Changchai Company, Limited Semi-Annual Report 2017
CHANGCHAI COMPANY, LIMITED
SEMI-ANNUAL REPORT 2017
August , 2017
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Changchai Company, Limited Semi-Annual Report 2017
Section I Important Statements, Contents and Definitions
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”) as well as
the directors, supervisors and senior management of Changchai Company, Limited (the “Company”)
hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall
be jointly and severally liable for any false representation, misleading statements or material
omissions in this Report.
Shi Xinkun, head of the Company, Zhang Xin, accounting head for this Report, and Jiang He, head
of the accounting department (head of accounting), hereby guarantee that the Financial Report
carried in this Report is factual, accurate and complete.
All the directors attended the board meeting for the review of this Report.
This Report involves futures plans and other forward-looking statements, which shall not be
considered as virtual promises to investors. Investors are kindly reminded to pay attention to
possible risks.
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into
share capital.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
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Changchai Company, Limited Semi-Annual Report 2017
Table of Contents
Section I Important Statements, Contents and Definitions.................................................................. 2
Section II Corporate Profile and Key Operating Results..................................................................... 5
Section III Business Profile..................................................................................................................8
Section IV Performance Discussion and Analysis............................................................................. 10
Section V Significant Events..............................................................................................................18
Section VI Share Changes and Shareholders’ Profile........................................................................ 25
Section VII Preference Shares............................................................................................................30
Section VIII Directors, Supervisors and Senior Management........................................................... 30
Section IX Corporate Bonds...............................................................................................................30
Section X Financial Report................................................................................................................ 31
Section XI Documents Available for Reference...............................................................................121
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Changchai Company, Limited Semi-Annual Report 2017
Definitions
Term Definition
Company, the Company, Changchai Changchai Company, Limited
Chuangzhou Changchai Benniu Diesel Engine Fittings Co.,
Changchai Benniu
Ltd.
Changchai Wanzhou Changchai Wanzhou Diesel Engine Co., Ltd.
Housheng Investment Changzhou Housheng Investment Co., Ltd.
Changzhou Changchai Housheng Agricultural Equipment Co.,
Housheng Agricultural Equipment
Ltd.
Changchai Robin Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
RMB, RMB’0,000 RMB yuan, RMB ten thousand yuan
Reporting Period January 1, 2017-June 30, 2017
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Changchai Company, Limited Semi-Annual Report 2017
Section II Corporate Profile and Key Operating Results
I Corporate Information
Stock name Changchai A, Changchai B Stock code 000570, 200570
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 常柴股份有限公司
Abbreviation 苏常柴
Company name in English CHANGCHAI COMPANY, LIMITED
Abbreviation CHANGCHAI CO., LTD.
Legal representative Shi Xinkun
II Contact Information
Board Secretary Securities Representative
Name He Jianjiang
Address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Tel. （86）519-68683155
Fax （86）519-86630954
E-mail cchjj@changchai.com
III Other Information
1. Ways to Contact the Company
Indicate by tick mark whether any changes occur to the registered address, office address and their postal codes,
website address and email address of the Company during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2016 Annual
Report.
2. Information Disclosure Media and Place where this Report is Kept
Indicate by tick mark whether any changes occurred to the information disclosure media and the place where this
Report was kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for
disclosing this Report and the location where this Report was placed did not change during the Reporting Period.
The said information can be found in the 2016 Annual Report.
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Changchai Company, Limited Semi-Annual Report 2017
IV Key Operating Results
Indicate by tick mark whether the Company needs to retroactively restate any of its accounting data.
□ Yes √ No
Reporting Period Same period of last year +/- (%)
Operating revenues (RMB) 1,308,106,180.92 1,163,660,721.69 12.41%
Net profit attributable to shareholders of the
39,679,158.13 35,018,142.36 13.31%
Company (RMB)
Net profit attributable to shareholders of the
Company before exceptional profit and loss 20,774,047.49 28,510,501.61 -27.14%
(RMB)
Net cash generated by operating activities (RMB) 64,379,323.31 118,035,913.29 -45.46%
Basic earnings per share (RMB/share) 0.07 0.06 16.67%
Diluted earnings per share (RMB/share) 0.07 0.06 16.67%
Weighted average return on equity (%) 1.71% 1.76% -0.05%
End of Reporting Period End of last year +/- (%)
Total assets (RMB) 3,814,165,961.66 3,724,857,266.71 2.40%
Net assets attributable to shareholders of the
2,304,915,696.27 2,323,712,892.92 -0.81%
Company (RMB)
V Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and
International Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and
Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VI Exceptional Profit/Loss
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Profit/loss on disposal of non-current assets
756,874.20
(including offset asset impairment provisions)
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Changchai Company, Limited Semi-Annual Report 2017
Government subsidies charged to profit/loss for
Reporting Period (except for government grants
closely related to business of the Company and 788,186.82
given at a fixed quota or amount in accordance
with government’s uniform standards)
The ownership transfer formalities
regarding the Company’s acquisition of
equity interest of Changzhou Fuji
Changchai Robin Gasoline Engine Co.,
Profit due to situation where investment costs
Ltd. (Changchai Robin) were
for the Company to obtain subsidiaries,
completed on January 20, 2017. As
associates and joint ventures are lower than 22,756,742.66
such, from that date Changchai Robin
enjoyable fair value of identifiable net assets of
has been consolidated by the Company.
investees when making investments
Since the closing cost of this equity
acquisition was lower than the
appraisal, this transaction generated a
premium of RMB22,756,742.66.
Profit/loss on fair value changes of
transactional financial assets and liabilities &
investment income from disposal of
transactional financial assets and liabilities as 190,326.41
well as financial assets available for sale,
except for effective hedges related to routine
operations of the Company
Non-operating income and expense other than
-6,246,118.36
above
Less: Income tax effects -591,497.43
Minority interests effects (after tax) -67,601.48
Total 18,905,110.64 --
Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the
said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Changchai Company, Limited Semi-Annual Report 2017
Section III Business Profile
I Main Business Scope for the Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings and castings,
gasoline engines, gasoline engine fittings, cereal harvesting machinery, rotovators, walking tractors, molds and
jigs as well as the assembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel engines under
the brand of “Changchai”, which are often used in tractors, combine-harvesters, light commercial vehicles,
agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
II Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Reason for significant change
The closing amount stood at RMB261,056,165.98, down 47.90% from the opening
Notes receivable amount, mainly because banker’s acceptance bill was adopted more often in settlement
with customers to strengthen collection before the Reporting Period.
The closing amount stood at RMB745,551,114.30, up 107.51% from the opening
amount, mainly because the Company properly allowed customers’ buying on credit
according to its production and operation characteristics in the first half of 2017 to
Accounts receivable
expand its market opportunities, and the percentage of multi-cylinder engines in the
total sales increased (longer payment days for these customers for they mostly procure
multi-cylinder engines as a component).
2. Main Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
1. Advantages in Brand
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Changchai Company, Limited Semi-Annual Report 2017
Changchai is a national industrial enterprise with a history of over one hundred years. It is one of the earliest
professional manufacturers of internal combustion engines in China. The brand "Changchai" is the earliest
domestic trademark of production goods known as China's well-known trademarks. The diesel engine of
"Changchai" brand is China's brand-name product. The enterprise has been certified by ISO9000 quality system,
ISO14001 environmental management system, ISO/TS16949 automotive product quality management system,
and accessed to the national export-free enterprise qualification. Changchai was honorably ranked among “the Top
One Hundred Chinese Enterprises in Engineering Industry” and “China Pacesetter Enterprise of Industrial
Industry” for several times, and was awarded the honorary title of “State-level Enterprise of Observing Contracts
and Keeping Promise”, “China's Agricultural Machinery Parts and Components Leading Enterprises”, “China's
Agricultural Machinery AAA Credit Enterprise”, “Jiangsu Independent Industries Brand Top 50”, “Quality
Management Excellence Award of Jiangsu Province”, “Mayor Quality Award of Changzhou City”, also our
company won as the 10 users most satisfied leading brands in “Jing Geng” competition in the last five years. In
the first half of 2017, the Company’s 4G33 product won the Quality New Product Award at the China (Jiangsu)
International Agricultural Machinery Fair, and the Company won the third prize in the Changzhou
Entrepreneurship & Innovation Contest organized by the local government. For many years, in the process of
achieving steady economic development of the enterprise, we developed in a sound manner and cultivated the
“Changchai” brand, a famous small diesel engine brand of China with independent intellectual property rights
2. Advantages in Technology
Changchai has a state-level technology center and post-doctoral research station, and a research center of small
and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently,
Changchai is mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel
engine. It has a complete product range, a wide power level coverage, a high reputation and intellectual property
rights for its main products. Changchai’s product research and development and scientific research projects have
won the second prize of National Machinery Industry Science and Technology Progress Award, the second prize
of Science and Technology Award of Jiangsu Province, and the first prize of Science and Technology Progress
Award of Changzhou City etc. So far, we have obtained 130 patents granted home and abroad in total, including 6
invention patents.
3. Advantages in Marketing
Changchai has built up a sales service network covering the whole country, with 11 sales business units, 31 sales
service centers, over 400 service stations and 600 designated maintenance stations. With a perfect diesel sales
service network system, our company is able to provide high quality, efficient and timely services for our
customers.
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Changchai Company, Limited Semi-Annual Report 2017
Section IV Performance Discussion and Analysis
I Summary
For the first half of 2017, we sold 457,800 units of diesel engines and gasoline engines and generator sets, up
0.66% compared to the same period of last year. We achieved a sales income of RMB1,308,106,180.92 , up
12.41% from the same period of last year. And the net profit attributable to our shareholders stood at
RMB39,679,158.13 , up13.31% on a year-on-year basis.
In the Reporting Period, the Agricultural Machinery Industry continued to face the dual pressures of rising costs
and overcapacity. The agricultural machinery sector was in grave difficulties, with stricter emission rules for
diesel engines, cuts in subsidies for farm machinery, falling grain prices and the low purchasing power of farmers.
Despite the general overcapacity on the single-cylinder diesel engine market, the Company managed to achieve an
increase in both the production and sales volumes of this product and maintained a leading position in this
sub-sector. As for multi-cylinder diesel engines, the sales volume went down compared to the same period of last
year due to the weak market demand, but the sales revenue rose because of higher sales. Meanwhile, due to the
Company’s efforts in expanding market opportunities at home and abroad, the sales volume of plant protection
machinery grew fast, the Company’s products saw an increased sales volume in emerging markets, and the export
revenue registered a year-on-year growth. This year Changzhou Fuji Changchai Robin Gasoline Engine Co.,Ltd.
Sold 79,200 units of gasoline engines and became a new profit growth point.To sum up, in the Reporting Period,
the sales revenue increased while the net profit before exceptional profit and loss went down significantly
compared to the same period of last year because of rising in raw material prices and the appreciation of RMB and
the decline in gross profit margin.
II Analysis of Main Business
See “I Summary” above.
Year-on-year changes of key financial data:
Unit: RMB
Reporting Period Same period of last year +/-% Reason for change
Operating revenues 1,308,106,180.92 1,163,660,721.69 12.41%
Operating costs 1,141,392,321.88 984,594,264.43 15.93%
Selling expense 55,815,356.13 59,518,474.60 -6.22%
Administrative expense 73,398,067.51 78,488,615.70 -6.49%
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Changchai Company, Limited Semi-Annual Report 2017
mainly generated from the
increase of exchange net
Finance costs 333,451.36 -4,811,135.29
profit or loss caused by the
changes in exchange rate.
Income taxes 5,670,998.75 6,581,748.12 -13.84%
R&D investments 34,348,304.81 36,683,008.45 -6.36%
mainly generated from the
Net cash generated by
64,379,323.31 118,035,913.29 -45.46% increase of Accounts
operating activities
receivable.
mainly generated from
Net cash generated by recovery of fi nancial
-53,774,916.26 -29,436,822.72
investing activities investment before the
Reporting Period.
mainly generated from the
Net cash generated by
-4,410,070.41 -20,380,965.42 increase of Pledge for bank
financing activities
loan of Subsidiary.
mainly generated from the
Net increase in cash and
6,194,336.64 68,218,125.15 -90.92% increase of Accounts
cash equivalents
receivable.
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Breakdown of main business:
Unit: RMB
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: margin: YoY
revenue margin YoY +/-%
YoY +/-% +/-%
By business segment
Internal
combustion 1,297,931,638.97 1,134,816,954.26 12.57% 12.60% 16.25% -2.74%
engine
By product
Diesel engines 1,297,931,638.97 1,134,816,954.26 12.57% 12.60% 16.25% -2.74%
By geographic segment
Domestic 1,148,571,549.89 988,832,403.19 13.91% 9.72% 13.22% -2.66%
Overseas 149,360,089.08 145,984,551.07 2.26% 41.13% 41.85% -0.49%
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Changchai Company, Limited Semi-Annual Report 2017
III Non-Core Business Analysis
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
End of Reporting Period End of same period of last year
Change in Reason for
As a percentage As a percentage
percentage significant
Amount of total assets Amount of total assets
(%) change
(%) (%)
Monetary
708,692,252.73 18.58% 673,796,047.14 21.03% -2.45%
funds
Accounts
745,551,114.30 19.55% 567,606,221.86 17.71% 1.84%
receivable
Inventories 448,832,816.34 11.77% 360,199,008.69 11.24% 0.53%
Investment
53,968,518.83 1.41% 56,176,859.63 1.75% -0.34%
property
Long-term
equity 0.00 0.00% 21,590,568.88 0.67% -0.67%
investment
Fixed assets 587,331,046.88 15.40% 571,960,644.43 17.85% -2.45%
Construction
69,532,401.98 1.82% 76,961,584.95 2.40% -0.58%
in progress
mainly
generated
from the
Short-term
23,000,000.00 0.60% 10,000,000.00 0.31% 0.29% increase of
borrowings
bank loan
of
Subsidiary
Long-term
0.00 0.00% 0.00 0.00% 0.00%
borrowings
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
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Changchai Company, Limited Semi-Annual Report 2017
Unit: RMB
Profit/loss on Cumulative
Impairment
fair value fair value Purchased in Sold in the
Opening provided in Closing
Item changes in changes the Reporting Reporting
balance the Reporting balance
the Reporting charged to Period Period
Period
Period equity
Financial
assets
Available-for
-sale 812,872,500. -48,982,500. 581,413,175. 763,890,000
financial 00 00 00 .00
assets
Subtotal of
812,872,500. -48,982,500. 581,413,175. 763,890,000
financial
00 00 00 .00
assets
Total of 812,872,500. -48,982,500. 581,413,175. 763,890,000
above 00 00 00 .00
Financial
0.00 0.00
liabilities
Significant changes in the measurement attributes of the main assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as of End of Reporting Period
Item Closing book value Reasons
Monetary funds 119,219,787.00 Security deposits for bank acceptance bills.
House constructions 9,394,240.27 Collaterals for loan.
Land use right 21,179,360.79 Collaterals for loan.
Total 149,793,388.06 --------
V Investments Made
1. Total Investments Made
√ Applicable □ Not applicable
Investments made in Reporting Period (RMB) Investments made in same period of last year (RMB) +/-%
26,280,000.00 0 --
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Changchai Company, Limited Semi-Annual Report 2017
2. Significant Equity Investments Made in Reporting Period
√ Applicable □ Not applicable
Unit: RMB
progress
Investm
up to the
ent
date of
gains Whether
Major Invest Invest Shareh Funds Invest Produ the Estima Disclosu Disclos
and involved
Name busines ment ment olding resour Partners ment cts assets ted re date ure
losses of with the
s method amount ratio ces period type liabilitie profits (if any) index
the lawsuits
s
Reportin
statemen
g period
t
Changz Relevant
hou industria
Fuji l and 2016-01
Gasolin Japan
Changc commer 4,
e Fuji Long-t Equit 08/30/2
hai cial 2016-01
Engine, Acquisi 26,280, Own Heavy erm y 016 and
Robin 67.00% registrati No 5,
assembl tion 000.00 funds Industri invest invest 01/24/2
Gasolin on of 2016-01
y and es Co., ment ment 017
e equity 6,2017-
etc Ltd
Engine transfer 001
Co., has
Ltd. changed
26,280,
Total -- -- -- -- -- -- -- -- -- -- --
000.00
Note: the Company accepted the transferred 67% stock equity of Changzhou Fuji Changchai Robin Gasoline
Engine Co., Ltd held by Japan Fuji Heavy Industries Co., Ltd by RMB26.28 million during the Reporting period.
After this transfer, the Company would directly hold the 100% stock equity of Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd.
3. Significant Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
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Changchai Company, Limited Semi-Annual Report 2017
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and stock-participating companies that have an influence on the net profit of the Company over
10%
Unit: RMB
Company Company Registered Operating Operating
Main business Industry Total assets Net assets Net profit
name variety capital revenues profit
Production of
Changchai Machinery 55,063,00 147,990,377 92,234,40 77,491,521. -171,460.5
Subsidiary diesel engine 490,973.25
Benniu manufacture 0.00 .35 0.97 43 2
accessories
Changchai Diesel engine Machinery 85,000,00 139,123,291 114,462,9 31,995,209. 1,219,834.
Subsidiary 867,855.82
Wanzhou assembly manufacture 0.00 .37 44.35 69 74
External
Housheng 30,000,00 36,037,726. 35,201,48 463,243.5
Subsidiary investment and Service 647,005.27 325,782.34
Investment 0.00 53 1.93 7
consulting
agricultural
Housheng
machinery Machinery 10,000,00 24,563,778. 7,851,808. 8,688,862.2 486,228.3
Agricultural Subsidiary 486,228.32
product of rice manufacture 0.00 61 36 5 2
Equipment
transplanter etc.
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Changchai Company, Limited Semi-Annual Report 2017
Gasoline
Changchai Machinery 37,250,00 99,748,792. 68,176,21 80,248,034. 6,029,604. 4,520,975.0
Subsidiary engines
Robin manufacture 0.00 88 8.18 94 68 1
assembly
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
Method of subsidiaries obtained or disposed in the Influence on overall production and
Company name
Reporting Period operation and performance
The Company convened the interim meeting of
Board of Directors on August 26, 2016, which
reviewed and approved the Bill about
Acceptance of the Transferred 67% Stock Equity
of Changzhou Fuji Changchai Robin Gasoline
Engine Co., Ltd Held by Japan Fuji Heavy
Industries Co., Ltd. After this acquisition the
Company would directly hold the 100% stock
equity of Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd that was changed from
The Company has paid the equity
Sino-foreign joint venture to domestic enterprise.
transfer amounts. Because of the
Changzhou Fuji Changchai Robin Gasoline
lower transaction price of the
Engine Co., Ltd completed relevant industrial
equity acquisition than the
and commercial registration change procedure of
Changzhou Fuji Changchai Robin valuation price, it incurred
equity transfer on January 20, 2017, and got the
Gasoline Engine Co., Ltd RMB22,756,742.66 income of this
Business License renewed by Changzhou
transaction, which respectively
National High-tech Industrial Development Zone
recorded into the current income
(New north district). Registered capital:
from investment and non-business
RMB37.25 million, business scope:
income.
Mini-universal gasoline engine and its support
sets (including agricultural machinery,
engineering machinery, pumping unit, and mini
generators) and its production, processing,
research, development, sales, and technology
consulting of relevant parts and accessories.
Changzhou Fuji Changchai Robin Gasoline
Engine Co., Ltd was included the scope of
consolidated statements of the Company from
January 20, 2017.
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Changchai Company, Limited Semi-Annual Report 2017
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Performance Forecast for January-September 2017
Warning of possible loss or considerable YoY change in the accumulative net profit made during the
period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
Possible risks and countermeasures:
(1) Market risk:
With fierce competition, over-capacity of some products and the total available market 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.
(3) Talent risk:
With escalation of national environmental policy and fierce competition in the market, the social and customer
requirements of product quality, performance and other aspects are getting higher and higher, meanwhile our
company’s needs of high-ranking talents are also growing as our resources in research and development increased.
Solutions: introduce all kinds of high-ranking talents through varieties of channels and strengthen personnel
training.
17
Section V Significant Events
I Annual and Special Meetings of Shareholders Convened during the Reporting Period
1. Meetings of Shareholders Convened during the Reporting Period
Investor Index to disclosed
Meeting Type Convened date Disclosure date
participation ratio information
2016 Annual Meeting of
Annual 31.43% 05/11/2017 05/12//2017 2017-011
Shareholders
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for the
Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company plans not to distribute cash dividends or bonus shares or convert capital
reserve into share capital.
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
Period or still Ongoing at Period-End
√ Applicable □ Not applicable
Type of Date of Period of
Commitm Fulfillme
Commitment commitme Contents commitme commitme
ent maker nt
nt nt making nt
Commitments made in
share reform
Commitments made in
acquisition documents or
shareholding alteration
documents
Commitments made in
time of asset restructuring
Commitments made in
18
time of IPO or
refinancing
Equity incentive
commitments
Rewards Plan for
Shareholders in Next Three
Years(2014-2016)
Under the premise of
positive distributive profit
(remaining after-tax profits
after making up for the loss
and extracting for the
common reserves) in this
year or half year and
abundant money flow and
no influence on the Impleme
Changchai
Other commitments made following-up going concern 05/14/201 Year nt in a
Company, bonus
to minority shareholders after cash bonus, the profits 4 2014-2016 normal
Limited
allocated by cash every year way
shouldn’t be lower than
10% of the allocable profits
from parent compan.
Meanwhile, the
accumulated allocable
profits by cash in the
arbitrary continuous three
accounting years should not
be lower than 30% of the
annual average allocable
profits in those three years.
Fulfilled on time Yes
Specific reasons for
failing to fulfill
N/A
commitments on time and
plans for next step
IV Engagement and Disengagement of CPAs Firm
Has the semi-annual financial report been audited?
19
□Yes √ No
This Semi-Annual Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Board Regarding “Modified
Auditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
√ Applicable □ Not applicable
Amount
Forming the Trial result Enforcement on
involved in the Progress of
Basic information of the lawsuit estimated and influence the judgment of Disclosu Disclosu
lawsuit the lawsuit
(arbitration) liabilities or of the lawsuit the lawsuit re date re index
(arbitration) (arbitration)
not (arbitration) (arbitration)
(RMB’0,000)
About the lawsuit case of
Shandong Hongli Group Co.,
Ltd., the accused company
Under the
owed accumulatively
compulsory
RMB14.36 million to the
execution by the
Company. The Company sued Judged for the
1,436 No N/A court and in the
to Changzhou Intermediate second trial
process of
People’s Court in 2001 and sued
liquidation and
for compulsory execution in
bankruptcy
April, 2002. Currently, the
defendant has started the
bankruptcy procedure.
Other legal matters:
□ Applicable √ Not applicable
20
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Significant Related Transactions
1. Related Transactions Relevant to Routine Operations
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Significant Related Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
21
XIII. Particulars about the Non-operating Occupation of Funds by the Controlling
Shareholder and Other Related Parties of the Company
□ Applicable √ Not applicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other
related parties during the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB’0,000
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosure
Actual Guarantee
date of the
occurrence date Actual for a
guarantee Line of Type of Term of Due or
Guaranteed party (date of guarantee related
line guarantee guarantee guarantee not
agreement amount party or
announcem
signing) not
ent
Guarantees between the Company and its subsidiaries
Disclosure Line of Actual Actual Type of Term of Due or Guarantee
Guaranteed party
date of the guarantee occurrence date guarantee guarantee guarantee not for a
22
guarantee (date of amount related
line agreement party or
announcem signing) not
ent
Changzhou
Changchai
Housheng
12/02/2016 2,000 12/02/2016 2,000 Joint-liability One year No No
Agricultural
Equipment Co.,
Ltd.
Total guarantee line for Total actual guarantee amount
subsidiaries approved during 2,000 for subsidiaries during the 2,000
the Reporting Period (B1) Reporting Period (B2)
Total approved guarantee line Total actual guarantee balance
for subsidiaries at the end of the 2,000 for subsidiaries at the end of 2,000
Reporting Period (B3) the Reporting Period (B4)
Guarantees between subsidiaries
Actual Guarantee
Disclosure
occurrence date Actual for a
Guaranteed date of the Line of Type of Term of Due or
(date of guarantee related
party guarantee line guarantee guarantee guarantee not
agreement amount party or
announcement
signing) not
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved Total actual guarantee amount
during the Reporting Period 2,000 during the Reporting Period 2,000
(A1+B1+C1) (A2+B2+C2)
Total approved guarantee line at Total actual guarantee balance
the end of the Reporting Period 2,000 at the end of the Reporting 2,000
(A3+B3+C3) Period (A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4)
0.87%
in net assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual
0
controller and their related parties (D)
Amount of debt guarantees provided directly or indirectly for
0
entities with a liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net
0
assets (F)
Total amount of the three kinds of guarantees above (D+E+F) 0
Joint responsibilities possibly borne in the Reporting Period
N/A
for undue guarantees (if any)
Provision of external guarantees in breach of the prescribed
N/A
procedures
23
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
1. Targeted Measures Taken to Help People Lift Themselves Out of Poverty
□ Applicable √ Not applicable
2. Significant Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by
the environmental protection authorities of China
No
XVI. Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
24
Section VI Share Changes and Shareholders’ Profile
I. Changes in Shares
1. Changes in Shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Newly Capitalize
Proporti Bonus Other Subto Proport
Amount issue d Capital Amount
on shares s tal ion
share 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 state-own
0 0.00% 0 0.00%
Legal-person
3. Shares held by other
0 0.00% 0 0.00%
domestic investors
Among which: shares held
0 0.00% 0 0.00%
by domestic legal person
Shares held by domestic
0 0.00% 0 0.00%
natural person
4.Oversea shareholdings 0 0.00% 0 0.00%
Among which: shares held
0 0.00% 0 0.00%
by oversea legal person
Shares held by oversea
0 0.00% 0 0.00%
natural person
II. Shares not subject to 100.00 100.00
561,374,326 561,374,326
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%
100.00 100.00
III. Total shares 561,374,326 561,374,326
% %
25
Reason for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
Reason for the change in shares
□ Applicable √ Not applicable
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 √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholding
Unit: share
Total number of preferred stockholder with
Total number of shareholders at the Reporting Period 52,387 0
vote right restored
Shareholding of common shareholders holding more than 5% shares or the top 10 of common shareholders
Number of Increase and Pledged or frozen
Number of Number of
shareholding decrease of shares
Holding shares held shares held
Nature of at the end of shares
Name of shareholder percentage subject to subject to
shareholder the during Status of
(%) trading trading Amount
Reporting Reporting shares
moratorium moratorium
Period Period
State-owned Assets
Supervision and
Administration On behalf of
30.43% 170,845,236 170,845,236
Commission of government
Changzhou Municipal
People’s Government
Foreign
KGI Asia Limited 0.57% 3,219,845 3,219,845
corporation
Beijing Shen Zhou Mu
Investment Fund Other 0.45% 2,543,395 2,543,395
Management
26
Ltd.—Hongyan Shen
Zhou Mu Fund
Tibet Shen Zhou Mu
Fund Management Co.,
Ltd.—Tianlu Securities Other 0.35% 1,971,518 1,971,518
Investment Private Fund
No. 10
Zhong Ou Asset
Management-Bank of
China-Ping An Life
Insurance- Zhong Ou
Asset Management - Other 0.34% 1,899,930 1,899,930
Ping An Life Insurance
Entrusted Investment
No. 1 Asset
Management Plan
Vanguard Total
Foreign
International Stock 0.29% 1,626,592 1,626,592
corporation
Index Fund
Guo Dong Ze Quan
Investment Management
Co., Ltd.－Ze Quan
Other 0.29% 1,616,500 1,616,500
Wealth Manager
Securities Investment
Fund No. 2
Tibet Shen Zhou Mu
Fund Management Co.,
Ltd.—Tianlu Securities Other 0.29% 1,613,081 1,613,081
Investment Private Fund
No. 1
Domestic
Huang Guoliang 0.27% 1,528,891 1,528,891
individual
AVIVA-COFCO－
Dividends－Dividends Other 0.27% 1,504,600 1,504,600
on Personal Insurance
Strategic investors or the general legal
person due to the placement of new shares Naught
become the top 10 shareholders
It is unknown whether there was any associated relationship among the top ten tradable
Explanation on associated relationship shareholders and among the top ten shareholders not subject to trading moratorium, or
or/and 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 common shareholders not subject to trading moratorium
Number of shares held not Type of share
Name of shareholder subject to trading moratorium
Type of share Amount
at the end of the period
27
State-owned Assets Supervision and Administration
Commission of Changzhou Municipal People’s 170,845,236 RMB ordinary shares 170,845,236
Government
Domestically listed
KGI Asia Limited 3,219,845 3,219,845
foreign shares
Beijing Shen Zhou Mu Investment Fund Management
2,543,395 RMB ordinary shares 2,543,395
Ltd.—Hongyan Shen Zhou Mu Fund
Tibet Shen Zhou Mu Fund Management Co.,
Ltd.—Tianlu Securities Investment Private Fund No. 1,971,518 RMB ordinary shares 1,971,518
10
Zhong Ou Asset Management-Bank of China-Ping An
Life Insurance- Zhong Ou Asset Management - Ping
1,899,930 RMB ordinary shares 1,899,930
An Life Insurance Entrusted Investment No. 1 Asset
Management Plan
Domestically listed
Vanguard Total International Stock Index Fund 1,626,592 1,626,592
foreign shares
Guo Dong Ze Quan Investment Management Co.,
Ltd.－Ze Quan Wealth Manager Securities 1,616,500 RMB ordinary shares 1,616,500
Investment Fund No. 2
Tibet Shen Zhou Mu Fund Management Co.,
Ltd.—Tianlu Securities Investment Private Fund No. 1,613,081 RMB ordinary shares 1,613,081
1
Domestically listed
Huang Guoliang 1,528,891 1,528,891
foreign shares
AVIVA-COFCO－Dividends－Dividends on
1,504,600 RMB ordinary shares 1,504,600
Personal Insurance
Explanation on associated relationship among the top
It is unknown whether there was any associated relationship among the top
ten shareholders of tradable share not subject to
ten tradable shareholders and among the top ten shareholders not subject to
trading moratorium, as well as among the top ten
trading moratorium, or whether they are persons acting in concert as
shareholders of tradable share not subject to trading
described by Measures for the Administrative of Disclosure of Shareholder
moratorium and top ten shareholders, or explanation
Equity Changes.
on acting-in-concert
Shareholder Beijing Shen Zhou Mu Investment Fund Management
Ltd.—Hongyan Shen Zhou Mu Fund held a total of 2,543,395 shares in the
Company through a common securities account and a client account of
Particular about shareholder participate in the
collateral securities for margin trading, representing a stake of 0.45%, of
securities lending and borrowing business
which the shares in the client account of collateral securities in Southwest
Securities Co., Ltd. for margin trading were 968,100 in number, a 0.17%
stake in the Company.
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.
28
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder during the Reporting Period.
□ Applicable √ Not applicable
The controlling shareholder did not change during the Reporting Period.
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
The actual controller did not change during the Reporting Period.
29
Section VII Preference Shares
□ Applicable √ Not applicable
Section VIII Directors, Supervisors and Senior Management
I. Changes in Shareholding of Directors, Supervisors and Senior Management Staff
□ Applicable √ Not applicable
There was no change in shareholding of Directors, Supervisors, Senior Management Staffs and Employees, for
details, please refer to 2016 Annual Report
II. Particulars about Changes of Directors, Supervisors and Senior Executives
□ Applicable √ Not applicable
There was no change in Directors, Supervisors, Senior Management Staffs and Employees, for details, please refer
to 2016 Annual Report
Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the
approval date of this Report or were due but could not be redeemed in full?
□ Yea √ No
30
Section X Financial Report
I. Audit Report
Has this semi-annual report been audited?
□ Yes √ No
The semi-annual financial report has not been audited.
II. Financial Statements
Currency unit for the statements in the notes to these financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
June 30, 2017
Unit: RMB
Item Closing balance Opening balance
Current Assets:
Monetary funds 708,692,252.73 670,703,802.02
Settlement reserves
Intra-group lendings
Financial assets measured by fair value with the changes be
0.00 0.00
included in the current gains and losses
Derivative financial assets 0.00 0.00
Notes receivable 261,056,165.98 501,070,279.01
Accounts receivable 745,551,114.30 359,279,821.69
Accounts paid in advance 29,426,739.29 15,483,475.43
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable 0.00 0.00
Dividend receivable 0.00 0.00
Other accounts receivable 13,647,674.27 4,165,674.62
Financial assets purchased under agreements to resell
Inventories 448,832,816.34 494,046,458.44
Assets divided available for sale 0.00 0.00
Non-current assets due within 1 year 0.00 0.00
Other current assets 19,228,929.49 39,669,983.12
Total current assets 2,226,435,692.40 2,084,419,494.33
Non-current assets:
31
Loans by mandate and advances granted
Available-for-sale financial assets 771,090,000.00 820,072,500.00
Held-to-maturity investments 0.00 0.00
Long-term accounts receivable 0.00 0.00
Long-term equity investment 0.00 21,006,230.03
Investing property 53,968,518.83 55,072,689.23
Fixed assets 587,331,046.88 553,678,938.87
Construction in progress 69,532,401.98 89,781,047.21
Engineering materials 0.00 0.00
Disposal of fixed assets 0.00 0.00
Production biological assets
Oil-gas assets
Intangible assets 104,897,072.15 99,915,137.62
R&D expense 0.00 0.00
Goodwill 0.00 0.00
Long-term deferred expenses 0.00 0.00
Deferred income tax assets 911,229.42 911,229.42
Other non-current assets 0.00 0.00
Total of non-current assets 1,587,730,269.26 1,640,437,772.38
Total assets 3,814,165,961.66 3,724,857,266.71
Current liabilities:
Short-term borrowings 23,000,000.00 10,000,000.00
Borrowings from Central Bank
Customer bank deposits and due to banks and other financial
institutions
Intra-group borrowings
Financial liabilities measured by fair value with the changes be
0.00 0.00
included in the current gains and losses
Derivative financial liabilities 0.00 0.00
Notes payable 389,020,800.00 276,090,000.00
Accounts payable 582,942,259.00 605,424,726.65
Accounts received in advance 71,687,056.39 40,890,620.69
Financial assets sold for repurchase
Handling charges and commissions payable
Employee’s compensation payable 32,383,280.13 58,549,908.90
Tax payable 1,741,002.84 9,622,332.76
Interest payable 0.00 0.00
Dividend payable 9,016,790.91 3,891,433.83
Other accounts payable 213,754,436.42 204,446,810.56
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of securities
32
Payables for acting underwriting of securities
Liabilities divided available for sale 0.00 0.00
Non-current liabilities due within 1 year 0.00 0.00
Other current liabilities 3,438,589.12 2,454,381.75
Total current liabilities 1,326,984,214.81 1,211,370,215.14
Non-current liabilities:
Long-term borrowings 0.00 0.00
Bonds payable 0.00
Of which: preferred shares
Perpetual capital securities
Long-term payables 0.00 0.00
Long-term payroll payables 0.00
Specific payables 0.00 0.00
Estimated liabilities 0.00
Deferred income 60,525,045.27 61,057,232.08
Deferred income tax liabilities 102,602,325.00 109,949,700.00
Other non-current liabilities 0.00
Total non-current liabilities 163,127,370.27 171,006,932.08
Total liabilities 1,490,111,585.08 1,382,377,147.22
Owners’ equity
Share capital 561,374,326.00 561,374,326.00
Other equity instruments 0.00 0.00
Of which: preferred shares
Perpetual capital securities
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 581,413,175.00 623,048,300.00
Specific reserves 11,715,417.22 11,715,417.22
Surplus reserves 311,880,248.88 311,880,248.88
Provisions for general risks
Retained profits 674,203,863.74 651,365,935.39
Total equity attributable to owners of the Company 2,304,915,696.27 2,323,712,892.92
Minority interests 19,138,680.31 18,767,226.57
Total owners’ equity 2,324,054,376.58 2,342,480,119.49
Total liabilities and owners’ equity 3,814,165,961.66 3,724,857,266.71
Legal representative: Shi Xinkun Person-in-charge of the accounting work: Zhang Xin
Chief of the accounting division: Jiang He
33
2. Balance Sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 670,572,518.97 637,109,762.94
Financial assets at fair value through profit/loss 0.00 0.00
Derivative financial assets 0.00 0.00
Notes receivable 259,104,652.98 500,870,279.01
Accounts receivable 661,325,595.53 308,800,670.90
Accounts paid in advance 3,683,481.08 9,845,904.32
Interest receivable 0.00 0.00
Dividends receivable 0.00 0.00
Other accounts receivable 2,230,562.08 3,694,673.93
Inventories 332,563,603.44 430,345,089.36
Assets held for sale 0.00 0.00
Non-current assets due within one year 0.00 0.00
Other current assets 1,226,185.68 24,225,031.87
Total current assets 1,930,706,599.76 1,914,891,412.33
Non-current assets:
Available-for-sale financial assets 763,890,000.00 812,872,500.00
Held-to-maturity investments 0.00 0.00
Long-term accounts receivable 0.00 0.00
Long-term equity investments 231,752,730.03 205,472,730.03
Investment property 53,968,518.83 55,072,689.23
Fixed assets 480,490,322.91 450,042,747.40
Construction in progress 69,532,401.98 89,781,047.21
Engineering materials 0.00 0.00
Disposal of fixed assets 0.00 0.00
Productive living assets
Oil-gas assets
Intangible assets 76,271,207.08 78,558,644.37
R&D expenses 0.00 0.00
Goodwill 0.00 0.00
Long-term deferred expense 0.00 0.00
Deferred income tax assets 911,229.42 911,229.42
Other non-current assets 0.00
Total non-current assets 1,676,816,410.25 1,692,711,587.66
Total assets 3,607,523,010.01 3,607,602,999.99
Current liabilities:
Short-term borrowings 0.00
34
Financial liabilities at fair value through profit/loss 0.00
Derivative financial liabilities 0.00
Notes payable 389,020,800.00 251,220,000.00
Accounts payable 493,997,139.79 596,734,009.07
Accounts received in advance 69,375,145.21 37,250,941.51
Payroll payable 26,071,177.66 52,498,428.10
Taxes payable 561,258.71 6,587,374.37
Interest payable 0.00 0.00
Dividends payable 8,368,537.05 3,243,179.97
Other accounts payable 210,410,727.69 194,596,980.96
Liabilities held for sale 0.00
Non-current liabilities due within one year 0.00 0.00
Other current liabilities 0.00
Total current liabilities 1,197,804,786.11 1,142,130,913.98
Non-current liabilities:
Long-term borrowings 0.00 0.00
Bonds payable 0.00
Of which: Preference shares
Perpetual bonds
Long-term payables 0.00 0.00
Long-term payroll payable 0.00
Special payables 0.00 0.00
Provisions
Deferred income 60,525,045.27 61,057,232.08
Deferred income tax liabilities 102,602,325.00 109,949,700.00
Other non-current liabilities 0.00
Total non-current liabilities 163,127,370.27 171,006,932.08
Total liabilities 1,360,932,156.38 1,313,137,846.06
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments 0.00 0.00
Of which: Preference shares
Perpetual bonds
Capital reserve 183,071,147.70 183,071,147.70
Less: Treasury shares
Other comprehensive income 581,413,175.00 623,048,300.00
Special reserve 11,715,417.22 11,715,417.22
Surplus reserve 311,880,248.88 311,880,248.88
Retained earnings 597,136,538.83 603,375,714.13
Total owners’ equity 2,246,590,853.63 2,294,465,153.93
Total liabilities and owners’ equity 3,607,523,010.01 3,607,602,999.99
35
3. Consolidated Income Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 1,308,106,180.92 1,163,660,721.69
Including: Sales income 1,308,106,180.92 1,163,660,721.69
Interest income
Premium income
Fee and commission income
2. Operating costs 1,287,121,365.15 1,130,064,900.87
Including: Cost of sales 1,141,392,321.88 984,594,264.43
Interest expenses
Fee and commission expenses
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and surtaxes 7,032,129.00 2,017,527.41
Selling expenses 55,815,356.13 59,518,474.60
Administrative expenses 73,398,067.51 78,488,615.70
Finance costs 333,451.36 -4,811,135.29
Asset impairment loss 9,150,039.27 10,257,154.02
Add: Profit on fair value changes (“-” means loss) 0.00 0.00
Investment income (“-” means loss) 9,358,126.62 1,901,135.64
Including: Share of profit/loss of associates and joint
ventures
Exchange gains (“-” means loss)
Other gains
3. Operating profit (“-” means loss) 30,342,942.39 35,496,956.46
Add: Non-operating income 21,773,323.41 10,636,194.05
Including: Profit on disposal of non-current assets 94,440.43 6,113,117.21
Less: Non-operating expense 6,394,655.18 4,147,840.72
36
Including: Loss on disposal of non-current assets 18,709.80 32,408.99
4. Total profit (“-” means loss) 45,721,610.62 41,985,309.79
Less: Corporate income tax 5,670,998.75 6,581,748.12
5. Net profit (“-” means loss) 40,050,611.87 35,403,561.67
Net profit attributable to owners of the Company 39,679,158.13 35,018,142.36
Minority interests’ income 371,453.74 385,419.31
6. Other comprehensive income net of tax -41,635,125.00 -49,761,550.00
Other comprehensive income net of tax attributable to
-41,635,125.00 -49,761,550.00
owners of the Company
6.1 Other comprehensive income that will not be
reclassified into profit/loss 0.00 0.00
6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees
that cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently
-41,635,125.00 -49,761,550.00
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees
that will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of
-41,635,125.00 -49,761,550.00
available-for-sale financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences
6.2.6 Other
Other comprehensive income net of tax attributable to
minority interests
7. Total comprehensive income -1,584,513.13 -14,357,988.33
Attributable to owners of the Company -1,955,966.87 -14,743,407.64
Attributable to minority interests 371,453.74 385,419.31
8. Earnings per share
8.1 Basic earnings per share 0.07 0.06
8.2 Diluted earnings per share 0.07 0.06
Legal representative: Shi Xinkun Person-in-charge of the accounting work: Zhang Xin
Chief of the accounting division: Jiang He
37
4. Income Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 1,229,307,547.12 1,163,696,328.66
Less: Operating costs 1,086,749,833.96 1,000,185,315.06
Taxes and surtaxes 6,052,840.56 1,663,181.76
Selling expenses 50,307,968.65 55,298,258.45
Administrative expenses 64,535,374.12 69,931,423.68
Finance costs -636,200.84 -5,358,474.86
Asset impairment loss 9,150,039.27 10,109,097.39
Add: profit on fair value changes (“-” means loss) 0.00 0.00
Investment income (“-” means loss) 6,952,750.99 1,185,264.12
Including: Share of profit/loss of associates and joint
ventures 0.00 0.00
Other gains
2. Operating profit (“-” means loss) 20,100,442.39 33,052,791.30
Add: Non-operating income 567,356.20 9,904,289.56
Including: Profit on disposal of non-current assets 94,440.43
Less: Non-operating expense 6,192,349.28 4,047,840.72
Including: Loss on disposal of non-current assets 18,709.80 32,408.99
3. Total profit (“-” means loss) 14,475,449.31 38,909,240.14
Less: Corporate income tax 3,873,394.83 6,299,732.98
4. Net profit (“-” means loss) 10,602,054.48 32,609,507.16
5. Other comprehensive income net of tax -41,635,125.00 -49,761,550.00
5.1 Other comprehensive income that will not be reclassified
into profit and loss 0.00 0.00
5.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
5.2 Other comprehensive income to be subsequently
reclassified into profit/loss -41,635,125.00 -49,761,550.00
5.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method
38
5.2.2 Profit/loss on fair value changes of available-for-sale
financial assets -41,635,125.00 -49,761,550.00
5.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
5.2.4 Effective profit/loss on cash flow hedges
5.2.5 Currency translation differences
5.2.6 Other
6. Total comprehensive income -31,033,070.52 -17,152,042.84
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
39
5. Consolidated Cash Flow Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows associated with operating activities:
Cash received from sale of commodities and rendering of
1,325,350,610.18 1,297,635,026.56
service
Net increase in money deposits from customers and interbank
placements
Net increase in loans from the Central Bank
Net increase in funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase in deposits of policy holders and investment fund
Net increase in disposal of financial assets at fair value through
profit/loss
Interest, fees and commissions received
Net increase in interbank borrowings
Net increase in funds in repurchase business
Tax refunds received 21,145,032.94 22,852,333.55
Cash generated by other operating activities 5,501,291.34 7,978,801.83
Subtotal of cash generated by operating activities 1,351,996,934.46 1,328,466,161.94
Cash paid for goods and services 1,033,701,551.38 956,379,929.94
Net increase in loans and advances to customers
Net increase in funds deposited in the Central Bank and
interbank placements
Cash paid for claims of original insurance contracts
Interest, fees and commissions paid
Cash paid as policy dividends
Cash paid to and for employees 185,470,230.57 174,777,109.44
Taxes paid 19,440,382.39 36,296,987.31
Cash used in other operating activities 49,005,446.81 42,976,221.96
Subtotal of cash used in operating activities 1,287,617,611.15 1,210,430,248.65
Net cash generated by operating activities 64,379,323.31 118,035,913.29
2. Cash flows associated with investing activities:
Cash received from retraction of investments 9,000,000.00 32,000,000.00
40
Cash received as investment income 7,143,077.40 663,870.52
Net cash received from disposal of fixed assets, intangible
501,236.14 22,440.00
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
0.00 0.00
business units
Cash generated by other investing activities 0.00
Subtotal of cash generated by investing activities 16,644,313.54 32,686,310.52
Cash paid to acquire fixed assets, intangible assets and other
48,464,630.47 39,123,133.24
long-term assets
Cash paid for investment 3,000,000.00
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other business units 1,854,599.33
Cash used in other investing activities 17,100,000.00 23,000,000.00
Subtotal of cash used in investing activities 70,419,229.80 62,123,133.24
Net cash generated by investing activities -53,774,916.26 -29,436,822.72
3. Cash flows associated with financing activities:
Cash received from capital contributions 0.00 0.00
Including: Cash received from minority shareholder
investments by subsidiaries
Cash received as borrowings 18,000,000.00 8,000,000.00
Cash received from issuance of bonds
Cash generated by other financing activities 0.00 5,431.58
Subtotal of cash generated by financing activities 18,000,000.00 8,005,431.58
Repayment of borrowings 5,000,000.00 15,000,000.00
Cash paid for interest expenses and distribution of dividends
17,410,070.41 13,386,397.00
or profit
Including: dividends or profit paid by subsidiaries to minority
interests
Cash used in other financing activities 0.00
Sub-total of cash used in financing activities 22,410,070.41 28,386,397.00
Net cash generated by financing activities -4,410,070.41 -20,380,965.42
4. Effect of foreign exchange rate changes on cash and cash
0.00 0.00
equivalents
5. Net increase in cash and cash equivalents 6,194,336.64 68,218,125.15
Add: Opening balance of cash and cash equivalents 583,278,129.09 526,716,238.21
6. Closing balance of cash and cash equivalents 589,472,465.73 594,934,363.36
41
6. Cash Flow Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows associated with operating activities:
Cash received from sale of commodities and rendering of
service 1,287,943,005.80 1,307,793,947.42
Tax refunds received 21,145,032.94 22,852,333.55
Cash generated by other operating activities 4,003,051.69 5,921,206.26
Subtotal of cash generated by operating activities 1,313,091,090.43 1,336,567,487.23
Cash paid for goods and services 1,012,243,538.73 1,003,396,703.92
Cash paid to and for employees 160,430,190.27 157,612,290.63
Taxes paid 17,376,389.94 31,818,121.46
Cash used in other operating activities 45,213,130.50 41,036,165.12
Subtotal of cash used in operating activities 1,235,263,249.44 1,233,863,281.13
Net cash generated by operating activities 77,827,840.99 102,704,206.10
2. Cash flows associated with investing activities:
Cash received from retraction of investments 20,000,000.00
Cash received as investment income 6,952,750.09 364,000.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 83,115.01 22,440.00
Net cash received from disposal of subsidiaries or other
business units 0.00
Cash generated by other investing activities
Subtotal of cash generated by investing activities 7,035,865.10 20,386,440.00
Cash paid to acquire fixed assets, intangible assets and other
long-term assets 48,311,909.08 37,368,413.24
Cash paid for investment 0.00
Net cash paid to acquire subsidiaries and other business units 26,516,925.27
Cash used in other investing activities 0.00
Subtotal of cash used in investing activities 74,828,834.35 37,368,413.24
Net cash generated by investing activities -67,792,969.25 -16,981,973.24
3. Cash flows associated with financing activities:
Cash received from capital contributions 0.00 0.00
42
Cash received as borrowings 0.00 0.00
Cash received from issuance of bonds
Cash generated by other financing activities 0.00 35,761.62
Subtotal of cash generated by financing activities 0.00 35,761.62
Repayment of borrowings 0.00 0.00
Cash paid for interest expenses and distribution of dividends
or profit 16,841,229.78 12,911,609.50
Cash used in other financing activities 0.00 0.00
Sub-total of cash used in financing activities 16,841,229.78 12,911,609.50
Net cash generated by financing activities -16,841,229.78 -12,875,847.88
4. Effect of foreign exchange rate changes on cash and cash
equivalents 0.00 0.00
5. Net increase in cash and cash equivalents -6,806,358.04 72,846,384.98
Add: Opening balance of cash and cash equivalents 558,159,090.01 503,933,918.79
6. Closing balance of cash and cash equivalents 551,352,731.97 576,780,303.77
43
7. Consolidated Statement of Changes in Owners’ Equity
January-June 2017
Unit: RMB
January-June 2017
Equity attributable to owners of the Company
Total
Item Other equity instruments Less: Other Minority
Share Capital Special Surplus General risk Retained owners’
Preferenc Perpetual Treasury comprehens interests
capital Other reserve reserve reserve reserve earnings equity
e shares bonds shares ive income
1. Balance at the end of the 561,374,3 164,328,665 623,048,300 11,715,417. 311,880,248 651,365,935 18,767,226. 2,342,480,11
0.00 0.00 0.00 0.00 0.00
prior year 26.00 .43 .00 22 .88 .39 57 9.49
Add: Changes in
0.00
accounting policies
Correction of errors in
0.00
prior periods
Business mergers
0.00
under the same control
Other 0.00
2. Balance at the beginning 561,374,3 164,328,665 623,048,300 11,715,417. 311,880,248 651,365,935 18,767,226. 2,342,480,11
0.00 0.00 0.00 0.00 0.00
of the year 26.00 .43 .00 22 .88 .39 57 9.49
3. Increase/ decrease in the -41,635,125 22,837,928. -18,425,742.
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 371,453.74
period (“-” means decrease) .00 35 91
3.1 Total comprehensive -41,635,125 39,679,158. -1,584,513.1
371,453.74
income .00 13 3
3.2 Capital increased and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
3.2.1 Ordinary shares
0.00
increased by shareholders
3.2.2 Capital increased
by holders of other equity 0.00
instruments
44
3.2.3 Amounts of
share-based payments 0.00
charged to owners’ equity
3.2.4 Other 0.00
-16,841,229 -16,841,229.
3.3 Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
.78 78
3.3.1 Appropriation to
0.00 0.00 0.00
surplus reserve
3.3.2 Appropriation to
0.00
general risk provisions
3.3.3 Appropriation to -16,841,229 -16,841,229.
owners (or shareholders) .78 78
3.3.4 Other 0.00
3.4 Internal
carry-forward of owners’ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity
3.4.1 New increase of
capital (or share capital) 0.00
from capital reserve
3.4.2 New increase of
capital (or share capital) 0.00
from surplus reserve
3.4.3 Surplus reserve
0.00
for making up loss
3.4.4 Other 0.00
3.5 Special reserve 0.00 0.00 0.00
3.5.1 Withdrawn for
0.00 0.00
the period
3.5.2 Used in the
0.00 0.00
period
3.6 Other 0.00
561,374,3 164,328,665 581,413,175 11,715,417. 311,880,248 674,203,863 19,138,680. 2,324,054,37
4. Closing balance 0.00 0.00 0.00 0.00 0.00
26.00 .43 .00 22 .88 .74 31 6.58
45
January-June 2016
Unit: RMB
January-June 2016
Equity attributable to owners of the Company
Total
Item Other equity instruments Less: Other Minority
Share Capital Special Surplus General risk Retained owners’
Preferenc Perpetual Treasury comprehens interests
capital Other reserve reserve reserve reserve earnings equity
e shares bonds shares ive income
1. Balance at the end of the 561,374,3 164,328,665 353,519,675 10,069,746. 305,758,285 607,859,611 17,590,453. 2,020,500,7
0.00 0.00 0.00 0.00 0.00
prior year 26.00 .43 .00 98 .91 .69 47 64.48
Add: Changes in
0.00
accounting policies
Correction of errors in
0.00
prior periods
Business mergers
0.00
under the same control
Other 0.00
2. Balance at the beginning 561,374,3 164,328,665 353,519,675 10,069,746. 305,758,285 607,859,611 17,590,453. 2,020,500,7
0.00 0.00 0.00 0.00 0.00
of the year 26.00 .43 .00 98 .91 .69 47 64.48
3. Increase/ decrease in the 269,528,625 1,645,670.2 6,121,962.9 43,506,323. 1,176,773.1 321,979,355
0.00 0.00 0.00 0.00 0.00 0.00 0.00
period (“-” means decrease) .00 4 7 70 0 .01
3.1 Total comprehensive 269,528,625 62,539,896. 1,176,773.1 333,245,294
income .00 17 0 .27
3.2 Capital increased and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
3.2.1 Ordinary shares
0.00
increased by shareholders
3.2.2 Capital increased
by holders of other equity 0.00
instruments
3.2.3 Amounts of
share-based payments 0.00
charged to owners’ equity
3.2.4 Other 0.00
46
6,121,962.9 -19,033,572. -12,911,609
3.3 Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7 47 .50
3.3.1 Appropriation to 6,121,962.9 -6,121,962.9
0.00
surplus reserve 7 7
3.3.2 Appropriation to
0.00
general risk provisions
3.3.3 Appropriation to -12,911,609. -12,911,609
owners (or shareholders) 50 .50
3.3.4 Other
3.4 Internal
carry-forward of owners’ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity
3.4.1 New increase of
capital (or share capital) 0.00
from capital reserve
3.4.2 New increase of
capital (or share capital) 0.00
from surplus reserve
3.4.3 Surplus reserve
0.00
for making up loss
3.4.4 Other 0.00
1,645,670.2 1,645,670.2
3.5 Special reserve 0.00
4 4
3.5.1 Withdrawn for 4,416,865.6 4,416,865.6
the period 1 1
3.5.2 Used in the 2,771,195.3 2,771,195.3
period 7 7
3.6 Other 0.00
47
561,374,3 164,328,665 623,048,300 11,715,417. 311,880,248 651,365,935 18,767,226. 2,342,480,1
4. Closing balance 0.00 0.00 0.00 0.00 0.00
26.00 .43 .00 22 .88 .39 57 19.49
8. Statement of Changes in Owners’ Equity of the Company
January-June 2017
Unit: RMB
January-June 2017
Other equity instruments Other
Item Less: Treasury Surplus Retained Total owners’
Share capital Preference Perpetual Capital reserve comprehensive Special reserve
Other shares reserve earnings equity
shares bonds income
1. Balance at the end of the 561,374,326. 183,071,147.7 623,048,300.0 311,880,248.8 603,375,714 2,294,465,153
0.00 0.00 0.00 0.00 11,715,417.22
prior year 00 0 0 8 .13 .93
Add: Changes in
0.00
accounting policies
Correction of errors in
0.00
prior periods
Other 0.00
2. Balance at the beginning 561,374,326. 183,071,147.7 623,048,300.0 311,880,248.8 603,375,714 2,294,465,153
0.00 0.00 0.00 0.00 11,715,417.22
of the year 00 0 0 8 .13 .93
3. Increase/ decrease in the -6,239,175.3 -47,874,300.3
0.00 0.00 0.00 0.00 0.00 0.00 -41,635,125.00 0.00 0.00
period (“-” means decrease) 0 0
3.1 Total comprehensive 10,602,054. -31,033,070.5
-41,635,125.00
income 48 2
3.2 Capital increased and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
3.2.1 Ordinary shares
0.00
increased by shareholders
3.2.2 Capital increased
by holders of other equity 0.00
instruments
3.2.3 Amounts of 0.00
48
share-based payments
charged to owners’ equity
3.2.4 Other 0.00
-16,841,229. -16,841,229.7
3.3 Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
78 8
3.3.1 Appropriation to
0.00 0.00 0.00
surplus reserve
3.3.2 Appropriation to -16,841,229. -16,841,229.7
owners (or shareholders) 78 8
3.3.3 Other 0.00
3.4 Internal
carry-forward of owners’ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity
3.4.1 New increase of
capital (or share capital) 0.00
from capital reserve
3.4.2 New increase of
capital (or share capital) 0.00
from surplus reserve
3.4.3 Surplus reserve
0.00
for making up loss
3.4.4 Other 0.00
3.5 Special reserve 0.00 0.00
3.5.1 Withdrawn for
0.00 0.00
the period
3.5.2 Used in the
0.00 0.00
period
3.6 Other 0.00
49
561,374,326. 183,071,147.7 581,413,175.0 311,880,248.8 597,136,538 2,246,590,853
4. Closing balance 0.00 0.00 0.00 0.00 11,715,417.22
00 0 0 8 .83 .63
January-June 2016
Unit: RMB
January-June 2016
Other equity instruments Other
Item Less: Treasury Surplus Retained Total owners’
Share capital Preference Perpetual Capital reserve comprehensive Special reserve
Other shares reserve earnings equity
shares bonds income
1. Balance at the end of the 561,374,326. 183,071,147.7 353,519,675.0 305,758,285.9 561,189,656 1,974,982,838.
0.00 0.00 0.00 0.00 10,069,746.98
prior year 00 0 0 1 .87 46
Add: Changes in
0.00
accounting policies
Correction of errors in
0.00
prior periods
Other 0.00
2. Balance at the beginning 561,374,326. 183,071,147.7 353,519,675.0 305,758,285.9 561,189,656 1,974,982,838.
0.00 0.00 0.00 0.00 10,069,746.98
of the year 00 0 0 1 .87 46
3. Increase/ decrease in the 269,528,625.0 42,186,057. 319,482,315.4
0.00 0.00 0.00 0.00 0.00 0.00 1,645,670.24 6,121,962.97
period (“-” means decrease) 0 26 7
3.1 Total comprehensive 269,528,625.0 61,219,629. 330,748,254.7
income 0 73 3
3.2 Capital increased and
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
reduced by owners
3.2.1 Ordinary shares
0.00
increased by shareholders
3.2.2 Capital increased
by holders of other equity 0.00
instruments
3.2.3 Amounts of
share-based payments 0.00
charged to owners’ equity
50
3.2.4 Other 0.00
-19,033,572. -12,911,609.5
3.3 Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6,121,962.97
47 0
3.3.1 Appropriation to -6,121,962.9
6,121,962.97 0.00
surplus reserve 7
3.3.2 Appropriation to -12,911,609. -12,911,609.5
owners (or shareholders) 50 0
3.3.3 Other 0.00
3.4 Internal
carry-forward of owners’ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity
3.4.1 New increase of
capital (or share capital) 0.00
from capital reserve
3.4.2 New increase of
capital (or share capital) 0.00
from surplus reserve
3.4.3 Surplus reserve
0.00
for making up loss
3.4.4 Other 0.00
3.5 Special reserve 1,645,670.24 1,645,670.24
3.5.1 Withdrawn for
4,416,865.61 4,416,865.61
the period
3.5.2 Used in the
2,771,195.37 2,771,195.37
period
3.6 Other 0.00
51
561,374,326. 183,071,147.7 623,048,300.0 311,880,248.8 603,375,714 2,294,465,153.
4. Closing balance 0.00 0.00 0.00 0.00 11,715,417.22
00 0 0 8 .13 93
52
Changchai Company, Limited Semi-Annual Report 2017
III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which is a
company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the State
Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 January 1993 by
way of public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF [1993]
No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through
document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 March 1994 to 30 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 July 1994 at Shenzhen Stock Exchange with “Su Changchai A” for short of
stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH [1996]
No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ [1996] No.
24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued 100
million B shares to qualified investors on 27 August 1996 to 30 August 1996, getting listed on 13 September
1996.
On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examine and
approve share merger reform plan, and performed the share merger reform on 19 June 2006.
As examined and approved at the 2009 2nd Extraordinary Shareholders’ General Meeting in September 2009,
based on the total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profit
distribution plan, i.e. to distribute 5 bonus shares and cash of RMB 0.8 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
December 2014, 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. The Company had registered the change
with the administrative authorities for industry and commerce, and obtained the renewed business license as legal
person with No. 320400000004012.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its
head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine,
diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures,
assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production
and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai
Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest
models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets and
shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the reporting
period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Board of
Supervisors, Corporate office, Financial Department, Political Department, Investment and Development
Department, Enterprise Management Department, Human Recourses Department, Production Department,
Procurement Department, Sales Company, Market Department, Chief Engineer Office, Technology Center, QA
Department, Foundry Branch, Machine Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine
Branch and Overseas Business Department in the Company.
53
Changchai Company, Limited Semi-Annual Report 2017
The financial report has been approved to be issued by the Board of Directors on 25 August 2017.
The consolidation scope for the Reporting Period includes the Company (as the parent company) and five
subsidiaries, one more subsidiary than the last reporting period. To be specific, Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd. has become a wholly-owned subsidiary of the Company and has been consolidated
since January 20, 2017. For details about the consolidation scope and the changes, please refer to “Changes in
Consolidation Scope and in Equity Interests in Other Entities” in the “Notes to Financial Statements” herein.
IV. Basis for preparation of the financial report
1. Basis for preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
the Group prepared financial statements in accordance with 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 Note to 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”. 54 Changchai Company, Limited Semi-Annual Report 2017 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Group are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present the Company’s and the Group’s financial positions, business results and cash flows and other relevant information. 2. Fiscal period The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from Jan. 1 to Dec. 31 and as the metaphase included monthly, quarterly and semi-yearly periods. 3. Operating cycle A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for the liquidity of its assets and liabilities. 4. Currency used in bookkeeping Renminbi is functional currency of the Company. 5. Accounting methods for business combinations under the same control and business combinations not under the same control (1) Business combinations under the same control: A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary. For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be recorded into the profits and losses at the current period. The expenses such as the handling charges and 55 Changchai Company, Limited Semi-Annual Report 2017 commission etc, premium income of deducting the equity securities, and as for the premium income was insufficient to dilute, the retained earnings shall be written down. Owning to the reasons such as the additional investment, for the equity investment held before acquiring the control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and the changes of other net assets since the date of the earlier one between the date when acquiring the original equity right and the date when the combine parties and combined ones were under the same control to the combination date, should be respectively written down and compared with the beginning balance of retained earnings or the current gains and losses during the statement period. (2) Business combinations not under the same control A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination. The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business reputation. The direct relevant expenses occurred from the enterprise combination should be included in the current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The difference between the fair value of the assets paid out by the Company and its book value should be included in the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the acquiree. For the business combinations not under the same control realized through step by step multiple transaction, as for the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed by the acquiree which involved with the other comprehensive income and the other owners’ equities changes except for the net gains and losses, other comprehensive income and the profits distribution and other related comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in the acquiree before the acquiring date should be transferred into the current investment income on the acquiring date, except for the other comprehensive income occurred from the re-measurement of the net profits of the defined benefit plans or the changes of the net assets of the investees. 6. Methods for preparing consolidated financial statements The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual control right into the consolidated financial statement. The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the 56 Changchai Company, Limited Semi-Annual Report 2017 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。 57 Changchai Company, Limited Semi-Annual Report 2017 A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the following items related to the interests share among the joint operations and executes accounting treatment according to the regulations of the relevant ASBE: (1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets according to the Group’s stake in the joint operation; (2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities according to the Group’s stake in the joint operation; (3) Recognizes the income from sale of the Group’s share in the output of the joint operation (4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it (5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according to the Group’s stake in it. 8. Recognition standard for cash and cash equivalents In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible into known amount of cash and whose risks in change of value are minimal. 9. Foreign currency businesses and translation of foreign currency financial statements (1) Foreign currency business Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges shall be converted according to the exchange rates adopted in the actual transactions. On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be converted into the recoding currency according to the middle price of the market exchange rates disclosed by the People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded into the establishment expense; others shall be recorded into the financial expenses for the current period. On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted according to the middle price of the market exchange disclosed by the People’s Bank of China on the date of the transaction, with no changes in the original recording-currency amount; while the foreign-currency non-monetary items measured by fair value shall be converted according to the middle price of the market exchange disclosed by the People’s Bank of China on the date when the fair value is recognized, and the exchange gain/loss caused thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current period. (2) Translation of foreign currency 58 Changchai Company, Limited Semi-Annual Report 2017 The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the revenues and expenses items among the balance sheet of the foreign operation shall be translated at the approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign currency statement should be listed in the other comprehensive income among the owners’ equities. 10. Financial instruments (1) Category of financial instruments The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale financial assets, accounts receivable and held-to-maturity investment according to the investment purpose and the economy nature. The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by fair value with the changes included in the current gains and losses and the other financial liabilities measured by amortized cost according to the economy nature. (2) Recognition basis and measurement methods of financial instruments The trading financial assets should be measured by fair value with the changes of fair value included in the current gains and losses; the available-for-sale financial assets should be measured by fair value with the changes of fair value included in the owners’ equities; and the accounts receivable and the held-to-maturity investment should be measured by amortized cost. (3) Recognition basis and measurement methods of financial instruments transformation The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and the transformation of the financial assets could be whole of the financial assets or a part of it, which including two methods: The enterprise transfers the right to another party for receiving the cash flow of the financial asset; The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient. Where the Company has transferred a part or nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset and the difference between the consideration received and the book value of the transferred financial assets should be recognized as gains and losses and at the same time transfers the accumulative gains or losses from the recognized financial assets among the original owners’ equities in the gains and losses; if it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall continue to recognize the whole or part of the financial assets and the consideration received be recognized as financial liabilities. Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. (4) De-recognition conditions of financial liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. (5) Recognition methods of the fair value of main financial assets and financial liabilities 59 Changchai Company, Limited Semi-Annual Report 2017 As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists active market, should adopt the current offering price in the active market, and as for the financial assets plans to be purchased by the Company or the financial liabilities undertook, should adopt the current offering in the active market, and if there is no current offering price or asking price, should adopt the market quotation of the recent transactions or the adjusted market quotation of the recent transactions, except for there is definite evidence indicate the market quotation is not the fair value. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature etc. (6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding accounts receivable) The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than those measured at their fair values and of which the variation is recorded into the profits and losses of the current period. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. For the financial assets with significant single amount, if there is objective evidence indicates the occurred impairment, should recognize the impairment losses and should include which in the current gains and losses. As for the financial assets with insignificant single amount but not occur impairment, the Company should execute the impairment test by credit groups according to the credit degree of the customers and the actual situation of the happen of the bad debts over the years for recognizing the impairment losses. The expression “objective evidence proving that the financial asset has been impaired” refers to the actually incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash flow of the said financial asset that can be reliably measured by the enterprise. The objective evidences that can prove the impairment of a financial asset shall include: A serious financial difficulty occurs to the issuer or debtor; The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.; The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal factors, etc.; The debtor will probably become bankrupt or carry out other financial reorganizations; The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of the issuer; It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets has decreased or not. But after making an overall appraisal according to the public data available, it is found that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was initially recognized and such decrease can be measured, for example, the ability of the debtor of the said combination of financial assets worsens gradually, the unemployment rate of the country or region where the debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the industrial sector concerned is in slump, etc.; Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its investment; 60 Changchai Company, Limited Semi-Annual Report 2017 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 significant single amounts refers to the accounts receivable of the receivable with individual and significant single amount more than RMB1 million (RMB1 million include) amount (including accounts receivable and other accounts receivable) The Company makes an independent impairment test on the accounts receivable with significant single amount, and provision for bad debts Withdrawal method of the bad debt shall withdrawn on the basis of the balance between the current values provision of the accounts receivable with of the predicted future cash flow lower than book value. Upon significant single amounts independent impairment test, the accounts receivable with significant single amounts has not been impaired, it shall be withdrawn bad debt provision based on ending balance by adopting aging analysis method. (2) Account receivable withdrawal bad debt provision by the credit risk portfolio Name of the group Method The age of the accounts receivable as the credit risk portfolio Aging analysis In the group, adopting aging analysis withdraws bad debt provision: √ Applicable □ Not applicable 61 Changchai Company, Limited Semi-Annual Report 2017 Withdrawal proportion for accounts Withdrawal proportion for other Age receivable accounts receivable Within 1 year (including 1 year) 2.00% 2.00% 1-2 years 5.00% 5.00% 2-3 years 15.00% 15.00% 3-4 years 30.00% 30.00% 4-5 years 60.00% 60.00% Over 5 years 100.00% 100.00% In the groups, adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Not applicable In the groups, adopting other methods to withdraw bad debt provision: □ Applicable √ Not applicable (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually Recognition criteria of accounts receivable with individual but Reason of individually withdrawing insignificant amount: insignificant single amounts refers to the accounts bad debt provision receivable of the single amount lower than RMB1 million (RMB1 million include) (including accounts receivable and other accounts receivable). As for an account receivable with an insignificant single amount and which can not show its risk feature when withdrawing a bad-bet provision for it on the group basis, the bad-debt provision for the account receivable shall be withdrawn based on the difference of the expected present value Withdrawal method for bad debt of the future cash flows of the account receivable that less than its provision 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. 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. 62 Changchai Company, Limited Semi-Annual Report 2017 (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 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 It 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 63 Changchai Company, Limited Semi-Annual Report 2017 the policies with the other parties. (2) Recognition for initial investment cost The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways in accordance with different methods of acquisition: ① As for those forms under the same control of the enterprise combine, if the combine party takes the cash payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination consideration, should take the shares of the book value by the ultimate control party in the consolidate financial statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The difference between the initial investment cost and the book value of the paid combination consideration or the total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant expense occurred when executing the enterprise merger into the current gains and losses; while the handling charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of the shareholders’ equities or the liabilities. ② As for long-term equity investment acquired through the merger of enterprises not under the same control, its initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability) undertaken on the combining date shall be measured at the fair value without considering the amount of minority interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree into the consolidated income statement directly. The agent expense and other relevant management expenses such as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the current gains and losses when occur; while the handling charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of the shareholders’ equities or the liabilities. ③ Long-term equity investment obtained by other means The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value. As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment received; where it is not commercial in nature, the book value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment received. The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at fair value of long-term equity investment. (3) Subsequent measurement and recognition of profits and losses ① An investment in the subsidiary company shall be measured by employing the cost method Where the Company hold, and is able to do equity investment with control over an invested entity, the invested 64 Changchai Company, Limited Semi-Annual Report 2017 entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%, or, while the Company holds the shares of an entity below 50%, but has a real control to the said entity, then the said entity shall be its subsidiary company. ② An investment in the joint enterprise or associated enterprise shall be measured by employing the equity method Where the Company hold, and is able to do equity investment with joint control with other parties over an invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have equity investment with significant influences on an invested entity, the invested entity shall be its associated entity. After the Company acquired the long-term equity investment, should respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the owners’ equity . The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting polices adopted by the investees is not accord with that of the Group, should be adjusted according to the accounting policies of the Group and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income. For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized. The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of all, to write down the book value of the long-term equity investment. Secondly, if the book value of the long-term equity investment is insufficient for written down, should be continued to recognized the investment losses limited to the book value of other long-term equity which forms of the net investment of the investees and to written down the book value of the long-term accounts receivable etc. Lastly, through the above handling, for those should still undertake the additional obligations according to the investment contracts or the agreements, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits. In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if 65 Changchai Company, Limited Semi-Annual Report 2017 the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity. For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses. For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses according to the proportion. For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. For those the Company lost the control of the investees by disposing part of the equity investment as well as the remained equity after disposal could execute joint control or significant influences on the investees, should change to measure by equity method when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the investees, should change the accounting disposal according to the relevant regulations of the recognition and measurement standards of financial instrument, and its difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or the recognition and measurement standards of financial instrument before the Group acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of financial instrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount. For those the Company lost the control of the investees by disposing part of the equity investment, the disposed remained equity should change to calculate according to the recognition and measurement standards of financial instrument, and difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized from the original equity investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of 66 Changchai Company, Limited Semi-Annual Report 2017 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 methods Expected net Annual Category of fixed assets Method Useful life salvage value deprecation Houses and buildings Average method of useful life 20-40 2.50-5 Machine equipment Average method of useful life 6-15 6.67-16.67 Transportation equipment Average method of useful life 5-10 10-20 Electronic equipment Average method of useful life Other equipment Average method of useful life 5-10 10-20 67 Changchai Company, Limited Semi-Annual Report 2017 (3) Recognition basis, pricing and depreciation method of fixed assets by finance lease The Company recognizes those meet with the following one or certain standards as the fixed assets by finance lease: ① The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred to the Company; ② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing right, so the Company could execute the choosing right reasonably on the lease starting date; ③ Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful life of the lease fixed assets; ④ The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets on the lease starting date; ⑤ The nature of the lease assets is special that only the Company could use it if not execute large transformation. The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing expenses should be amortized by adopting the actual interest rate during the period of the lease term. The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life 17. Construction in process (1) Valuation of the progress in construction Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct materials, direct wages and direct construction fees; construction contract shall be measured at project price payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation, trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses, which should be capitalized. (2) Standardization on construction in process transferred into fixed assets and time point The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward fixed assets on schedule. The one that hasn’t audit the final accounting shall recognize the cost and make depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its historical cost but not adjust the depreciation that has been made after auditing the final accounting. 68 Changchai Company, Limited Semi-Annual Report 2017 18. Borrowing costs (1) Recognition principle of capitalization of borrowing costs The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction of investment real estates and inventories over one year (including one year) shall be capitalized, and record into relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized unless they simultaneously meet the following three requirements: (1) The asset disbursements have already incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started. (2) The period of capitalization of borrowing costs The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs occurred later shall be included into the financial expense directly at the current period. (3) Measurement method of capitalization amount of borrowing costs As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment. Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. 19. Intangible assets (1) Pricing method, using life and impairment test of 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. 69 Changchai Company, Limited Semi-Annual Report 2017 For the intangible assets acquires from the exchange of the non-currency assets, if own the commercial nature, should be recorded according to the fair value of the swap-out assets; for those not own the commercial nature, should be recorded according to the book value of the swap-out assets. For the intangible assets acquires from the debts reorganization should be recognized by the fair value. 2) Amortization method and term of intangible assets As for the intangible assets with limited service life, which are amortized by straight-line method when it is available for use within the service period, shall be recorded into the current profits and losses. The Company shall, at least at the end of each year, check the service life and the amortization method of intangible assets with limited service life. When the service life and the amortization method of intangible assets are different from those before, the years and method of the amortization shall be changed. Intangible assets with uncertain service life may not be amortized. However, the Company shall check the service life of intangible assets with uncertain service life during each accounting period. Where there are evidences to prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized according to the above method mentioned. The rights to use land of the Company shall be amortized according to the rest service life. (2) Accounting polices of internal R & D expenses The internal research and development projects of an enterprise shall be classified into research phase and development phase: the term “research” refers to the creative and planned investigation to acquire and understand new scientific or technological knowledge; the term “development” refers to the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. The Company collects the expenses of the corresponding phases according to the above standard of classifying the research phase and the development phase. The research expenditures for its internal research and development projects of an enterprise shall be recorded into the profit or loss for the current period. The development expenditures for its internal research and development projects of an enterprise may be capitalized when they satisfy the following conditions simultaneously: it is feasible technically to finish intangible assets for use or sale; it is intended to finish and use or sell the intangible assets; the usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; it is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; the development expenditures of the intangible assets can be reliably measured. 20. Impairment of long-term assets For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Group should judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no matter whether it exists. If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair 70 Changchai Company, Limited Semi-Annual Report 2017 value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the minimum asset combination producing cash flow independently. In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination, then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset group combination except business reputation. After the asset impairment loss is determined, recoverable value amounts would not be returned in future. 21. Amortization method of long-term deferred expenses Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure, and amortized averagely within benefit period. In case of no benefit in the future accounting period, the amortized value of such project that fails to be amortized shall be transferred into the profits and losses of the current period. 22. Payroll (1) Accounting treatment of short-term compensation Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value. (2) Accounting treatment of the welfare after demission The Company classifies the welfare plans after demission into defined contribution plans and defined benefit plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the Company and the employees, or the regulations or methods formulated by the Company for providing the welfare after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission that the Company no more undertake the further payment obligations after the payment of the fixed expenses for the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined contribution plans. Defined contribution plans 71 Changchai Company, Limited Semi-Annual Report 2017 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. (4) Accounting treatment of the welfare of other long-term staffs 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. 72 Changchai Company, Limited Semi-Annual Report 2017 (2) Recognition of revenue from providing labor services: When the total revenue and costs from providing labor can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the schedule of completion under the transaction can be measured in a reliable way, the revenue from providing labor shall be recognized. If the Company can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the date of the balance sheet, otherwise the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to be compensated. The Company recognized the completion process of the transaction concerning the labor services according to the proportion of the occurred cost of the estimated total cost. The total amount of the revenue from providing services should be recognized according to the contract price received or receivable from the accepting of the labor services or the agreement price except for those unfair prices. (3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits are likely to flow into the enterprises and the amount of revenues can be measured in a reliable way, the revenue from abalienating the right to use assets shall be recognized. The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual interest rate；the amount of royalty revenue should be measured and confirmed in accordance with the period and method of charging as stipulated in the relevant contract or agreement；as for the rental revenue: the amount of the rental revenue from the operation lease should be recognized according to the straight-line method during each period of the lease term or accrued into the current gains and losses if rental actual occurred. 25. Government subsidies (1) Judgment basis and accounting treatment of government subsidies related to assets 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. 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. 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. (2) Judgment basis and accounting treatment of government subsidies related to profits 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. 73 Changchai Company, Limited Semi-Annual Report 2017 26. Deferred income tax assets and liabilities (1) Basis of recognizing the deferred income tax assets According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax assets shall be measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence showing that sufficient taxable profit will be available against which the deductible temporary difference can be utilized, the deferred tax asset unrecognized in prior period shall be recognized. The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that sufficient taxable profit will not be available against which the deductible temporary difference can be utilized, the Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later when it’s probable that sufficient taxable profit will be available (2) Basis of recognizing the deferred income tax liabilities According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax liabilities shall be measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. 27. Lease (1) Accounting treatment of operating lease Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they are incurred. Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the lease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct expenses occur should be directly included in the current gains and losses except for those with larger amount and be capitalized as well as be included in the gains and losses by stages. Contingent rents shall be charged as expenses in the periods in which they are incurred. (2) Accounting treatments of financial lease When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges and the occurred initial direct expenses, should be recorded in the lease assets value. During each lease period, should recognize the current financing expenses by adopting the actual interest rate. When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual 74 Changchai Company, Limited Semi-Annual Report 2017 value and the sum of their present values shall be recognized as unrealized financing income. During each lease period, should recognize the current financing revenues adopting the actual interest rate. 28. Other significant accounting policies and estimates (1) Operation termination Operation termination refers to the compose part that meet with one of the following conditions which had been disposed by the Group or be classified to held-to-sold as well as could be individually distinguished in operating and compiling the financial statement: ① The compose part represents an individual main business or a main operation area; ② The compose part is a part intends to dispose and plan an individual main business or a main operation area; ③ The compose part is a subsidiary which be acquired only for resold. (2) Hedging accounting The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item. The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise for hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative financial asset or non-derivative financial liability may be used as a hedging instrument. The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value or cash flow and are designated as the hedged objectives. The hedging should be executed by the hedging accounting methods when satisfying the following conditions at the same time: ① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the relationship between the hedging instrument and the hedged item) and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. ② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by enterprise at the very beginning. ③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses. ④ The effectiveness of hedging can be reliably measured. ⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified. 29. Changes in main accounting policies and estimates (1) Change of accounting policies √Applicable□ Inapplicable The reason of change of accounting policies Procedures for examination and approval Remarks of projects 75 Changchai Company, Limited Semi-Annual Report 2017 According to the Notice (CK [2017] No. 15) Considered and approved at 6th Meeting Regarding Printing and Issuing Standard No. 16 for Business Supervisory Board of the Company. Enterprises—Governmental Subsidies> issued by the Ministry of Finance on May 10, 2017, the new standard has applied since June 12, 2017. As such, the Company accounted its governmental subsidies existing on January 1, 2017 using the prospective application method, and adjusted the governmental subsidies arising during the period from January 1, 2017 to the application day of the new standard. (2) Change of main accounting estimates □ Applicable √ Inapplicable 30. Other 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 76 Changchai Company, Limited Semi-Annual Report 2017 realizable value as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for falling price of inventories on the lower one between costs and net realizable value. Evaluating the falling price of inventories needed the management level gain the valid evidence and take full consideration of the purpose of inventories, influence of events after balance sheet date and other factors, and then made relevant judgments and estimates. The actual amount and the difference of previous estimates would affect the book value of inventories and the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being changed. (3) Held-to-maturity investment The Company classifies the non-derivative financial assets which meet with conditions with fixed or confirmable repayment amount and fixed maturity date as well as the Company owns definite intention and ability to hold until mature as the held-to-maturity investment. To execute the classification needs large judgment. In the process of executing the judgment, the Company would assess the intention and ability of the investment which hold until the due date. Except for the particular situation (for example, selling the investment with insignificant amount when approaching the due date), if the Company fails to hold the investment until the due date, should re-classify the investment to the available-for-sale financial assets and would no more be classified as the held-to-maturity investment in the current fiscal year as well as the afterward two complete fiscal years. If there exits such situation, that would probably cause significant influences on the value of the relevant financial assets presented on the financial statement and may influence the risks management strategies of the financial instruments of the Company. (4) Held-to-maturity investment impairment The Company confirms whether the held-to-maturity investment has impairment depends on the judgment from the management layer to a large extent. The objective evidences of the impairments including the issuers which occur serious financial difficulties that lead the financial assets could not continue to trade in the active market and to execute the contracts regulations (for example, to return the interests or the principal violates a treaty) etc. In the process of executing judgment, the Company needs to evaluate the influences of the objective evidences of the impairment on the estimated future cash flow. (5) The impairment of financial assets available for sale The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment and assumption of the management team, so as to decide whether recognized the impairment losses in the income statement. During the process of making the judgment and assumption, the Group needed to appraise the balance of the cost of the investment exceeding its fair value and the continuous period, the financial status and business forecast in a short period, including the industrial situation, technical reform, credit level, default rate and risk of counterparty. (6) Provision for impairment of non-financial non-current assets The Group made a judgment on the non-current assets other than financial assets whether they had any indication of impairment on the balance sheet date. For the intangible assets without finite service life, other than the annual impairment test, they should be subject to the impairment test when there was any indication of impairment. For other non-current non-financial assets, which should be subjected to impairment test when there was indication of impairment indicated that the book value can’t be recoverable. When the book value of the assets or assets portfolio was more than the recoverable amount, which was the higher one between the net amount of fair value after deducting the disposal expenses and the discounted amount of the estimated future cash flow, it means impairment incurred. The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale agreement 77 Changchai Company, Limited Semi-Annual Report 2017 for similar assets in the fair transaction minus the increased costs directly attributable to the assets disposal. When estimated the discounted value of future cash flow, the Group needed to make important judgment on the output, selling price, relevant costs and the discount rate for calculating the discounted amount, etc. When estimated the recoverable amount, the Group would adopt all the available documents, including the prediction for relevant output, selling price and relevant operating costs arising from reasonable and supportive assumptions. The Group made the impairment test on goodwill at least one time per year, which required to predict the discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which, the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property discounted rate to decide the discounted amount of future cash flow. (7) Depreciation and amortization For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and amortization by adopting the straight-line method during the service life after full consideration of the salvage value. The Group checked the service life periodically so as to decide the amount of depreciation and amortization at each reporting period. The service life was fixed by the Group in accordance with the previous experience of the similar assets and the expected technical update. If there was any significant change on the previous estimates, the depreciation and amortization expenses should be adjusted. (8) Income tax During the routine operating activities, there were some uncertainty in the ultimate tax treatment and calculation for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures only after the approval of taxation authorities. If there were any differences between the ultimate result of recognition for these taxation maters and their initial estimates, the differences would affect the current income tax and deferred income tax at the period of ultimate recognition. VI. Taxation 1. Main taxes and tax rate Type of tax Taxation basis Tax rates VAT Payable to sales revenue 13%, 17% Urban maintenance and construction Tax paid in accordance with the tax Taxable turnover amount tax regulations of tax units location Corporate income tax Taxable income 25% or 15% Education surcharge Taxable turnover amount 5% 2. Tax preference In 2009, 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 January 2011 to 31 December 2020 in accordance with the Notice of the Ministry of Finance, the General Administration of Customs of PRC and the National Administration of Taxation about the Preferential Tax Policies for the Western Development. 78 Changchai Company, Limited Semi-Annual Report 2017 VII. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Item Closing balance Opening balance Cash on hand 136,578.34 314,905.29 Bank deposits 589,335,887.39 582,963,123.80 Other monetary funds 119,219,787.00 87,425,772.93 Total 708,692,252.73 670,703,802.02 At the period-end, the restricted monetary fund was RMB 119,219,787.00 in total, of which: the bank acceptance deposit was RMB 119,219,787.00. 2. Notes receivable (1) Notes receivable listed by category Unit: RMB Item Closing balance Opening balance Bank acceptance bill 261,056,165.98 501,070,279.01 Total 261,056,165.98 501,070,279.01 (2) Notes receivable pledged at the period-end Naught (3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end Unit: RMB Amount of recognition termination Amount of not terminated recognition Item at the period-end at the period-end Bank acceptance bill 210,469,025.51 Total 210,469,025.51 (4) There was no any notes be transferred to accounts receivable owning to the drawer failed to performance of the Company at the period-end (5) The amount of the period-end decreased of 47.9% over that of the period-begin, which was mainly due to the payment in current period for non balance bill in last period-end or collection with acceptance 79 Changchai Company, Limited Semi-Annual Report 2017 3. Accounts receivable (1) Accounts receivable disclosed by category Unit: RMB Closing balance Opening balance Bad debt Book balance Book balance Bad debt provision provision Category Withdra Book Withdraw Book Proporti wal value Amou Proporti al value Amount Amount Amount on proporti nt on proportio on n Accounts receivable with 27,508 significant single 26,163, 25,324, 838,639 25,391,0 2,117,539. 2.64% 96.79% ,638.8 4.62% 92.30% amount for which 467.65 828.04 .61 99.21 61 2 bad debt provision separately accrued Accounts receivable withdrawn bad 567,67 964,407 219,695 744,712 210,511, 357,162,28 debt provision 97.33% 22.78% 3,711. 95.33% 37.08% ,900.22 ,425.53 ,474.69 429.64 2.08 according to credit 72 risks characteristics Accounts receivable with insignificant 276,298 276,298 100.00 276,29 276,298. single amount for 0.03% 0.05% 100.00% .29 .29 % 8.29 29 which bad debt provision separately accrued Total 595,45 990,847 100.00 245,296 745,551 100.00 236,178, 359,279,82 24.76% 8,648. 39.66% ,666.16 % ,551.86 ,114.30 % 827.14 1.69 83 Accounts receivable with significant single amount for which bad debt provision separately accrued at period end: √ Applicable □ Not applicable Unit: RMB Closing balance Accounts receivable Withdrawal (classified by units) Book balance Bad debt provision Withdrawal Reason Proportion 80 Changchai Company, Limited Semi-Annual Report 2017 Customer 1 1,902,326.58 1,902,326.58 100.00% Difficult to recover Customer 2 6,215,662.64 6,202,854.45 99.79% Difficult to recover Estimated Customer 3 3,040,439.17 2,214,607.75 72.84% irrecoverable Customer 4 3,279,100.00 3,279,100.00 100.00% Difficult to recover Customer 5 2,133,377.01 2,133,377.01 100.00% Difficult to recover Customer 6 5,359,381.00 5,359,381.00 100.00% Difficult to recover Customer 7 2,584,805.83 2,584,805.83 100.00% Difficult to recover Customer 8 1,648,375.42 1,648,375.42 100.00% Difficult to recover Total 26,163,467.65 25,324,828.04 -- -- In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Not applicable Unit: RMB Closing balance Aging Accounts receivable Bad debt provision Withdrawal Proportion Sub-item within 1 year Within 1 year 752,385,108.62 15,047,702.17 2.00% Subtotal of within 1 year 752,385,108.62 15,047,702.17 2.00% 1 to 2 years 3,248,002.36 162,400.11 5.00% 2 to 3 years 1,995,444.32 299,316.65 15.00% 3 to 4 years 602,482.11 180,744.63 30.00% 4 to 5 years 5,429,002.10 3,257,401.26 60.00% Over 5 years 200,747,860.71 200,747,860.71 100.00% Total 964,407,900.22 219,695,425.53 Notes of confirming the basis of the groups: In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Not applicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: Not applicable (2) Accounts receivable withdraw, reversed or collected during the Reporting Period The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 9,183,995.89; the amount of the reversed or collected part during the Reporting Period was of RMB 66,271.17. (3) Top 5 of the closing balance of the accounts receivable collected according to the arrears party At period end, the total amount of top 5 of the closing balance of the accounts receivable collected according to 81 Changchai Company, Limited Semi-Annual Report 2017 the arrears party was RMB 449,507,585.4, 45.37% of the closing balance of the accounts receivable and the relevant closing balance of bad debt provision was RMB 22,939,768.44. (4) The amount of the period-end increased of 107.51% over that of the period-begin, which was mainly because the Company sells on credit moderately to expand the market space. At the same time, the proportion of multi-cylinder engine among promoting products increased. Customers of multi-cylinder engine are mainly from units of supporting main engine, so the payment days are comparatively long. 4. Prepayment (1) List by aging analysis: Unit: RMB Aging Closing balance Opening balance Amount Proportion Amount Proportion Within 1 year 27,901,734.49 94.82% 13,981,887.79 90.30% 1 to 2 years 621,763.47 2.11% 515,122.72 3.33% 2 to 3 years 12,785.91 0.04% 7,418.00 0.05% Over 3 years 890,455.42 3.03% 979,046.92 6.32% Total 29,426,739.29 -- 15,483,475.43 -- (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target At the period-end, the total amount of top 5 of the closing balance of the prepayment collected according to the prepayment target was RMB 26,018,229.27, 88.42% of the closing balance of the accounts receivable. (3) The amount of the period-end increased of 90.05% over that of the period-begin, which was mainly due to the increased payment in advance for some materials customers to meet the market demand. 5. Other accounts receivable (1) Other accounts receivable disclosed by category Unit: RMB Closing balance Opening balance Bad debt Book balance Book balance Bad debt provision provision Category Withdra Book Withdraw Book Proporti wal value Amou Proporti al value Amount Amount Amount on proporti nt on proportio on n 82 Changchai Company, Limited Semi-Annual Report 2017 Other accounts receivable with significant single 2,853,1 2,853,1 100.00 2,853, 2,853,18 6.21% 7.82% 100.00% amount for which 88.02 88.02 % 188.02 8.02 bad debt provision separately accrued Other accounts receivable withdrawn bad 30,950 40,435, 26,788, 13,647, 26,785,0 4,165,674. debt provision 87.96% 66.25% ,737.2 84.83% 86.54% 733.09 058.82 674.27 62.60 62 according to credit 2 risks characteristics Other accounts receivable with insignificant 2,679,8 2,679,8 100.00 2,679, 2,679,80 single amount for 5.83% 7.35% 100.00% 01.13 01.13 % 801.13 1.13 which bad debt provision separately accrued 36,483 45,968, 100.00 32,321, 100.00 13,647, 100.00 32,318,0 4,165,674. Total ,726.3 88.58% 722.24 % 047.97 % 674.27 % 51.75 62 7 Other accounts receivable with significant single amount for which bad debt provision separately accrued: √ Applicable □ Not applicable Unit: RMB Closing balance Other account receivable Withdrawal Withdrawal (classified by units) Other accounts receivable Bad provision proportion reason Changchai Group Import & Difficult to 2,853,188.02 2,853,188.02 100.00% Export 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: √ Applicable □ Not applicable Unit: RMB Closing balance Aging Other account receivable Bad provision Withdrawal proportion Sub-item within 1 year Within 1 year 13,275,459.23 265,509.18 2.00% 83 Changchai Company, Limited Semi-Annual Report 2017 Subtotal of within 1 year 13,275,459.23 265,509.18 2.00% 1-2 years 153,096.28 7,654.81 5.00% 2-3 years 73,669.19 11,050.37 15.00% 3-4 years 594,689.02 178,406.70 30.00% 4-5 years 33,454.01 20,072.40 60.00% Over 5 years 26,305,365.36 26,305,365.36 100.00% Total 40,435,733.09 26,788,058.82 In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Not applicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Not applicable (2) Accounts receivable withdraw, reversed or collected during the Reporting Period The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 2,996.22; the amount of the reversed or collected part during the Reporting Period was of RMB 0.00. (3) List of the other accounts receivable actual written-off during the Reporting Period Naught (4) Other accounts receivable classified by the nature of accounts Unit: RMB Nature Closing book balance Opening book balance Margin and cash pledge 4,200.00 4,200.00 Unit current amount 18,255,359.36 19,305,341.92 Employee loan 2,093,156.28 1,819,817.62 Other 25,616,006.60 15,354,366.83 Total 45,968,722.24 36,483,726.37 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Proportion of the total Closing Closing Name of units Nature Aging year end balance of the balance of bad balance accounts receivable debt provision Xuzhou East China Casting Current 5,000,000.00 Within 1 year 10.88% 100,000.00 General Factory 84 Changchai Company, Limited Semi-Annual Report 2017 Changzhou Changjiang Current 5,000,000.00 Within 1 year 10.88% 100,000.00 Casting Materials Co., Ltd. Changzhou Compressor Co., Current 2,940,000.00 Over 5 years 6.40% 2,940,000.00 Ltd. Import and Export Company Current 2,853,188.02 Over 5 years 6.21% 2,853,188.02 of Changchai Group Changzhou New District Current 1,626,483.25 Over 5 years 3.54% 1,626,483.25 Accounting Center Total -- 17,419,671.27 -- 37.89% 7,619,671.27 (6) The amount of the period-end increased of 227.62% over that of the period-begin, which was mainly due to the temporary borrowings of subsidiary Housheng Investment from Xuzhou East China Casting General Factory and other units in the Reporting Period. 6. Inventory (1) Category of inventory Unit: RMB Item Closing balance Opening balance Falling price Falling price Book balance Book value Book balance Book value reserves reserves Raw material 130,188,781.71 4,345,253.62 125,843,528.09 105,129,601.58 4,315,935.29 100,813,666.29 Goods in 103,285,266.86 21,803,781.18 81,481,485.68 127,378,644.50 21,803,781.18 105,574,863.32 process Materials processed on 28,446,620.31 597,808.75 27,848,811.56 25,326,273.77 597,808.75 24,728,465.02 commission Finished goods 229,645,391.32 20,174,913.34 209,470,477.98 280,847,238.35 20,174,913.34 260,672,325.01 Low priced and easily 5,489,300.37 1,300,787.34 4,188,513.03 3,557,926.14 1,300,787.34 2,257,138.80 worn articles Total 497,055,360.57 48,222,544.23 448,832,816.34 542,239,684.34 48,193,225.90 494,046,458.44 85 Changchai Company, Limited Semi-Annual Report 2017 (2) Falling price reserves of inventory Unit: RMB Increased amount Decreased amount Opening Item Reverse or Closing balance balance Withdrawal Other Other write-off Raw material 4,315,935.29 29,318.33 4,345,253.62 Goods in process 21,803,781.18 21,803,781.18 Materials processed on commission 597,808.75 597,808.75 Finished goods 20,174,913.34 20,174,913.34 Low priced and easily worn articles 1,300,787.34 1,300,787.34 Total 48,193,225.90 29,318.33 48,222,544.23 7. Other current assets Unit: RMB Item Closing balance Opening balance The VAT tax credits 8,728,929.49 31,669,983.12 Bank financial products Financial products from securities companies 5,500,000.00 6,000,000.00 Financial products 5,000,000.00 2,000,000.00 Total 19,228,929.49 39,669,983.12 The amount of the period-end decreased of 51.53% over that of the period-begin, which was mainly to the decrease of tax retained of retained VAT in last period-end. 8. Available-for-sale financial assets (1) List of available-for-sale financial assets Unit: RMB Item Closing balance Opening balance Depreciatio Depreciatio Book balance Book value Book balance Book value n reserves n reserves Available-for-sale equity 772,300,000.00 1,210,000.00 771,090,000.00 821,282,500.00 1,210,000.00 820,072,500.00 instruments: Measured by fair 763,890,000.00 763,890,000.00 812,872,500.00 812,872,500.00 value Measured by cost 8,410,000.00 1,210,000.00 7,200,000.00 8,410,000.00 1,210,000.00 7,200,000.00 method Total 772,300,000.00 1,210,000.00 771,090,000.00 821,282,500.00 1,210,000.00 820,072,500.00 86 Changchai Company, Limited Semi-Annual Report 2017 (2) Available-for-sale financial assets measured by fair value at the period-end Unit: RMB Available-for-sale Available-for-sale Category Total equity instruments debt instruments Cost of equity instruments /amortized cost of 79,874,500.00 79,874,500.00 debt instruments Fair value 763,890,000.00 763,890,000.00 Changes of fair value accumulated recorded 581,413,175.00 581,413,175.00 into other comprehensive income (3) Available-for-sale financial assets measured by cost at the period-end Unit: RMB Book balance Sharehol Impairment provision Cash ding bonus of proportio Investee Period-b Period-e Period-b Period-e the Increase Decrease Increase Decrease n among egin nd egin nd reporting the period investees Qidong Liantong 7,200,00 7,200,00 Dynamo 3.20% 0.00 0.00 meter Co., Ltd. 1,210,00 1,210,00 1,210,00 1,210,00 Others 0.00 0.00 0.00 0.00 8,410,00 8,410,00 1,210,00 1,210,00 Total -- 0.00 0.00 0.00 0.00 Other were respectively the investment of RMB0.51 million in Chengdu Changchai Wanzhou Diesel Engine Distribution Company, RMB0.29 million in Chongqing Wanzhou District Changchai Wanzhou Diesel Engine Accessories Company, RMB0.02 million in Changzhou Economic Technology Development Company, RMB0.1 million in Changzhou Tractor Company, RMB0.2 million in Changzhou Economic Commission Industrial Funds Fraternity and RMB0.09 million in Beijing Engineering Machinery Agricultural Machinery Company, and all of the above investment were difficult to recover that should withdraw the impairment provision in full amount. 87 Changchai Company, Limited Semi-Annual Report 2017 (4) Changes of the impairment of the available-for-sale financial assets during the reporting period Unit: RMB Available-for-sale equity Available-for-sale debt Category Total instruments instruments Balance of the withdrawn impairment 1,210,000.00 1,210,000.00 at the period-begin Balance of the withdrawn impairment 1,210,000.00 1,210,000.00 at the period-end 9. Long-term equity investment Unit: RMB Increase/decrease Gains Closing and Adjustm Cash Withdra balance Additio losses ent of bonus or wal of Investee Opening Reduced Changes Closing of nal recogniz other profits impairm s balance investm of other Other balance impairme investm ed under compreh announc ent ent equity nt ent the ensive ed to provisio provision equity income issue n method I．Joint ventures II. Associated enterprises Changz hou Fuji Changc hai Robin 21,006,2 -21,006, Gasolin 30.03 230.03 e Engine Co., Ltd. Beijing Tsinghu a Industri al 44,182.5 Investm 0 ent Manage ment Co., Ltd. 21,006,2 -21,006, 44,182.5 Subtotal 30.03 230.03 0 21,006,2 -21,006, 44,182.5 Total 30.03 230.03 0 88 Changchai Company, Limited Semi-Annual Report 2017 The closing amount decreases 100% from the opening amount mainly because wholly-owned subsidiary Changch ai Robin was included in the consolidation scope for the Reporting Period while it was a joint stock company and accounted for as a long-term equity investment in the same period of last year. 10. Investment property (1) Investment property adopted the cost measurement mode √ Applicable □ Not applicable Unit: RMB 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) Increased from enterprise merger 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Closing balance 87,632,571.14 87,632,571.14 II. Accumulative depreciation and accumulative amortization 1.Opening balance 32,559,881.91 32,559,881.91 2. Increased amount of the period 1,104,170.40 1,104,170.40 (1) Withdrawal or amortization 1,104,170.40 1,104,170.40 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Closing balance 33,664,052.31 33,664,052.31 III. Depreciation reserves 1. Opening balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period 89 Changchai Company, Limited Semi-Annual Report 2017 (1) Disposal (2) Other transfer 4. Closing balance IV. Book value 1. Closing book value 53,968,518.83 53,968,518.83 2. Opening book value 55,072,689.23 55,072,689.23 11. Fixed assets (1) List of fixed assets Unit: RMB Houses and Machinery Transportation Item Other Total buildings equipment equipment I. Original book value 1. Opening balance 419,008,246.37 853,659,305.64 23,007,178.60 35,579,255.84 1,331,253,986.45 2. Increased amount of 7,294,253.69 83,913,099.63 895,525.12 1,582,238.78 93,685,117.22 the period (1) Purchase 0.00 (2) Transfer of 3,769,687.39 64,566,184.52 1,058,113.59 69,393,985.50 project under construction (3) Increased from 3,524,566.30 19,346,915.11 895,525.12 524,125.19 24,291,131.72 enterprise merger 3. Decreased amount of 2,076,030.39 1,275,274.00 351,002.32 3,702,306.71 the period (1) Disposal or scrap 2,076,030.39 1,275,274.00 351,002.32 3,702,306.71 4. Closing balance 426,302,500.06 935,496,374.88 22,627,429.72 36,810,492.30 1,421,236,796.96 II. Accumulative depreciation 1.Opening balance 227,113,343.57 521,613,394.34 16,918,357.45 27,792,358.93 793,437,454.29 2. Increased amount of 7,854,165.37 30,899,240.09 994,215.91 1,419,264.10 41,166,885.47 the period (1) Withdrawal 7,854,165.37 30,899,240.09 994,215.91 1,419,264.10 41,166,885.47 3. Decreased amount of 1,820,588.31 1,099,240.63 302,898.10 3,222,727.04 the period (1) Disposal or scrap 1,820,588.31 1,099,240.63 302,898.10 3,222,727.04 4. Closing balance 234,967,508.94 550,692,046.12 16,813,332.73 28,908,724.93 831,381,612.72 90 Changchai Company, Limited Semi-Annual Report 2017 III. Depreciation reserves 1.Opening balance 2,524,137.36 2,524,137.36 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal or scrap 4. Closing balance 2,524,137.36 2,524,137.36 IV. Book value 1. Closing book value 191,334,991.12 382,280,191.40 5,814,096.99 7,901,767.37 587,331,046.88 2. Opening book value 194,880,445.10 342,780,985.20 6,245,071.54 9,772,437.03 553,678,938.87 The depreciation amount of the Reporting Period was of RMB 41,166,885.47. The original value transferred into the fixed assets from the construction in progress of the Reporting Period was of RMB 69,393,985.50. 12. Construction in progress (1) List of construction in progress Unit: RMB Closing amount Opening amount Item Book balance Bad debt Book value Book balance Bad debt Book value provision provision Trial production workshop 1,753,262.88 1,753,262.88 4,233,919.80 4,233,919.80 project technology center Test system of technology 18,608,677.80 18,608,677.80 center Casting renovation project 7,527,600.00 7,527,600.00 396,000.00 396,000.00 Expansion capacity of multi-cylinder (The 2nd 1,603,928.11 1,603,928.11 57,529,623.42 57,529,623.42 Period) Warehouse of 5,929,403.82 5,929,403.82 multi-cylinder engine Diesel Engine Cylinder Body Flexible 19,476,100.69 19,476,100.69 15,110,073.95 15,110,073.95 Manufacturing Line Equipment to be installed 14,633,428.68 14,633,428.68 12,511,430.04 12,511,430.04 and payment for projects Total 69,532,401.98 69,532,401.98 89,781,047.21 89,781,047.21 91 Changchai Company, Limited Semi-Annual Report 2017 (2) Changes of significant construction in progress Unit: RMB Of Proport Amoun Accum which: ion Capitali t that Other ulative the Increas estimat zation transfer decreas amount amount Estimat Openin ed ed of Project rate of Capital Name red to ed Closing of of the ed g amount the progres the resourc of item fixed amount balance capitali capitali number balance of the project s interest es assets of the zed zed period accumu s of the of the period interest interest lative period period s s of the input period Trial product ion worksh 49,130, 4,233,9 1,384,6 3,865,2 1,753,2 op 65.68% 65.68% Other 000.00 19.80 01.36 58.28 62.88 project technol ogy center Test system of 22,896, 18,608, 18,608, 81.27% 81.27% Other technol 320.00 677.80 677.80 ogy center Casting renovat 48,320, 396,000 7,131,6 7,527,6 48.21% 48.21% Other ion 000.00 .00 00.00 00.00 project Expansi on capacit y of 60,000, 57,529, 1,207,7 57,133, 1,603,9 multi-c 95.55% 95.55% Other 000.00 623.42 11.25 406.56 28.11 ylinder (The 2nd Period) Wareho use of 10,190, 5,929,4 5,929,4 multi-c 58.19% 58.19% Other 000.00 03.82 03.82 ylinder engine Diesel Engine Cylinde r Body Flexibl 116,040 15,110, 4,366,0 19,476, 24.65% 24.65% Other e ,000.00 073.95 26.74 100.69 Manufa cturing Line 306,576 77,269, 38,628, 60,998, 54,898, Total 0.00 -- -- -- ,320.00 617.17 020.97 664.84 973.30 92 Changchai Company, Limited Semi-Annual Report 2017 13. Intangible assets (1) List of intangible assets Unit: RMB Patent Non-patented Item Land use right Software Other Total right technology I. Total original book value 1. Opening balance 137,782,945.30 8,795,831.59 146,578,776.89 2. Increase in the reporting period 2,550,800.00 8,751,862.30 11,302,662.30 (1) Purchase (2) Internal R &D (3) Increase from enterprise 2,550,800.00 8,751,862.30 11,302,662.30 combination 3. Decrease in the reporting period (1) Purchase 4. Closing balance 140,333,745.30 8,751,862.30 8,795,831.59 157,881,439.19 II. Total accrued amortization 1. Opening balance 42,118,737.38 2,553,703.10 5,360,285.28 50,032,725.76 2. Increase in the reporting period 1,421,545.38 346,126.47 1,183,969.43 2,951,641.28 (1) Withdrawal 1,421,545.38 346,126.47 1,183,969.43 2,951,641.28 3. Decrease in the reporting period (1) Disposal 4. Closing balance 43,540,282.76 2,899,829.57 6,544,254.71 52,984,367.04 III. Total impairment provision 1. Opening balance 2. Increase in the reporting period (1) Withdrawal 3. Decrease in the reporting period (1) Disposal 4. Closing balance IV. Total book value of intangible assets 1. Book value of the period-end 96,793,462.54 5,852,032.73 2,251,576.88 104,897,072.15 2. Book value of the period-begin 96,479,591.31 3,435,546.31 99,915,137.62 93 Changchai Company, Limited Semi-Annual Report 2017 14. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set Unit: RMB Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Assets impairment 6,074,862.83 911,229.42 6,074,862.83 911,229.42 provision Total 6,074,862.83 911,229.42 6,074,862.83 911,229.42 (2) Deferred income tax liabilities had not been off-set Unit: RMB Closing balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income difference liabilities difference tax liabilities Change in fair value of 684,015,500.00 102,602,325.00 732,998,000.00 109,949,700.00 available financial assets Total 684,015,500.00 102,602,325.00 732,998,000.00 109,949,700.00 (3) List of the unrecognized deferred income tax assts Unit: RMB Item Closing balance Opening balance Bad debt provision 271,542,737.00 262,422,016.06 Inventory falling price reserves 48,222,544.23 48,193,225.90 Total 319,765,281.23 310,615,241.96 15. Other non-current assets Unit: RMB Impairment provision at Impairment provision at Item Closing balance Opening balance the period-end the period-begin Entrusted 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 94 Changchai Company, Limited Semi-Annual Report 2017 16. Short-term loans (1) Category of short-term loans Unit: RMB Item Closing balance Opening balance Mortgage loan 13,000,000.00 5,000,000.00 Guaranteed loan 10,000,000.00 5,000,000.00 Total 23,000,000.00 10,000,000.00 (2) List of the short-term loans overdue but not return at period end (3) The amount of the period-end increased of 130% over that of the period-begin, which was mainly due to the increasing bank borrowings of subsidiaries Fuji Robin and Housheng Agricultural Equipment in the Reporting Period. 17. Notes payable Unit: RMB Category Closing balance Opening balance Bank acceptance bill 389,020,800.00 276,090,000.00 Total 389,020,800.00 276,090,000.00 The amount of the period-end increased of 40.9% over that of the period-begin, which was mainly due to the settlement with suppliers with more bills of the Company in the Reporting Period. 18. Accounts payable (1) List of accounts payable Unit: RMB Item Closing balance Opening balance Goods payment 582,942,259.00 605,424,726.65 Total 582,942,259.00 605,424,726.65 (2)There was no note of the accounts payable aging over one year 19. Advance from customers (1) List of advance from customers 95 Changchai Company, Limited Semi-Annual Report 2017 Unit: RMB Item Closing balance Opening balance Goods payment 71,687,056.39 40,890,620.69 Total 71,687,056.39 40,890,620.69 (2) There was no significant advance from customers aging over one year (3) The amount of the period-end increased of 75.31% over that of the period-begin, which was mainly because the Company increased the advance payment of some customers in the Reporting Period. 20. Payroll payable (1) List of Payroll payable Unit: RMB Item Opening balance Increase Decrease Closing balance I. Short-term salary 58,549,908.90 137,532,006.04 163,698,634.81 32,383,280.13 II. Post-employment benefit-defined 19,148,057.60 19,148,057.60 contribution plans Total 58,549,908.90 156,680,063.64 182,846,692.41 32,383,280.13 (2) List of Short-term salary Unit: RMB Item Opening balance Increase Decrease Closing balance 1. Salary, bonus, allowance, subsidy 50,720,926.61 112,882,259.68 140,014,642.47 23,588,543.82 2. Employee welfare 2,596,588.69 2,596,588.69 3. Social insurance 9,764,264.83 9,764,264.83 Of which: Medical insurance 7,876,593.40 7,876,593.40 premiums Work-related injury insurance 1,330,547.67 1,330,547.67 Maternity insurance 557,123.76 557,123.76 4. Housing fund 9,094,294.00 9,094,294.00 5. Labor union budget and employee 7,828,982.29 3,194,598.84 2,228,844.82 8,794,736.31 education budget Total 58,549,908.90 137,532,006.04 163,698,634.81 32,383,280.13 (3) List of drawing scheme 96 Changchai Company, Limited Semi-Annual Report 2017 Unit: RMB Item Opening balance Increase Decrease Closing balance 1. Basic pension benefits 18,330,431.52 18,330,431.52 2. Unemployment insurance 817,626.08 817,626.08 Total 19,148,057.60 19,148,057.60 (4) The amount of the period-end decreased of 44.69% over that of the period-begin, which was mainly because some of the salary and bonus withheld in the same period of last year has been paid. 21. Taxes payable Unit: RMB Item Closing balance Opening balance VAT 325,025.10 972,104.89 Corporate income tax 799,265.24 5,537,211.23 Personal income tax 124,661.81 940,612.41 Urban maintenance and construction tax 52,624.01 902,501.60 Property tax 154,266.37 143,204.51 Education surcharge 45,744.87 51,563.36 Comprehensive fees 239,415.44 1,075,134.76 Total 1,741,002.84 9,622,332.76 22. Dividends payable Unit: RMB Item Closing balance Opening balance Common stock dividends 8,368,537.05 3,243,179.97 Minority dividends 648,253.86 648,253.86 Total 9,016,790.91 3,891,433.83 Reason of not pay overdue 1 year: the shareholder had not drawn down yet. The amount of the beginning of the period increases 131.71% compared with that of the end of the period, which is mainly generated from some shareholders’ dividends not yet taken. 23. Other Accounts Payable (1) Other Accounts Payable Listed by Nature of the Account Unit: RMB 97 Changchai Company, Limited Semi-Annual Report 2017 Item Closing balance Opening balance Margin &cash pledge 3,280,796.03 2,700,853.59 Intercourse funds between entities 15,497,255.05 11,420,825.32 Personal amount payable 1,785,768.40 1,067,429.96 Sales discount and three guarantees 154,374,468.85 151,408,043.35 Others 38,816,148.09 37,849,658.34 Total 213,754,436.42 204,446,810.56 (2) Other Significant Accounts Payable with Aging over One Year Other significant accounts payable with aging over one year mainly was the temporary receivable and charges owed. 24. Other Current-liabilities Unit: RMB Item Closing balance Opening balance Sewage charge 200,000.00 200,000.00 Energy charge 2,454,129.51 2,254,381.75 Other 784,459.61 Total 3,438,589.12 2,454,381.75 25. Deferred Revenue Unit: RMB Closing Item Opening balance Increase Decrease Formed reason balance Government subsidies 61,057,232.08 532,186.81 60,525,045.27 Government allocations Total 61,057,232.08 532,186.81 60,525,045.27 -- Item involving government subsidies: Unit: RMB Amount recorded Amount Related to Opening into non-operating Other Closing Item of newly assets/relat balance income in report changes balance subsidy ed income period Electric control of diesel Related to engine research and 1,443,600.00 199,200.00 1,244,400.00 assets development and 98 Changchai Company, Limited Semi-Annual Report 2017 industrialization allocations National major project Related to 28,770,000.00 28,770,000.00 special allocations assets Related to Remove compensation 21,843,632.08 332,986.81 21,510,645.27 assets The R & D and Industrialization allocations Related to of National III/IV Standard 9,000,000.00 9,000,000.00 assets high-powered and efficient agricultural diesel engine Total 61,057,232.08 0.00 532,186.81 60,525,045.27 -- 26. Share Capital Unit: RMB Increase/decrease (+/-) Opening New shares Bonus Capitalized Closing balance balance Others Subtotal issued shares Capital reserves The sum of 561,374,326.00 561,374,326.00 shares 27. Capital Surplus Unit: RMB Item Opening balance Increase Decrease Closing balance Capital premium 143,990,690.24 143,990,690.24 Other capital reserves 20,337,975.19 20,337,975.19 Total 164,328,665.43 164,328,665.43 28. Other Comprehensive Income Unit: RMB The reporting period Less: recorded in Attributab Attributab Amount other Less: le to le to Opening before comprehensi Closing Item Income owners of minority balance income tax ve income in balance tax the sharehold in current prior period expense Company ers after period and after tax tax transferred to profit or 99 Changchai Company, Limited Semi-Annual Report 2017 loss in current period I. Other comprehensive cannot be reclassified into 0.00 profits or losses II. Other comprehensive -48,982,500. -7,347,37 -41,635,1 581,413, reclassified into profits or 623,048,300.00 00 5.00 25.00 175.00 losses Profits or losses of change in fair value of -48,982,500. -7,347,37 -41,635,1 581,413, 623,048,300.00 available-for-sale 00 5.00 25.00 175.00 financial assets -48,982,500. -7,347,37 -41,635,1 581,413, Total 623,048,300.00 00 5.00 25.00 175.00 29. Special Reserves Unit: RMB Item Opening balance Increase Decrease Closing balance Safety production cost 11,715,417.22 11,715,417.22 Total 11,715,417.22 11,715,417.22 30. Surplus Reserves Unit: RMB Item Opening balance Increase Decrease Closing balance Statutory surplus reserves 298,723,390.98 298,723,390.98 Discretionary surplus reserves 13,156,857.90 13,156,857.90 Total 311,880,248.88 311,880,248.88 31. Retained Profits Unit: RMB Item Reporting Period Last period Opening balance of retained profits before adjustments 651,365,935.39 607,859,611.69 Opening balance of retained profits after adjustments 651,365,935.39 607,859,611.69 Add: Net profit attributable to owners of the Company 39,679,158.13 62,539,896.17 Less: Withdrawal of statutory surplus reserves 6,121,962.97 Dividend of common stock payable 16,841,229.78 12,911,609.50 Closing retained profits 674,203,863.74 651,365,935.39 100 Changchai Company, Limited Semi-Annual Report 2017 32. Revenue and Cost of Sales Unit: RMB Reporting Period Same period of last year Item Sales revenue Cost of sales Sales revenue Cost of sales Main operations 1,297,931,638.97 1,134,816,954.26 1,152,656,941.95 976,226,687.99 Other operations 10,174,541.95 6,575,367.62 11,003,779.74 8,367,576.44 Total 1,308,106,180.92 1,141,392,321.88 1,163,660,721.69 984,594,264.43 33. Business Tax and Surcharges Unit: RMB Item Reporting Period Same period of last year Urban maintenance and construction tax 1,420,461.39 1,130,189.36 Education Surcharge 1,010,250.20 792,992.40 House property tax 2,185,072.01 Land use tax 1,632,123.85 Stamp duty 553,859.70 Business tax 94,345.65 Vehicles and vessels tax 3,495.54 Other taxes 226,866.31 Total 7,032,129.00 2,017,527.41 The current financial expenses increase 106.93% ,According to “Notice of ‘VAT Accounting Treatment’ Issued by Ministry of Finance” (Finance and 137Accounting [2016] No.22), after full trial for changing business tax to VAT, the name of “business tax and surcharges” was changed to “tax and surcharges”, which was for calculating consumption tax, urban maintenanceand construction tax, and resources tax, education surcharge, house property tax, land use tax, vehicle and vessel taxand stamp tax, and other related taxes in enterprise’s business activities. 34. Sales Expenses Unit: RMB Item Reporting Period Same period of last year Office expenses 6,982,458.17 9,181,360.21 Employee’s remuneration 11,332,610.95 12,133,611.70 Sales promotional expense 5,898,980.00 7,436,628.43 Three guarantees 25,519,985.07 26,050,046.98 101 Changchai Company, Limited Semi-Annual Report 2017 Transport fees 2,928,996.14 3,854,006.91 Others 3,152,325.80 862,820.37 Total 55,815,356.13 59,518,474.60 35. Administrative Expenses Unit: RMB Item Reporting Period Same period of last year Office expenses 8,272,173.27 8,381,652.44 Employee’s remuneration 30,067,256.77 32,126,018.65 Depreciation and amortization 7,874,255.36 8,374,082.68 Research and development expense 20,745,380.97 20,553,134.25 Transport fees 1,748,122.94 1,035,214.39 Repair charge 2,150,881.75 2,044,525.58 Taxes 3,789,425.82 Security charge 584,333.18 881,547.58 Others 1,955,663.27 1,303,014.31 Total 73,398,067.51 78,488,615.70 36. Financial Expenses Unit: RMB Item Reporting Period Same period of last year Interest expenses 2,466,943.16 1,917,987.53 Less: Interest income 1,995,814.22 2,859,561.84 Exchange net profit or loss 2,245,667.55 -1,649,720.29 Others -2,383,345.13 -2,219,840.69 Total 333,451.36 -4,811,135.29 The current financial expenses increase 106.93% compared to that of the same period of last year, which is mainly generated from the increase of exchange net profit or loss caused by the changes in exchange rate. 37. Asset Impairment Loss Unit: RMB Item Reporting Period Same period of last year I. Bad debt loss 9,120,720.94 10,257,154.02 102 Changchai Company, Limited Semi-Annual Report 2017 II. Inventory falling price loss 29,318.33 Total 9,150,039.27 10,257,154.02 38. Investment Income Unit: RMB Item Reporting Period Same period of last year Long-term equity investment income accounted by equity method 821,264.12 Investment income received from disposal of financial assets measured by fair value and the changes be included in the current 555,871.52 profits and losses during holding period Investment income received from holding of available-for-sale 6,952,750.99 160,000.00 financial assets Investment income from disposal of bank financial products 364,000.00 Investment income from disposal of financial products of 190,326.41 security companies Equity difference is measured at fair value. 2,215,049.22 Total 9,358,126.62 1,901,135.64 The amount in the Reporting Period increases 392.24% from a year earlier mainly because the Company received dividends from the Bank of Jiangsu in the Reporting Period while there were no such dividends in the same period of last year; and the Company increased its investment in Changchai Robin to gain its control and the Company’s previous holdings in Changchai Robin are accounted for at the difference between these holdings’ fair value and book value. 39. Non-operating Gains Unit: RMB Recorded in the amount of the Item Reporting Period Same period of last year non-recurring gains and losses Total gains from disposal 94,440.43 6,113,117.21 94,440.43 of non-current assets Including: Gains from 94,440.43 6,113,117.21 94,440.43 disposal of fixed assets Government subsidies 532,186.81 3,787,728.09 532,186.81 Insurance compensation 353,600.00 144,000.00 353,600.00 Gains from disposal of 251,402.73 377,937.49 251,402.73 current assets Others 20,541,693.44 213,411.26 20,541,693.44 Total 21,773,323.41 10,636,194.05 21,773,323.41 103 Changchai Company, Limited Semi-Annual Report 2017 Government subsidies recorded into current profits and losses: Unit: RMB Whether Distribut subsidies Special Related to Distributio Reportin Same period Item ion Nature influence the subsidy assets/relat n reason g Period of last year entity current profits or not ed income and losses or not The central Related to budget 1,000,000.00 income investment plans Special fund for Related to industrial income development Special fund for Promoting the transformation of Related to 1,250,000.00 industrial income economy steady growth Borrowing fiscal Related to 500,000.00 interest discount income Talent Related to development 103,800.00 income funds Other incentives Related to 300,941.28 and subsidies income Remove 332,986. Related to 332,986.81 compensation 81 assets Electric control of diesel engine research and 199,200. Related to development and 00 assets industrialization allocations Famous brand Related to 300,000.00 reward income 532,186. Total -- -- -- -- -- 3,787,728.09 -- 81 The current non-operating gains increase 104.71% compared to that of the same period of last year, which is mainly generated from the stock acquisition by a discount of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. which is recorded into the income of scope of consolidated statements as current non-operating gains. 104 Changchai Company, Limited Semi-Annual Report 2017 40. Non-operating Expenses Unit: RMB Same period of last Recorded in the amount of the Item Reporting Period year non-recurring gains and losses Loss on disposal of non-current assets 18,709.80 32,408.99 Including: Loss on disposal of fixed 18,709.80 32,408.99 assets Donation 100,000.00 Loss on disposal of current assets 6,124,349.29 3,988,707.85 Others 251,596.09 26,723.88 Total 6,394,655.18 4,147,840.72 The current non-operating expenses increase 54.17% compared to that of the same period of last year, which is mainly generated from losses caused by the disposal of bad inventory. 41. Income Tax Expense (1) Lists of Income Tax Expense Unit: RMB Item Reporting Period Same period of last year Current income tax expense 5,670,998.75 6,581,748.12 Total 5,670,998.75 6,581,748.12 (2) Adjustment Process of Accounting Profit and Income Tax Expense: Unit: RMB Item Reporting Period Total profits 45,721,610.62 Current income tax expense accounted by tax and 6,858,241.59 relevant regulations Influence of different tax rate suitable to subsidiary 649,121.03 Influence of non taxable income -1,042,912.65 Influence of not deductable costs, expenses and losses 762,452.35 Tax preference incurred from qualified expense -1,555,903.57 Income tax expense 5,670,998.75 105 Changchai Company, Limited Semi-Annual Report 2017 42. Information of Cash Flow Statements (1) Other Cash Received Relevant to Operating Activities Unit: RMB Item Reporting Period Same period of last year Subsidies and grants 3,454,741.28 Cash received from other current account 3,505,477.12 1,964,606.67 Interest income 1,995,814.22 2,559,453.88 Total 5,501,291.34 7,978,801.83 (2) Other Cash Paid Relevant to Operating Activities Unit: RMB Item Reporting Period Same period of last year Sales expense paid in Reporting Period 25,339,487.40 18,835,610.08 Administration expense paid in Reporting Period 23,145,470.19 23,200,555.04 Handling charges for financial expense in Reporting Period 190,445.34 359,561.84 Others 330,043.88 580,495.00 Total 49,005,446.81 42,976,221.96 43. Supplemental Information for Cash Flow Statement (1) Supplemental Information for Cash Flow Statement Unit: RMB Supplemental information Reporting Period Same period of last year 1. Reconciliation of net profit to net cash flows generated from -- -- operating activities Net profit 40,050,611.87 35,403,561.67 Add: Provision for impairment of assets 9,150,039.27 10,257,154.02 Depreciation of fixed assets, of oil-gas assets, of productive 46,215,003.48 42,685,033.48 biological assets Amortization of intangible assets 2,951,641.28 2,408,513.75 Losses on disposal of fixed assets, intangible assets and other -65,821.39 -6,113,117.21 long-term assets (gains: negative) Financial cost (gains: negative) 568,840.63 2,163,147.25 Investment loss (gains: negative) -7,143,077.40 -1,901,135.64 106 Changchai Company, Limited Semi-Annual Report 2017 Decrease in deferred income tax assets -8,781,450.00 (“-” means increase) Decrease in inventory (gains: negative) 45,213,642.10 37,091,003.67 Decrease in accounts receivable from operating activities (gains: -97,396,929.18 -25,134,137.10 negative) Increase in payables from operating activities (decrease: negative) 30,817,483.85 29,957,339.40 Others -5,982,111.20 Net cash flows generated from operating activities 64,379,323.31 118,035,913.29 2. Significant investing and financing activities without -- -- involvement of cash receipts and payments 3. Change of cash and cash equivalent: -- -- Closing balance of cash 589,472,465.73 594,934,363.36 Less: Opening balance of cash 583,278,129.09 526,716,238.21 Net increase in cash and cash equivalents 6,194,336.64 68,218,125.15 (2) Cash and Cash Equivalents Unit: RMB Item Closing balance Opening balance I. Cash 589,472,465.73 583,278,129.09 Including: Cash on hand 136,578.34 314,905.29 Bank deposit on demand 589,335,887.39 582,963,123.80 Other monetary fund on demand 100.00 III. Closing balance of cash and cash equivalents 589,472,465.73 583,278,129.09 44. The Assets with the Ownership or Use Right Restricted Unit: RMB Item Closing book value Restricted reason Monetary capital 119,219,787.00 Bank acceptance draft deposited in the margin Houses and buildings 9,394,240.27 Pledge for bank loan Land use right 21,179,360.79 Pledge for bank loan Total 149,793,388.06 -- 107 Changchai Company, Limited Semi-Annual Report 2017 45. Foreign Currency Monetary Items (1) Foreign Currency Monetary Items Unit: RMB Item Closing foreign currency balance Exchange rate Closing convert to RMB balance Monetary capital Including: USD 5,742,604.48 6.774 38,902,699.82 Account receivable Including: USD 5,063,339.22 6.774 34,301,085.23 (2) Note to Oversea Entities Including: for Significant Oversea Entities, Shall Disclose Main Operating Place, Recording Currency and Selection Basis, if there Are Changes into Recording Currency, Shall Also Disclose the Reason. □ Applicable √ Not applicable VIII. Changes of Merge Scope The Company held an extraordinary meeting of the Board of Directors on August 26, 2016. The meeting examined and approved the Proposal on Assigning 67% Equity of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. held by Fuji Heavy Industries, Ltd.. After the completion of the acquisition, the Company holds Changzhou 100% stock of Fuji Changchai Robin Gasoline Engine Co., Ltd. and it shall change from Sino-foreign joint ventures to domestic enterprises. On January 20, 2017, Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. completed the business registration procedures related to equity transfer, and got the business license issued by Changzhou National Hi-Tech Industrial Development Zone (Xinbei District) Market Supervision and Administration. The registered capital is RMB37,250,000, and the business scope includes small general-purpose gasoline engine and its auxiliary units (Including agricultural machinery, engineering machinery, water pump units, small generating units) and the production, processing, R & D, development, sales and technical consulting of supporting components and parts. Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. has been included in the consolidated financial statements of the Company since January 20, 2017. IX. Equity in Other Entities (1) The Structure of the Enterprise Group 1. Equity in Subsidiary Main operating Registration Nature of Holding percentage (%) Way of Name place place business Holding percentage gaining Changchai Wanzhou Diesel Chongqing Chongqing Industry 60.00% Set-up Engine Co., Ltd. 108 Changchai Company, Limited Semi-Annual Report 2017 Changzhou Changchai Benniu Changzhou Changzhou Industry 99.00% 1.00% Set-up Diesel Engine Fittings Co., Ltd. Changzhou Housheng Changzhou Changzhou Service 100.00% Set-up Investment Co., Ltd. Changzhou Changchai Housheng Agricultural Changzhou Changzhou Industry 70.00% 25.00% Set-up Equipment Co., Ltd. Changzhou Fuji Changchai Investme Changzhou Changzhou Industry 100.00% Robin Gasoline Engine Co., Ltd. nt (2) Significant Not Wholly Owned Subsidiary Unit: RMB Shareholding The profits and losses Declaring dividends Balance of minority Name proportion of arbitrate to the distribute to minority shareholder at minority shareholder minority shareholders shareholder closing period Changchai Wanzhou Diesel Engine Co., 40.00% 347,142.32 18,746,089.89 Ltd. Changzhou Changchai Housheng 5.00% 24,311.42 392,590.42 Agricultural Equipment Co., Ltd. (3) The Main Financial Information of Significant Not Wholly Owned Subsidiary Unit: RMB Closing balance Opening balance Non-cu Current Non-cu Total Non-cu Current Non-curr Total Name Current Total Current Total rrent liabiliti rrent liabiliti rrent liabiliti ent liabiliti assets assets assets assets assets es liability es assets es liability es Changc hai Wanzh ou 50,196, 27,219, 77,416, 30,551, 30,551, 43,462, 27,671, 71,134, 25,137, 25,137, Diesel 479.97 810.97 290.94 066.20 066.20 836.42 597.38 433.80 064.88 064.88 Engine Co., Ltd. Changz 25,427, 389,88 25,817, 17,965, 17,965, 29,743, 372,86 30,116, 22,750, 22,750, hou 470.18 7.75 357.93 549.57 549.57 164.98 8.70 033.68 453.64 453.64 109 Changchai Company, Limited Semi-Annual Report 2017 Changc hai Houshe ng Agricul tural Equipm ent Co., Ltd. Unit: RMB Reporting Period Same period of last year Total Total Name Operation Net Operating Operation comprehen Operating comprehen Net profit revenue profit cash flow revenue sive cash flow sive income income Changchai Wanzhou 32,078,103. 867,855 1,475,032.8 29,922,164. 9,295,155.4 867,855.82 684,407.82 684,407.82 Diesel Engine 46 .82 7 72 0 Co., Ltd. Changzhou Changchai Housheng 8,689,291.6 486,228 -10,269,00 14,101,934. 2,233,123.5 2,233,123.5 -10,382,517. 486,228.32 Agricultural 1 .32 3.10 04 6 6 52 Equipment Co., Ltd. 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 analyze all kinds of risk that the Company faced, set up suitable risk bottom line and conduct risk management, and supervised the risks timely and reliably and control the risk within the limited scope. The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. The management level had reviewed and approved the policies to manage the risks, which summarized as follows: (I) Credit risk Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the other party. The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the Company conduct the following methods. The Company only conducts related transaction with approved and reputable third party, in line with the policy of the Company, the Company need to conduct credit-check for the clients adopting way of credit to conduct 110 Changchai Company, Limited Semi-Annual Report 2017 transaction. In addition, the Company continuously monitors the balance of account receivable to ensure the Company would not face the significant bad debt risk. (II) Liquidity Risk Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in the way of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash to pay the due liabilities. The liquidity risk was centralized controlled by the financial department of the Company. The financial departments through supervising the balance of the cash and securities can be convert to cash at any time and the rolling prediction of cash flow in future 12 months to ensure the Company 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 is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due to the change of market price. 2. Foreign exchange risk Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. 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 Fair value at the end of the reporting period First level Second level Third level Item Fair value Fair value Fair value measurement Total measurement measurement I. Consistent fair value -- -- -- -- measurement (II) Available-for-sale 763,890,000.00 763,890,000.00 financial assets (2) Equity tool investment 763,890,000.00 763,890,000.00 Total assets of consistent fair 763,890,000.00 763,890,000.00 value measurement II. Inconsistent fair value -- -- -- -- measurement 111 Changchai Company, Limited Semi-Annual Report 2017 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 Proportion of voting Proportion of share rights owned by Registration Nature of Registered held by parent Name of parent company parent company place business capital company against against the Company the Company (%) (%) Changzhou Government State-owned Assets Supervision Changzhou 30.43% 30.43% and Administration Commission The actual controller of the Company is Changzhou Government State-owned Assets Supervision and Administration Commission. As of June 30, 2017, 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. Information on Other Related Parties of the Company The Company had no other related party. 5. List of Related-party Transactions The Company had no other related transaction need to be disclosed. XIII. Commitments and Contingencies 1. Significant Commitments As of 30 June 2017, there were no significant commitments to be disclosed. 112 Changchai Company, Limited Semi-Annual Report 2017 2. Contingencies (1) Significant Contingency at Balance Sheet Date Litigation and arbitration in the Reporting Period: Name of the entity Date of Name of the litigation or Amount involved Notes accepted arbitration institutions (RMB ten thousand) Shandong Hongli Group Co., Ltd. 06/27/2001 Changzhou Intermediate 1,436.00 Under the People's Court bankruptcy and liquidation Total 1,436.00 Notes: About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively RMB 14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and sued for compulsory execution in April, 2002. Currently, the defendant has started the bankruptcy procedure. The aforesaid payment has arranged for the full provision for bad debts. XIV. Other Significant Events 1. Segment Information Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common management, did not divide business unit, so the Company only made single branch report. XV. Notes of Main Items in the Financial Statements of the Company 1. Accounts Receivable (1) Accounts Receivable Classified by Category Unit: RMB Closing balance Opening balance Bad debt Book balance Book balance Bad debt provision provision Category Withdra Book Withdraw Book Proporti wal value Amou Proporti al value Amount Amount Amount on proporti nt on proportio on n Accounts 37,894 36,350, 31,144, 5,205,6 31,210,5 6,684,100. receivable with 4.08% 85.68% ,677.7 7.17% 82.36% 005.76 305.79 99.97 76.96 82 significant single 8 113 Changchai Company, Limited Semi-Annual Report 2017 amount for which bad debt provision separately accrued Accounts receivable 490,38 withdrawal of bad 853,571 197,451 656,119, 188,267, 302,116,57 95.89% 23.13% 3,771. 92.78% 38.39% debt provision of ,093.30 ,197.74 895.56 201.85 0.08 93 by credit risks characteristics: Accounts receivable with insignificant 276,298 276,298 100.00 276,29 276,298. single amount for 0.03% 0.00 0.05% 100.00% .29 .29 % 8.29 29 which bad debt provision separately accrued 528,55 890,197 100.00 228,871 661,325 100.00 219,754, 308,800,67 Total 25.71% 4,748. 41.58% ,397.35 % ,801.82 ,595.53 % 077.10 0.90 00 Accounts receivable with single significant amount and withdrawal bad debt provision separately at end of period √ Applicable □ Not applicable Unit: RMB Closing balance Accounts receivable Withdrawal (classified by units) Account receivable Bad debt provision Withdrawal reason proportion Customer 1 1,902,326.58 1,902,326.58 100.00% Difficult to recover Customer 2 6,215,662.64 6,202,854.45 99.79% Difficult to recover Estimated difficult Customer 3 3,040,439.17 2,214,607.75 72.84% to recover Customer 4 3,279,100.00 3,279,100.00 100.00% Difficult to recover Customer 5 2,133,377.01 2,133,377.01 100.00% Difficult to recover Customer 6 5,359,381.00 5,359,381.00 100.00% Difficult to recover Customer 7 2,584,805.83 2,584,805.83 100.00% Difficult to recover Customer 8 1,648,375.42 1,648,375.42 100.00% Difficult to recover Estimated difficult Customer 9 10,186,538.11 5,819,477.75 57.13% to recover Total 36,350,005.76 31,144,305.79 -- -- In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Not applicable 114 Changchai Company, Limited Semi-Annual Report 2017 Unit: RMB Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Subentry within 1 year Within 1 year 662,351,634.14 13,247,032.68 2.00% Subtotal of within 1 year 662,351,634.14 13,247,032.68 2.00% 1 to 2 years 3,158,558.75 157,927.94 5.00% 2 to 3 years 1,700,460.62 255,069.09 15.00% 3 to 4 years 656,652.40 196,995.72 30.00% 4 to 5 years 5,274,037.71 3,164,422.63 60.00% Over 5 years 180,429,749.68 180,429,749.68 100.00% Total 853,571,093.30 197,451,197.74 In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Not applicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: Not applicable (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 RMB9,183,995.89; the amount of the reversed or collected part during the Reporting Period was of RMB66,271.17. (3) Accounts Receivable of the Top 5 of the Closing Balance Collected According to the Arrears Party The total amount of top five of account receivable of closing balance collected by arrears party was RMB449,507,585.41, 50.50% of total closing balance of account receivable. 42.05%, the relevant closing balance of bad debt provision withdrawn was RMB22,939,768.44. 2. Other Accounts Receivable (1) Other Accounts Receivable Classified by Category Unit: RMB Closing balance Opening balance Bad debt Book balance Book balance Bad debt provision provision Category Withdra Book Withdraw Book Proporti wal value Amou Proporti al value Amount Amount Amount on proporti nt on proportio on n 115 Changchai Company, Limited Semi-Annual Report 2017 Other accounts receivable with significant single 2,853,1 2,853,1 100.00 2,853, 2,853,18 8.95% 8.56% 100.00% amount for which 88.02 88.02 % 188.02 8.02 bad debt provision separately accrued Other accounts receivable withdrawn bad 27,799 26,346, 24,115, 2,230,5 24,104,7 3,694,673. debt provision 82.64% 91.53% ,389.2 83.40% 86.71% 366.45 804.37 62.08 15.33 93 according to credit 6 risks characteristics Other accounts receivable with insignificant 2,679,8 2,679,8 100.00 2,679, 2,679,80 single amount for 8.41% 8.04% 100.00% 01.13 01.13 % 801.13 1.13 which bad debt provision separately accrued 33,332 31,879, 100.00 29,648, 2,230,5 100.00 29,637,7 3,694,673. Total 93.00% ,378.4 88.92% 355.60 % 793.52 62.08 % 04.48 93 1 Other receivable with single significant amount and withdrawal bad debt provision separately at end of period： √ Applicable □ Not applicable Unit: RMB Closing balance Other accounts receivable Other accounts Withdrawal Withdrawal (unit) Bad debt provision receivable proportion reason Changchai Group Import & Difficult to 2,853,188.02 2,853,188.02 100.00% Export Co., Ltd. recover Total 2,853,188.02 2,853,188.02 -- -- In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Not applicable Unit: RMB Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion Subentry within 1 year Within 1 year 1,699,462.99 33,989.26 2.00% 116 Changchai Company, Limited Semi-Annual Report 2017 Subtotal of within 1 year 1,699,462.99 33,989.26 2.00% 1 to 2 years 99,906.12 4,995.31 5.00% 2 to 3 years 59,314.08 8,897.10 15.00% 3 to 4 years 588,002.87 176,400.85 30.00% 4 to 5 years 20,396.36 12,237.82 60.00% Over 5 years 23,879,284.03 23,879,284.03 100.00% Total 26,346,366.45 24,115,804.37 In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Not applicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Not applicable (2) The Bad-debt Provision Withdrew, Reversed or Collected during the Reporting Period The withdrawal amount of the bad debt provision during the Reporting Period was of RMB2,996.22; the amount of the reversed or collected part during the Reporting Period was of RMB0.00. (3) Other Accounts Receivable Classified by Account Nature Unit: RMB Nature of accounts Closing book balance Opening book balance Margin &cash pledge 4,200.00 4,200.00 Intercourse funds between entities 8,954,002.16 16,917,626.21 Petty cash &employee borrowing 1,980,351.32 1,056,185.37 Others 20,940,802.12 15,354,366.83 Total 31,879,355.60 33,332,378.41 (4) The Top Five Other Account Receivable Classified by Debtor at Period-end Unit: RMB Proportion to the Closing Account-age at Nature of Closing total of closing balance of Name of unit the end of the accounts balance balance of other bad-debt period accounts receivable provision Changzhou Compressor Co., Intercours 2,940,000.00 Over 5 years 9.22% 2,940,000.00 Ltd. e funds Changchai Group Import & Intercours 2,853,188.02 Over 5 years 8.95% 2,853,188.02 Export Co., Ltd. e funds Changzhou New District Intercours 1,626,483.25 Over 5 years 5.10% 1,626,483.25 117 Changchai Company, Limited Semi-Annual Report 2017 Accounting Center e funds Intercours OEM Group Settlement Cente 1,140,722.16 Over 5 years 3.58% 1,140,722.16 e funds Changzhou Xingsheng Intercours Property Management Co., 505,981.70 Within 1 year 1.59% 10,119.63 e funds Ltd. Total -- 9,066,375.13 -- 28.44% 8,570,513.06 3. Long-term Equity Investment Unit: RMB Closing balance Opening balance Item Depreciation Depreciatio Book balance Book value Book balance Book value reserves n reserves Investment to 231,752,730.03 231,752,730.03 184,466,500.00 184,466,500.00 the subsidiary Investment to joint ventures 44,182.50 44,182.50 21,050,412.53 44,182.50 21,006,230.03 and associated enterprises Total 231,796,912.53 44,182.50 231,752,730.03 205,516,912.53 44,182.50 205,472,730.03 (1) Investment to the Subsidiary Unit: RMB Withdrawn Closing Closing impairment balance of Investee Opening balance Increase Decrease balance provision in the impairment Reporting Period provision Changchai Wanzhou 51,000,000.00 51,000,000.00 Diesel Engine Co., Ltd. Changzhou Changchai Benniu Diesel Engine 96,466,500.00 96,466,500.00 Fittings Co., Ltd. Changzhou Housheng 30,000,000.00 30,000,000.00 Investment Co., Ltd. Changzhou Changchai Housheng Agricultural 7,000,000.00 7,000,000.00 Equipment Co., Ltd. Changzhou Fuji 0.00 47,286,2 47,286,230.03 118 Changchai Company, Limited Semi-Annual Report 2017 Changchai Robin 30.03 Gasoline Engine Co., Ltd. 47,286,2 231,752,730.0 Total 184,466,500.00 30.03 3 (2) Investment to Joint Ventures and Associated Enterprises Unit: RMB Increase/decrease in Reporting Period Investm ent Closing Adjustm Declarat Withdra profit balance Additio Negativ ent of ion of wn Opening and loss Other Closing of Investee nal e other cash impairm balance recogniz equity Others balance impairme investm investm compreh dividend ent ed under changes nt ent ent ensive s or provisio the provision income profits n equity method I. Joint ventures II. Associated enterprises Changz hou Fuji Changc hai Robin 21,006,2 21,006,2 0.00 Gasolin 30.03 30.03 e Engine Co., Ltd. Beijing Tsinghu a Xingye Industri al 44,182.5 44,182.5 44,182.5 Investm 0 0 0 ent Manage ment Co., Ltd. 21,050,4 44,182.5 44,182.5 Subtotal 12.53 0 0 119 Changchai Company, Limited Semi-Annual Report 2017 21,050,4 44,182.5 44,182.5 Total 12.53 0 0 4. Revenues and Operating Costs Unit: RMB Reporting Period Same period of last year Item Sales revenue Cost of sales Sales revenue Cost of sales Main operations 1,219,777,917.09 1,080,764,388.78 1,153,641,301.29 992,786,487.60 Other operations 9,529,630.03 5,985,445.18 10,055,027.37 7,398,827.46 Total 1,229,307,547.12 1,086,749,833.96 1,163,696,328.66 1,000,185,315.06 5. Investment Income Unit: RMB Item Reporting Period Same period of last year Long-term equity investment income accounted by equity method 821,264.12 Investment income received from holding of available-for-sale 6,952,750.99 financial assets Investment income from disposal of bank financial products 364,000.00 Total 6,952,750.99 1,185,264.12 XVI. Supplementary Materials 1. Items and Amounts of Extraordinary Gains and Losses √ Applicable □ Not applicable Unit: RMB Item Amount Explanation Gains/losses on the disposal of non-current assets 756,874.20 Government subsidies recorded into the current gains and losses (excluding the government subsidies that are closely relative to business and enjoyed in normed 788,186.82 way or quantitatively in accordance with the national standards) Gain achieved when the Company’s investment costs On January 20, 2017, the Company in the acquisition of subsidiary, Joint venture and accomplished the transfer of stock associated enterprise are less than the fair value of 22,756,742.66 rights after the acquisition of shares of recognizable assets of invested company enjoyed by Changzhou Fuji Changchai Robin the Company while finishing the investment Gasoline Engine Co., Ltd. From 120 Changchai Company, Limited Semi-Annual Report 2017 January 20, 2017, the company shall be included in the Company’s consolidated statements. Since the transfer price was less than valuation, the transaction brought about revenues of RMB22,756,742.66. Gain/loss from change of fair value of transactional assets and liabilities, and investment gains from disposal of transactional financial assets and liabilities 190,326.41 and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses Other non-operating income and expenses other than -6,246,118.36 the above Less: Income tax effects -591,497.43 Minority interests effects -67,601.48 Total 18,905,110.64 -- 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 √ Not applicable 2. Return on Net Equity and Earnings Per Share Weighted average EPS（Yuan/share） Profit as of Reporting Period ROE (%) EPS-basic EPS-diluted Net profit attributable to common shareholders of the 1.71% 0.07 0.07 Company Net profit attributable to common shareholders of the 0.90% 0.04 0.04 Company after deduction of non-recurring profit and loss 3. Differences between Accounting Data under Domestic and Overseas Accounting Standards (1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International and Chinese Accounting Standards □ Applicable √ Not applicable (2) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under Overseas and Chinese Accounting Standards □ Applicable √ Not applicable 121 Changchai Company, Limited Semi-Annual Report 2017 Section XI Documents Available for Reference Documents available for reference include the following: 1. The 2017 Semi-Annual Report with the signature of the Board Chairman. 2. Financial Statements carrying the signatures and seals of the responsible person of the Company, the accounting principal, as well as the head of the accounting organ. 3. In the Reporting Period, originals of all documents of the Company ever disclosed publicly in media designated by China Securities Regulatory Commission such as the Securities Times and Ta Kung Pao and the originals of all the public notices. 4. The Articles of Association of the Company. The above-mentioned documents available for reference are all kept in the Secretariat of the Board of Directors of the Company and Shenzhen Stock Exchange. This Semi-annual Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. The Board of Directors Changchai Company, Limited August 25, 2017 122
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