Changchai Company, Limited Interim Report 2020
CHANGCHAI COMPANY, LIMITED
SEMI-Financial Report 2020I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
√ Yes □ No
| Type of the audit opinion | Unmodified unqualified opinion |
| Date of signing the independent auditor’s report | 29 July 2020 |
| Name of the audit firm | Gongzheng Tianye Certified Public Accountants (Special General Partnership) |
| Reference number of the independent auditor’s report | SGW[2020]A1166 |
| Name of the certified public accountants | Dai Weizhong and Xu Wenxiang |
Is the independent auditor’s report modified?
□ Yes √ No
Text of the Independent Auditor’s Report
To the Shareholders of Changchai Company, Limited,I OpinionWe have audited the accompanying financial statements of Changchai Company, Limited. (together with itsconsolidated subsidiaries included in the consolidated financial statements, the “Company”), which comprise theparent’s and consolidated balance sheets as at 30 June 2020, the parent’s and consolidated income statements, theparent’s and consolidated cash flow statements, the parent’s and consolidated statements of changes in owners’equity for the six months then ended, as well as the notes to the financial statements.In our opinion, the financial statements attached were prepared in line with the regulations of AccountingStandards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidatedand parent financial position of Changchai Company, Limited as at 30 June 2020 and the consolidated and parentbusiness performance and cash flow for the six months then ended.II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Ourresponsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of FinancialStatements section of our report. We are independent of the Company in accordance with the China Code ofEthics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance withthe said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
Changchai Company, Limited Interim Report 2020
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of revenue
1. Description of the item
For details of accounting policies governing revenue recognition, please refer to the Note III-28 Revenue and theNote V-34 Operating Revenue and Cost of Sales. The operating revenue of the Company in the period fromJanuary to June 2020 is RMB1,167.4558 million.Since the operating revenue is one of key performance indicators of the Company, and there is the inherent riskthat the management may manipulate the timing of revenue recognition for the purpose of achieving certain goalsor expectations, so we identify the revenue recognition as a key audit item.
2. Response for audit
(1) Know the key internal control related to revenue recognition, evaluate whether its design and execution arevalid or not, and test the operation effectiveness of the related internal control.
(2) Analyze and assess the time-point of transferring major risks and rewards related to recognition of salesrevenue through the sampling inspection of sales contract and interviews with management, and then evaluate therecognition policies of sales revenue of the Company.
(3) Check the supporting documents related to revenue recognition, such as sales contracts, order form, invoicefor sales, shipping order, declaration for exportation, and etc.
(4) Check the operating revenue recognized before and after the balance sheet date to the supporting documents,such as shipping order, declaration for exportation, and etc by sampling method to assess whether the operatingrevenue is recognized within appropriate period.
(5) Implement the confirmation by drawing sample to recognize the balance of accounts receivable and theamount of sales revenue according to the features and natures of customer transaction.(II) Bad debt provision for accounts receivable
1. Description of the item
Please refer to the accounting policies stipulated in the Note III-10 Impairment of Financial Assets and the NoteV-4 Accounts Receivable. On 30 June 2020, as for accounts receivable of the Company, the carrying amount wasRMB918.1510 million, the bad debt provision was RMB187.7513 million, and the carrying value wasRMB730.3997 million, accounting for 20.64% of total assets at the period-end. The bad debt of accountsreceivable due to failure of recovery at maturity or failure of recovery will generate significant impacts onfinancial statements, thus, we identify the impairment of accounts receivable as a key audit item.
2. Response for audit
(1) Access Changchai’s internal control systems of sales and accounts receivable management to understand andevaluate the design of internal control, and carry out walk-through test to confirm the implementation of internalcontrol systems.
(2) Analyze and confirm the reasonableness of Changchai’s accounting estimates of bad debt provision foraccounts receivable, including the basis for determining the combination of accounts receivable, the expectedcredit loss rate and the judgment of impairment test of accounts receivable evaluated individually.
(3) Access and check the account receivable details, aging schedule, statement of provisions for bad debts, andconfirm the reasonableness of bad debt provision for accounts receivable by combining with the request ofconfirmation of balance and subsequent collection inspection;
(4) Understand the reasons for accounts receivable, check Changchai’s reconciliation and collection during thereporting period and any other data related to payment recovery, verify and confirm its accounts receivablewithout transaction dispute at the end of the reporting period, as well as the adequacy of bad debt provision foraccounts receivable.
Changchai Company, Limited Interim Report 2020
(5) Send request for confirmation of balance, and confirm the authenticity and accuracy of the amount of accountsreceivable on the balance sheet date by combining with subsequent inspection and other procedures.IV Other InformationThe Company’s management (hereinafter referred to as “management”) is responsible for the other information.The other information comprises all of the information included in the Company’s 2020 Interim Report other thanthe financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we haveperformed, we conclude that there is a material misstatement of this other information; we are required to reportthat fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial StatementsThe management is responsible for the preparation of the financial statements that give a fair view in accordancewith CAS, and for designing, implementing and maintaining such internal control as the management determinesis necessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the management either intends to liquidate the Company or to cease operations,or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or errorand are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
Changchai Company, Limited Interim Report 2020
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the relateddisclosures in the financial statements. If such disclosures are inadequate, we need to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future eventsor conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Company to express an opinion on the financial statements. We are responsible for thedirection, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding the planned scope and timing of the audit andsignificant audit findings, including any noteworthy deficiencies in internal control that we identify during ouraudit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Gongzheng Tianye Certified Public Accountants Chinese CPA Dai Weizhong(Special General Partnership) (Engagement Partner)
Chinese CPA Xu Wenxiang
Wuxi · China 29 July 2020
II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
30 June 2020
Unit: RMB
| Item | 30 June 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 600,274,769.45 | 638,589,260.09 |
Changchai Company, Limited Interim Report 2020
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 14,600,000.00 | 13,050,000.00 |
| Derivative financial assets | ||
| Notes receivable | 508,401,509.54 | 606,283,023.05 |
| Accounts receivable | 730,399,692.57 | 419,302,056.87 |
| Accounts receivable financing | ||
| Prepayments | 10,208,446.08 | 12,968,746.16 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 10,280,692.50 | 9,703,390.94 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 428,205,070.52 | 473,359,168.90 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 8,576,962.79 | 6,421,275.47 |
| Total current assets | 2,310,947,143.45 | 2,179,676,921.48 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | ||
| Investments in other equity | 462,160,000.00 | 532,886,000.00 |
Changchai Company, Limited Interim Report 2020
| instruments | ||
| Other non-current financial assets | 77,952,101.63 | 77,952,101.63 |
| Investment property | 47,343,496.43 | 48,447,666.83 |
| Fixed assets | 437,411,354.41 | 457,722,667.32 |
| Construction in progress | 103,006,376.02 | 91,358,156.24 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 97,374,195.14 | 99,699,450.26 |
| Development costs | ||
| Goodwill | ||
| Long-term prepaid expense | 33,595.50 | 53,497.80 |
| Deferred income tax assets | 1,979,974.43 | 1,023,863.04 |
| Other non-current assets | 177,400.00 | |
| Total non-current assets | 1,227,438,493.56 | 1,309,143,403.12 |
| Total assets | 3,538,385,637.01 | 3,488,820,324.60 |
| Current liabilities: | ||
| Short-term borrowings | 22,000,000.00 | 22,000,000.00 |
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 479,515,000.00 | 403,035,000.00 |
| Accounts payable | 580,840,786.08 | 525,625,016.89 |
| Advances from customers | 31,789,001.78 | |
| Contract liabilities | 31,527,438.40 | |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities |
Changchai Company, Limited Interim Report 2020
| Employee benefits payable | 18,957,655.55 | 44,559,015.79 |
| Taxes payable | 8,253,042.15 | 9,094,382.58 |
| Other payables | 190,736,737.19 | 205,064,145.10 |
| Including: Interest payable | ||
| Dividends payable | 3,891,433.83 | 3,891,433.83 |
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 2,240,843.08 | 1,177,712.38 |
| Total current liabilities | 1,334,071,502.45 | 1,242,344,274.52 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 58,331,924.41 | 58,864,111.22 |
| Deferred income tax liabilities | 46,398,724.72 | 57,082,890.27 |
| Other non-current liabilities | ||
| Total non-current liabilities | 104,730,649.13 | 115,947,001.49 |
| Total liabilities | 1,438,802,151.58 | 1,358,291,276.01 |
| Owners’ equity: | ||
| Share capital | 561,374,326.00 | 561,374,326.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds |
Changchai Company, Limited Interim Report 2020
| Capital reserves | 164,328,665.43 | 164,328,665.43 |
| Less: Treasury stock | ||
| Other comprehensive income | 257,019,600.00 | 317,059,775.00 |
| Specific reserve | 18,438,650.51 | 17,560,202.07 |
| Surplus reserves | 322,228,533.72 | 322,228,533.72 |
| General reserve | ||
| Retained earnings | 756,379,945.09 | 728,341,265.36 |
| Total equity attributable to owners of the Company as the parent | 2,079,769,720.75 | 2,110,892,767.58 |
| Non-controlling interests | 19,813,764.68 | 19,636,281.01 |
| Total owners’ equity | 2,099,583,485.43 | 2,130,529,048.59 |
| Total liabilities and owners’ equity | 3,538,385,637.01 | 3,488,820,324.60 |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 30 June 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 537,280,656.10 | 584,957,678.96 |
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 472,217,227.54 | 576,948,023.05 |
| Accounts receivable | 644,643,117.23 | 337,447,538.04 |
| Accounts receivable financing | ||
| Prepayments | 4,990,201.79 | 6,386,284.14 |
| Other receivables | 22,243,041.97 | 22,741,542.22 |
| Including: Interest receivable | ||
| Dividends receivable |
Changchai Company, Limited Interim Report 2020
| Inventories | 311,044,719.11 | 368,653,472.39 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 3,217,463.57 | 3,898,333.51 |
| Total current assets | 1,995,636,427.31 | 1,901,032,872.31 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 287,752,730.03 | 252,752,730.03 |
| Investments in other equity instruments | 462,160,000.00 | 532,886,000.00 |
| Other non-current financial assets | 50,000,000.00 | 50,000,000.00 |
| Investment property | 47,343,496.43 | 48,447,666.83 |
| Fixed assets | 348,701,107.11 | 364,071,199.07 |
| Construction in progress | 73,761,874.14 | 89,330,161.60 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 68,543,680.83 | 70,169,770.91 |
| Development costs | ||
| Goodwill | ||
| Long-term prepaid expense | ||
| Deferred income tax assets | 1,926,498.14 | 970,026.67 |
| Other non-current assets | ||
| Total non-current assets | 1,340,189,386.68 | 1,408,627,555.11 |
| Total assets | 3,335,825,813.99 | 3,309,660,427.42 |
| Current liabilities: | ||
| Short-term borrowings | 5,000,000.00 | 5,000,000.00 |
| Held-for-trading financial liabilities |
Changchai Company, Limited Interim Report 2020
| Derivative financial liabilities | ||
| Notes payable | 467,515,000.00 | 392,105,000.00 |
| Accounts payable | 523,091,443.14 | 481,854,210.18 |
| Advances from customers | 28,673,664.87 | |
| Contract liabilities | 27,529,799.73 | |
| Employee benefits payable | 12,316,392.34 | 39,125,477.30 |
| Taxes payable | 4,913,254.33 | 5,952,664.10 |
| Other payables | 176,944,594.03 | 192,046,130.29 |
| Including: Interest payable | ||
| Dividends payable | 3,243,179.97 | 3,243,179.97 |
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | ||
| Total current liabilities | 1,217,310,483.57 | 1,144,757,146.74 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 58,331,924.41 | 58,864,111.22 |
| Deferred income tax liabilities | 45,356,400.00 | 55,951,725.00 |
| Other non-current liabilities | ||
| Total non-current liabilities | 103,688,324.41 | 114,815,836.22 |
| Total liabilities | 1,320,998,807.98 | 1,259,572,982.96 |
| Owners’ equity: | ||
| Share capital | 561,374,326.00 | 561,374,326.00 |
| Other equity instruments |
Changchai Company, Limited Interim Report 2020
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 183,071,147.70 | 183,071,147.70 |
| Less: Treasury stock | ||
| Other comprehensive income | 257,019,600.00 | 317,059,775.00 |
| Specific reserve | 18,438,650.51 | 17,560,202.07 |
| Surplus reserves | 322,228,533.72 | 322,228,533.72 |
| Retained earnings | 672,694,748.08 | 648,793,459.97 |
| Total owners’ equity | 2,014,827,006.01 | 2,050,087,444.46 |
| Total liabilities and owners’ equity | 3,335,825,813.99 | 3,309,660,427.42 |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
3. Consolidated Income Statement
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Revenue | 1,167,455,782.30 | 1,118,871,125.00 |
| Including: Operating revenue | 1,167,455,782.30 | 1,118,871,125.00 |
| Interest income | ||
| Insurance premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 1,123,014,304.27 | 1,099,092,785.90 |
| Including: Cost of sales | 985,842,718.68 | 972,984,773.54 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net insurance claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 6,551,605.53 | 5,009,692.95 |
| Selling expense | 63,392,358.52 | 58,258,398.98 |
Changchai Company, Limited Interim Report 2020
| Administrative expense | 35,609,030.74 | 34,560,062.30 |
| R&D expense | 32,338,250.78 | 30,064,283.46 |
| Finance costs | -719,659.98 | -1,784,425.33 |
| Including: Interest expense | 3,340,575.91 | 1,567,625.50 |
| Interest income | 2,792,152.75 | 1,647,206.24 |
| Add: Other income | 2,677,964.82 | 134,037.71 |
| Return on investment (“-” for loss) | 5,384,597.04 | 184,349.63 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | ||
| Credit impairment loss (“-” for loss) | -5,979,021.29 | -5,252,610.74 |
| Asset impairment loss (“-” for loss) | -16,343,805.00 | -26,096.43 |
| Asset disposal income (“-” for loss) | 10,977.61 | 988,535.95 |
| 3. Operating profit (“-” for loss) | 30,192,191.21 | 15,806,555.22 |
| Add: Non-operating income | 468,290.78 | 582,937.48 |
| Less: Non-operating expense | 395,375.68 | 217,837.98 |
| 4. Profit before tax (“-” for loss) | 30,265,106.31 | 16,171,654.72 |
| Less: Income tax expense | 2,397,311.58 | -2,994,995.32 |
| 5. Net profit (“-” for net loss) | 27,867,794.73 | 19,166,650.04 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 27,867,794.73 | 19,166,650.04 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 27,690,311.06 | 19,117,635.69 |
| 5.2.1 Net profit attributable to non-controlling interests | 177,483.67 | 49,014.35 |
| 6. Other comprehensive income, net of tax | -59,691,806.33 | 87,330,700.00 |
| Attributable to owners of the Company as the parent | -59,691,806.33 | 87,330,700.00 |
| 6.1 Items that will not be reclassified to profit or loss | -59,691,806.33 | 87,330,700.00 |
| 6.1.1 Changes caused by remeasurements on defined |
Changchai Company, Limited Interim Report 2020
| benefit schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | -59,691,806.33 | 87,330,700.00 |
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | ||
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 6.2.7 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | -31,824,011.60 | 106,497,350.04 |
| Attributable to owners of the Company as the parent | -32,001,495.27 | 106,448,335.69 |
| Attributable to non-controlling interests | 177,483.67 | 49,014.35 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.0493 | 0.0341 |
| 8.2 Diluted earnings per share | 0.0493 | 0.0341 |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Operating revenue | 1,081,469,803.12 | 1,033,329,175.58 |
| Less: Cost of sales | 923,422,022.77 | 907,286,315.49 |
| Taxes and surcharges | 5,359,697.76 | 3,963,893.19 |
Changchai Company, Limited Interim Report 2020
| Selling expense | 57,376,397.80 | 53,346,830.95 |
| Administrative expense | 26,796,437.18 | 25,476,365.88 |
| R&D expense | 31,647,738.36 | 27,891,685.42 |
| Finance costs | -1,390,764.55 | -3,010,192.35 |
| Including: Interest expense | 2,303,571.52 | 1,314,360.50 |
| Interest income | 2,529,399.84 | 1,165,423.09 |
| Add: Other income | 1,931,604.92 | 129,300.00 |
| Return on investment (“-” for loss) | 4,983,988.73 | |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | ||
| Credit impairment loss (“-” for loss) | -5,440,782.47 | -5,260,420.00 |
| Asset impairment loss (“-” for loss) | -15,816,298.12 | -26,096.43 |
| Asset disposal income (“-” for loss) | 10,781.75 | 988,535.95 |
| 2. Operating profit (“-” for loss) | 23,927,568.61 | 14,205,596.52 |
| Add: Non-operating income | 238,948.92 | 230,353.36 |
| Less: Non-operating expense | 4,025.58 | 166,954.64 |
| 3. Profit before tax (“-” for loss) | 24,162,491.95 | 14,268,995.24 |
| Less: Income tax expense | 609,572.51 | -4,118,680.40 |
| 4. Net profit (“-” for net loss) | 23,552,919.44 | 18,387,675.64 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 23,552,919.44 | 18,387,675.64 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | -59,691,806.33 | 87,330,700.00 |
| 5.1 Items that will not be reclassified to profit or loss | -59,691,806.33 | 87,330,700.00 |
| 5.1.1 Changes caused by remeasurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | -59,691,806.33 | 87,330,700.00 |
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other |
Changchai Company, Limited Interim Report 2020
| 5.2 Items that will be reclassified to profit or loss | ||
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | -36,138,886.89 | 105,718,375.64 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | ||
| 7.2 Diluted earnings per share |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 860,915,528.67 | 925,855,455.10 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from the central bank | ||
| Net increase in loans from other financial institutions | ||
| Premiums received on original insurance contracts | ||
| Net proceeds from reinsurance | ||
| Net increase in deposits and investments of policy holders | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Net proceeds from acting trading of securities |
Changchai Company, Limited Interim Report 2020
| Tax rebates | 13,166,033.29 | 21,598,658.84 |
| Cash generated from other operating activities | 7,744,404.19 | 8,402,843.81 |
| Subtotal of cash generated from operating activities | 881,825,966.15 | 955,856,957.75 |
| Payments for commodities and services | 657,759,091.59 | 900,048,290.07 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in the central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts | ||
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 152,057,875.00 | 152,284,424.64 |
| Taxes paid | 19,245,929.17 | 18,008,386.04 |
| Cash used in other operating activities | 73,117,799.64 | 38,837,349.87 |
| Subtotal of cash used in operating activities | 902,180,695.40 | 1,109,178,450.62 |
| Net cash generated from/used in operating activities | -20,354,729.25 | -153,321,492.87 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 3,550,487.00 | 7,900,000.00 |
| Return on investment | 5,384,597.04 | 184,349.63 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 108,370.88 | 988,535.95 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | 97,150.00 | |
| Subtotal of cash generated from investing activities | 9,140,604.92 | 9,072,885.58 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 33,004,278.41 | 11,800,890.16 |
| Payments for investments | 4,600,000.00 | 16,538,441.76 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 930,300.00 | |
| Subtotal of cash used in investing activities | 38,534,578.41 | 28,339,331.92 |
| Net cash generated from/used in investing activities | -29,393,973.49 | -19,266,446.34 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received |
Changchai Company, Limited Interim Report 2020
| Including: Capital contributions by non-controlling interests to subsidiaries | ||
| Borrowings raised | 10,000,000.00 | 12,000,000.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 10,000,000.00 | 12,000,000.00 |
| Repayment of borrowings | 10,000,000.00 | 19,000,000.00 |
| Interest and dividends paid | 2,212,485.64 | 15,977,861.20 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 12,212,485.64 | 34,977,861.20 |
| Net cash generated from/used in financing activities | -2,212,485.64 | -22,977,861.20 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -361,452.02 | |
| 5. Net increase in cash and cash equivalents | -52,322,640.40 | -195,565,800.41 |
| Add: Cash and cash equivalents, beginning of the period | 545,959,998.20 | 691,266,373.34 |
| 6. Cash and cash equivalents, end of the period | 493,637,357.80 | 495,700,572.93 |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | H1 2020 | H1 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 731,880,356.33 | 825,164,929.97 |
| Tax rebates | 8,380,462.40 | 16,338,954.71 |
| Cash generated from other operating activities | 6,294,839.20 | 5,103,265.56 |
| Subtotal of cash generated from operating activities | 746,555,657.93 | 846,607,150.24 |
| Payments for commodities and services | 566,778,723.71 | 834,695,159.25 |
| Cash paid to and for employees | 130,215,884.89 | 127,977,021.88 |
| Taxes paid | 12,974,529.61 | 9,992,032.82 |
| Cash used in other operating activities | 65,655,389.30 | 30,159,658.65 |
| Subtotal of cash used in operating activities | 775,624,527.51 | 1,002,823,872.60 |
| Net cash generated from/used in operating activities | -29,068,869.58 | -156,216,722.36 |
Changchai Company, Limited Interim Report 2020
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 500,487.00 | |
| Return on investment | 4,983,988.73 | |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 107,470.88 | 988,535.95 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 5,591,946.61 | 988,535.95 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 2,365,851.07 | 9,220,626.97 |
| Payments for investments | 35,000,000.00 | 10,000,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 37,365,851.07 | 19,220,626.97 |
| Net cash generated from/used in investing activities | -31,773,904.46 | -18,232,091.02 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings raised | 5,000,000.00 | 5,000,000.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 5,000,000.00 | 5,000,000.00 |
| Repayment of borrowings | 5,000,000.00 | 10,000,000.00 |
| Interest and dividends paid | 914,216.00 | 15,404,432.84 |
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 5,914,216.00 | 25,404,432.84 |
| Net cash generated from/used in financing activities | -914,216.00 | -20,404,432.84 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -491,932.82 | |
| 5. Net increase in cash and cash equivalents | -62,248,922.86 | -194,853,246.22 |
| Add: Cash and cash equivalents, beginning of the period | 497,777,104.81 | 651,854,206.79 |
| 6. Cash and cash equivalents, end of the period | 435,528,181.95 | 457,000,960.57 |
Legal representative: Shi Xinkun General Manager: Zhang XinHead of the accounting department: Jiang He
Changchai Company, Limited Interim Report 2020
7. Consolidated Statements of Changes in Owners’ Equity
H1 2020
Unit: RMB
| Item | H1 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 561,374,326.00 | 164,328,665.43 | 317,059,775.00 | 17,560,202.07 | 322,226,700.34 | 726,689,929.10 | 2,109,239,597.94 | 19,636,281.01 | 2,128,875,878.95 | ||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | 1,833.38 | 1,651,336.26 | 1,653,169.64 | 1,653,169.64 | |||||||||||
| Adjustment for business combination under common control | |||||||||||||||
| Other | |||||||||||||||
Changchai Company, Limited Interim Report 2020
| adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 561,374,326.00 | 164,328,665.43 | 317,059,775.00 | 17,560,202.07 | 322,228,533.72 | 728,341,265.36 | 2,110,892,767.58 | 19,636,281.01 | 2,130,529,048.59 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -60,040,175.00 | 878,448.44 | 28,038,679.73 | -31,123,046.83 | 177,483.67 | -30,945,563.16 | |||||||||
| 3.1 Total comprehensive income | -59,691,806.33 | 27,690,311.06 | -32,001,495.27 | 177,483.67 | -31,824,011.60 | ||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other |
Changchai Company, Limited Interim Report 2020
| 3.3 Profit distribution | |||||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | |||||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | -348,368.67 | 348,368.67 | |||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes |
Changchai Company, Limited Interim Report 2020
| in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | -348,368.67 | 348,368.67 | |||||||||||||
| 3.5 Specific reserve | 878,448.44 | 878,448.44 | 878,448.44 | ||||||||||||
| 3.5.1 Increase in the period | 1,883,145.87 | 1,883,145.87 | 1,883,145.87 | ||||||||||||
| 3.5.2 Used in the period | 1,004,697.43 | 1,004,697.43 | 1,004,697.43 | ||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 561,374,326.00 | 164,328,665.43 | 257,019,600.00 | 18,438,650.51 | 322,228,533.72 | 756,379,945.09 | 2,079,769,720.75 | 19,813,764.68 | 2,099,583,485.43 |
H1 2019
Unit: RMB
| Item | H1 2019 | ||
| Equity attributable to owners of the Company as the parent | Non-con | Total | |
Changchai Company, Limited Interim Report 2020
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | trolling interests | owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 561,374,326.00 | 164,328,665.43 | 264,405,675.00 | 15,182,958.83 | 320,133,050.15 | 717,883,351.33 | 2,043,308,026.74 | 19,618,480.11 | 2,062,926,506.85 | ||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | 1,364.08 | 1,619,864.82 | 1,621,228.90 | 1,621,228.90 | |||||||||||
| Adjustment for business combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 561,374,326.00 | 164,328,665.43 | 264,405,675.00 | 15,182,958.83 | 320,134,414.23 | 719,503,216.15 | 2,044,929,255.64 | 19,618,480.11 | 2,064,547,735.75 | ||||||
| 3. Increase/ decrease in the | 87,330,700.00 | 5,083,277.54 | 92,413,977.5 | 49,014.35 | 92,462,991.89 | ||||||||||
Changchai Company, Limited Interim Report 2020
| period (“-” for decrease) | 4 | ||||||||||||||
| 3.1 Total comprehensive income | 87,330,700.00 | 19,117,635.69 | 106,448,335.69 | 49,014.35 | 106,497,350.04 | ||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -14,034,358.15 | -14,034,358.15 | -14,034,358.15 | ||||||||||||
| 3.3.1 |
Changchai Company, Limited Interim Report 2020
| Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -14,034,358.15 | -14,034,358.15 | -14,034,358.15 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in |
Changchai Company, Limited Interim Report 2020
| defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 561,374,326.00 | 164,328,665.43 | 351,736,375.00 | 15,182,958.83 | 320,134,414.23 | 724,586,493.69 | 2,137,343,233.18 | 19,667,494.46 | 2,157,010,727.64 |
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2020
Changchai Company, Limited Interim Report 2020
Unit: RMB
| Item | H1 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 561,374,326.00 | 183,071,147.70 | 317,059,775.00 | 17,560,202.07 | 322,226,700.34 | 648,776,959.53 | 2,050,069,110.64 | |||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | 1,833.38 | 16,500.44 | 18,333.82 | |||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 561,374,326.00 | 183,071,147.70 | 317,059,775.00 | 17,560,202.07 | 322,228,533.72 | 648,793,459.97 | 2,050,087,444.46 | |||||
| 3. Increase/ decrease in the period (“-” for decrease) | -60,040,175.00 | 878,448.44 | 23,901,288.11 | -35,260,438.45 | ||||||||
| 3.1 Total comprehensive income | -59,691,806.33 | 23,552,919.44 | -36,138,886.89 | |||||||||
| 3.2 Capital | ||||||||||||
Changchai Company, Limited Interim Report 2020
| increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | ||||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | -348,368.67 | 348,368.67 |
Changchai Company, Limited Interim Report 2020
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | -348,368.67 | 348,368.67 | ||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | 878,448.44 | 878,448.44 | ||||||||||
| 3.5.1 Increase in the period | 1,883,145.87 | 1,883,145.87 | ||||||||||
| 3.5.2 Used in the period | 1,004,697.43 | 1,004,697.43 | ||||||||||
| 3.6 Other |
Changchai Company, Limited Interim Report 2020
| 4. Balance as at the end of the period | 561,374,326.00 | 183,071,147.70 | 257,019,600.00 | 18,438,650.51 | 322,228,533.72 | 672,694,748.08 | 2,014,827,006.01 |
H1 2019
Unit: RMB
| Item | H1 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 561,374,326.00 | 183,071,147.70 | 264,405,675.00 | 15,182,958.83 | 320,133,050.15 | 643,980,742.64 | 1,988,147,900.32 | |||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | 1,364.08 | 1,364.08 | ||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 561,374,326.00 | 183,071,147.70 | 264,405,675.00 | 15,182,958.83 | 320,134,414.23 | 643,980,742.64 | 1,988,149,264.40 | |||||
| 3. Increase/ decrease in the period (“-” for | 87,330,700.00 | 4,358,502.17 | 91,689,202.17 | |||||||||
Changchai Company, Limited Interim Report 2020
| decrease) | ||||||||||||
| 3.1 Total comprehensive income | 87,330,700.00 | 18,392,860.32 | 105,723,560.32 | |||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -14,034,358.15 | -14,034,358.15 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or | -14,034,358.15 | -14,034,358.15 |
Changchai Company, Limited Interim Report 2020
| shareholders) | ||||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other |
Changchai Company, Limited Interim Report 2020
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 561,374,326.00 | 183,071,147.70 | 351,736,375.00 | 15,182,958.83 | 320,134,414.23 | 648,339,244.81 | 2,079,838,466.57 |
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
III. Company ProfileChangchai 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 theapproval 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 Governmentof Jiangsu Province SZF [1993] No. 67, as well as reexamined and approved by China SecuritiesRegulatory Commission (“CSRC”) through document ZJFSZ (1994) No. 9, the Company initially issued Ashares to the public from 15 March 1994 to 30 March 1994. As approved by the Shenzhen Stock Exchangethrough document SZSFZ (1994) No. 15, such tradable shares of the public got listing on 1 July 1994 atShenzhen 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 throughSZBZ [1996] No. 24, and approval of the State Council Securities Commission ZWF [1996] No. 27, theCompany issued 100 million B shares to qualified investors on 27 August 1996 to 30 August 1996, gettinglisted on 13 September 1996.On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examineand approve share merger reform plan, and performed the share merger reform on 19 June 2006.As examined and approved at the 2
ndExtraordinary General Meeting of 2009 in September 2009, based onthe total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profitdistribution plan, i.e. to distribute 5 bonus shares and cash of RMB0.80 for every 10 shares, with registeredcapital increased by RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 afterchange. As at 31 December 2015, the total share capital of the Company is 561,374,326.00 shares, as wellas registered capital of RMB561,374,326.00, which verified by Jiangsu Gongzheng Tianye CertifiedPublic Accountants Company Limited with issuing Capital Verification Report SGC [2010] No. B002. Andthe unified social credit code of the enterprise business license of the Company is 91320400134792410W.The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, aswell 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 dieselengine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mouldand fixtures, assembling and sale of diesel generating set and pumping unit. The Company mainly engagedin the production and sales of small and medium-sized single cylinders and multi-cylinder diesel enginewith the label of Changchai Brand. The diesel engine produced and sold by the Company were mainlyused in tractors, combine harvest models, light commercial vehicle, farm equipment, small-sizedconstruction machinery, generating sets and marine engine and equipment, etc. The Company’scorebusiness remained unchanged in the Reporting Period.The Company established the Shareholders’ General Meeting, the Board of Directors and the SupervisoryCommittee, Corporate office, Financial Department, Political Department, Investment and DevelopmentDepartment, Audit Department, Human Recourses Department, Production Department, ProcurementDepartment, Sales Company, Chief Engineer Office, Technology Center, QA Department, Foundry Branch,
Machine Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine Branch and OverseasBusiness Department in the Company.The financial report has been approved to be issued by the Board of Directors on 29 July 2020.The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 7subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation,please refer to the changes of the consolidated scope of the notes to the financial report and the notes to theequities among other entities.IV. Basis for Preparation of the Financial Report
1. Basis for Preparation
With the going-concern assumption as the basis and based on transactions and other events that actuallyoccurred, the Group prepared financial statements in accordance with The Accounting Standards forBusiness Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revisedwith Decree No. 76, the various specific accounting standards, the Application Guidance of AccountingStandards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprisesand other regulations issued and revised from 15 February 2006 onwards (hereinafter jointly referred to as“the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well asthe Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – GeneralRegulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Groupadopted the accrual basis in accounting. Except for some financial instruments, where impairment occurredon 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 suchfactors in the 12 months from the end of the Reporting Period that would obviously influence thecontinuation capability of the Company and predicted that the operating activities would continue in thefuture 12 months of the Company. The financial statement compiled base on the continuous operation.V. Important Accounting Policies and EstimationsNotification of specific accounting policies and accounting estimations:
The Company and each subsidiary according to the actual production and operation characteristics and inaccord with the regulations of the relevant ASBE, formulated certain specific accounting policies andaccounting estimations, which mainly reflected in the financial instruments, withdrawal method of the baddebt provision of the accounts receivable, the measurement of the inventory and the depreciation of thefixed assets etc.
1. Statement of Compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Group are in compliance with in compliance with the AccountingStandards for Business Enterprises, which factually and completely present the Company’s and theGroup’s financial positions, business results and cash flows and other relevant information.
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December31 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 realizingcash or cash equivalents. An operating cycle for the Group is 12 months, which is also the classificationcriterion 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 BusinessCombinations 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 combiningenterprises are ultimately controlled by the same party or the same parties both before and after thebusiness 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 itmakes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regardthe share of the book value of the owner's equity of the merged enterprise as the initial cost of thelong-term equity investment. The difference between the initial cost of the long-term equity investment andthe payment in cash, non-cash assets transferred as well as the book value of the debts borne by themerging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, theretained earnings shall be adjusted.If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date ofmerger, regard the share of the book value of the owner's equity of the merged enterprise as the initial costof the long-term equity investment. The total face value of the stocks issued shall be regarded as the capitalstock, while the difference between the initial cost of the long-term equity investment and total face valueof the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, theretained 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 handlingcharges and commission etc, premium income of deducting the equity securities, and as for the premiumincome 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 acquiringthe control right of the combined parties, the confirmed relevant gains and losses, other comprehensiveincome and the changes of other net assets since the date of the earlier one between the date whenacquiring the original equity right and the date when the combine parties and combined ones were underthe same control to the combination date, should be respectively written down and compared with thebeginning 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 combiningenterprises are not ultimately controlled by the same party or the same parties both before and after thebusiness combination.The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a businesscombination shall be measured at the fair values. The acquirer shall recognize the positive balance betweenthe combination costs and the fair value of the identifiable net assets it obtains forms the acquiree asbusiness reputation. The direct relevant expenses occurred from the enterprise combination should beincluded in the current gains and losses when occurred. The combination costs of the acquirer and theidentifiable net assets obtained by it in the combination shall be measured according to their fair values atthe acquiring date. The difference between the fair value of the assets paid out by the Company and itsbook value should be included in the current gains and losses. The purchase date refers to the date that thepurchaser acquires the control right of the acquiree.For the business combinations not under the same control realized through step by step multipletransaction, as for the equity interests that the Group holds in the acquiree before the acquiring date, theyshall be re-measured according to their fair values at the acquiring date; the positive difference betweentheir fair values and carrying amounts shall be recorded into the investment gains for the period includingthe acquiring date. The equity holed by the acquiree which involved with the other comprehensive incomeand the other owners’ equities changes except for the net gains and losses, other comprehensive incomeand the profits distribution and other related comprehensive gains and other owners’ equities which inrelation to the equity interests that the Group holds in the acquiree before the acquiring date should betransferred into the current investment income on the acquiring date, except for the other comprehensiveincome occurred from the re-measurement of the net profits of the defined benefit plans or the changes ofthe 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 withactual control right into the consolidated financial statement.The consolidated financial statement of the Company is compiled according to the regulations of No. 33 ofASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significantcome-and-go balance, investment, transaction and the unrealized profits should be written off whencompiling 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 asminority interests and minority shareholder profits and losses respectively and presented separately undershareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’snet profits and losses for the period that belong to minority interests is presented as the item of “minorityshareholder profits and losses” under the bigger item of net profits in the consolidated financial statements.Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minorityshareholders 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 bythe Company when preparing the consolidated financial statements.As for the added subsidiary company not controlled by the same enterprise preparing the consolidatedfinancial statement, shall adjust individual financial statement based on the fair value of the identifiable netassets on the acquisition date; as for the added subsidiary companies controlled by the same enterprisepreparing the financial statement, shall not adjust the financial statement of the subsidiaries, namelysurvived by integration as participating in the consolidation when the final control party startsimplementing control and should adjust the period-begin amount of the consolidated balance sheet and atthe 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 theconsolidated income statement and the consolidated cash flow before the disposing date; the disposedsubsidiaries of the current period, should not be adjusted the period-begin amount of the consolidatedbalance sheet.Where the Group losses control on its original subsidiaries due to disposal of some equity investments orother reasons, the residual equity interests are re-measured according to the fair value on the date whensuch control ceases. The summation of the consideration obtained from the disposal of equity interests andthe fair value of the residual equity interests, minus the portion in the original subsidiary’s net assetsmeasured on a continuous basis from the acquisition date that is enjoyable by the Group according to theoriginal shareholding percentage in the subsidiary, is recorded in investment gains for the period when theGroup’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equityinvestment and the other owners’ equities changes except for the net gains and losses, other comprehensiveincome and profits distribution in the original subsidiary are treated on the same accounting basis as theacquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the netliabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, therest shall all be transferred into current investment gains) when such control ceases. And subsequentmeasurement is conducted on the residual equity interests according to the No.2 Accounting Standard forBusiness Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for BusinessEnterprises-Recognition and Measurement of Financial Instruments.For the disposal of equity investment belongs to a package deal, should be considered as a transaction andconduct accounting treatment. However, Before losing control, every disposal cost and corresponding netassets balance of subsidiary of disposal investment are confirmed as other comprehensive income inconsolidated financial statements, which together transferred into the current profits and losses in the lossof 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 accountingtreatment according to the relevant policies of partly disposing the equity investment of the subsidiariesunder 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 thedisposal of the subsidiaries.
7. Classification of Joint Arrangements and Accounting Treatment of Joint OperationsThe Group classifies joint arrangements into joint operations and joint ventures.A joint operation refers to a joint arrangement where the Group is the joint operations party of the jointarrangement and enjoys assets and has to bear liabilities related to the arrangement. The Companyconfirms the following items related to the interests share among the joint operations and executesaccounting 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 assetsaccording 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-heldliabilities 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 operationaccording 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 usedfor cover, and short-term (usually due within 3 months since the day of purchase) and high circulatinginvestments, which are easily convertible into known amount of cash and whose risks in change of valueare 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 intothe recording currency according to the middle price of the market exchange rate disclosed by the People’sBank of China on the date of the transaction. Among the said transactions that occurred, those involvingforeign 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 accountshall be converted into the recoding currency according to the middle price of the market exchange ratesdisclosed by the People’s Bank of China on the Balance Sheet Date. The difference between therecording-currency amount converted according to the exchange rate on the Balance Sheet Date and theoriginal book recording-currency amount shall be recognized as gains/losses from foreign exchange. Andthe 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 incurredin the establishment period shall be recorded into the establishment expense; others shall be recorded intothe financial expenses for the current period.On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall beconverted according to the middle price of the market exchange disclosed by the People’s Bank of Chinaon the date of the transaction, with no changes in the original recording-currency amount; while theforeign-currency non-monetary items measured by fair value shall be converted according to the middleprice of the market exchange disclosed by the People’s Bank of China on the date when the fair value isrecognized, and the exchange gain/loss caused thereof shall be recognized as the gain/loss from fair valuechanges and recorded into the gain/loss of the current period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at aspot 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 areincurred. And the revenues and expenses items among the balance sheet of the foreign operation shall betranslated at the approximate exchange rate of the transaction date. The difference caused from the abovetransaction of the foreign currency statement should be listed in the other comprehensive income amongthe owners’ equities.
10. Financial Instruments
(1) Classification of Financial Instruments
The Company classifies the financial assets when initially recognized into the following three categoriesbased on the business model for financial assets management and characteristics of contractual cash flowof financial assets: financial assets measured at amortized cost, financial assets at fair value through othercomprehensive income (debt instruments) and financial assets at fair value through profit or lossFinancial liabilities were classifies when initially recognized into financial liabilities at fair value throughprofit or loss and financial liabilities measured at amortized cost.
(2) Recognition Basis and Measurement Method for Financial Instruments
① Financial assets measured at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables,long-term receivables, and investment in debt obligations which are initially measured at fair value andrelated transaction cost shall be recorded into the initial recognized amount. For accounts receivableexcluding significant financing and accounts receivable that the Company decides not to considerfinancing components less than one year, the initial measurement shall be made at the contract transactionprice. The interest calculated with actual rates for the holding period shall be recorded into the currentprofit or loss. When recovered or disposed, the difference between the price obtained and the carryingvalue of the financial assets shall be recorded into the current profit or loss.
② Financial assets at fair value through other comprehensive income (debt instruments)Financial assets at fair value through other comprehensive income (debt instruments) include accountsreceivable financing and investment in other debt obligations which are initially measured at fair value andrelated transaction cost shall be recorded into the initial recognized amount. The subsequent measurement
of the financial assets shall be at fair value and changes of fair value except for interest calculated withactual rates, impairment losses or gains and exchange gains or losses shall be recorded into othercomprehensive income. When derecognized, the accumulated gains or losses originally recorded into othercomprehensive income shall be transferred into the current profit or loss.
③ Financial assets at fair value through other comprehensive income (equity instruments)Financial assets at fair value through other comprehensive income (equity instruments) include investmentin other equity instruments, etc. which are initially measured at fair value and related transaction cost shallbe recorded into the initial recognized amount. The subsequent measurement of the financial assets shall beat fair value and changes of fair value shall be recorded into other comprehensive income. The dividendsobtained shall be recorded into the current profit or loss. When derecognized, the accumulated gains orlosses originally recorded into other comprehensive income shall be transferred into retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include held-for-trading financial assets, derivativefinancial assets and other non-current financial assets which are initially measured at fair value and therelated transaction cost shall be recorded into the current profit or loss. The subsequent measurement of thefinancial assets shall be at fair value and the changes of fair value shall be recorded into the current profitor loss.
⑤ Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities andderivative financial liabilities which are initially measured at fair value and the related transaction costshall be recorded into the current profit or loss. The subsequent measurement of the financial liabilitiesshall be at fair value and the changes of fair value shall be recorded into the current profit or loss. Whenderecognized, the difference between the carrying value and the paid consideration shall be recorded intothe current profit or loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term borrowings, notes payable, accounts payable,other payables, long-term borrowings, bonds payable and long-term payables which are initially measuredat fair value and the related transaction cost shall be recorded into the initial recognized amount. Theinterest calculated with actual rates for the holding period shall be recorded into the current profit or loss.When derecognized, the difference between the paid consideration and the carrying value of the financialliabilities shall be recorded into the current profit or loss.
(3) Recognition Basis and Measurement of Transfer of Financial Assets
Where the Company has transferred nearly all of the risks and rewards related to the ownership of thefinancial asset to the transferee, it shall stop recognizing the financial asset and separately recognize therights and obligations generated retained from the transfer as assets or liabilities. If it retained nearly all ofthe risks and rewards related to the ownership of the financial asset, it shall continue to recognize thetransferred financial asset. Where the Company does not transfer or retain nearly all of the risks andrewards related to the ownership of a financial asset, it shall deal with it according to the circumstances asfollows, respectively: (1) If it gives up its control over the financial asset, it shall stop recognizing thefinancial asset and separately recognize the rights and obligations generated retained from the transfer asassets or liabilities; (2) If it does not give up its control over the financial asset, it shall, according to theextent of its continuous involvement in the transferred financial asset, recognize the related financial asset
and recognize the relevant liability accordingly.If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the differencebetween the amounts of the following 2 items shall be recorded in the profits and losses of the currentperiod: (1) The carrying value of the transferred financial asset on the derecognition date; (2) The sum ofconsideration received from the transfer of financial assets, and derecognition amount among theaccumulative amount of the changes of the fair value originally recorded in the other comprehensiveincome (the financial assets involve transfer are investments in debt instruments at fair value through othercomprehensive income. If the transfer of partial financial asset satisfies the conditions to stop therecognition, the entire carrying value of the transferred financial asset shall, between the portion whoserecognition has been stopped and the portion whose recognition has not been stopped, be apportionedaccording to their respective relative fair value on the transfer date, and the difference between theamounts of the following two items shall be included into the profits and losses of the current period:
(1)The carrying value of the portion whose recognition has been stopped; (2)The sum of consideration ofthe portion whose recognition has been stopped, and derecognition amount among the accumulativeamount of the changes of the fair value originally recorded in the other comprehensive income (thefinancial assets involve transfer are investments in debt instruments at fair value through othercomprehensive income.
(4) Derecognition Basis of Financial Liabilities
A financial liability or part of it can be derecognized after its current obligation has been relieved in full orin part.
(5) Recognition of Fair Value of Financial Assets and Financial Liabilities
The fair value of financial instruments with an active market is determined by the quoted price in theactive market. For financial instruments without active market, the fair value is determined by valuationtechniques. The Company adopts the valuation techniques applicable to the current conditions which aresupported by sufficient data and other information for valuation, and selects the input values consistentwith the characteristics of assets or liabilities considered by market participants in asset or liabilitytransactions, with priority to observable input values. Unobservable input values are used only whenrelevant observable input values are not available or practical.
(6) Impairment of financial instrument
① Impairment measurement and accounting handling of financial instrument
Based on expected credit loss, the Company conducts impairment handling and confirms creditimpairment loss for financial assets which is measured by amortized cost, debt instrument investmentwhich is measured by fair value and whose change is calculated into other comprehensive profits, financialguarantee contract.Expected credit loss refers to weighted average of credit loss of financial instrument which takes the risk ofcontract breach occurrence as the weight. Credit loss refers to the difference between all contract cash flowwhich is converted into cash according to actual interest rate and receivable according to contract and allcash flow which to be charged as expected, i.e. current value of all cash shortage. Among it, as forfinancial asset purchased or original which has had credit impairment, it should be converted into cashaccording actual interest rate of this financial asset after credit adjustment.As for financial asset purchased or original which has had credit impairment, the Company only confirmscumulative change of expected credit loss within the whole duration after initial confirmation on the
balance sheet date as loss reserve.As for accounts receivable which don’t include major financing contents or the Company does notconsider financing contents in contract which is less than one year, the Company applies simplifiedmeasurement method, and measures loss reserve according to amount of expected credit loss within thewhole duration.As for account receivable of rental and accounts receivable including major financing contents, theCompany applies simplified measurement method, and measure loss reserve according to amount ofexpected credit loss within the whole duration.As for financial asset beyond above mentioned measurement methods, the Company evaluates whether itscredit risk has increased obviously since the initial confirmation on each balance sheet date. In case creditrisk has increased obviously, the Company measures the loss reserve according to amount of expectedcredit loss within the whole duration; in case the credit risk does not increase obviously, the Companymeasures loss reserve according to the amount of expected credit loss in next 12 months.By utilizing obtainable rational and well grounded information, including forward-looking information,comparing the risk of contract breach on balance sheet date and risk of contract breach on initialconfirmation date, the Company confirms whether the credit risk of financial instrument has increasedobviously from initial confirmation.On balance sheet date, in case the Company judges that the financial instrument just has relatively lowcredit risk, then it will be assumed that credit risk of the financial instrument has not increased obviously.Based on single financial instrument or financial portfolio, the Company evaluates expected credit risk andmeasures expected credit loss. When based on financial instrument portfolio, the Company takes commonrisk characteristics as the basis, and divides financial instruments into different portfolios.The Company measures expected credit loss again on each balance sheet date, the increase of loss reserveor amount which is transfer back generated by it is calculated into current profits and losses as impairmentprofits or losses. As for financial asset which is measured by amortized cost, loss reserve offsets thecarrying value of the financial asset listed in the balance sheet; as for debt investment which is measuredby fair value and whose change is calculated into other comprehensive profits, the Company confirms itsloss reserve in other comprehensive profits and does not offset the carrying value of the financial asset.
② For notes receivable, accounts receivable, other receivables and long-term receivables with objectiveevidence indicating impairment and those suitable for individual evaluation, the Company carries outimpairment test separately to confirm expected credit loss and prepare provision for impairment of singleitems. For notes receivable, accounts receivable and other receivables without objective evidence ofimpairment, or a single financial asset with expected credit loss impossible to be assessed at a reasonablecost, the Company divides the receivables into groups according to the characteristics of credit risk, andcalculates the expected credit loss based on receivable groups.Accounts receivable with expected credit losses measured by groupsSpecific groups and method of measuring expected credit loss
| Item | Recognition basis | Method of measuring expected credit losses |
| Bank’s acceptance bills receivable | Bill type | Consulting historical experience in credit losses, combining current situation and prediction for future economic situation, the expected credit loss shall be accounted through exposure at default and the expected |
| Trade acceptance bills |
| receivable | credit loss rate over the entire life | |
| Accounts receivable-credit risk characteristics group | Aging group | Prepare the comparative list between aging of accounts receivable and expected credit loss rate over the entire life and calculate the expected credit loss by consulting historical experience in credit losses, combining current situation and prediction for future economic situation |
| Accounts receivable-intercourse funds among related party group within the consolidation scope | Related party within the consolidation scope | Consulting historical experience in credit losses, combining current situation and prediction for future economic situation, the expected credit loss shall be accounted through exposure at default and the expected credit loss rate over the entire life |
Accounts receivable-the comparative list between aging of credit risk characteristic group and expectedcredit loss rate over the entire life
| Aging | Withdrawal proportion |
| Within 1 year | 2.00% |
| 1 to 2 years | 5.00% |
| 2 to 3 years | 15.00% |
| 3 to 4 years | 30.00% |
| 4 to 5 years | 60.00% |
| Over 5 years | 100.00% |
Other receivables with expected credit losses measured by groupsSpecific groups and method of measuring expected credit loss
| Item | Recognition basis | Method of measuring expected credit losses |
| Other receivables-aging analysis group | Aging group | Consulting historical experience in credit losses, combining current situation and prediction for future economic situation, the expected credit loss shall be accounted through exposure at default and the expected credit loss rate within the next 12 months or over the entire life |
| Other receivables-intercourse funds among related party group within the consolidation scope | Related party within the consolidation scope | Consulting historical experience in credit losses, combining current situation and prediction for future economic situation, the expected credit loss shall be accounted through exposure at default and the expected credit loss rate over the entire life |
For the measurement of impairment loss of other receivables, refer to the aforesaid measurement of
impairment loss of accounts receivable.
11. Notes Receivable
See “10. Financial Instruments”.
12. Accounts Receivable
See “10. Financial Instruments”.
13. Inventory
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materialsconsumed in the production process or the process providing the labor service etc. Inventory is mainlyincluding the raw materials, low priced and easily worn articles, unfinished products, inventories and workin process–outsourced etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and thedispatch be calculated according to the weighted average method; carried forward the cost of the finishedproducts according to the actual cost of the current period and the sales cost according to the weightedaverage method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision forfalling price of inventoryAt the balance sheet date, inventories are measured at the lower of the costs and net realizable value. Whenall the inventories are checked roundly, for those which were destroyed, outdated in all or in part, sold at aloss, etc, the Company shall estimate the irrecoverable part of its cost and withdrawal the inventory fallingprice reserve at the year-end. Where the cost of the single inventory item is higher than the net realizablevalue, the inventory falling price reserve shall be withdrawn and recorded into profits and losses of thecurrent period. Of which: in the normal production and operating process, as for the commoditiesinventory directly for sales such as the finished products, commodities and the materials for sales, shouldrecognize the net realizable value according to the amount of the estimated selling price of the inventoryminuses the estimated selling expenses and the relevant taxes; as for the materials inventory needs to beprocessed in the normal production and operating process, should recognize its net realizable valueaccording to the amount of the estimated selling price of the finished products minuses the cost predicts tobe 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 partsnot by the contract price, should be respectively recognized the net realizable value. For items ofinventories relating to a product line that are produced and marketed in the same geographical area, havethe same or similar end users or purposes, and cannot be practicably evaluated separately from other itemsin that product line provision for decline in value is determined on an aggregate basis; for large quantityand low value items of inventories, provision for decline in value is made based on categories of
inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumables and packages
One time amortization method is adopted for low-value consumables and packages.
14. Contract Assets
Contract Assets means that the Company is endowed with the right to charge the consideration throughtransferring any commodity or service to the client, and such right depends on other factors except thepassing of time. The Company’s unconditional right (only depending on the passing of time) of chargingthe consideration from the client shall be separately presented as receivables.The recognition method and accounting treatment method of the estimated credit loss of contract assets areconsistent with that specified in Notes V.12.
15. Contract Costs
(1) Costs from Acquiring Contract
If the incremental cost resulting from the Company’s acquiring of contract (namely costs merely resultingfrom the acquiring of contract) is predicted to be retrieved, it shall be recognized as an assets, amortized byadopting the same basis with the recognition of commodities or service revenues related to the assets andincluded into the current profit and loss. If the assets’ amortization period does not exceed one year, it shallbe immediately included into the current profit and loss. Other expenses resulting from the Company’sacquiring of contract shall also be included into the current profit and loss unless it is explicitly borne bythe client.
(2) Costs from Executing Contract
The Company’s costs from executing contract is not covered by other ASBE except for Revenue Standards,and when the following situations are met, such costs can be recognized as an assets: ① the costs aredirectly related to a current or predicted contract; ② the costs increase the Company’s resources applied tofulfill performance obligations in the future; ③ the costs are predicted to be retrieved. The recognizedassets shall be amortized by adopting the same basis with the recognition of commodities or servicerevenues related to the assets and included into the current profit and loss.If the book value of contract costs is higher than the difference of the following two items, correspondingdepreciation reserves shall be counted and withdrawn and it shall be recognized as the assets depreciationloss: ① the residual consideration predicted to be acquired by transferring commodities related to theassets; ② the costs predicted to occur due to the transfer of related commodities.If the difference between ① and ② is higher than the book value of contract costs due to any change invarious factors causing depreciation in previous periods, it shall be restituted to the withdrawn assetsdepreciation reserves and included in the current profit and loss. However, the book value of restitutedcontract costs shall not exceed the book value of the assets on the day of restitution based on thehypothesis that depreciation reserves are not counted and withdrawn.
16. Assets Held for Sale
The Company recognizes the components (or the non-current assets) which meet with the followingconditions 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 acquiredthe approved from the Annual General Meeting or the relevant authority institutions;
(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.
17. Long-term Equity Investments
(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement bythe Company and the relevant activities of the arrangement should be decided only after the participantswhich share the control right make consensus. Significant influence refers to the power of the Companywhich could anticipate in the finance and the operation polices of the investees, but could not control orjointly control the formulation of the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting thefollowing 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 cashpayment, non-cash assets transformation, liabilities assumption or equity securities issuance as thecombination consideration, should take the shares of the book value by the ultimate control party in theconsolidate financial statement of the owners’ equities of the combiners acquired on the merger date as theinitial investment cost. The difference between the initial investment cost and the book value of the paidcombination consideration or the total amount of the issued shares of the long-term equity investmentshould be adjusted the capital reserve; If the capital reserve is insufficient to dilute, the retained earningsshall be adjusted. To include each direct relevant expense occurred when executing the enterprise mergerinto the current gains and losses; while the handling charges and commission occurs from the issuing theequity securities or the bonds for the enterprise merger should be included in the initial measurementamount of the shareholders’ equities or the liabilities.
2) As for long-term equity investment acquired through the merger of enterprises not under the samecontrol, its initial investment cost shall regard as the combination cost calculated by the fair value of theassets, equity instrument issued and liabilities incurred or undertaken on the purchase date adding thedirect 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 valuewithout considering the amount of minority interest. The acquirer shall recognize the positive balancebetween the combination costs and the fair value of the identifiable net assets it obtains from the acquireeas business reputation. The acquirer shall record the negative balance between the combination costs andthe fair value of the identifiable net assets it obtains from the acquiree into the consolidated incomestatement directly. The agent expense and other relevant management expenses such as the audit, legalservice and evaluation consultation occurs from the enterprise merger, should be included in the currentgains and losses when occur; while the handling charges and commission occurs from the issuing theequity securities or the bonds for the enterprise merger should be included in the initial measurementamount 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 purchasecost which is actually paid.The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall bethe 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 theinvestment contract or agreement, the unfair value stipulated in the contract or agreement shall bemeasured at fair value.As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial innature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equityinvestment received; where it is not commercial in nature, the book value of the assets surrendered shall berecognized 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 berecognized 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 methodWhere the Company hold, and is able to do equity investment with control over an invested entity, theinvested 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 equitymethodWhere the Company hold, and is able to do equity investment with joint control with other parties over aninvested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able tohave equity investment with significant influences on an invested entity, the invested entity shall be itsassociated entity.After the Company acquired the long-term equity investment, should respectively recognize investmentincome and other comprehensive income according to the net gains and losses as well as the portion ofother comprehensive income which should be enjoyed or be shared, and at the same time adjust the bookvalue of the long-term equity investment; corresponding reduce the book value of the long-term equityinvestment according to profits which be declared to distribute by the investees or the portion of thecalculation of cash dividends which should be enjoyed; for the other changes except for the net gains andlosses, other comprehensive income and the owners’ equity except for the profits distribution of theinvestees, 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 entitywhen it obtains the investment, recognize the attributable share of the net profits and losses of the investedentity after it adjusts the net profits of the invested entity.If the accounting policy adopted by the investees is not accord with that of the Company, should beadjusted according to the accounting policies of the Company and the financial statement of the investeesduring the accounting period and according which to recognize the investment income as well as othercomprehensive income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, ifthe assets launched or sold not form into business, the portion of the unrealized gains and losses of theinternal transaction, which belongs to the Company according to the calculation of the enjoyed proportion,should recognize the investment gains and losses on the basis. But the losses of the unrealized internaltransaction happened between the Company and the investees which belongs to the impairment losses ofthe 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 ofthe long-term equity investment is insufficient for written down, should be continued to recognized theinvestment losses limited to the book value of other long-term equity which forms of the net investment ofthe investees and to written down the book value of the long-term accounts receivable etc. Lastly, throughthe above handling, for those should still undertake the additional obligations according to the investmentcontracts or the agreements, it shall be recognized as the estimated liabilities in accordance with theestimated duties and then recorded into investment losses at current period. If the invested entity realizesany net profits later, the Company shall, after the amount of its attributable share of profits offsets againstits 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 investmentincreased by acquiring shares of minority interest and the attributable net assets on the subsidiarycalculated by the increased shares held since the purchase date (or combination date), the capital reservesshall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted; theCompany disposed part of the long-term equity investment on subsidiaries without losing its controllingright on them, the balance between the disposed price and attributable net assets of subsidiaries bydisposing 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 thedisposed 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 afterdisposal still adopts the equity method for measurement, the other comprehensive income originallyrecorded into owners’ equity should adopt the same basis of the accounting disposal of the relevant assetsor 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 thecurrent gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement, if the remained equitystill adopt the cost method, the other comprehensive income recognized owning to adopting the equitymethod for measurement or the recognition and measurement standards of financial instrument beforeacquiring the control of the investees, should adopt the same basis of the accounting disposal of therelevant assets or liabilities directly disposed by the investees and should be carried forward into thecurrent gains and losses according to the proportion; the changes of the other owners’ equity except for thenet gains and losses, other comprehensive income and the profits distribution among the net assets of theinvestees which recognized by adopting the equity method for measurement, should be carried forwardinto 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 shouldadjust the measurement of the remained equity to equity method as adopted since the time acquired; if theremained 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 andmeasurement standards of financial instrument, and its difference between the fair value and book value onthe date lose the control right should be included in the current gains and losses. For the othercomprehensive income recognized by adopting equity method for measurement or the recognition andmeasurement standards of financial instrument before the Company acquired the control of the investees,should execute the accounting disposal by adopting the same basis of the accounting disposal of therelevant assets or liabilities directly disposed by the investees when lose the control of them, while thechanges of the other owners’ equity except for the net gains and losses, other comprehensive income andthe profits distribution among the net assets of the investees which recognized by adopting the equitymethod for measurement, should be carried forward into the current gains and losses according to theproportion. 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 theproportion; for the disposed remained equity which changed to execute the accounting disposal accordingto the recognition and measurement standards of financial instrument, the other comprehensive income andthe 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, thedisposed remained equity should change to calculate according to the recognition and measurementstandards of financial instrument, and difference between the fair value and book value on the date lose thecontrol right should be included in the current gains and losses. For the other comprehensive incomerecognized from the original equity investment by adopting the equity method, should execute theaccounting disposal by adopting the same basis of the accounting disposal of the relevant assets orliabilities directly disposed by the investees when terminate the equity method for measurement, while forthe owners’ equity recognized owning to the changes of the other owner’s equity except for the net gainsand losses, other comprehensive income and the profits distribution of the investees, should be transferredinto the current investment income with full amount when terminate adopting the equity method.
18. Investment Real Estate
Measurement mode of investment real estate:
Measurement of cost methodDepreciation or amortization methodThe investment real estate shall be measured at its cost. Of which, the cost of an investment real estate byacquisition 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 tothe hoped condition for use. The investment real estate invested by investors shall be recorded at the valuestipulated in the investment contracts or agreements, but the unfair value appointed in the contract oragreement 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 withdrawalmethod for provision for impairment of fixed assets.
19. Fixed Assets
(1) Recognition Conditions
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they areheld 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 relevanteconomic benefits probably flow in the Company and its cost could be reliable measured.
(2) Depreciation Method
| Category of fixed assets | Method | Useful life | Annual deprecation |
| Housing and building | Average method of useful life | 20-40 | 2.50%-5% |
| Machinery equipment | Average method of useful life | 6-15 | 6.67%-16.67% |
| Transportation equipment | Average method of useful life | 5-10 | 10%-20% |
| Other equipment | Average method of useful life | 5-10 | 10%-20% |
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance LeaseThe Company recognizes those meet with the following one or certain standards as the fixed assets byfinance lease:
1) The leasing contract had agreed that (or made the reasonable judgment according to the relevantconditions on the lease starting date) when the lease term expires, the ownership of leasing the fixed assetscould be transferred to the Company;
2) The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchaseprice which is estimated far lower than the fair value of the fixed assets by finance lease when executingthe 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 theuseful 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 to90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of theminimum lease receipts on the lease starting date of the leaser is equal to 90% or above of the fair value ofthe 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 largetransformation.The fixed assets by finance lease should take the lower one between the fair value of the leasing assets andthe current value of the minimum lease payment on the lease starting date as the entry value. As for theminimum 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 occurin the lease negotiations and the signing process of the lease contracts that attribute to the handlingexpenses, counsel fees, travel expenses and stamp taxes of the lease items, should be included in thecharter-in assets value. The unrecognized financing expenses should be amortized by adopting the actualinterest 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 itis reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease termexpires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certainthat the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased assetshall be fully depreciated over the shorter one of the lease term or its useful life
20. Construction in Progress
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured atdirect materials, direct wages and direct construction fees; construction contract shall be measured atproject price payable; project cost for plant engineering shall be recognized at value of equipmentsinstalled, cost of installation, trail run of projects. Costs of construction in process also include borrowingcosts and exchange gains and losses, which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time pointThe construction in process, of which the fixed assets reach to the predicted condition for use, shall carryforward fixed assets on schedule. The one that has not audited the final accounting shall recognize the costand make depreciation in line with valuation value. The construction in process shall adjust the originalvaluation value at its historical cost but not adjust the depreciation that has been made after auditing thefinal accounting.
21. Borrowing Costs
(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums onborrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where theborrowing costs occurred belong to specifically borrowed loan or general borrowing used for theacquisition 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 asexpenses on the basis of the actual amount incurred, and shall be recorded into the current profits andlosses. The borrowing costs shall not be capitalized unless they simultaneously meet the following threerequirements: (1) The asset disbursements have already incurred; (2) The borrowing costs have alreadyincurred; and (3) The acquisition and construction or production activities which are necessary to preparethe 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 andinventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowingcosts shall be measured into asset cost before such assets reach to the intended use or sale, Whereacquisition 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 borrowingcosts shall be suspended, and recorded into the current expense, till the acquisition and construction of theassets restarts. When the qualified asset is ready for the intended use or sale, the capitalization of theborrowing costs shall be ceased, the borrowing costs occurred later shall be included into the financialexpense 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 forcapitalization, the to-be-capitalized amount of interests shall be determined in light of the actual costincurred of the specially borrowed loan at the present period minus the income of interests earned on theunused 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 forcapitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on thegeneral borrowing by multiplying the weighted average asset disbursement of the part of the accumulativeasset 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 ofthe general borrowing.
22. Intangible Assets
(1) Pricing Method, Service Life, and Impairment Test
(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actualcost.For the intangible assets invested by the investors should be recognized the actual cost according to thevalue of the investment contracts or agreements, however, for the value of the contracts or agreements isnot fair, the actual cost should be recognized according to the fair value.For the intangible assets acquires from the exchange of the non-currency assets, if own the commercialnature, should be recorded according to the fair value of the swap-out assets; for those not own thecommercial 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 itis available for use within the service period, shall be recorded into the current profits and losses. TheCompany shall, at least at the end of each year, check the service life and the amortization method ofintangible assets with limited service life. When the service life and the amortization method of intangibleassets 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 theservice life of intangible assets with uncertain service life during each accounting period. Where there areevidences to prove the intangible assets have limited service life, it shall be estimated of its service life,and be amortized according to the above method mentioned.The rights to use land of the Company shall be amortized according to the rest service life.
(2) Accounting Polices of Internal R & D Costs
The internal research and development projects of an enterprise shall be classified into research phase anddevelopment phase: the term “research” refers to the creative and planned investigation to acquire andunderstand new scientific or technological knowledge; the term “development” refers to the application ofresearch achievements and other knowledge to a certain plan or design, prior to the commercial productionor use, so as to produce any new material, device or product, or substantially improved material, deviceand product.The Company collects the costs of the corresponding phases according to the above standard of classifyingthe research phase and the development phase. The research expenditures for its internal research anddevelopment projects of an enterprise shall be recorded into the profit or loss for the current period. Thedevelopment costs for its internal research and development projects of an enterprise may be capitalizedwhen they satisfy the following conditions simultaneously: it is feasible technically to finish intangibleassets for use or sale; it is intended to finish and use or sell the intangible assets; the usefulness of methodsfor intangible assets to generate economic benefits shall be proved, including being able to prove that thereis a potential market for the products manufactured by applying the intangible assets or there is a potentialmarket for the intangible assets itself or the intangible assets will be used internally; it is able to finish thedevelopment of the intangible assets, and able to use or sell the intangible assets, with the support ofsufficient technologies, financial resources and other resources; the development costs of the intangibleassets can be reliably measured.
23. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limitedservice life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperativeenterprises and joint ventures, the Company should judge whether decrease in value exists on the date ofbalance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangibleAssets of reputation and uncertain service life and other non-accessible intangible assets should be testedfor decrease in value no matter whether it exists.If the recoverable amount is less than book value in impairment test results, the provision for impairmentof differences should include in impairment loss. Recoverable amounts would be the higher of net value ofasset fair value deducting disposal charges or present value of predicted cash flow. Asset fair value shouldbe determined according to negotiated sales price of fair trade. If no sales agreement exists but with assetactive market, fair value should be determined according to the Buyer’s price of the asset. If no salesagreement or asset active market exists, asset fair value could be acquired on the basis of best informationavailable. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantableAssets related to asset disposal. Present value of predicted asset cash flow should be determined by theproper discount rate according to Assets in service and predicted cash flow of final disposal. Assetdepreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict therecoverable amounts for single Assets, recoverable amounts should be determined according to thebelonging 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 beneficialasset group and asset group combination in collaboration of business merger. It is shown in the test that ifrecoverable 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 deductedand shared to the book value of business reputation of asset group or asset group combination, then deductbook value of all assets according to proportions of other book value of above assets in asset group or assetgroup combination except business reputation.After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
24. Long-term Deferred Expenses
Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure, andamortized averagely within benefit period. In case of no benefit in the future accounting period, theamortized value of such project that fails to be amortized shall be transferred into the profits and losses ofthe current period.
25. Contract Liabilities
Contract liabilities refer to the Company’s obligations in transferring commodities or services to the clientfor the received or predicted consideration. Contract assets and contract liabilities under the same contractshall be presented based on the net amount.
26. Employee Benefits
(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services andbenefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium,housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. Theshort-term compensation actually happened during the accounting period when the active staff offering theservice for the Company should be recognized as liabilities and is included in the current gains and lossesor 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 definedbenefit plans. Welfare plans after demission refers to the agreement on the welfare after demission reachesbetween the Company and the employees, or the regulations or methods formulated by the Company forproviding the welfare after demission for the employees. Of which, defined contribution plans refers to thewelfare plans after demission that the Company no more undertake the further payment obligations afterthe payment of the fixed expenses for the independent funds; defined benefit plans, refers to the welfareplans after demission except for the defined contribution plans.Defined contribution plansDuring the accounting period that the Company providing the service for the employees, the Companyshould 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 losseswhen providing the demission welfare for the employees: the Company could not unilaterally withdraw thedemission welfare owning to the relieve plans of the labor relationship or reduction; when the Companyrecognizing the costs or expenses related to the reorganization involves with the demission welfarepayments.
27. Provisions
(1) Criteria of provisions
Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when thefollowing 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 theobligation;
3) The amount of the obligation can be measured in a reliable way.
(2) Measurement of provisions
The Company shall measure the provisions in accordance with the best estimate of the necessary expensesfor the performance of the current obligation.The Company shall check the book value of the provisions on the Balance Sheet Date. If there is anyconclusive evidence proving that the said book value can’t truly reflect the current best estimate, theCompany shall, subject to change, make adjustment to carrying value to reflect the current best estimate.
28. Revenue
Accounting policies for recognition and measurement of revenue:
When the Company fulfills its due performance obligations (namely when the client obtains the controlover related commodities or services), revenues shall be recognized based on the obligation’s amortizedtransaction price. Performance Obligation refers to the Company’s promise of transferring commodities orservices that can be clearly defined to the client. Transaction Price refers to the consideration amount dulycharged by the Company for transferring commodities or services to the client, excluding any amountcharged by the third party and any amount predicted to be returned to the client. Control Over RelevantCommodities means that the use of commodities can be controlled and almost all economic interests canbe obtained.On the contract commencement day, the Company shall evaluate the contract, recognize individualperformance obligation and confirm that individual performance obligation is fulfilled in a certain periodor at a certain time. When one of the following conditions is met, such performance obligation shall bedeemed as fulfilled in a certain period, and the Company shall recognize it as revenue within a certainperiod according to the performance schedule: (1) the client obtains and consumes the economic interestsresulting from the Company’s performance of contract while performing the contract; (2) the client is ableto control the commodities under construction during the performance; (3) commodities produced by theCompany during the performance possess the irreplaceable purpose, and the Company has the right tocharge all finished parts during the contract period; otherwise, the Company shall recognize the revenuewhen the client obtains the control over relevant commodities or services.
The Company shall adopt the Input Method to determine the Performance Schedule. Namely, thePerformance Schedule shall be determined according to the Company’s input for fulfilling performanceobligations. When the Performance Schedule cannot be reasonably determined and all resulting costs arepredicted to be compensated, the Company shall recognize the revenue based on the resulting cost amounttill the Performance Schedule can be reasonably determined.When the contract involves two or more than two performance obligations, the transaction price shall beamortized to each single performance obligation on the contract commencement day according to therelative proportion of the independent selling price of commodities or services under each singleperformance obligation. If any solid evidence proves that the contract discount or variable considerationonly relates to one or more than one (not all) performance obligation under the contract, the Company shallamortize the contract discount or variable consideration to one or more than one related performanceobligations. Independent selling price refers to the price adopted by the Company to independently sellcommodities or services to the client. However, independent selling price cannot be directly observed. TheCompany shall estimate the independent selling price by comprehensively considering all relatedinformation that can be reasonably obtained and maximally adopting the observable input value.Variable ConsiderationIf any variable consideration exists in the contract, the Company shall determine the optimal estimation ofthe variable consideration based on the expected values or the most possible amount. The variableconsideration’s transaction price shall be included without exceeding the total revenue amount recognizedwithout the risk of significant restitution when all uncertainties are eliminated. On each balance sheet day,the Company shall re-estimate the variable consideration amount to be included in the transaction price.Consideration Payable to the ClientIf any consideration payable to the client exists in the contract, the Company shall use such considerationto offset the transaction price unless such consideration is paid for acquiring other clearly-definedcommodities or services from the client, and write down the current revenue at the later time between thetime of recognizing relevant revenues and the time of paying (or promising the payment) the considerationto the client.Sales with the Quality AssuranceFor sales with the Quality Assurance, if the Quality Assurance involves another separate service except forthe guarantee of all sold commodities or services meeting all established standards, the Quality Assuranceshall constitute a single Performance Obligation; otherwise, the Company shall make correspondingaccounting treatment to the Quality Assurance according to ASBE No.13--Contingency.Main Responsibility Person/AgentAccording to whether the control over commodities or services is obtained before they are transferred tothe client, the Company can judge whether it is Main Responsibility Person or Agent based on its statusduring the transaction. If the Company can control commodities or services before they are transferred tothe client, the Company shall be Main Responsibility Person, and revenues shall be recognized accordingto the total consideration amount received or to be received; otherwise, the Company shall be Agent, andrevenues shall be recognized according to the commission or service fees predicted to be duly charged.However, such amount shall be determined based on the net amount after deducting other amounts payableto other related parties from the total consideration received or to be duly received or the fixed commission
amount or proportion.Interest RevenueInterest Revenue shall be determined according to the time of the Company’s use of monetary capital andthe actual interest rate.Rental IncomeThe rental income from operating lease shall be recognized during each lease period according to thestraight-line method, and the contingent rent shall be included into the current profit and loss withoutdelay.
29. Government Grants
(1) Type
A government grant means the monetary or non-monetary assets obtained free by an enterprise from thegovernment. Government grants consist of the government grants pertinent to assets and governmentgrants pertinent to income according to the relevant government documents.For those the government documents not definite stipulate the assistance object, the judgment basis of theCompany classifies the government grants pertinent to assets and government subsidies pertinent toincome is: whether are used for purchasing or constructing or for forming the long-term assets by othermethods.
(2) Recognition of Government Subsidies
The government subsidies should be recognized only when meet with the attached conditions of thegovernment grants as well as could be acquired.If the government grants are the monetary assets, should be measured according to the received orreceivable amount; and for the government grants are the non-monetary assets, should be measured by fairvalue.
(3) Accounting Treatment
The government grants pertinent to assets shall be recognized as deferred income, and included in thecurrent gains and losses or offset the book value of related assets within the useful lives of the relevantassets with a reasonable and systematic method. Government grants pertinent to income used tocompensate the relevant costs, expenses or losses of the Company in the subsequent period shall berecognized as deferred income, and shall be included in the current profit and loss during the period ofconfirming the relevant costs, expenses or losses; those used to compensate the relevant costs, expenses orlosses of the Company already happened shall be included in the current gains and losses or used to offsetrelevant costs directly.For government grants that include both assets-related and income-related parts, they should bedistinguished separately for accounting treatment; for government subsidies that are difficult to bedistinguished, they should be classified as income-related.Government grants related to the daily activities of the Company shall be included into other income orused to offset relevant costs by the nature of economic business; those unrelated shall be included intonon-operating income.The government grants recognized with relevant deferred income balance but need to return shall be usedto offset the book balance of relevant deferred income, the excessive part shall be included in the current
gains and losses or adjusting the book value of assets for the government grants assets-related that offsetthe book value of relevant assets when they are initially recognized; those belong to other cases shall bedirectly included in the current gains and losses.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, adeferred tax asset shall be measured in accord with the tax rates that are expected to apply to the periodwhen 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 Companyprobably gains for deducting the deductible temporary differences. At the balance sheet date, where thereis strong evidence showing that sufficient taxable profit will be available against which the deductibletemporary difference can be utilized, the deferred tax asset unrecognized in prior period shall berecognized.The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probablethat sufficient taxable profit will not be available against which the deductible temporary difference can beutilized, the Company shall write down the carrying amount of deferred tax asset, or reverse the amountwritten 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, Adeferred tax liability shall be measured in accord with the tax rates that are expected to apply to the periodwhen the asset is realized or the liability is settled.
31. Lease
(1) Accounting Treatment of Operating Lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost orthe current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall berecognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in whichthey are incurred.Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over thelease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initialdirect expenses occur should be directly included in the current gains and losses except for those with largeramount and be capitalized as well as be included in the gains and losses by stages. Contingent rents shall becharged 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 ofthe 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 paymentsas the entering value in an account of long-term account payable, and treat the balance between therecorded amount of the leased asset and the long-term account payable as unrecognized financing chargesand the occurred initial direct expenses, should be recorded in the lease assets value. During each leaseperiod, 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 recognizethe sum of the minimum lease receipts on the lease beginning date and the initial direct costs as theentering value in an account of the financing lease values receivable, and record the unguaranteed residualvalue at the same time. The balance between the sum of the minimum lease receipts, the initial direct costsand the unguaranteed residual value and the sum of their present values shall be recognized as unrealizedfinancing income. During each lease period, should recognize the current financing revenues adopting theactual interest rate.
32. 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 hadbeen disposed by the Group or be classified to held-to-sold as well as could be individually distinguishedin 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 operationarea;
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 foravoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., andwhich is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all orpart 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 enterprisefor hedging and by which it is expected that changes in its fair value or cash flow can offset the changes infair value or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivativefinancial 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 fairvalue or cash flow and are designated as the hedged objectives.The hedging should be executed by the hedging accounting methods when satisfying the followingconditions 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 formalwritten 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 confirmedfor 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 andlosses.
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.
33. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
| Changes to the accounting policies and why | Approval process | Remark |
| The Ministry of Finance issued the Notice on Revising and Printing the Accounting Standards for Business Enterprises No.14-Revenue (CK[2017]No.22) (hereinafter referred to as the “New Standards governing Revenue”) in July 2017 and required all domestically listed companies to implement it since 1 January 2020. | On 28 April 2020, the Company held the 2nd Meeting of the 9th Board of Directors and the 2nd Meeting of the 9th Supervisory Committee and approved the Proposal on Changes of Some Accounting Policies |
(1) Influence of Implementing the New Standards Governing Revenue
Affected items in the consolidated balance sheet and amount thereof:
| Item | 31 December 2019 | Affected by classification and measurement | 1 January 2020 |
| Advances from customers | 31,789,001.78 | -31,789,001.78 | |
| Contract liabilities | 31,789,001.78 |
Affected items in the balance sheet of the Company as the parent and amount thereof:
| Item | 31 December 2019 | Affected by classification and measurement | 1 January 2020 |
| Advances from customers | 28,673,664.87 | -28,673,664.87 |
| Contract liabilities | 28,673,664.87 |
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any NewStandards Governing Revenue or Leases since 2020Applicable
Consolidated Balance Sheet
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Monetary assets | 638,589,260.09 | 638,589,260.09 | |
| Settlement reserve | |||
| Interbank loans granted | |||
| Held-for-trading financial assets | 13,050,000.00 | 13,050,000.00 | |
| Derivative financial assets | |||
| Notes receivable | 606,283,023.05 | 606,283,023.05 | |
| Accounts receivable | 419,302,056.87 | 419,302,056.87 | |
| Accounts receivable financing | |||
| Prepayments | 12,968,746.16 | 12,968,746.16 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 9,703,390.94 | 9,703,390.94 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 473,359,168.90 | 473,359,168.90 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 6,421,275.47 | 6,421,275.47 | |
| Total current assets | 2,179,676,921.48 | 2,179,676,921.48 | |
| Non-current assets: |
| Loans and advances to customers | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | |||
| Investments in other equity instruments | 532,886,000.00 | 532,886,000.00 | |
| Other non-current financial assets | 77,952,101.63 | 77,952,101.63 | |
| Investment property | 48,447,666.83 | 48,447,666.83 | |
| Fixed assets | 457,722,667.32 | 457,722,667.32 | |
| Construction in progress | 91,358,156.24 | 91,358,156.24 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 99,699,450.26 | 99,699,450.26 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 53,497.80 | 53,497.80 | |
| Deferred income tax assets | 1,023,863.04 | 1,023,863.04 | |
| Other non-current assets | |||
| Total non-current assets | 1,309,143,403.12 | 1,309,143,403.12 | |
| Total assets | 3,488,820,324.60 | 3,488,820,324.60 | |
| Current liabilities: | |||
| Short-term borrowings | 22,000,000.00 | 22,000,000.00 | |
| Borrowings from the central bank | |||
| Interbank loans obtained | |||
| Held-for-trading financial |
| liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 403,035,000.00 | 403,035,000.00 | |
| Accounts payable | 525,625,016.89 | 525,625,016.89 | |
| Advances from customers | 31,789,001.78 | -31,789,001.78 | |
| Contract liabilities | 31,789,001.78 | 31,789,001.78 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Employee benefits payable | 44,559,015.79 | 44,559,015.79 | |
| Taxes payable | 9,094,382.58 | 9,094,382.58 | |
| Other payables | 205,064,145.10 | 205,064,145.10 | |
| Including: Interest payable | |||
| Dividends payable | 3,891,433.83 | 3,891,433.83 | |
| Handling charges and commissions payable | |||
| Reinsurance payables | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | 1,177,712.38 | 1,177,712.38 | |
| Total current liabilities | 1,242,344,274.52 | 1,242,344,274.52 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 58,864,111.22 | 58,864,111.22 | |
| Deferred income tax liabilities | 57,082,890.27 | 57,082,890.27 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 115,947,001.49 | 115,947,001.49 | |
| Total liabilities | 1,358,291,276.01 | 1,358,291,276.01 | |
| Owners’ equity: | |||
| Share capital | 561,374,326.00 | 561,374,326.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 164,328,665.43 | 164,328,665.43 | |
| Less: Treasury stock | |||
| Other comprehensive income | 317,059,775.00 | 317,059,775.00 | |
| Specific reserve | 17,560,202.07 | 17,560,202.07 | |
| Surplus reserves | 322,228,533.72 | 322,228,533.72 | |
| General reserve | |||
| Retained earnings | 728,341,265.36 | 728,341,265.36 | |
| Total equity attributable to owners of the Company as the parent | 2,110,892,767.58 | 2,110,892,767.58 |
| Non-controlling interests | 19,636,281.01 | 19,636,281.01 | |
| Total owners’ equity | 2,130,529,048.59 | 2,130,529,048.59 | |
| Total liabilities and owners’ equity | 3,488,820,324.60 | 3,488,820,324.60 |
Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2019 | 1 January 2020 | Adjusted |
| Current assets: | |||
| Monetary assets | 584,957,678.96 | 584,957,678.96 | |
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 576,948,023.05 | 576,948,023.05 | |
| Accounts receivable | 337,447,538.04 | 337,447,538.04 | |
| Accounts receivable financing | |||
| Prepayments | 6,386,284.14 | 6,386,284.14 | |
| Other receivables | 22,741,542.22 | 22,741,542.22 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventories | 368,653,472.39 | 368,653,472.39 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 3,898,333.51 | 3,898,333.51 | |
| Total current assets | 1,901,032,872.31 | 1,901,032,872.31 | |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Investments in other debt obligations |
| Long-term receivables | |||
| Long-term equity investments | 252,752,730.03 | 252,752,730.03 | |
| Investments in other equity instruments | 532,886,000.00 | 532,886,000.00 | |
| Other non-current financial assets | 50,000,000.00 | 50,000,000.00 | |
| Investment property | 48,447,666.83 | 48,447,666.83 | |
| Fixed assets | 364,071,199.07 | 364,071,199.07 | |
| Construction in progress | 89,330,161.60 | 89,330,161.60 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 70,169,770.91 | 70,169,770.91 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | |||
| Deferred income tax assets | 970,026.67 | 970,026.67 | |
| Other non-current assets | |||
| Total non-current assets | 1,408,627,555.11 | 1,408,627,555.11 | |
| Total assets | 3,309,660,427.42 | 3,309,660,427.42 | |
| Current liabilities: | |||
| Short-term borrowings | 5,000,000.00 | 5,000,000.00 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 392,105,000.00 | 392,105,000.00 | |
| Accounts payable | 481,854,210.18 | 481,854,210.18 | |
| Advances from customers | 28,673,664.87 | -28,673,664.87 | |
| Contract liabilities | 28,673,664.87 | 28,673,664.87 |
| Employee benefits payable | 39,125,477.30 | 39,125,477.30 | |
| Taxes payable | 5,952,664.10 | 5,952,664.10 | |
| Other payables | 192,046,130.29 | 192,046,130.29 | |
| Including: Interest payable | |||
| Dividends payable | 3,243,179.97 | 3,243,179.97 | |
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | |||
| Total current liabilities | 1,144,757,146.74 | 1,144,757,146.74 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 58,864,111.22 | 58,864,111.22 | |
| Deferred income tax liabilities | 55,951,725.00 | 55,951,725.00 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 114,815,836.22 | 114,815,836.22 | |
| Total liabilities | 1,259,572,982.96 | 1,259,572,982.96 | |
| Owners’ equity: | |||
| Share capital | 561,374,326.00 | 561,374,326.00 |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 183,071,147.70 | 183,071,147.70 | |
| Less: Treasury stock | |||
| Other comprehensive income | 317,059,775.00 | 317,059,775.00 | |
| Specific reserve | 17,560,202.07 | 17,560,202.07 | |
| Surplus reserves | 322,228,533.72 | 322,228,533.72 | |
| Retained earnings | 648,793,459.97 | 648,793,459.97 | |
| Total owners’ equity | 2,050,087,444.46 | 2,050,087,444.46 | |
| Total liabilities and owners’ equity | 3,309,660,427.42 | 3,309,660,427.42 |
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Revenue or Leases since 2020
□ Applicable √ Not applicable
VI. Taxation
1. Main Taxes and Tax Rate
| Category of taxes | Tax basis | Tax rate |
| VAT | Payable to sales revenue | 13%, 9%, 6% |
| Urban maintenance and construction tax | Taxable turnover amount | Tax paid in accordance with the tax regulations of tax units location |
| Enterprise income tax | Taxable income | 25% or 15% |
| Education surcharge | Taxable turnover amount | 5% |
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
| Name | Income tax rate |
| Changchai Company, Limited | 15% |
| Changchai Wanzhou Diesel Engine Co., Ltd. | 15% |
| Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. | 25% |
| Changzhou Housheng Investment Co., Ltd. | 5% |
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | 25% |
| Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. | 25% |
| Jiangsu Changchai Machinery Co., Ltd. | 25% |
| Changzhou Xingsheng Real Estate Management Co., Ltd. | 25% |
| Changzhou Xingsheng Real Estate Management Co., Ltd. | 5% |
2. Tax Preference
On 24 October 2018, the Company obtained the Certificates for High-tech Enterprises again, and it stillenjoys 15-percent preferential rate for corporate income tax during the Reporting Period; the Company’scontrolling 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 inaccordance with the Notice of the Ministry of Finance, the General Administration of Customs of PRC andthe National Administration of Taxation about the Preferential Tax Policies for the Western Development.The wholly-owned subsidiaries Changzhou Housheng Investment Co., Ltd. and Changzhou XingshengReal Estate Management Co., Ltd. are eligible small enterprises with low profits and shall pay thecorporate income tax at the tax rate from 5% to 10% for small enterprises with low profits during theReporting Period.VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Cash on hand | 348,885.71 | 181,115.21 |
| Bank deposits | 489,583,551.02 | 545,271,159.50 |
| Other monetary assets | 110,342,332.72 | 93,136,985.38 |
| Total | 600,274,769.45 | 638,589,260.09 |
| Of which: Total amount deposited overseas | ||
| Total amount of restriction in use by guaranteed, pledged or frozen |
At the period-end, the restricted monetary assets of the Company was RMB106,637,411.65, of whichRMB105,752,474.15 was the cash deposit for bank acceptance bills, and RMB884,937.50 was cashdeposit for environment.
2. Trading Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Financial assets at fair value through profit or loss | 14,600,000.00 | 13,050,000.00 |
| Of which: Financial products | 14,600,000.00 | 13,050,000.00 |
| Total | 14,600,000.00 | 13,050,000.00 |
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 508,401,509.54 | 606,283,023.05 |
| Total | 508,401,509.54 | 606,283,023.05 |
(2) There Were No Notes Receivable Pledged by the Company at the Period-end
(3) Notes Receivable which Had Endorsed by the Company or had Discounted but had not Due onthe Balance Sheet Date at the Period-end
Unit: RMB
| Item | Amount of recognition termination at the period-end | Amount of not terminated recognition at the period-end |
| Bank acceptance bill | 372,860,750.83 | |
| Total | 372,860,750.83 |
(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed toExecute the Contract or Agreement at the Period-end
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
| Category | Ending balance | Beginning balance |
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable for which bad debt provision separately accrued | 35,354,686.26 | 3.85 | 33,459,099.42 | 94.64 | 1,895,586.84 | 35,534,574.55 | 5.31 | 33,449,794.41 | 94.13 | 2,084,780.14 |
| Of which: | ||||||||||
| Accounts receivable with significant amount for which bad debt provision separately accrued | 30,515,544.63 | 3.32 | 28,619,957.79 | 93.79 | 1,895,586.84 | 30,642,717.62 | 4.58 | 28,557,937.48 | 93.20 | 2,084,780.14 |
| Accounts receivable with insignificant amount for which bad debt provision separately accrued | 4,839,141.63 | 0.53 | 4,839,141.63 | 100.00 | 0.00 | 4,891,856.93 | 0.73 | 4,891,856.93 | 100.00 | 0.00 |
| Accounts receivable for which bad debt provision accrued by group | 882,796,356.12 | 96.15 | 154,292,250.39 | 17.48 | 728,504,105.73 | 633,062,365.04 | 94.69 | 215,845,088.31 | 34.10 | 417,217,276.73 |
| Of which: | ||||||||||
| Accounts receivable for which bad debt | 882,796,356.12 | 96.15 | 154,292,250.39 | 17.48 | 728,504,105.73 | 633,062,365.04 | 94.69 | 215,845,088.31 | 34.10 | 417,217,276.73 |
| provision accrued by credit risk features group | ||||||||||
| Total | 918,151,042.38 | 100.00 | 187,751,349.81 | 20.45 | 730,399,692.57 | 668,596,939.59 | 100.00 | 249,294,882.72 | 37.29 | 419,302,056.87 |
Account receivables withdrawn bad debt provision separately with significant amount at the period end:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Reason of withdrawal | |
| Customer 1 | 1,470,110.64 | 1,470,110.64 | 100.00% | Expected to difficultly recover |
| Customer 2 | 1,902,326.58 | 1,902,326.58 | 100.00% | Difficult to recover |
| Customer 3 | 6,215,662.64 | 6,215,662.64 | 100.00% | Difficult to recover |
| Customer 4 | 2,254,860.60 | 2,175,814.37 | 96.49% | Expected to difficultly recover |
| Customer 5 | 3,633,081.23 | 1,816,540.62 | 50.00% | Expected to difficultly recover |
| Customer 6 | 3,279,100.00 | 3,279,100.00 | 100.00% | Expected to difficultly recover |
| Customer 7 | 2,068,377.01 | 2,068,377.01 | 100.00% | Expected to difficultly recover |
| Customer 8 | 5,359,381.00 | 5,359,381.00 | 100.00% | Difficult to recover |
| Customer 9 | 2,584,805.83 | 2,584,805.83 | 100.00% | Difficult to recover |
| Customer 10 | 1,747,839.10 | 1,747,839.10 | 100.00% | Difficult to recover |
| Total | 30,515,544.63 | 28,619,957.79 | -- | -- |
Accounts receivable for which bad debt provision accrued by credit risk features group:
Unit: RMB
| Aging | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Within 1 year | 723,172,550.57 | 14,463,451.49 | 2.00 |
| 1 to 2 years | 11,827,502.09 | 591,375.09 | 5.00 |
| 2 to 3 years | 7,877,220.88 | 1,181,583.14 | 15.00 |
| 3 to 4 years | 1,938,785.27 | 581,635.58 | 30.00 |
| 4 to 5 years | 1,265,230.57 | 759,138.34 | 60.00 |
| Over 5 years | 136,715,066.75 | 136,715,066.75 | 100.00 |
| Total | 882,796,356.12 | 154,292,250.39 | -- |
Notes of the basis of determining the group:
The accounts receivable was adopted the aging analysis based on the months when the accounts incurredactually, among which the accounts incurred earlier will be priority to be settled in terms of the capitalturnover.Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debtprovision on the Current Period: With reference to the experience of the historical credit loss, combiningwith the prediction of the present status and future financial situation, the comparison table was preparedbetween the aging of the accounts receivable and estimated credit loss rate in the duration and to calculatethe estimated credit loss.Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable ifadopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 723,172,550.56 |
| 1 to 2 years | 12,928,501.44 |
| 2 to 3 years | 11,061,670.64 |
| Over 3 years | 170,988,319.74 |
| 3 to 4 years | 5,336,135.78 |
| 4 to 5 years | 2,864,816.64 |
| Over 5 years | 162,787,367.32 |
| Total | 918,151,042.38 |
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodInformation of bad debt provision withdrawn:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Bad debt provision withdrawn separately | 33,449,794.41 | 65,231.52 | 55,926.51 | 33,459,099.42 | |
| Bad debt provision withdrawn by group | 215,845,088.31 | 6,592,063.00 | 68,144,900.92 | 154,292,250.39 | |
| Total | 249,294,882.72 | 6,657,294.52 | 55,926.51 | 68,144,900.92 | 187,751,349.81 |
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) Accounts Receivable with Actual Verification during the Reporting Period
Unit: RMB
| Item | Verified amount |
| Accounts receivable with actual verification | 68,144,900.92 |
Of which the verification of significant accounts receivable:
Unit: RMB
| Name of the entity | Nature of the accounts receivable | Verified amount | Reason for verification | Verification procedures performed | Arising from related-party transactions or not |
| Wuwei Jinwa Vehicle Manufacturing Co., Ltd. | Bad debt losses | 10,000,000.00 | The aging of canceled receivables shall exceed 5 years and result from fruitless collection, and if any single client’s large amount is involved without any business transaction with the Company for over ten | The Company held the 3rd Meeting of the 9th Board of Directors and the 3rd Meeting of the 9th Supervisory Committee on 28 June 2020 and approved the Proposal on Verification of Some Accounts Receivable. | Not |
| Xuzhou Zhengda Agricultural Machinery Company | 7,583,232.65 | ||||
| Shandong Agricultural Machinery Group Heze Agricultural Machinery Company | 4,581,880.41 |
| Sichuan Tiantai Electromechanical Agricultural Machinery Co., Ltd. | 3,600,000.00 | years, the client’s qualification for business operation shall be canceled or the insolvency liquidation is finished without any production and operation activities. | |
| Puyang Shifeng Agricultural Machinery Company | 2,752,840.00 | ||
| Jining Water Conservancy Drilling Machinery Factory | 2,450,966.67 | ||
| Zhanjiang Agricultural Machinery Company | 2,180,243.72 | ||
| Kaifeng Tractor Manufacturing Factory | 1,976,282.47 | ||
| Linyi Agricultural Machinery Group Corporation | 1,860,830.82 | ||
| Henan Zhongcu Industrial Corporation | 1,758,686.48 | ||
| Shanxi Jiaocheng Xinyuan Iron Factory | 1,662,052.98 | ||
| Ganyu Agricultural Machinery Co., Ltd. | 1,285,160.60 | ||
| Nanning Changshunrong | 1,236,225.30 |
| Agricultural Machinery Co., Ltd. | ||
| Longma Agricultural Vehicle Co., Ltd. | 1,235,170.95 | |
| Xinjiang Korla Feihong Agricultural Machinery Co., Ltd. | 1,200,000.00 | |
| Gaotang Raoyang County Agricultural Machinery City | 1,149,217.70 | |
| Haining Bus General Factory | 848,158.92 | |
| Yunnan Nanping Agricultural Machinery Management | 841,642.86 | |
| Tongshan Dongfang Agricultural Machinery Sales Department | 830,000.00 | |
| Juning Huaihai Agricultural Machinery Trading Company | 800,000.00 | |
| Jiangxi Lida Agricultural Machinery Sales Co., Ltd. | 797,786.72 |
| Shenyang Fusang Agricultural Machinery Corporation | 796,226.73 | ||||
| Anhui Guoyang Agricultural Machinery Corporation | 760,197.20 | ||||
| Tai’an Guotai Tractor Factory | 728,666.36 | ||||
| Lijin Yongxing Agricultural Machinery Sales Co., Ltd. | 677,250.00 | ||||
| Hefei Xinfa Materials Co., Ltd. | 551,305.36 | ||||
| Changqing County Agricultural Machinery Company | 549,800.00 | ||||
| Henan Boai Agricultural Machinery Company | 537,698.10 | ||||
| Shandong Shuangli Group Co., Ltd. | 12,343,782.28 | ||||
| Shandong Dongchang Group Labor Service Corporation | 520,892.51 | ||||
| Total | -- | 68,096,197.79 | -- | -- | -- |
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Ending balance of accounts receivable | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer 1 | 376,475,098.82 | 41.00% | 7,529,501.98 |
| Customer 2 | 54,293,467.67 | 5.91% | 1,085,869.35 |
| Customer 3 | 32,287,845.17 | 3.52% | 763,817.03 |
| Customer 4 | 21,395,243.36 | 2.33% | 427,904.87 |
| Customer 5 | 18,593,170.87 | 2.03% | 371,863.42 |
| Total | 503,044,825.89 | 54.79% |
At the end of the period, the sum of the top five accounts receivable collected according to the arrearsamounted to RMB 503,044,825.89, accounting for54.79% of the total balance at the end of the period. Thecorresponding ending balance of bad debt provision is RMB10,178,956.65 .
5. Prepayments
(1) List by Aging Analysis
Unit: RMB
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 8,202,915.10 | 80.36% | 10,857,776.65 | 83.72% |
| 1 to 2 years | 769,139.60 | 7.53% | 993,030.99 | 7.66% |
| 2 to 3 years | 233,809.27 | 2.29% | 115,335.90 | 0.89% |
| Over 3 years | 1,002,582.11 | 9.82% | 1,002,602.62 | 7.73% |
| Total | 10,208,446.08 | -- | 12,968,746.16 | -- |
There was no prepayment with significant amount aging over one year as of the period-end.
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment TargetAt the period-end, the total top 5 of the ending balance of the prepayments collected according to theprepayment target was RMB5,352,129.27 accounting for 52.43% of the total ending balance ofprepayments.
6. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 0.00 |
| Other receivables | 10,280,692.50 | 9,703,390.94 |
| Total | 10,280,692.50 | 9,703,390.94 |
(1) Other Receivables
1) Other Receivables Classified by Accounts Nature
Unit: RMB
| Nature | Ending carrying value | Beginning carrying value |
| Margin and cash pledge | 4,200.00 | 7,758.60 |
| Intercourse funds | 27,822,768.62 | 24,536,151.71 |
| Petty cash and borrowings by employees | 1,600,421.35 | 3,208,541.67 |
| Other | 13,654,933.26 | 15,374,916.41 |
| Total | 43,082,323.23 | 43,127,368.39 |
2) Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2020 | 33,423,977.45 | 33,423,977.45 | ||
| Balance of 1 January 2020 in the Current Period | —— | —— | ||
| --Transfer to Second stage |
| -- Transfer to Third stage | ||||
| -- Reverse to Second stage | ||||
| -- Reverse to First stage | ||||
| Withdrawal of the Current Period | 26,813.06 | 26,813.06 | ||
| Reversal of the Current Period | 649,159.78 | 649,159.78 | ||
| Write-offs of the Current Period | ||||
| Verification of the Current Period | ||||
| Other changes | ||||
| Balance of 30 June 2020 | 32,801,630.73 | 32,801,630.73 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 5,923,228.62 |
| 1 to 2 years | 3,274,854.15 |
| 2 to 3 years | 605,754.36 |
| Over 3 years | 33,278,486.10 |
| 3 to 4 years | 1,014,471.63 |
| 4 to 5 years | 190,365.24 |
| Over 5 years | 32,073,649.23 |
| Total | 43,082,323.23 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodInformation of withdrawal of bad debt provision:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Bad debt provision for which accrued separately | 5,042,448.58 | 25,814.56 | 5,068,263.14 | |||
| Bad debt provision for which accrued by group | 28,381,528.87 | 998.50 | 649,159.78 | 27,733,367.59 | ||
| Total | 33,423,977.45 | 26,813.06 | 649,159.78 | 32,801,630.73 | ||
4) There Was No Particulars of the Actual Verification of Other Receivables during the ReportingPeriod
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to ending balance of other receivables | Ending balance of bad debt provision |
| Changzhou Changjiang Casting Materials Co., Ltd. | Intercourse funds | 5,000,000.00 | Within 1 year | 11.61% | 100,000.00 |
| Changzhou Compressors Factory | Intercourse funds | 2,940,000.00 | Over 5 years | 6.82% | 2,940,000.00 |
| Changchai Group Imp. & Exp. Co., Ltd. | Intercourse funds | 2,853,188.02 | Over 5 years | 6.62% | 2,853,188.02 |
| Changzhou New District Accounting Centre | Intercourse funds | 1,626,483.25 | Over 5 years | 3.78% | 1,626,483.25 |
| Changchai Group Settlement Centre | Intercourse funds | 1,140,722.16 | Over 5 years | 2.65% | 1,140,722.16 |
| Total | -- | 13,560,393.43 | -- | 31.48% | 8,660,393.43 |
7. Inventory
Whether the Company needs to comply with the requirements of real estate industryNo
(1) Category of Inventory
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Falling price reserves | Carrying value | Carrying amount | Falling price reserves | Carrying value | |
| Raw materials | 126,396,694.75 | 7,158,592.68 | 119,238,102.07 | 125,757,856.89 | 6,539,831.39 | 119,218,025.50 |
| Materials processed on commission | 12,579,124.50 | 183,111.28 | 12,396,013.22 | 12,444,566.41 | 183,111.28 | 12,261,455.13 |
| Goods in process | 120,787,978.56 | 25,872,020.66 | 94,915,957.90 | 142,399,981.66 | 26,985,350.14 | 115,414,631.52 |
| Finished goods | 215,181,247.70 | 15,698,168.05 | 199,483,079.65 | 239,701,513.09 | 15,404,153.29 | 224,297,359.80 |
| Low priced and easily worn articles | 3,377,456.53 | 1,205,538.85 | 2,171,917.68 | 3,373,235.80 | 1,205,538.85 | 2,167,696.95 |
| Total | 478,322,502.04 | 50,117,431.52 | 428,205,070.52 | 523,677,153.85 | 50,317,984.95 | 473,359,168.90 |
(2) Falling Price Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Withdrawal | Other | Reversal or write-off | Other | |||
| Raw materials | 6,539,831.39 | 661,773.68 | 43,012.40 | 7,158,592.67 | ||
| Materials processed on commission | 183,111.28 | 183,111.28 | ||||
| Goods in process | 26,985,350.14 | 9,115,845.06 | 10,229,174.54 | 25,872,020.66 | ||
| Finished goods | 15,404,153.29 | 6,566,186.26 | 6,272,171.49 | 15,698,168.06 | ||
| Low priced and easily worn articles | 1,205,538.85 | 1,205,538.85 | ||||
| Total | 50,317,984.95 | 16,343,805.00 | 16,544,358.43 | 50,117,431.52 |
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
8. Other Current Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| The VAT tax credits | 7,748,855.06 | 6,043,473.29 |
| Prepaid expense | 802,628.31 | 98,856.26 |
| Other | 25,479.42 | 278,945.92 |
| Total | 8,576,962.79 | 6,421,275.47 |
9. Long-term Equity Investment
Unit: RMB
| Investees | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserves | |||||||
| Additional investment | Reduced investment | Gain or loss recognized under the equity method | Adjustment of other comprehensive income | Changes in other equity | Cash bonus or profit announced to issue | Withdrawal of depreciation reserves | Other | ||||
| II. Associated enterprises | |||||||||||
| Beijing Tsinghua Industrial Investment Management Co., Ltd. | 0 | 0 | 44,182.50 | ||||||||
| Subtotal | 0 | 0 | 44,182.50 | ||||||||
| Total | 0 | 0 | 44,182.50 |
10. Other Equity Instrument Investment
Unit: RMB
| Item | Ending balance | Beginning balance |
| Changzhou Synergetic Innovation Private Equity Fund (Limited Partnership) | 100,000,000.00 | 100,000,000.00 |
| Other equity instrument investment measured by fair value | 362,160,000.00 | 432,886,000.00 |
| Total | 462,160,000.00 | 532,886,000.00 |
Non-trading equity instrument investment disclosed by category
Unit: RMB
| Item | Dividend income recognized | Accumulative gains | Accumulative losses | Amount of other comprehensive transferred to retained earnings | Reason for assigning to measure by fair value of which changes be included to other comprehensive income | Reason for other comprehensive income transferred to retained earnings |
| Foton Motor Co., Ltd. | 39,015,000.00 | Non-trading equity investment |
| Bank of Jiangsu | 4,865,000.00 | 27,725,000.00 | Non-trading equity investment | |||
| Changzhou Synergetic Innovation Private Equity Fund (Limited Partnership) | Non-trading equity investment | |||||
| Total | 4,865,000.00 | 66,740,000.00 |
Other notes:
(1) The stocks of listed companies such as Foton Motor Co., Ltd. held by the Company belong tonon-trading equity investment. Therefore, the investment was divided into the financial assets assignedmeasured by fair value and the changes be included in the other comprehensive income.
(2) The corporate securities of accommodation business still on lending at the period-end: 7,183,900 sharesof Foton Motor Co., Ltd. and 1,900,000 of Bank of Jiangsu.
12. Other Non-current Financial Assets
Unit: RMB
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Jiangsu Liance Electromechanical Technology Co., Ltd. | 7,200,000.00 | 7,200,000.00 |
| Kailong High Technology Co., Ltd. | 20,001,268.00 | 20,001,268.00 |
| Guizhou Warmen Pharmaceutical Co, Ltd. | 200,104.80 | 200,104.80 |
| Guizhou Anda Energy Technology Co., Ltd. | 195,297.49 | 195,297.49 |
| Henan Lantian Gas Co., Ltd. | 160,744.76 | 160,744.76 |
| Hebei Songhe Recycling Resources Co., Ltd. | 104,699.44 | 104,699.44 |
| Anhui Hofo Electromechanical Co., Ltd. | 89,987.14 | 89,987.14 |
| Jiangsu Housheng New Energy Technology Co., Ltd. | 50,000,000.00 | 50,000,000.00 |
| Total | 77,952,101.63 | 77,952,101.63 |
| Item | Houses and buildings | Total |
| I. Original carrying value | ||
| 1.Beginning balance | 87,632,571.14 | 87,632,571.14 |
| 2.Increased amount of the period | ||
| (1) Outsourcing | ||
| (2) Transfer from inventories/fixed assets/construction in progress | ||
| (3) Enterprise combination increase | ||
| 3.Decreased amount of the period | ||
| (1) Disposal | ||
| (2) Other transfer | ||
| 4. Ending balance | 87,632,571.14 | 87,632,571.14 |
| II. Accumulative depreciation and accumulative amortization | ||
| 1.Beginning balance | 39,184,904.31 | 39,184,904.31 |
| 2.Increased amount of the period | 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. Ending balance | 40,289,074.71 | 40,289,074.71 |
| III. Depreciation reserves | ||
| 1.Beginning balance | ||
| 2.Increased amount of the period | ||
| (1) Withdrawal | ||
| 3.Decreased amount of the period | ||
| (1) Disposal | ||
| (2) Other transfer | ||
| 4. Ending balance | ||
| IV. Carrying value | ||
| 1.Ending carrying value | 47,343,496.43 | 47,343,496.43 |
| 2.Beginning carrying value | 48,447,666.83 | 48,447,666.83 |
13. Fixed Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 437,411,354.41 | 457,722,667.32 |
| Disposal of fixed assets | ||
| Total | 437,411,354.41 | 457,722,667.32 |
(1) List of Fixed Assets
Unit: RMB
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Other equipment | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 448,688,661.22 | 956,138,240.18 | 17,283,169.54 | 42,791,587.37 | 1,464,901,658.31 |
| 2. Increased amount of the period | 16,099,288.86 | 1,086,367.26 | 1,088,767.65 | 307,824.30 | 18,582,248.07 |
| (1) Purchase | 418,626.65 | 77,522.12 | 243,538.31 | 196,178.30 | 935,865.38 |
| (2) Transfer from construction in progress | 15,680,662.21 | 1,008,845.14 | 845,229.34 | 111,646.00 | 17,646,382.69 |
| (3) Enterprise combination increase | |||||
| 3. Decreased amount of the period | - | 10,459,143.75 | 1,595,757.66 | 327,228.60 | 12,382,130.01 |
| (1) Disposal or scrap | - | 10,459,143.75 | 1,595,757.66 | 327,228.60 | 12,382,130.01 |
| 4. Ending balance | 464,787,950.08 | 946,765,463.69 | 16,776,179.53 | 42,772,183.07 | 1,471,101,776.37 |
| II.Accumulative depreciation |
14. Construction in Progress
| 1. Beginning balance | 281,666,582.26 | 674,545,182.51 | 13,892,318.80 | 35,580,792.42 | 1,005,684,875.99 |
| 2. Increased amount of the period | 8,083,059.02 | 30,085,167.12 | 558,563.27 | 90,156.56 | 38,816,945.97 |
| (1) Withdrawal | 8,083,059.02 | 30,085,167.12 | 558,563.27 | 90,156.56 | 38,816,945.97 |
| 3. Decreased amount of the period | 1,235.25 | 10,459,143.75 | 1,520,233.58 | 324,902.42 | 12,305,515.00 |
| (1) Disposal or scrap | 1,235.25 | 10,459,143.75 | 1,520,233.58 | 324,902.42 | 12,305,515.00 |
| 4. Ending balance | 289,748,406.03 | 694,171,205.88 | 12,930,648.49 | 35,346,046.56 | 1,032,196,306.96 |
| III.Depreciation reserves | |||||
| 1. Beginning balance | 1,494,115.00 | 1,494,115.00 | |||
| 2. Increased amount of the period | |||||
| (1) Withdrawal | |||||
| 3. Decreased amount of the period | |||||
| (1) Disposal or scrap | |||||
| 4. Ending balance | 1,494,115.00 | 1,494,115.00 | |||
| IV. Carrying value | |||||
| 1. Ending carrying value | 175,039,544.05 | 251,100,142.81 | 3,845,531.04 | 7,426,136.51 | 437,411,354.41 |
| 2. Beginning carrying value | 167,022,078.96 | 280,098,942.67 | 3,390,850.74 | 7,210,794.95 | 457,722,667.32 |
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 71,668,151.01 | 63,216,445.03 |
| Engineering materials | 31,338,225.01 | 28,141,711.21 |
| Total | 103,006,376.02 | 91,358,156.24 |
(1) List of Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Expansion capacity of multi-cylinder (The 2nd Period) | 1,097,435.90 | 1,097,435.90 | 11,375,531.74 | 11,375,531.74 | ||
| Diesel Engine Cylinder Body Flexible Manufacturing Line | 38,444,213.42 | 38,444,213.42 | 38,266,788.31 | 38,266,788.31 | ||
| 35KV Substation | 1,321,959.41 | 1,321,959.41 | ||||
| Oily water separating equipment | 340,800.00 | 340,800.00 | 340,800.00 | 340,800.00 | ||
| Relocation project of light engine and casting | 28,903,701.88 | 28,903,701.88 | 1,687,194.64 | 1,687,194.64 | ||
| Equipment to be installed and payment for projects | 2,881,999.81 | 2,881,999.81 | 10,224,170.93 | 10,224,170.93 | ||
| Total | 71,668,151.01 | 71,668,151.01 | 63,216,445.03 | 63,216,445.03 |
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
| Item | Budget | Beginning balance | Increased amount | Transferred in fixed assets | Other decreased amount | Ending balance | Proportion of accumulated investment in constructions to budget | Job schedule | Accumulated amount of interest capitalization | Of which: Amount of capitalized interests for the Reporting Period | Capitalization rate of interests for the Reporting Period | Capital resources |
| Expansion capacity of multi-cylinder (The 2nd Period) | 79,000,000.00 | 11,375,531.74 | 10,278,095.84 | 1,097,435.90 | Uncompleted | Self-funded |
| Diesel Engine Cylinder Body Flexible Manufacturing Line | 116,040,000.00 | 38,266,788.31 | 217,769.94 | 40,344.83 | 38,444,213.42 | Uncompleted | Self-funded | |||||
| 35KV Substation | 73,290,000.00 | 1,321,959.41 | 390,676.04 | 1,712,635.45 | 0.00 | Self-funded | ||||||
| Relocation project of light engine and casting | 452,863,800.00 | 1,687,194.64 | 27,216,507.24 | 28,903,701.88 | 6.38% | Uncompleted | Self-funded | |||||
| Total | 721,193,800.00 | 52,651,474.10 | 27,824,953.22 | 12,031,076.12 | 68,445,351.20 | -- | -- | -- |
(3) Engineering Materials
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Engineering materials | 31,338,225.01 | 31,338,225.01 | 28,141,711.21 | 28,141,711.21 | ||
| Total | 31,338,225.01 | 31,338,225.01 | 28,141,711.21 | 28,141,711.21 | ||
15. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
| Item | Land use right | Patent right | License fee | Total |
| I. Original carrying value | ||||
| 1. Beginning balance | 144,770,507.85 | 12,866,992.58 | 5,488,000.00 | 163,125,500.43 |
| 2. Increased amount of the period | ||||
| (1) Purchase | ||||
| (2) Internal R&D | ||||
| (3) Business combination increase | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| 4. Ending balance | 144,770,507.85 | 12,866,992.58 | 5,488,000.00 | 163,125,500.43 |
| II. Accumulated amortization | ||||
| 1. Beginning balance | 51,100,000.82 | 10,771,116.13 | 1,554,933.22 | 63,426,050.17 |
| 2. Increased amount of the period | 1,485,989.14 | 564,866.00 | 274,399.98 | 2,325,255.12 |
| (1) Withdrawal | 1,485,989.14 | 564,866.00 | 274,399.98 | 2,325,255.12 |
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| 4. Ending balance | 52,585,989.96 | 11,335,982.13 | 1,829,333.20 | 65,751,305.29 |
| III. Depreciation reserves | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | ||||
| (1) Withdrawal |
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| 4. Ending balance | ||||
| IV. Carrying value | ||||
| 1. Ending carrying value | 92,184,517.89 | 1,531,010.45 | 3,658,666.80 | 97,374,195.14 |
| 2. Beginning carrying value | 93,670,507.03 | 2,095,876.45 | 3,933,066.78 | 99,699,450.26 |
16. Long-term Prepaid Expenses
| Item | Beginning balance | Increase | Amortized amount | Decrease | Ending balance |
| Furniture of employee dormitory, etc. | 53,497.80 | 19,902.30 | 33,595.50 | ||
| Total | 53,497.80 | 19,902.30 | 33,595.50 |
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Provision for impairment of assets | 13,050,698.84 | 1,979,974.43 | 6,682,294.34 | 1,023,863.04 |
| Total | 13,050,698.84 | 1,979,974.43 | 6,682,294.34 | 1,023,863.04 |
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Changes in fair value of other equity instrument investment | 302,376,000.00 | 45,356,400.00 | 373,011,500.00 | 55,951,725.00 |
| Assets evaluation appreciation for business combination not under the same control | 4,169,298.89 | 1,042,324.72 | 4,524,661.07 | 1,131,165.27 |
| Total | 306,545,298.89 | 46,398,724.72 | 377,536,161.07 | 57,082,890.27 |
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bad debt provision | 207,502,281.70 | 276,036,565.83 |
| Falling price reserves of inventories | 50,117,431.52 | 50,317,984.95 |
| Total | 257,619,713.22 | 326,354,550.78 |
18. Other Non-current Assets
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Advances payment of equipments | 177,400.00 | 177,400.00 | ||||
| Total | 177,400.00 | 177,400.00 | ||||
19. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Guaranteed loans | 10,000,000.00 | 10,000,000.00 |
| Mortgage loans | 7,000,000.00 | 7,000,000.00 |
| Credit loans | 5,000,000.00 | 5,000,000.00 |
| Total | 22,000,000.00 | 22,000,000.00 |
(2) There Was No Short-term Borrowings Overdue but Unpaid.
20. Notes Payable
Unit: RMB
| Category | Ending balance | Beginning balance |
| Bank acceptance bill | 479,515,000.00 | 403,035,000.00 |
| Total | 479,515,000.00 | 403,035,000.00 |
21. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Loans | 580,840,786.08 | 525,625,016.89 |
| Total | 580,840,786.08 | 525,625,016.89 |
(2) There Was No Significant Accounts Payable Aging over One Year
22. Contract Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Contract liabilities | 31,527,438.40 | 31,789,001.78 |
| Total | 31,527,438.40 | 31,789,001.78 |
Refer to “V Significant Accounting Policies, Estimates-33(1) Changes to Significant Accounting Policies”for the difference between the beginning balance and ending balance of prior period (31 December 2019).
23. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 44,559,015.79 | 117,786,801.08 | 143,388,161.32 | 18,957,655.55 |
| II.Post-employment benefit-defined contribution plans | 8,626,798.61 | 8,626,798.61 | ||
| III. Termination benefits | 306,693.00 | 306,693.00 | ||
| Total | 44,559,015.79 | 126,720,292.69 | 152,321,652.93 | 18,957,655.55 |
(2) List of Short-term Salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 36,894,953.71 | 98,842,788.54 | 124,423,164.48 | 11,314,577.77 |
| 2.Employee welfare | 1,592.74 | 1,451,667.16 | 1,451,667.16 | 1,592.74 |
| 3. Social insurance | 5,601,857.94 | 5,601,857.94 | ||
| Of which: Medical insurance premiums | 4,466,934.01 | 4,466,934.01 | ||
| Work-related injury insurance | 388,321.79 | 388,321.79 | ||
| Maternity insurance | 746,602.14 | 746,602.14 | ||
| 4. Housing fund | 9,419,253.40 | 9,419,253.40 | ||
| 5.Labor union budget and employee education budget | 7,662,469.34 | 2,471,234.04 | 2,492,218.34 | 7,641,485.04 |
| 6. Short-term absence with salary | ||||
| 7. Short-term profit sharing scheme | ||||
| Total | 44,559,015.79 | 117,786,801.08 | 143,388,161.32 | 18,957,655.55 |
(3) List of Defined Contribution Plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 8,207,802.43 | 8,207,802.43 | ||
| 2. Unemployment insurance | 257,200.18 | 257,200.18 | ||
| 3. Enterprise annuities | 161,796.00 | 161,796.00 | ||
| Total | 8,626,798.61 | 8,626,798.61 |
24. Taxes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 532,081.43 | 1,290,060.47 |
| Corporate income tax | 5,430,266.89 | 5,090,781.18 |
| Personal income tax | 88,470.51 | 367,624.40 |
| Urban maintenance and construction tax | 886,662.32 | 970,067.92 |
| Property tax | 94,257.18 | 94,257.20 |
| Land use tax | 100,135.19 | 100,135.19 |
| Stamp duty | 5,554.00 | 6,282.95 |
| Education Surcharge | 160,541.11 | 99,824.96 |
| Comprehensive fees | 954,843.18 | 1,075,134.76 |
| Environmental protection tax | 230.34 | 213.55 |
| Total | 8,253,042.15 | 9,094,382.58 |
25. Other Payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Interest payable | ||
| Dividends payable | 3,891,433.83 | 3,891,433.83 |
| Other payables | 186,845,303.36 | 201,172,711.27 |
| Total | 190,736,737.19 | 205,064,145.10 |
(1) Dividends Payable
Unit: RMB
The reason for non-payment for over one year: Not gotten by shareholders yet.
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
| Item | Ending balance | Beginning balance |
| Margin & cash pledged | 3,574,326.23 | 3,271,541.83 |
| Intercourse funds among units | 10,501,265.91 | 11,321,462.95 |
| Intercourse funds among individuals | 423,702.83 | 430,612.05 |
| Sales discount and three guarantees | 133,978,988.49 | 143,497,522.22 |
| Other | 38,367,019.90 | 42,651,572.22 |
| Total | 186,845,303.36 | 201,172,711.27 |
2) Significant Other Payables Aging over One Year
The significant other payables aging over one year at the period-end mainly referred to the unsettledtemporary credits and charges owned.
26. Other Current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Item | Ending balance | Beginning balance |
| Ordinary share dividends | 3,243,179.97 | 3,243,179.97 |
| Interest of preferred shares/ perpetual bond classified as equity instrument | ||
| Dividends for non-controlling shareholders | 648,253.86 | 648,253.86 |
| Other | ||
| Total | 3,891,433.83 | 3,891,433.83 |
| Sale service fee | 229,387.96 | |
| Transportation storage fee | 132,551.86 | |
| Electric charge | 2,147,922.70 | 815,772.56 |
| Rental expense | 92,920.38 | |
| Total | 2,240,843.08 | 1,177,712.38 |
27. Deferred Income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| Government grants | 58,864,111.22 | 532,186.81 | 58,331,924.41 | Government appropriation | |
| Total | 58,864,111.22 | 532,186.81 | 58,331,924.41 | -- |
Item involving government grants:
Unit: RMB
| Item | Beginning balance | Amount of new subsidy | Amount recorded into non-operating income in the Reporting Period | Amount recorded into other income in the Reporting Period | Amount offset cost in the Reporting Period | Other changes | Ending balance | Related to assets/related income |
| Electric control of diesel engine research and development and industrialization allocations | 248,400.00 | 199,200.00 | 49,200.00 | Related to assets | ||||
| National major project special allocations | 28,770,000.00 | 28,770,000.00 | Related to assets | |||||
| Remove compensation | 19,845,711.22 | 332,986.81 | 19,512,724.41 | Related to assets |
| Research and development and industrialization allocations of national III/IV standard high-powered efficient diesel engine for agricultural use | 10,000,000.00 | 10,000,000.00 | Related to assets | |||||
| Total | 58,864,111.22 | 532,186.81 | 58,331,924.41 |
28. Share Capital
Unit: RMB
| Beginning balance | Increase/decrease (+/-) | Ending balance | |||||
| New shares issued | Bonus shares | Bonus issue from profit | Other | Subtotal | |||
| The sum of shares | 561,374,326.00 | 561,374,326.00 | |||||
29. Capital Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 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 |
30. Other Comprehensive Income
Unit: RMB
| Item | Beginning balance | Reporting Period | Ending balance | |||||
| Income before taxation in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred in profit or loss in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred in retained earnings in the Current Period | Less: Income tax expense | Attributable to owners of the Company as the parent after tax | Attributable to non-controlling interests after tax | |||
| I. Other comprehensive income that will not be reclassified to profit or loss | 317,059,775.00 | -70,225,654.50 | 348,368.67 | -10,533,848.17 | -60,040,175.00 | 257,019,600.00 | ||
| Of which: Changes caused by re-measurements on defined benefit pension schemes | ||||||||
| Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method | ||||||||
| Changes in fair value of other equity instrument investment | 317,059,775.00 | -70,225,654.50 | 348,368.67 | -10,533,848.17 | -60,040,175.00 | 257,019,600.00 | ||
| Changes in fair value of corporate credit risk | ||||||||
| II. Other comprehensive income that may subsequently be reclassified to profit or loss | ||||||||
| Of which: Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method | ||||||||
| Changes in fair value of investment in other debt obligations | ||||||||
| Amount of financial assets reclassified to other comprehensive income | ||||||||
| Credit depreciation reserves of investment in other debt obligations | ||||||||
| Reserves for cash flow hedges | ||||||||
| Differences arising from translation of foreign currency-denominated financial statements | ||||||||
| Total of other comprehensive income | 317,059,775.00 | -70,225,654.50 | 348,368.67 | -10,533,848.17 | -60,040,175.00 | 257,019,600.00 |
31. Specific Reserve
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Safety production cost | 17,560,202.07 | 1,883,145.87 | 1,004,697.43 | 18,438,650.51 |
| Total | 17,560,202.07 | 1,883,145.87 | 1,004,697.43 | 18,438,650.51 |
32. Surplus Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 309,071,675.82 | 309,071,675.82 | ||
| Discretional surplus reserves | 13,156,857.90 | 13,156,857.90 | ||
| Total | 322,228,533.72 | 322,228,533.72 |
33. Retained Earnings
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained earnings before adjustments | 726,689,929.10 | 717,883,351.33 |
| Total retained earnings at the beginning of the adjustment period (“+” means up, “-” means down) | 1,651,336.26 | 1,619,864.82 |
| Beginning balance of retained earnings after adjustments | 728,341,265.36 | 719,503,216.15 |
| Add: Net profit attributable to owners of the Company as the parent | 27,690,311.06 | 24,966,526.85 |
| Less: Withdrawal of statutory surplus reserves | 2,094,119.49 | |
| Withdrawal of discretional surplus reserves | ||
| Withdrawal of general reserve | ||
| Dividend of ordinary shares payable | 14,034,358.15 |
| Dividends of ordinary shares transferred as share capital | ||
| Recorded in other comprehensive income in prior period and transferred in retained profits in the Current Period | 348,368.67 | |
| Ending retained earnings | 756,379,945.09 | 728,341,265.36 |
The retained earnings at the beginning of the adjustment period due to the accounting errors correction inprevious period: RMB1,651,336.26 at the period-beginning of 2020, and RMB1,619,864.82 at theperiod-beginning of 2019.
34. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 1,149,231,063.13 | 974,846,243.01 | 1,099,044,681.77 | 958,911,511.17 |
| Other operations | 18,224,719.17 | 10,996,475.67 | 19,826,443.23 | 14,073,262.37 |
| Total | 1,167,455,782.30 | 985,842,718.68 | 1,118,871,125.00 | 972,984,773.54 |
Information related to performance obligations: performing according to the contract offerInformation related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed ornot fully performed yet was RMB0 at the period-end.
35. Taxes and Surtaxes
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Urban maintenance and construction tax | 1,188,616.29 | 581,717.24 |
| Education surcharge | 849,011.61 | 271,520.11 |
| Property tax | 2,212,278.84 | 1,986,524.35 |
| Land use tax | 1,804,439.63 | 1,713,504.95 |
| Vehicle and vessel use tax | 300.00 | |
| Stamp duty | 394,779.95 | 456,518.80 |
| Environment tax | 60,179.21 | |
| Other | 42,000.00 | -92.50 |
| Total | 6,551,605.53 | 5,009,692.95 |
36. Selling Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Office expenses | 4,629,025.89 | 2,915,326.32 |
| Employee benefits | 13,886,073.89 | 12,563,212.25 |
| Sales promotional expense | 5,545,750.00 | 3,165,350.00 |
| Three guarantees | 27,893,180.55 | 31,616,012.47 |
| Transport charge | 3,641,245.55 | 1,767,281.30 |
| Other | 7,797,082.64 | 6,231,216.64 |
| Total | 63,392,358.52 | 58,258,398.98 |
37. Administrative Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Office expenses | 6,035,491.45 | 6,839,822.78 |
| Employee benefits | 17,294,526.56 | 11,909,173.93 |
| Depreciation and amortization | 5,263,681.34 | 7,665,203.65 |
| Transport fees | 1,073,680.39 | 1,205,423.26 |
| Repair charge | 138,950.52 | 992,564.62 |
| Safety expenses | 1,883,145.87 | 1,005,623.68 |
| Other | 3,919,554.61 | 4,942,250.38 |
| Total | 35,609,030.74 | 34,560,062.30 |
38. Development Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Direct input expense | 19,721,929.05 | 19,912,601.44 |
| Employee benefits | 9,551,798.98 | 8,459,434.34 |
| Depreciation and amortization | 2,063,723.78 | 1,367,141.44 |
| Entrusted development charges | 32,231.13 | |
| Other | 968,567.84 | 325,106.24 |
| Total | 32,338,250.78 | 30,064,283.46 |
39. Finance Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Interest expense | 3,340,575.91 | 1,567,625.50 |
| Interest income | 2,792,152.75 | 1,647,206.24 |
| Net foreign exchange gains or losses | -1,097,813.30 | -1,047,246.55 |
| Other | -170,269.84 | -657,598.04 |
| Total | -719,659.98 | -1,784,425.33 |
40. Other Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Government grants | 2,657,218.07 | 134,037.71 |
| Other (Additional deduction of input tax) | 20,746.75 |
41. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | ||
| Investment income from disposal of long-term equity investment | ||
| Investment income from holding of trading financial assets | ||
| Investment income from disposal of trading financial assets | ||
| Dividend income from holding of other equity instrument investment | 4,983,988.73 | |
| Investment income from holding of held-to –maturity investment |
| Investment income from holding of available-for-sale financial assets | ||
| Investment income from disposal of available-for-sale financial assets | ||
| Investment income from disposal of held-to –maturity investment | ||
| Income from re-measurement of residual stock rights at fair value after losing control power | ||
| Interest income from holding of investment in debt obligations | ||
| Interest income from holding of investment in other debt obligations | ||
| Investment income from disposal of investment in other debt obligations | ||
| Investment income from holding of other non-current financial assets | 149,121.58 | |
| Investment income from disposal of financial products of securities company | 251,486.73 | 184,349.63 |
| Total | 5,384,597.04 | 184,349.63 |
42. Credit Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Bad debt loss of other receivables | 622,346.72 | 4,859.68 |
| Bad debt loss of accounts receivable | -6,601,368.01 | -9,257,470.42 |
| Impairment loss of entrusted loan | 4,000,000.00 | |
| Total | -5,979,021.29 | -5,252,610.74 |
43. Asset Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| I. Bad debt loss |
| II. Loss on inventory valuation and contract performance cost | -16,343,805.00 | -26,096.43 |
| III. Impairment loss on long-term equity investment | ||
| IV. Impairment loss on investment property | ||
| V. Impairment loss on fixed assets | ||
| VI. Impairment loss on engineering materials | ||
| VII. Impairment loss on construction in progress | ||
| VIII. Impairment loss on productive living assets | ||
| IX. Impairment loss on oil and gas assets | ||
| X. Impairment loss on intangible assets | ||
| XI. Impairment loss on goodwill | ||
| XII. Other | ||
| Total | -16,343,805.00 | -26,096.43 |
44. Asset Disposal Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Disposal income of fixed assets | 10,977.61 | 988,535.95 |
45. Non-operating Income
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Income from penalty | 181,076.00 | 181,076.00 | |
| Income generated from disposal of current assets | 324,516.28 | ||
| Other | 287,214.78 | 258,421.20 | 287,214.78 |
| Total | 468,290.78 | 582,937.48 | 468,290.78 |
46. Non-operating Expense
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Retirement loss of non-current assets | 1,725.58 | 215,077.98 | 1,725.58 |
| Other | 393,650.10 | 2,760.00 | 393,650.10 |
| Total | 395,375.68 | 217,837.98 | 395,375.68 |
47. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Current income tax expense | 3,442,263.52 | -2,995,296.80 |
| Deferred income tax expense | -1,044,951.94 | 301.48 |
| Total | 2,397,311.58 | -2,994,995.32 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
| Item | Reporting Period |
| Profit before taxation | 30,265,106.31 |
| Current income tax expense accounted at statutory/applicable tax rate | 4,539,765.95 |
| Influence of applying different tax rates by subsidiaries | 708,102.34 |
| Influence of income tax before adjustment | -717,080.73 |
| Influence of non-taxable income | |
| Influence of non-deductable costs, expenses and losses | -1,249,574.37 |
| Influence of deductable losses of unrecognized deferred income tax at the beginning of the Reporting Period | -27,842.32 |
| Influence of deductable temporary difference or deductable losses of unrecognized deferred income tax assets in the Reporting Period | -729,438.12 |
| Tax preference generated from eligible expense | -126,621.17 |
| Income tax expense | 2,397,311.58 |
48. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Subsidy and appropriation | 2,125,031.26 | 129,300.00 |
| Other intercourses in cash | 2,450,124.78 | 6,626,337.57 |
| Interest income | 2,792,152.75 | 1,647,206.24 |
| Other | 377,095.40 | |
| Total | 7,744,404.19 | 8,402,843.81 |
(2) Cash Used in Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Selling expense paid in cash | 42,790,201.08 | 22,265,032.54 |
| Administrative expense paid in cash | 28,635,717.97 | 15,932,156.09 |
| Handling charges | 850,745.30 | 276,917.44 |
| Other | 841,135.29 | 363,243.80 |
| Total | 73,117,799.64 | 38,837,349.87 |
(3) Cash Generated from Other Investing Activities
| Item | Reporting Period | Same period of last year |
| Performance bond | 97,150.00 | |
| Total | 97,150.00 |
(4) Cash Used in Other Investing Activities
| Item | Reporting Period | Same period of last year |
| Product margin | 930,300.00 | |
| Total | 930,300.00 |
49. 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 | 27,867,794.73 | 19,166,650.04 |
| Add: Provision for impairment of assets | 22,322,826.29 | 5,278,707.17 |
| Depreciation of fixed assets, of oil and gas assets, of productive living assets | 39,921,116.37 | 45,097,580.24 |
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 2,325,255.12 | 2,667,349.89 |
| Amortization of long-term deferred expenses | 19,902.30 | 19,902.30 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains by “-”) | -10,977.61 | -988,535.95 |
| Losses on the scrapping of fixed assets (gains by “-”) | 1,725.58 | |
| Losses on the changes in fair value (gains by “-”) | ||
| Financial expenses (gains by “-”) | 3,702,027.93 | -1,780,811.62 |
| Investment losses (gains by “-”) | -5,384,597.04 | -5,275.78 |
| Decrease in deferred income tax assets (increase by “-”) | -956,111.39 | 301.48 |
| Increase in deferred income tax liabilities (decrease by “-”) | -88,840.55 | |
| Decrease in inventory (increase by “-”) | 28,810,293.38 | 77,790,426.75 |
| Decrease in accounts receivable from operating activities (increase by “-”) | -219,167,832.28 | -399,676,635.32 |
| Increase in payables from operating activities (decrease by “-”) | 93,944,576.05 | 102,084,867.92 |
| Other | -13,661,888.13 | -2,976,019.99 |
| Net cash flows generated from operating activities | -20,354,729.25 | -153,321,492.87 |
| 2. Investing and financing activities that do not involving cash receipts and payment: | -- | -- |
| Debt transferred as capital | ||
| Convertible corporate bond due within one year |
| Fixed assets from financing lease | ||
| 3. Net increase in cash and cash equivalents | -- | -- |
| Ending balance of cash | 493,637,357.80 | 495,700,572.93 |
| Less: Beginning balance of cash | 545,959,998.20 | 691,266,373.34 |
| Add: Ending balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -52,322,640.40 | -195,565,800.41 |
(2) Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 493,637,357.80 | 545,959,998.20 |
| Including: Cash on hand | 348,885.71 | 181,115.21 |
| Bank deposit on demand | 489,583,551.02 | 545,271,159.5 |
| Other monetary assets on demand | 3,704,921.07 | 507,723.49 |
| Accounts deposited in the central bank available for payment | ||
| Deposits in other banks | ||
| Accounts of interbank | ||
| II. Cash equivalents | ||
| Of which: Bond investment expired within three months | ||
| III. Ending balance of cash and cash equivalents | 493,637,357.80 | 545,959,998.20 |
| Of which: Cash and cash equivalents with restriction in use for the Company as the parent or subsidiaries of the Group |
50. Assets with Restricted Ownership or Right to Use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 106,637,411.65 | As cash deposit for bank acceptance bill and environment |
| Houses and buildings | 9,933,008.28 | Mortgaged for borrowings from banks |
| Land use right | 989,620.82 | Mortgaged for borrowings from banks |
| Machinery equipment | 38,139,602.80 | Mortgaged for borrowings from banks |
| Total | 155,699,643.55 | -- |
51. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
| Item | Ending foreign currency balance | Exchange rate | Ending balance converted to RMB |
| Monetary assets | -- | -- | 88,036,406.31 |
| Of which: USD | 12,318,549.63 | 7.0795 | 87,209,172.11 |
| EUR | |||
| HKD | 285,400.46 | 0.9134 | 260,684.78 |
| SGD | 54,427.95 | 5.0813 | 276,564.74 |
| JPY | 4,407,062.00 | 0.0658 | 289,984.68 |
| Accounts receivable | -- | -- | 56,189,918.16 |
| Of which: USD | 7,936,989.64 | 7.0795 | 56,189,918.16 |
| Accounts payable | 2,142.26 | ||
| Of which: USD | 302.60 | 7.0795 | 2,142.26 |
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place,Recording Currency and Selection Basis Shall Be Disclosed; if there Are Changes in RecordingCurrency, Relevant Reasons Shall Be Disclosed.
□ Applicable √ Not applicable
52. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
| Category | Amount | Listed items | Amount recorded in the current profit or loss |
| Subsidy for stabilizing posts | 1,462,592.43 | Other income | 1,462,592.43 |
| Patent rewards | 100,000.00 | Other income | 100,000.00 |
| The first-year fund for district-level demonstration base for training high-level skilled personnel in 2019 | 20,000.00 | Other income | 20,000.00 |
| High-skilled personnel training award | 15,000.00 | Other income | 15,000.00 |
| Tax award | 50,000.00 | Other income | 50,000.00 |
| Individual income tax commission | 8,587.83 | Other income | 8,587.83 |
| Special fund for business development | 10,600.00 | Other income | 10,600.00 |
| Innovation-driven rewards | 6,000.00 | Other income | 6,000.00 |
| Funds of development of international market project | 14,200.00 | Other income | 14,200.00 |
| Subsidy fund of New District Finance Bureau award | 7,882.00 | Other income | 7,882.00 |
| Provincial-level special fund for industrial and information industry transformation and upgrading | 150,000.00 | Other income | 150,000.00 |
| Special award and subsidy funds used to stabilize employment | 230,169.00 | Other income | 230,169.00 |
| Relocation compensation | 332,986.81 | Other income | 332,986.81 |
| R & D and industrialization of off-road diesel engine controlled by electricity | 199,200.00 | Other income | 199,200.00 |
| Talent special fund | 50,000.00 | Other income | 50,000.00 |
| Additional deduction of input tax | 20,746.75 | Other income | 20,746.75 |
| Appropriation of off-road diesel engine controlled by electricity | 49,200.00 | Deferred income | |
| National major special appropriation | 28,770,000.00 | Deferred income | |
| Relocation compensation | 19,512,724.41 | Deferred income | |
| Appropriation or research and development and industrialization allocations of national III/IV standard high-powered efficient diesel engine for agricultural use | 10,000,000.00 | Deferred income |
Return of Government Grants
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
None
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Changchai Wanzhou Diesel Engine Co., Ltd. | Chongqing | Chongqing | Industry | 60.00% | Set-up | |
| Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. | Changzhou | Changzhou | Industry | 99.00% | 1.00% | Set-up |
| Changzhou Housheng Investment Co., Ltd. | Changzhou | Changzhou | Service | 100.00% | Set-up | |
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | Changzhou | Changzhou | Industry | 70.00% | 25.00% | Set-up |
| Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. | Changzhou | Changzhou | Industry | 100.00% | Combination not under the same control | |
| Jiangsu Changchai Machinery Co., Ltd. | Changzhou | Changzhou | Industry | 100.00% | Set-up | |
| Changzhou Xingsheng Property Management Co., Ltd. | Changzhou | Changzhou | Service | 100.00% | Set-up | |
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to the non-controlling interests | Declaring dividends distributed to non-controlling interests | Balance of non-controlling interests at the period-end |
| Changchai Wanzhou Diesel Engine Co., Ltd. | 40.00% | 187,651.15 | 19,801,599.87 |
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | 5.00% | -10,167.48 | 12,164.81 |
Holding proportion of non-controlling interests in subsidiary different from voting proportion: Notapplicable
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
| Name | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Changchai Wanzhou Diesel Engine Co., Ltd. | 50,396,468.90 | 25,368,758.87 | 75,765,227.77 | 26,261,228.09 | 26,261,228.09 | 43,807,991.71 | 25,821,314.00 | 69,629,305.71 | 20,594,433.90 | 20,594,433.90 | ||
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | 28,971,588.41 | 464,382.91 | 29,435,971.32 | 29,192,675.01 | 29,192,675.01 | 28,573,892.12 | 514,669.94 | 29,088,562.06 | 28,641,916.23 | 28,641,916.23 | ||
Unit: RMB
| Name | Reporting Period | Same period of last year | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Changchai Wanzhou Diesel Engine Co., Ltd. | 24,477,850.44 | 469,127.87 | 469,127.87 | 1,744,069.06 | 23,600,857.49 | 257,014.16 | 257,014.16 | -862,600.33 |
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | 9,272,539.79 | -203,349.52 | -203,349.52 | -784,927.87 | 6,815,423.91 | -570,014.57 | -570,014.57 | -1,101,489.23 |
2. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial StatementsNotes to the structured entity excluded in the scope of consolidated financial statements:
In 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together withSynergetic Innovation Fund Management Co., Ltd. through joint investment. On 18 October 2018, newpartners were added. In line with the revised Partnership Agreement, the general partner is SynergeticInnovation Fund Management Co., Ltd., and the limited partners are Changchai Company, Limited,Changzhou Zhongyou Petroleum Sales Co., Ltd., Changzhou Fuel Co., Ltd., Tong Yinzhu and Tong Yinxin.In accordance with the Partnership Agreement, the limited partner does not execute the partnership affairs.Thus, the Company does not control Changzhou Xietong Private Equity Fund (Limited Partnership) anddid not include it into the scope of consolidated financial statements.
X. The Risk Related to Financial InstrumentsThe 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 andmaximized the interests of shareholders and other equity investors. Base on the risk management goal, thebasis strategy of the Company’s risk management was to recognized and analyze all kinds of risk that theCompany faced, set up suitable risk bottom line and conduct risk management, and supervised the riskstimely 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 asfollows:
(I) Credit RiskCredit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assetsof the other party.The credit of risk of the Company mainly was related to account receivable, in order to control the risk, theCompany conduct the following methods.The Company only conducts related transaction with approved and reputable third party, in line with thepolicy of the Company, the Company need to conduct credit-check for the clients adopting way of credit toconduct transaction. In addition, the Company continuously monitors the balance of account receivable toensure the Company would not face the significant bad debt risk.(II) Liquidity RiskLiquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation inthe way of cash payment or other financial assets. The policies of the Company are to ensure that there wassufficient cash to pay the due liabilities.The liquidity risk was centralized controlled by the financial department of the Company. The financialdepartments through supervising the balance of the cash and securities can be convert to cash at any timeand the rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash topay the liabilities under the case of all reasonable prediction.
(III) Market RiskMarket risk is refer to risk of the fair value or future cash flow of financial instrument changed due to thechange 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 instrumentchange due to the change of market price.
2. Foreign Exchange Risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. As for theCompany’s export business, customers will be given a certain credit term, if the RMB appreciates againstthe dollar, the company's accounts receivable will incur foreign currency exchange loss.XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | -- | -- | -- | -- |
| (I) Financial assets at fair value through profit or loss | 362,160,000.00 | 192,552,101.63 | 554,712,101.63 | |
| 1. Trading financial assets | 92,552,101.63 | 92,552,101.63 | ||
| (1) Debt instrument investment | 14,600,000.00 | 14,600,000.00 | ||
| (2) Equity instrument investment | 77,952,101.63 | 77,952,101.63 | ||
| (3) Derivative financial assets | ||||
| 2. Financial assets designated to be measured at fair value and the changes included into the current profit or loss | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (II) Other bond investment | ||||
| (III)Other equity instrument investment | 362,160,000.00 | 100,000,000.00 | 462,160,000.00 | |
| (2) Equity instrument investment | ||||
| (IV) Investment property | ||||
| 1. Land use right for lease | ||||
| 2. Buildings leased out | ||||
| 3. Land use right held and planned to be transferred once appreciating | ||||
| (V) Living assets | ||||
| 1. Consumptive living assets | ||||
| 2. Productive living assets | ||||
| Total assets consistently measured by fair value | 362,160,000.00 | 192,552,101.63 | 554,712,101.63 | |
| (VI) Trading financial liabilities | ||||
| Of which: Issued trading bonds | ||||
| Derivative financial liabilities | ||||
| Other | ||||
| (VII) Financial liabilities designated to be measured at fair value and the changes recorded into the current profit or loss | ||||
| Total liabilities consistently measured by fair value | ||||
| II. Inconsistent fair value measurement | -- | -- | -- | -- |
| (1) Assets held for sale | ||||
| Total assets inconsistently measured by fair value | ||||
| Total liabilities inconsistently measured by fair value |
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items atLevel 1The available-for-sale financial assets measured at fair value of the Company were shares with the closingprice as the basis of fair value calculation at period-end.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parametersfor Consistent and Inconsistent Fair Value Measurement Items at Level 3
(1) In terms of trading financial assets held by the Company, as the underlying assets through financialproducts investment include cash, bond repurchase, bank deposit, interbank loan, national bank and centralbank bill, etc., the assets portfolio invested were executed dynamic management, while the fair value offinancial products is difficult to measure, so the fair value shall be recognized by adopting cost amount.
(2) In terms of non-trading financial assets, with regard to the equity instrument investment without activemarket transactions, including the capital investment to Jiangsu Housheng New Energy Technology Co.,Ltd., Jiangsu Liance Electromechanical Technology Co., Ltd. and Kailong High Technology Co., Ltd., andno significant impact due to the low equity of the invested companies held by the Company, so theappraisement to the invested companies by income or market approach was unfeasible. Therefore, theinvestment cost shall be treated as reasonable estimation of fair value to measure at the period-end.In terms of shares of NEEQ unlisted public companies held by the Company, as for the equity instrumentinvestment with inactive market transactions, due to the market value of shares cannot be reflected by the
market transaction price with the low volume of holding, so the appraisement to the invested companies byincome or market approach was unfeasible. Therefore, the investment cost shall be treated as reasonableestimation of fair value to measure at the period-end.
(3) In terms of other equity instrument investment, there was no significant changes in businessenvironment and circumstance and financial condition of Changzhou Synergetic Innovation Private EquityFund (Limited Partnership), and thus the investment cost shall be treated as reasonable estimation of fairvalue to measure at the period-end. As for other equity instrument, the investment in Chengdu ChangwanDiesel Engine Distribution Co., Ltd., Chongqing Changwan Diesel Engine Accessories Co., Ltd.,Changzhou Economic and Technological Development Co., Ltd., Changzhou Tractor Co., Ltd., ChangzhouEconomic and Industrial Fund Mutual-aid Association, Beijing Engineering Machinery AgriculturalMachinery Co., Ltd. totals RMB1,210,000.00, and because the investment is difficult to recover, the fairvalue is RMB0.00.XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the Company as the parent against the Company | Proportion of voting rights owned by the Company as the parent against the Company |
| Changzhou Investment Group Co., Ltd. | Changzhou | Investment and operations of state-owned assets, assets management (excluding financial business), investment consulting (excluding consulting on investment in securities and options), etc. | RMB1.2 billion | 30.43% | 30.43% |
Notes: Information on the Company as the parentOn 22 November 2018, Changzhou Government State-owned Assets Supervision and AdministrationCommission transferred all 170,845,236 shares of the Company (accounting for 30.43% of the total share
capital of the Company) to Changzhou Investment Group Co., Ltd. for free. In accordance with ChangzhouPeople’s Government Document (CZF [2006] No. 62), both the Company and Changzhou InvestmentGroup Co., Ltd. are enterprises which Changzhou People’s Government authorizes ChangzhouGovernment State-owned Assets Supervision and Administration Commission to perform duties ofinvestors. Thus, after the sharer transfer, Changzhou Investment Group Co., Ltd. is the controllingshareholder of the Company and Changzhou Government State-owned Assets Supervision andAdministration Commission is still the actual controller of the Company. The final controller of theCompany is Changzhou Government State-owned Assets Supervision and Administration Commission.
2. Subsidiaries of the Company
Refer to Note IX for details.
3. Information on Other Related Parties
| Name | Relationship with the Company |
| Synergetic Innovation Fund Management Co., Ltd. | The director of the Company serves as the senior management of the company |
| Changzhou Synergetic Innovation Private Equity Fund (Limited Partnership) | Participated in establishing the industrial investment fund |
| Jiangsu Housheng New Energy Technology Co., Ltd. | Shareholding enterprise of the Company |
| Donghai Securities Co., Ltd. | Controlled by the same Company as the parent |
4. Related-party Transactions
(1) Other Related-party Transaction
On 28 June 2020, the 3
rd Meeting of the 9
thBoard of Directors approved the Proposal on Signature of JointSponsorship Underwriting Agreement of the Private Placement of A shares and Related-party Transaction,which allowed the Company signing the joint sponsorship underwriting agreement with IndustrialSecurities Co., Ltd. (hereinafter referred to as “Industrial Securities”) and Donghai Securities Co., Ltd.(hereinafter referred to as “Donghai Securities”), and appointing Industrial Securities and DonghaiSecurities as the co-sponsor underwriters for the private placement of A shares of the Company withsponsor fee of RMB3 million to Industrial Securities and Donghai Securities and the underwriting fee ofno more than RMB11 million (inclusive of RMB11 million).
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet dateAs of 30 June 2020, there was no significant commitment for the Company to disclose.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Previous litigations continuing to the Reporting Period the Company involved:
| Name of defendant | Date of accepted | Name of the litigation or arbitration institutions | Amount involved (RMB’0,000) | Remark |
| Shandong Hongli Group Co., Ltd. | 27 June 2001 | Changzhou Intermediate People’s Court | 1,436.00 | Under the bankruptcy and liquidation |
Notes:
About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulativelyRMB14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in2001 and sued for compulsory execution in April 2002. Currently, the defendant has started the bankruptcyprocedure. The aforesaid payment has arranged for the full provision for bad debts.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
| Profits or dividends to be distributed | 0 |
2. Notes to Other Events after Balance Sheet Date
As of the approval issue date of financial statements, there was no significant event afterbalance sheet date that shall be disclosed.
XV. Other Significant Events
1. Correction of Previous Accounting Error
(1) Retrospective Restatement
Unit: RMB
| Content | Processing procedure | Affected financial statement line items of the comparative periods | Cumulative effects |
| Changzhou Xingsheng Property Management Co., Ltd. that was not included in the scope of consolidated statements before has been conducted accounting treatment according to the provisions of the accounting standards during the Reporting Period. | The 4th Meeting of the 9th Board of Directors held on 29 July 2020 reviewed and approved the Proposal on Accounting Errors Correction in Previous Period. | Consolidated Balance Sheet in 2019-Mnetary assets | 1,375,254.03 |
| Consolidated Balance Sheet in 2019-Trading financial assets | 3,050,000.00 | ||
| Consolidated Balance Sheet in 2019-Accounts receivable | 6,391.36 | ||
| Consolidated Balance Sheet in 2019-Prepayment | 38,200.00 | ||
| Consolidated Balance Sheet in 2019-Other receivables | -893,682.24 | ||
| Consolidated Balance Sheet in 2019-Inventories | 7,158.32 | ||
| Consolidated Balance Sheet in 2019-Other current assets | 67,355.14 | ||
| Consolidated Balance Sheet in 2019-Total of current assets | 4,632,342.79 | ||
| Consolidated Balance Sheet in 2019-Fixed assets | 140,153.19 | ||
| Consolidated Balance Sheet in 2019-Long-term prepaid expenses | 53,497.80 | ||
| Consolidated Balance Sheet in 2019-Deferred income tax assets | 6.52 | ||
| Consolidated Balance Sheet in 2019-Total of non-current assets | 193,657.51 | ||
| Consolidated Balance Sheet in 2019- Total assets | 4,826,000.30 | ||
| Consolidated Balance Sheet in 2019-Accounts payable | 14,760.00 | ||
| Consolidated Balance Sheet in 2019-Advances from customers | 952,386.57 | ||
| Consolidated Balance Sheet in 2019-Other payables | 1,224,017.91 | ||
| Consolidated Balance Sheet in 2019-Total of current liabilities | 2,191,164.48 |
| Consolidated Balance Sheet in 2019-Total liabilities | 2,191,164.48 |
| Consolidated Balance Sheet in 2019-Surplus reserves | 163,483.58 |
| Consolidated Balance Sheet in 2019- Retained earnings | 1,471,352.24 |
| Consolidated Balance Sheet in 2019- Total equity attributable to owners of the Company as the parent | 2,634,835.82 |
| Consolidated Balance Sheet in 2019- Total owners’ equity | 2,634,835.82 |
| Consolidated Balance Sheet in 2019- Total liabilities and owners’ equity | 4,826,000.30 |
| Consolidated Income Statement in 2019- Revenue | 5,687,083.80 |
| Consolidated Income Statement in 2019- Operating revenue | 5,687,083.80 |
| Consolidated Income Statement in 2019-Operating costs | 5,726,254.73 |
| Consolidated Income Statement in 2019- Cost of sales | 4,884,089.75 |
| Consolidated Income Statement in 2019- Taxes and surtaxes | 21,043.17 |
| Consolidated Income Statement in 2019- Administrative expense | 832,824.01 |
| Consolidated Income Statement in 2019- Finance costs | -11,702.20 |
| Consolidated Income Statement in 2019-Interest income | 13,193.10 |
| Consolidated Income Statement in 2019- Other income | 12,063.29 |
| Consolidated Income Statement in 2019- Investment income | 58,549.24 |
| Consolidated Income Statement in 2019-Credit impairment loss | 7,317.61 |
| Consolidated Income Statement in 2019-Operating profit | 38,759.21 |
| Consolidated Income Statement in 2019- Non-operating income | 16,006.10 |
| Consolidated Income Statement in 2019- Non-operating expense | 12,597.35 |
| Consolidated Income Statement in 2019- Profit before taxation | 42,167.96 |
| Consolidated Income Statement in 2019- Income tax | 10,227.22 |
| Consolidated Income Statement in 2019-Net profit | 31,940.74 |
| Consolidated Income Statement in 2019- Net profit from continuing operations | 31,940.74 |
| Consolidated Income Statement in 2019- Net profit attributable to owners of the Company as the parent | 31,940.74 |
| Consolidated Income Statement in 2019-Total comprehensive income | 31,940.74 |
| Consolidated Income Statement in 2019- Attributable to owners of the Company as the parent | 31,940.74 |
| Consolidated Income Statement in 2019-Earnings per share | 0.00005 |
| Consolidated Income Statement in 2019- Diluted earnings per share | 0.00005 |
| Consolidated Cash Flow Statement in 2019-Proceeds from sale of commodities and rendering of services | 6,150,306.39 |
| Consolidated Cash Flow Statement in 2019- Cash generated from other operating activities | 110,627.50 |
| Consolidated Cash Flow Statement in 2019-Subtotal of cash used in operating activities | 6,260,933.89 |
| Consolidated Cash Flow Statement in 2019- Payments for commodities and services | 4,051,587.11 |
| Consolidated Cash Flow Statement in 2019- Cash paid to and for employees | 1,415,158.29 |
| Consolidated Cash Flow Statement in 2019- Taxes paid | 223,381.96 |
| Consolidated Cash Flow Statement in 2019- Cash used in other operating activities | 353,138.57 |
| Consolidated Cash Flow Statement in 2019- Subtotal of cash used in operating activities | 6,043,265.93 |
| Consolidated Cash Flow Statement in 2019- Net | 217,667.96 |
| cash generated from/used in operating activities | |
| Consolidated Cash Flow Statement in 2019-Proceeds from disinvestments | 3,900,000.00 |
| Consolidated Cash Flow Statement in 2019- Investment income | 58,549.24 |
| Consolidated Cash Flow Statement in 2019- Subtotal of cash generated from investing activities | 3,958,549.24 |
| Consolidated Cash Flow Statement in 2019-Payments for acquisition of fixed assets, intangible assets and other long-lived assets | 37,696.92 |
| Consolidated Cash Flow Statement in 2019- Payments for investments | 6,950,000.00 |
| Consolidated Cash Flow Statement in 2019- Subtotal of cash used in investing activities | 6,987,696.92 |
| Consolidated Cash Flow Statement in 2019- Net cash generated from/used in investing activities | -3,029,147.68 |
| Consolidated Cash Flow Statement in 2019- Cash and cash equivalents, end of the period | -2,811,479.72 |
2. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
Due to the operation scope of the Company and subsidiaries were similar, the Company conducts commonmanagement, and did not divide business unit, so the Company only made single branch report.
3. Other Significant Transactions and Events with Influence on Investors’ Decision-makingNoneXVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
| Category | Ending balance | Beginning balance |
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable for which bad debt provision separately accrued | 35,354,686.26 | 4.37% | 33,459,099.43 | 94.64% | 1,895,586.83 | 37,510,056.90 | 6.66% | 33,788,291.86 | 90.08% | 3,721,765.04 |
| Of which: | ||||||||||
| Accounts receivable with significant single amount for which bad debt provision separately accrued | 30,515,544.63 | 3.77% | 28,619,957.80 | 93.79% | 1,895,586.83 | 32,618,199.97 | 5.79% | 28,896,434.93 | 88.59% | 3,721,765.04 |
| Accounts receivable with insignificant single amount for which bad debt provision separately accrued | 4,839,141.63 | 0.60% | 4,839,141.63 | 100.00% | 4,891,856.93 | 0.87% | 4,891,856.93 | 100.00% | ||
| Accounts receivable for which bad debt provision accrued by group | 773,193,382.27 | 95.63% | 130,445,851.87 | 16.87% | 642,747,530.40 | 525,874,423.56 | 93.34% | 192,148,650.56 | 36.54% | 333,725,773.00 |
| Of which: | ||||||||||
| Accounts receivable for which bad debt provision accrued by credit risk features group | 773,193,382.27 | 95.63% | 130,445,851.87 | 16.87% | 642,747,530.40 | 525,874,423.56 | 93.34% | 192,148,650.56 | 36.54% | 333,725,773.00 |
| Total | 808,548,068.53 | 100.00% | 163,904,951.30 | 20.27% | 644,643,117.23 | 563,384,480.46 | 100.00% | 225,936,942.42 | 40.10% | 337,447,538.04 |
Accounts receivable with significant single amount for which bad debt provision separately accrued at theend of the period:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Withdrawal reason | |
| Customer 1 | 1,470,110.64 | 1,470,110.64 | 100.00% | Expected to difficultly recover |
| Customer 2 | 1,902,326.58 | 1,902,326.58 | 100.00% | Difficult to recover |
| Customer 3 | 6,215,662.64 | 6,215,662.64 | 100.00% | Difficult to recover |
| Customer 4 | 2,254,860.60 | 2,175,814.38 | 96.49% | Expected to difficultly recover |
| Customer 5 | 3,633,081.23 | 1,816,540.62 | 50.00% | Expected to difficultly recover |
| Customer 6 | 3,279,100.00 | 3,279,100.00 | 100.00% | Expected to difficultly recover |
| Customer 7 | 2,068,377.01 | 2,068,377.01 | 100.00% | Expected to difficultly recover |
| Customer 8 | 5,359,381.00 | 5,359,381.00 | 100.00% | Difficult to recover |
| Customer 9 | 2,584,805.83 | 2,584,805.83 | 100.00% | Difficult to recover |
| Customer 10 | 1,747,839.10 | 1,747,839.10 | 100.00% | Difficult to recover |
| Total | 30,515,544.63 | 28,619,957.80 | -- | -- |
Accounts receivable for which bad debt provision accrued by credit risk features group
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Within 1 year | 642,166,048.04 | 12,843,320.94 | 2.00% |
| 1 to 2 years | 8,755,103.78 | 437,755.18 | 5.00% |
| 2 to 3 years | 4,792,557.78 | 718,883.67 | 15.00% |
| 3 to 4 years | 1,052,669.09 | 315,800.73 | 30.00% |
| 4 to 5 years | 742,280.57 | 445,368.34 | 60.00% |
| Over 5 years | 115,684,723.01 | 115,684,723.01 | 100.00% |
| Total | 773,193,382.27 | 130,445,851.87 | - |
Notes to the basis for the determination of the groups:
The accounts receivable was adopted the aging analysis based on the months when the accounts occurredactually, among which the accounts occurred earlier will be priority to be settled in terms of the capitalturnover. Explanation of the input value and assumption adopted to determine the withdrawal amount ofbad debt provision on the Current Period: With reference to the experience of the historical credit loss,combining with the prediction of the present status and future financial situation, the comparison table wasprepared between the aging of the accounts receivable and estimated credit loss rate in the duration and tocalculate the estimated credit loss.Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable ifadopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 642,166,048.04 |
| 1 to 2 years | 9,856,103.13 |
| 2 to 3 years | 7,977,007.54 |
| Over 3 years | 148,548,909.82 |
| 3 to 4 years | 4,450,019.60 |
| 4 to 5 years | 2,341,866.64 |
| Over 5 years | 141,757,023.58 |
| Total | 808,548,068.53 |
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Bad debt provision withdrawn separately | 33,788,291.86 | 65,231.52 | 272,117.93 | 33,581,405.45 | ||
| Bad debt provision withdrawn by group | 192,148,650.56 | 6,319,796.20 | 68,144,900.92 | 130,323,545.84 | ||
| Total | 225,936,942.42 | 6,385,027.72 | 272,117.93 | 68,144,900.92 | 163,904,951.29 |
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) There Was No Particulars of the Actual Verification of Accounts Receivable during theReporting Period
Unit: RMB
| Item | Amount |
| Actual verification of accounts receivable | 68,144,900.92 |
Of which the verification of significant accounts receivable:
Unit: RMB
| Name of the entity | Nature | Amount verified | Reason | Performance of verification procedures | Whether generated from related-party transaction |
| Wuwei Golden Frog Vehicle Manufacturing Co., Ltd. | Bad debt loss | 10,000,000.00 | The aging of canceled receivables shall exceed 5 years and result from fruitless collection, and if any single client’s large amount is involved without any business transaction | The 3rd Meeting of the 9th Board of Directors and the 3rd Meeting of the 9th Supervisory Committee held on 26 June 2020 reviewed | No |
| Xuzhou Zhengda Agricultural Machinery Co., Ltd. | 7,583,232.65 | ||||
| Shandong Agricultural Machinery Group Heze Area Agricultural Machinery Co., Ltd. | 4,581,880.41 | ||||
| Sichuan Tiantai Electromechanical Agricultural Machinery Co., Ltd. | 3,600,000.00 |
| Puyang Shifeng Agricultural Machinery Co., Ltd. | 2,752,840.00 | with the Company for over ten years, the client’s qualification for business operation shall be canceled or the insolvency liquidation is finished without any production and operation activities. | and approved the Proposal on Verification of Partial Accounts Receivable. | |
| Jining Hydraulic Drilling Plant | 2,450,966.67 | |||
| Zhanjiang Agricultural Machinery Co., Ltd. | 2,180,243.72 | |||
| Kaifeng Tractor Factory | 1,976,282.47 | |||
| Linyi Agricultural Machinery Group Corporation | 1,860,830.82 | |||
| Henan Zhongjian Industrial Co., Ltd. | 1,758,686.48 | |||
| Shanxi Jiaocheng Xinyuan Iron Factory | 1,662,052.98 | |||
| Ganyu Agricultural Machinery Co., Ltd. | 1,285,160.60 | |||
| Nanning Changshunrong Agricultural Machinery Co., Ltd. | 1,236,225.30 | |||
| Longma Agricultural Vehicle Co., Ltd. | 1,235,170.95 | |||
| Xinjiang Korla Feihong Agricultural Machinery Co., Ltd. | 1,200,000.00 | |||
| Gaotang Raoyang County Agricultural Machinery City | 1,149,217.70 | |||
| Haining Bus General Factory | 848,158.92 | |||
| Yunnan Nanping Agricultural Machinery Management | 841,642.86 | |||
| Tongshan Dongfang Agricultural Machinery Sales Department | 830,000.00 |
| Juning Huaihai Agricultural Machinery Trading Co., Ltd. | 800,000.00 | ||||
| Jiangxi Lida Agricultural Machinery Sales Co., Ltd. | 797,786.72 | ||||
| Shenyang Fusang Agricultural Machinery Co., Ltd. | 796,226.73 | ||||
| Anhui Woyang Agricultural Machinery Co., Ltd. | 760,197.20 | ||||
| Tai 'an Guotai Tractor Factory | 728,666.36 | ||||
| Lijin Yongxing Agricultural Machinery Sales Co., Ltd. | 677,250.00 | ||||
| Hefei Xinfa Materials Co., Ltd. | 551,305.36 | ||||
| Changqing County Agricultural Machinery Company | 549,800.00 | ||||
| Henan Boai Agricultural Machinery Co., Ltd. | 537,698.10 | ||||
| Shandong Shuangli Group Co., Ltd. | 12,343,782.28 | ||||
| Shandong Dongchang Group Labor Service Co., Ltd. | 520,892.51 | ||||
| Total | -- | 68,096,197.79 | -- | -- | -- |
(4) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Ending balance of accounts receivable | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer 1 | 376,475,098.82 | 46.56% | 7,529,501.98 |
| Customer 2 | 54,293,467.67 | 6.71% | 1,085,869.35 |
| Customer 3 | 32,287,845.17 | 3.99% | 763,817.03 |
| Customer 4 | 21,395,243.36 | 2.65% | 427,904.87 |
| Customer 5 | 18,593,170.87 | 2.30% | 371,863.42 |
| Total | 503,044,825.89 | 62.22% |
At the end of the period, the sum of the top five accounts receivable collected according to the arrearsamounted to RMB 503,044,825.89, accounting for 62.22% of the total balance at the end of the period.The corresponding ending balance of bad debt provision is RMB10,178,956.65.
2. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other receivables | 22,243,041.97 | 22,741,542.22 |
| Total | 22,243,041.97 | 22,741,542.22 |
(1) Other Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Cash deposit and Margin | 4,200.00 | 4,200.00 |
| Intercourse funds among units | 38,118,999.36 | 37,618,642.29 |
| Petty cash and borrowings by employees | 671,871.57 | 624,083.07 |
| Other | 13,654,433.26 | 15,373,206.41 |
| Total | 52,449,504.19 | 53,620,131.77 |
2) Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2020 | 30,878,589.55 | 30,878,589.55 | ||
| Balance of 1 January 2020 in the Current Period | —— | —— | —— | —— |
| --Transfer to Second stage | ||||
| -- Transfer to Third stage | ||||
| -- Reverse to Second stage | ||||
| -- Reverse to First stage | ||||
| Withdrawal of the Current Period | 25,814.56 | 25,814.56 | ||
| Reversal of the Current Period | 697,941.89 | 697,941.89 | ||
| Write-offs of the Current Period | ||||
| Verification of the Current Period | ||||
| Other changes | ||||
| Balance of 30 June 2020 | 30,206,462.22 | 30,206,462.22 |
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 19,721,955.40 |
| 1 to 2 years | 1,720,886.24 |
| 2 to 3 years | 592,647.80 |
| Over 3 years | 30,414,014.75 |
| 3 to 4 years | 1,007,667.17 |
| 4 to 5 years | 178,915.24 |
| Over 5 years | 29,227,432.34 |
| Total | 52,449,504.19 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodInformation of bad debt provision withdrawn:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Bad debt provision withdrawn separately | 5,042,448.58 | 25,814.56 | 5,068,263.14 | |||
| Bad debt provision withdrawn by group | 25,836,140.97 | 697,941.89 | 25,138,199.08 | |||
| Total | 30,878,589.55 | 25,814.56 | 697,941.89 | 30,206,462.22 | ||
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period: No.
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to total ending balance of other receivables | Ending balance of bad debt provision |
| Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. | Intercourse funds | 10,000,000.00 | Within 1 year | 19.07% | 200,000.00 |
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | Intercourse funds | 9,415,165.78 | Within 1 year with RMB8,125,173.79, 1 to 2 years with RMB1,206,967.28, 2 to 3 years with RMB83,024.71. | 17.95% | 235,305.55 |
| Changzhou Compressors Factory | Intercourse funds | 2,940,000.00 | Over 5 years | 5.61% | 2,940,000.00 |
| Changchai Group Imp. & Exp. Co., Ltd. | Intercourse funds | 2,853,188.02 | Over 5 years | 5.44% | 2,853,188.02 |
| Changzhou New District Accounting Centre | Intercourse funds | 1,626,483.25 | Over 5 years | 3.10% | 1,626,483.25 |
| Total | -- | 26,834,837.05 | -- | 51.16% | 7,854,976.82 |
3. Long-term Equity Investment
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Investment to subsidiaries | 287,752,730.03 | 287,752,730.03 | 252,752,730.03 | 252,752,730.03 | ||
| Investment to joint ventures and associated enterprises | 44,182.50 | 44,182.50 | 44,182.50 | 44,182.50 | ||
| Total | 287,796,912.53 | 44,182.50 | 287,752,730.03 | 252,796,912.53 | 44,182.50 | 252,752,730.03 |
(1) Investment to Subsidiaries
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||
| Additional investment | Reduced investment | Withdrawal of depreciation reserve | Other | ||||
| Changchai Wanzhou Diesel Engine Co., Ltd. | 51,000,000.00 | 51,000,000.00 | |||||
| Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. | 96,466,500.00 | 96,466,500.00 | |||||
| Changzhou Housheng Investment Co., Ltd. | 40,000,000.00 | 40,000,000.00 | |||||
| Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. | 7,000,000.00 | 7,000,000.00 | |||||
| Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. | 47,286,230.03 | 47,286,230.03 | |||||
| Jiangsu Changchai Machinery Co., Ltd. | 10,000,000.00 | 35，000,000.00 | 45,000,000.00 | ||||
| ChangzhouXingsheng Property Management Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||||
| Total | 252,752,730.03 | 35,000,000.00 | 287,752,730.03 | 0.00 |
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| II. Associated enterprises | |||||||||||
| Beijing Tsinghua Xingye Industrial Investment Management Co., Ltd. | 0.00 | 0.00 | 44,182.50 | ||||||||
| Subtotal | 0.00 | 0.00 | 44,182.50 | ||||||||
| Total | 0.00 | 0.00 | 44,182.50 |
4. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 1,066,808,215.93 | 914,519,611.82 | 1,016,544,011.76 | 895,758,979.30 |
| Other operations | 14,661,587.19 | 8,902,410.95 | 16,785,163.82 | 11,527,336.19 |
| Total | 1,081,469,803.12 | 923,422,022.77 | 1,033,329,175.58 | 907,286,315.49 |
Information related to performance obligations: performing according to the contract offerInformation related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed ornot fully performed yet was RMB0 at the period-end.
5. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Dividend income from holding of other equity instrument investment | 4,865,000.00 | |
| Investment income from holding of available-for-sale financial assets | ||
| Investment income from disposal of available-for-sale financial assets | ||
| Income from transferring to accommodation business | 118,988.73 | |
| Total | 4,983,988.73 |
XVII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gain or loss on disposal of non-current assets | 9,252.03 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 2,657,218.07 | |
| Capital occupation charges on non-financial enterprises that are recorded into current gains and losses | 257,714.14 | |
| Gain/loss from change of fair value of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment in other debt obligations, other than valid hedging related to the Company’s common businesses | 5,384,597.04 | |
| Other non-operating income and expenses other than the above | 95,387.43 | |
| Less: Income tax effects | 1,205,579.18 | |
| Non-controlling interests effects | 180,418.43 | |
| Total | 7,018,171.10 | -- |
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies OfferingTheir Securities to the Public—Non-recurring Gains and Losses, or classifies any extraordinary gain/lossitem mentioned in the said explanatory announcement as a recurrent gain/loss item.
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
| Profit as of Reporting Period | Weighted average ROE (%) | EPS (Yuan/share) | |
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 1.32 | 0.0493 | 0.0493 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 0.99 | 0.0368 | 0.0368 |
Changchai Company, Limited Interim Report 2019
Changchai Company, Limited29 July 2020