2013 Annual Report of Changchai Company, Limited CHANGCHAI COMPANY, LIMITED
2014 ANNUAL REPORT
April 2015
2014 Annual Report of Changchai Company, Limited Section I. Important Reminders, Catalogue& Explanation
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Changchai Company, Limited (hereinafter referred to as “the Company”) warrant that this report is factual, accurate and complete without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that.
All directors attended the board session for reviewing this report.
TheCompany’s profit distribution preplan upon review and approval of this board session: Based on the total 561,374,326 shares of the Company, a cash dividend of RMB 0.20 (tax included) will be distributed for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be turned into share capital.
Mr. Xue Guojun, company principal, Mr. He Jianguang, chief of the accounting work, and Mr. Jiang He, chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed in this report is factual, accurate and complete.
The future plans and some other forward-looking statements involved in this report shall not be considered as virtual promises of the Company to investors. And investors are kindly reminded to pay attention to possible risks.
This report is prepared in both Chinese and English. Should there be any understanding discrepancy between the two versions, the Chinese version shall prevail.
2014 Annual Report of Changchai Company, Limited Catalogue
Section I. Important Reminders, Catalogue& Explanation.................................................................2 Section II. Company Profile.................................................................................................................5 Section III. Accounting& Financial Indicator Highlights...................................................................7 Section IV. Report of the Board of Directors.......................................................................................9 Section V. Significant Events.............................................................................................................27 Section VI. Change in Share Capital and Particulars about Shareholders.........................................31 Section IX. Corporate Governance....................................................................................................43 Section XI. Financial Report..............................................................................................................50 Section XII. Documents Available For Reference...........................................................................150
2014 Annual Report of Changchai Company, Limited Explanation
||||
|-|-|-|
|Term|Refers to|Contents|
|Company, the Company, Changchai|Refers to|Changchai Company, Limited|
|Changchai Benniu|Refers to|Chuangzhou Changchai Benniu Diesel Engine Fittings Co., Ltd.|
|Changchai Wanzhou|Refers to|Changchai Wanzhou Diesel Engine Co., Ltd|
|Housheng Investment|Refers to|Changzhou Housheng Investment Co., Ltd.|
|Housheng Agricultural Equipment|Refers to|Changzhou Changchai Housheng Agricultural Equipment Co., Ltd.|
|Yuan, Ten thousand Yuan|Refers to|RMB Yuan, RMB Ten thousand|
|Reporting period|Refers to|1 Jan. 2014-31 Dec. 2014|

2014 Annual Report of Changchai Company, Limited Section II. Company Profile
I. Company information
|||||
|-|-|-|-|
|Stock abbreviation|SCCA, SCCB|Stock code|000570, 200570|
|Stock exchange listed with|Shenzhen Stock Exchange|||
|Chinese name of the Company|常柴股份有限公司|||
|Abbr. of the Chinese name of the Company|苏常柴|||
|English name of the Company (if any)|CHANGCHAI COMPANY,LIMITED|||
|Abbr. of the English name of the Company (if any)|CHANGCHAI CO.,LTD.|||
|Legal representative of the Company|Xue Guojun|||
|Registered address|123 Huaide Middle Road, Changzhou, Jiangsu, China|||
|Postal code for the registered address|213002|||
|Office address|123 Huaide Middle Road, Changzhou, Jiangsu, China|||
|Postal code for the office address|213002|||
|Internet website of the Company|http://www.changchai.com.cn|||
|Email address|cctqm@public.cz.js.cn|||

II. Contact us
||||
|-|-|-|
||Company Secretary|Securities Affairs Representative|
|Name|Shi Jianchun|He Jianjiang|
||123 Huaide Middle Road, Changzhou,|123 Huaide Middle Road, Changzhou,|
|Contact address|||
||Jiangsu, China|Jiangsu, China|
|Tel.|(86)519-86610041|(86)519-68683155|
|Fax|(86)519-86630954|(86)519-86630954|
|E-mail|ccsjc@changchai.com|cchjj@changchai.com|

III. About information disclosure and where this report is placed
|||
|-|-|
|Newspapers designated by the Company for||
||Securities Times, Ta Kung Pao (HK)|
|information disclosure||
|Internet website designated by CSRC for disclosing||
||http://www.cninfo.com.cn|
|this report||
|Where this report is placed|BOD Secretariat|

2014 Annual Report of Changchai Company, Limited IV. Change of the registered information
|||||||
|-|-|-|-|-|-|
|||||Registration code of||
||Registration date|Registration place|Business license No.||Organizational code|
|||||taxation||
|||Changzhou||||
|||Municipal||||
|Initial registration|5 May 1994|Administration|13715586-3|320400137155863|13479241-0|
|||Bureau for Industry||||
|||and Commence||||
|||Changzhou||||
|||Municipal||||
|At the end of the||||||
||8 Mar. 2010|Administration|320400000004012|320400137155863|13479241-0|
|reporting period||||||
|||Bureau for Industry||||
|||and Commence||||
|Changes of the main business since listing||||||
|||Unchanged||||
|(if any)||||||
|Changes of the controlling shareholder (if||||||
|||Unchanged||||
|any)||||||

V. Other information
The CPAs firm hired by the Company:
|||
|-|-|
|Name|Jiangsu Gongzheng Tianye Certified Public Accountants LLP|
|Office address|10/F, Yingtong Commerce Building, Changzhou, Jiangsu, China|
|Signing accountants|Wang Wenkai, He Taifeng|

Sponsor engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable√ Inapplicable
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable√ Inapplicable
2014 Annual Report of Changchai Company, Limited Section III. Accounting& Financial Indicator Highlights
I. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error?
□ Yes√ No
||||||
|-|-|-|-|-|
||||Increase or decrease of||
||2014|2013|this year over last year|2012|
||||(%)||
|Operating revenues (RMB Yuan)|2,489,792,063.33|2,927,593,052.78|-14.95%|2,955,536,089.13|
|Net profit attributable to|64,202,144.29|75,712,361.04|||
|shareholders of the Company|||-15.20%|55,434,031.99|
|(RMB Yuan)|||||
|Net profit attributable to|||||
|shareholders of the Company after|58,685,034.57|71,950,142.51|-18.44%|37,838,390.21|
|extraordinary gains and losses|||||
|(RMB Yuan)|||||
|Net cash flows from operating|-51,507,355.52|31,406,848.48|||
||||-264.00%|305,344,709.73|
|activities (RMB Yuan)|||||
|Basic EPS (RMB Yuan/share)|0.11|0.13|-15.38%|0.10|
|Diluted EPS (RMB Yuan/share)|0.11|0.13|-15.38%|0.10|
|Weighted average ROE (%)|3.28%|4.14%|-0.86%|3.05%|
||||Increase or decrease of||
||As at 31 Dec. 2014|As at 31 Dec. 2013|this year-end than last|As at 31 Dec. 2012|
||||year-end (%)||
|Total assets (RMB Yuan)|3,166,783,758.18|3,082,340,149.65|2.74%|3,181,303,850.46|
|Net assets attributable to|1,936,936,835.27|1,809,577,062.45|||
|shareholders of the Company|||7.04%|1,845,193,200.65|
|(RMB Yuan)|||||

II. Differences between accounting data under domestic and overseas accounting standards 1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards
□ Applicable√ Inapplicable
No such cases in the reporting period.
2014 Annual Report of Changchai Company, Limited 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards
□ Applicable√ Inapplicable
No such cases in the reporting period.
III. Items and amounts of extraordinary gains and losses
√ Applicable□ Inapplicable
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2014|2013|2012|Note|
|Gains/losses on the disposal of non-current assets|118,901.99||||
|(including the offset part of the asset impairment||568,054.78|2,678,463.82||
|provisions)|||||
|Government grants recognized in the current period,|10,344,073.62||||
|except for those acquired in the ordinary course of|||||
|||2,022,736.01|6,916,993.51||
|business or granted at certain quotas or amounts|||||
|according to the government’s unified standards|||||
|Capital occupation charges on non-financial enterprises|1,505,666.68||||
|||2,224,950.00|1,600,000.00||
|that are recorded into current gains and losses|||||
|Gains and losses on change in fair value from tradable|572,812.70||||
|financial assets and tradable financial liabilities, as well|||||
|as investment income from disposal of tradable|||||
|||439,841.66|344,219.63||
|financial assets and tradable financial liabilities and|||||
|financial assets available for sales except for effective|||||
|hedging related with normal businesses of the Company|||||
|Impairment provision reversal of accounts receivable|||||
|||1,879,038.74|2,000,000.00||
|on which the impairment test is carried out separately|||||
|Non-operating income and expense other than the|-6,029,012.72||||
|||-1,918,603.81|7,464,322.36||
|above|||||
|Less: Income tax effects|995,341.14|1,236,496.89|3,372,131.87||
|Minority interests effects (after tax)|-8.59|217,301.96|36,225.67||
|Total|5,517,109.72|3,762,218.53|17,595,641.78|--|

 Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item□ Applicable√ Inapplicable
No such cases in the reporting period.
2014 Annual Report of Changchai Company, Limited Section IV. Report of the Board of Directors
I. Overview
For 2014, we sold 956,100 units of various engines and generator sets, including 820,800 units of single-cylinder engines, 125,100 units of multi-cylinder engines and 10,200 units of generator sets. Meanwhile, we exported 113,000 units of engines and generator sets by ourselves, generating an export income of USD 45.07 million. We achieved a sales income of RMB 2.489 billion, down14.95% from last year; and net profits attributable to shareholders of the Company of RMB 64.2021 million,down15.20% on the year-on-year basis.
Judging from the development trends in the industry, due to thegovernment’s new policy for vehicle emission as well as the changes in the means and focuses of agricultural machinery subsidies, the macro-economic entered a gear-shifting period of growth for transformation and upgrading. In the reporting period, the whole agricultural machinery and combustion engine markets continued to decline. Under such a circumstance, we managed to achieve a business performance better than the average in the industry. Despite a YoY decrease in both the production and sales volumes of single-cylinder engines, we were still No. 1 in the industry in this respect. The multi-cylinder diesel engines for automobile also saw a drop, but those for agricultural and non-road machinery were stable.
In terms of the sale of single-cylinder diesel engines, we enhanced marketing and marketing innovation, constantly optimized the product sales and market structures, and focused on the markets regarding governmental subsidy projects and the market share of our main engine plants. We also adopted flexible measures to effectively enlarge the market shares of our new products, enhanced the marketing and supporting work for key products, beefed up marketing of new products, generator sets and pumping units, and enhanced marketing of high-horsepower single-cylinder engines in the circulating and engine supporting sectors.
Concerning the sale of multi-cylinder diesel engines, we stabilized the current engine supporting system first, and then effectively enlarged the market share of our multi-cylinder engines in the non-road machinery sector through accelerating the development of our light-weight engines in sectors such as tug boats, mechanical units, ships, small-scaled engineering machinery, etc. and providing more competitive products.
In sale of fittings, we kept integrating our service resources, continuously optimized the reserve of fittings for market services and enhanced marketing. We also proactively pushed forward brand store building, perfected the spare part supply system, and improved the end market service capability and the coordination capability in marketing and market expansion.
As for export, we strengthened promotion of our new products in traditional markets such as Southeast Asia and Africa, and beefed up exploration of new markets and customers. As a result, we successfully entered new markets such as Columbia, the Philippines and Vietnam, and expanded markets such as Middle East and Africa. We launched more competitive products to the market, which were more needed by the market. We also expanded export of components, etc. to create new growth space for export profits. At the same time, considering a highly centralized export network, we made stricter rules, standardized work processes, prevented market risks and worked harder on the inflow of funds, which made sure the quality and quantity of our export.
In general, despite certain drops in our sales volume and income, our gross profit rate improved from the year earlier due to stable raw and auxiliary material prices as well as effective cost reduction.
2014 Annual Report of Changchai Company, Limited II. Main business analysis
1. Overview
During the reporting period, the Company was mainly engaged in manufacture and sale of single-cylinder and multi-cylinder diesel engines, power generation sets, etc. The composition and sources of profit did not differ greatly from last year.
|||||
|-|-|-|-|
|Item|Amount in 2014 (RMBYuan)|Amount in 2013 (RMBYuan)|YoY +/-%|
|Operating revenues|2,489,792,063.33|2,927,593,052.78|-14.95%|
|Operating costs|2,157,062,245.66|2,530,625,259.11|-14.76%|
|Sales expenses|92,235,311.13|122,731,331.97|-24.85%|
|Administrative expenses|146,002,446.70|165,237,477.97|-11.64%|
|Financial expenses|-10,932,468.28|-12,404,044.54|——|
|R&D expenses|90,058,586.14|127,377,520.56|-29.30%|
|Net cash flows from operatingactivities|-51,507,355.52|31,406,848.48|——|

Overview of the reporting period progress of development strategies and business plans disclosed in previous periods:
In 2014, the Company developed in an orderly manner according to its overall strategic planning. Despite drops in our sales volume and income due to the impact from development trends in the industry, we managed to carry out a good cost control.
State the reasons why theCompany’s actual business performance is20% lower or higher than the earning forecast for the reporting period which has been publicly disclosed earlier:
□ Applicable√ Inapplicable
Changes in the main operational model
□ Applicable√ Inapplicable
2. Revenues
Notes:
In the reporting period, the overall operation was good, our production and sales volume and sales revenue decreased from last year, and our market share remained at a leading position in the industry.
Are theCompany’s goods selling revenue higher than the service revenue?
√ Yes□ No
||||||
|-|-|-|-|-|
|Industry|Items|2014|2013|YoY +/- (%)|
|Diesel engines|Sales volume|956,116|1,163,039|-17.99|
||Output|952,186|1,175,838|-19.02|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Stock|100,475|108,172|-7.12|

Reasons for anyover-30% YoY movement of the data above:
□ Applicable√ Inapplicable
Major orders held:
□ Applicable√ Inapplicable
Significant change or adjustment of theCompany’s products or services during the reporting period:
□ Applicable√ Inapplicable
Major customers:
Information about the top 5 customers:
√ Applicable□ Inapplicable
|||||
|-|-|-|-|
|Serial No.|Name of customer|Sales (RMB Yuan)|Proportion in annual total sales (%)|
|1|Customer 1|256,491,757.13|10.30%|
|2|Customer 2|146,321,417.85|5.88%|
|3|Customer 3|138,367,122.06|5.56%|
|4|Customer 4|106,647,991.66|4.28%|
|5|Customer 5|97,248,934.61|3.91%|
|Total|--|745,077,223.31|29.93%|

 Other information about the major customers
√ Applicable□ Inapplicable
The top 5 customers are not related parties of the Company. None of theCompany’s directors, supervisors, senior executives, core technicians, and shareholders with a stake over5%, actual controller or other related parties holds any equity interests in the top 5 customers directly or indirectly.
3. Costs
Classified by industry:
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|||2014||2013||YoY +/- (%)|
||||Proportion in||Proportion||
|Industry|Item||||||
|||Amount|operating|Amount|in operating||
||||costs (%)||costs (%)||
|Internal combustion engine|Raw materials|1,825,581,911.47|84.63%|2,126,484,405.23|84.03%|0.6%|
|Internal combustion engine|Labor cost|189,024,754.33|8.76%|252,102,133.45|9.96%|-1.2%|
|Internal combustion engine|Depreciation|72,536,387.35|3.36%|70,152,635.18|2.77%|0.59%|
|Internal combustion engine|Energy|34,919,192.51|1.62%|39,243,866.61|1.55%|0.07%|

Classified by product:
Unit: RMB Yuan
2014 Annual Report of Changchai Company, Limited
||||||||
|-|-|-|-|-|-|-|
|||2014||2013|||
||||Proportion in||Proportion in||
|Product|Item|||||YoY +/- (%)|
|||Amount|operating costs|Amount|operating costs||
||||(%)||(%)||
|Diesel engines|Raw materials|1,825,581,911.47|84.63%|2,126,484,405.23|84.03%|0.6%|
|Diesel engines|Labor cost|189,024,754.33|8.76%|252,102,133.45|9.96%|-1.2%|
|Diesel engines|Depreciation|72,536,387.35|3.36%|70,152,635.18|2.77%|0.59%|
|Diesel engines|Energy|34,919,192.51|1.62%|39,243,866.61|1.55%|0.07%|

 Notes
Major suppliers:
Information about the top 5 suppliers:
√ Applicable□ Inapplicable
|||||
|-|-|-|-|
|||Procurement amount (RMB|Proportion in annual total procurement|
|Serial No.|Name of supplier|||
|||Yuan)|amount (%)|
|1|Customer 1|68,231,134.11|4.37%|
|2|Customer 2|36,288,224.85|2.33%|
|3|Customer 3|35,143,332.74|2.25%|
|4|Customer 4|28,574,550.23|1.83%|
|5|Customer 5|27,758,908.62|1.78%|
|Total|--|195,996,150.56|12.56%|

 Other information about the major suppliers
√ Applicable□ Inapplicable
The top 5 suppliers are not related parties of the Company. None of theCompany’s directors, supervisors, senior executives, core technicians, and shareholders with a stake over5%, actual controller or other related parties holds any equity interests in the top 5 suppliers directly or indirectly.
4. Expense
|||||
|-|-|-|-|
|Items|Amount in 2014(RMB Yuan)|Amount in 2013(RMB Yuan)|YoY +/- (%)|
|Administrative expenses|146,002,446.70|165,237,477.97|-11.64%|
|Sales expenses|92,235,311.13|122,731,331.97|-24.85%|
|Financial expenses|-10,932,468.28|-12,404,044.54|——|
|Income tax|19,587,550.64|23,190,324.77|-15.54%|

5.R&D expenses
In the reporting period, theR&D expenses of the Company stood at RMB 90,058,586.14, accounting for4.65% of
2014 Annual Report of Changchai Company, Limited the closing net assets and3.62% of the operating revenues.
6. Cash flows
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2014|2013|YoY +/- (%)|
|Subtotal of cash inflows from operating activities|2,736,023,892.55|3,317,498,067.68|-17.53%|
|Subtotal of cash outflows from operating activities|2,787,531,248.07|3,286,091,219.20|-15.17%|
|Net cash flows from operating activities|-51,507,355.52|31,406,848.48|——|
|Subtotal of cash inflows from investing activities|11,488,203.39|16,605,996.66|-30.82%|
|Subtotal of cash outflows from investing activities|85,211,666.98|67,808,515.95|25.67%|
|Net cash flows from investing activities|-73,723,463.59|-51,202,519.29|——|
|Subtotal of cash inflows from financing activities|20,280,600.00|60,250,000.00|-66.34%|
|Subtotal of cash outflows from financing activities|41,194,562.05|66,514,667.28|-38.07%|
|Net cash flows from financing activities|-20,913,962.05|-6,264,667.28|——|

 Reasons for anyover-30% YoY movement of the data above:
√ Applicable□ Inapplicable
Reasons for a big difference between the operating cash flows and the net profit:
□ Applicable√ Inapplicable
III. Breakdown of main business
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrea|Increase/decrease|
||Operating||Gross profit|of operating|se of operating|of gross profit|
|||Operating costs|||||
||revenues||rate (%)|revenues over last|costs over last|rate over last year|
|||||year (%)|year (%)|(%)|
|Classified by industry|||||||
|Internal combustion|||||||
||2,461,692,196.75|2,141,415,126.02|13.01%|-14.98%|-14.71%|-0.27%|
|engine|||||||
|Classified by product|||||||
|Diesel engines|2,461,692,196.75|2,141,415,126.02|13.01%|-14.98%|-14.71%|-0.27%|
|Classified by region|||||||
|Domestic|2,180,086,698.19|1,866,399,196.13|14.39%|-16.60%|-16.56%|-0.04%|
|Overseas|281,605,498.56|275,015,929.89|2.34%|0.16%|0.43%|-0.26%|

 List of the data statistics caliber of the main business of the Company which under the adjustment during the reporting period and the
main business data after the adjustment according to the caliber at the period-end of the recent 1 year of the Company
□ Applicable√ Inapplicable
2014 Annual Report of Changchai Company, Limited IV. Asset and liability analysis
1. Major changes of asset items
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
||As at 31 Dec. 2014||As at 31 Dec. 2013||||
||||||Proportion|Explain any major|
|||Proportion in||Proportion in|||
||Amount||Amount||change|change|
|||total assets||total assets|||
|Monetary funds|531,969,747.91|16.80%|688,297,469.30|22.33%|-5.53%||
|Accounts receivable|374,335,355.22|11.82%|317,295,375.34|10.29%|1.53%||
|Inventories|497,588,717.86|15.71%|473,238,876.29|15.35%|0.36%||
|Investing real estate|59,489,370.83|1.88%|61,697,711.63|2.00%|-0.12%||
|Long-term equity|20,459,975.99||19,548,325.73||||
|||0.65%||0.63%|0.02%||
|investment|||||||
|Fixed assets|572,785,946.61|18.09%|619,468,246.18|20.10%|-2.01%||
|Construction in process|134,948,317.87|4.26%|78,207,347.80|2.54%|1.72%||

2. Major changes of liability items
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
||2014||2013||||
||||||Proportion|Explain any major|
|||Proportion in||Proportion in|||
||Amount||Amount||change|change|
|||total assets||total assets|||
|Short-term borrowings|20,000,000.00|0.63%|30,000,000.00|0.97%|-0.34%||
|Long-term borrowings|0.00||0.00||||

3. Assets and liabilities measured at fair value
√ Applicable□ Inapplicable
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|||Gain/loss on||||||
||||Cumulative fair|Impairment|Purchased|||
|||fair value||||Sold amount in||
||Opening||value change|provisions in|amount in the||Closing|
|Item||change in the||||the reporting||
||amount||recorded into|the reporting|reporting||amount|
|||reporting||||period||
||||equity|period|period|||
|||period||||||
|Financial asset||||||||
|1. Financial assets||||||||
|||109,642.19|||2,000,000.00||2,109,642.1|
|measured by fair value||||||||
|with its changes||||||||

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|included in the current||||||
|gains and losses||||||
|(excluding the||||||
|derivative financial||||||
|assets)||||||
|3. Available-for-sale|368,754,0|||||
||||349,159,175.00||452,650,000.00|
|financial assets|00.00|||||
|Subtotal of financial|368,754,0|||||
|||109,642.19|349,159,175.00|2,000,000.00|454,759,642.19|
|assets|00.00|||||
||368,754,0|||||
|Total of the above||109,642.19|349,159,175.00|2,000,000.00|454,759,642.19|
||00.00|||||
|Financial liabilities|0.00||||0.00|

 Did any significant change occur to the attribute of theCompany’s main asset measurement during the reporting period?
□Yes√No
Notes of the reasons of the significant changes of theCompany’s main asset measurement and the influences on the operation results and the financial conditions during the reporting period
4. List of the main overseas assets
□ Applicable√ Inapplicable
V. Core competitiveness analysis
1. Brand advantage
Incorporated in 1913, the Company has a history over 100 years, with its diesel engines well received both at home and abroad.
The trademark of “Changchai” was the first among the production goods in the country to be recognized as a “Famous Trademark of China”. In 2005, the single-cylinder diesel engines of the Company were among the first to be titled as “Brandname Products of China”. In 2013, reviewed and approved by AQSIQ, and the Company produced for export had gained the qualification of exemption. For decades, the Company developed in a sound manner and cultivated the “Changchai” brand, a famous small diesel engine brand of China with independent intellectual property rights
2. Product advantage
Currently, the Company is mainly engaged in small power single-cylinder and multi-cylinder diesel engines. It has a complete product range, a wide power level coverage, a high reputation and intellectual property rights for its main products. It owns a state-level technical center, a post doctoral scientific research station and Jiangsu Small-and Medium-Power Internal Combustion Engine Engineering Research Center. Quite a few of its multi-cylinder diesel engines have passed the European Union EC certification and the America EPA certification. Besides, it has the capability to develop and put into pass production products meeting the national emission
standard III and IV.
3. Sales network advantage
2014 Annual Report of Changchai Company, Limited The Company has built up a sales service network covering the whole country. With 11 marketing units, 31 sales service centers, over 400 service locations and 600 cooperation maintenance stations, the service network covering the major cities and the countryside, the Company is able to provide quality, efficient and timely services for its customers.
VI. Investment analysis
1. Investments in equities of external parties
(1) Investments in external parties
√ Applicable□ Inapplicable
||||
|-|-|-|
|Investments in external parties|||
|Investment amount in the reporting|Investment amount in the same||
|||+/-|
|period (RMB Yuan)|period of last year (RMB Yuan)||
|27,550,000.00|4,950,000.00|456.57%|
|Particulars about investees|||
|||Proportion of the Company’s|
|Name of investee|Main business|investment in the investee’s total|
|||equity interests|
|Changzhou Changchai Benniu|Production and sales of the diesel||
|||100.00%|
|Diesel Engine Fittings Co., Ltd.|engine parts||
||Production and sales of the||
|Changzhou Changchai Housheng|||
||agricultural machinery such as rice|95.00%|
|Agricultural Equipment Co., Ltd.|||
||transplanters||

(2) Equity-holdings in financial enterprises
√ Applicable□ Inapplicable
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Gain/loss|||
|||Initial|Opening||Closing||Closing|in the|||
|||||Opening||Closing|||||
|Enterprise|Enterprise|investment|equity-hol||equity-hol||book value|reporting|Accountin|Equity|
|||||equity-hol||equity-hol|||||
|name|variety|cost (RMB|dings||dings||(RMB|period|g title|source|
|||||ding ratio||ding ratio|||||
|||Yuan)|(share)||(share)||Yuan)|(RMB|||
|||||||||Yuan)|||
|Bank of|||||||||Long-term||
||Commerci|38,000,000|||||38,000,000|||Promoter’s|
|Jiangsu|||38,000,000||38,000,000|||0.00|equity||
||al bank|.00|||||.00|||shares|
|Co., Ltd.|||||||||investment||

(3) Securities investments
□ Applicable√ Inapplicable
2014 Annual Report of Changchai Company, Limited There was no any security investment of the Company during the reporting period.
(4) Explanation about shareholdings in other listed companies
√ Applicable□ Inapplicable
At the end of the reporting period, the Company held 72.25 million “Foton Motor” shares measured as available-for-sale financial assets and 50,000 “Ninghu Expressway” shares measured as a long-term equity investment.
2. Wealth management entrustment, derivative investments and entrustment loans
(1) Wealth management entrustment
□ Applicable√ Inapplicable
The Company did not make any wealth management entrustment in the reporting period.
(2) Derivative investment
□ Applicable√ Inapplicable
The Company did not carry out any derivative investment in the reporting period.
(3) Entrustment loans
□ Applicable√ Inapplicable
There were no entrustment loans in the reporting period.
3. Use of raised funds
□ Applicable√ Inapplicable
There was no any use of raised funds in the reporting period.
4. Analysis to main subsidiaries and stock-participating companies
√ Applicable□ Inapplicable
Main subsidiaries and stock-participating companies:
Unit: RMB Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Main|||||||
|Company|Company|||Registered|||Operating|Operating||
|||Industry|||Total assets|Net assets|||Net profit|
||||products/ser|||||||
|name|variety|||capital|||revenues|profit||
||||vices|||||||
|||Machinery|Production|||||||
|Changchai||||55063000.0|167,245,42|108,117,66|172,328,06|-2,201,984.|-2,674,723.|
||Subsidiary|manufactur|of diesel|||||||
|Benniu||||0|8.80|3.55|0.50|33|81|
|||e|engine|||||||

2014 Annual Report of Changchai Company, Limited
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||fittings|||||||
|||Machinery|Assembly|||||||
|Changchai||||85000000.0|142,660,77|107,013,84|100,257,12|4,538,651.8|3,803,869.5|
||Subsidiary|manufactur|of diesel|||||||
|Wanzhou||||0|0.47|3.81|3.26|9|1|
|||e|engines|||||||
||||External|||||||
||||investment|||||||
|Housheng||Financial||30000000.0|33,616,961.|32,871,663.||1,280,667.9||
||Subsidiary||and||||199,000.00||977,910.64|
|Investment||services||0|35|92||0||
||||consulting|||||||
||||service|||||||
||||Agricultural|||||||
||||machinery|||||||
|Housheng||Machinery||||||||
||||product of|10000000.0|10,254,946.|7,781,223.7|1,748,141.6|-2,326,026.|-2,215,122.|
|Agricultural|Subsidiary|manufactur||||||||
||||rice|0|72|0|0|01|10|
|Equipment||e||||||||
||||transplanter|||||||
||||etc.|||||||
|Changzhou||||||||||
|Changchai||||||||||
|||Machinery|Assembly|||||||
|Fuji Robin|Shareholding|||USD|99,075,624.|59,255,495.|223,014,82|5,884,337.8|4,260,299.5|
|||manufactur|of gasoline|||||||
|Gasoline|company|||4500000.00|15|48|1.84|2|9|
|||e|engines|||||||
|Engine Co.,||||||||||
|Ltd.||||||||||

Notes of the main subsidiaries and stock-participating companies
Subsidiaries acquired or disposed during the reporting period:
√ Applicable□ Inapplicable
|||||
|-|-|-|-|
||Purpose of acquiring and|Method of acquiring and||
||||Influences on the overall|
|Name of the company|disposing the subsidiaries of the|disposing the subsidiaries of the||
||||production and performances|
||reporting period|reporting period||
||The Company decided towritten off owning to there wasno any effective operatingactivities developed.|||
|Changsheng Company||Written off|N/A|

5. Significant projects invested with non-raised funds
□ Applicable√ Inapplicable
No significant projects of investments with non-raised funds during the reporting period.
VII. Predict the operating results of Jan.-Mar. 2015
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next reporting period according to prediction, as well as explanations on the reasons:
□ Applicable√ Inapplicable
2014 Annual Report of Changchai Company, Limited VIII. List of the entities with special purpose controlled by the Company
□ Applicable√ Inapplicable
IX. Outlook of theCompany’s future development
1. Competition situation and development trends in the industry
Recently, the agricultural machinery industry was in the new phase of medium and high speed growth transferred from high speed growth. Although the growth of the industry slowed down, the agricultural machinery level of our country was still in the middle stage development phase, with the market requirements were still strong and the policies bonus which took the purchasing subsidy policies as principal of the agricultural machinery were still continually being released as well as the renew requirements of the market volume more and more flourishing. Besides, when compared to the developed countries, the difference between the former and the domestic agricultural machinery was still obvious and the high-end products still had greatly market space. Thus, in the future ten years, it was the significant opportunity phase for our agricultural machinery industry to become larger and stronger. As for the new normalcy for the future ten years, the Company would focus on and take the quality improvement and technology progress as theme.
The non-economy effects was enlarged such as the overall weakness recovery situation of the global economy which was difficult to have apparent change, the fluctuation of the international financial market enlarged, the undulation of the commodity prices and the geopolitics, with the domestic economy still faced with the twinge of the structure adjustment and the large economic downward pressure, as well as the labor cost improved greatly and the farmers had difficulty in increment, the environmental protection pressure increased that led the enterprises faced with new significant challenges
2. Development strategy of the Company:
Bases on farm machinery, creates stronger momentum, and develops the fields and developing scientifically. The future vision is to inherit the rise of the classics and to lead the light-duty power.
The existing products of the Company are mainly sold to the agricultural machinery field such as walking tractors, small four-wheel farm vehicles, medium-and-small-sized roller tractors, gardening tractors and combine-harvesters; the small-sized engineering machinery, the transportation machinery such as forklifts, third wheels and low speed vehicles; automobile industry such as light-duty trucks and pick-ups; the export market and the other fields such as power generation sets and water pumps, small-sizedships’ auxiliary engines. As for the wheel trailers, the Company only owned slight advantages on the shelves lower than 50 horsepower but higher than 30 horsepower. In the supporting field of the combine-harvester, although we caught the market opportunity, we had not formed our own stable brand in the field. In the terminal field, the Company recently realized the pitching-in of the production of the rice transplanters which was still in the exploration and trial sub stage. Currently, the Company is in lack of heavy-duty and light-duty trucks, the depth was not enough of the single, multi-cylinder machine product line of miniwatt below 25 horsepower and the variety was not abundant which was badly in need of upgrading, while the over-80-horsepower roller tractors and diesel engines for engineering and non-road vehicles was not only our weaknesses but also the emphasis of the further products planning and the direction of upgrading. The emphasis of the Company of 2015 is to focus on working on advantageous products, increasing the additional value of these products, reducing the quality cost, so thus to get the market share and gain the economic benefits. In terms of market structure adjustment, the Company will enhance expansion in the
2014 Annual Report of Changchai Company, Limited new market field and the segment markets and reform the mechanisms and the operating mode and should innovate the system as well as the marketing mode.
3. Operation Plan for the Year 2015:
To Achieve a sale of 1.05 million units of diesel engine products, a sales income of RMB 2.8 billion andUS$ 46 million in foreign exchange earnings on export.
The above operation plan not represent the profit forecast of Y2015 by the listed companies and whether could be realized was depend on various factors on the changes of the market conditions and the effort level of the running team which with great uncertainty that the investors should pay special attention.
4. Possible risks and countermeasures:
(1) Market risk
With fierce competition, over-capacity of some products and the total available market of the single cylinder engine were in a decline tendency. Besides, the capital turnover was rather slow as well as the profitable ability of the enterprises faced with great pressure.
Countermeasures:
Firstly, to accelerate adjustment of the market structure, to adjust the marketing strategies, to expand the channels and to dig out potential requirements, to refine the internal management process and to constantly improve and enhance the team efficiency.
Secondly, to make use of the leading position and brand advantages of the Company in the single-cylinder diesel engine market and expand the sales of air-cooled single-cylinder diesel engines and the high-power diesel engines. Thirdly, to lean to medium-and high-class multi-cylinder diesel engines in product development and vigorously develop high-power diesel engines with high added value for non-road vehicles.
Fourthly, to update the service and management ideas, optimize the resources, improve its after-sales services and strictly control the expenses on maintenance, replacement and refunding.
(2) Policy risk
The macro-economic environment is complex and changeable, economic growth is slowing down and the policy on the diesel engine emissions is becoming stricter and stricter. As such, the market demands for some products of the Company will be affected to some extent.
Countermeasures: The Company will pay close attention to thegovernment’s economic macro-control policies and market developments. To promote the work such as the energy saving, weight reducing, Emission reducing and reliability improving, to pay attention on the study of the core technology and to strengthen the development power such as the ECU, combustion engineering and the after-treatment, to embrace the upgrading of the engine emission standards, to accelerate the forging of the new “Standard V” platform, and to execute the necessary products resources reserves in advance.
X. Explanation of the Board of Directors and Board of Supervisors on Non-standard Auditing Report issued by the CPA firm for the reporting period
□ Applicable√ Inapplicable
XI. Explanation on changes of accounting policy, estimate and method compared to previousyear’s financial report
√ Applicable□ Inapplicable
2014 Annual Report of Changchai Company, Limited Alteration of the accounting polices led by executing the new ASBE
At the year-begin of 2014, the Ministry of Finance issued No. 39 ofASBE—Fair Value Measurement, No. 30 ofASBE—Presentation of Financial Statements (revised in 2014), No. 9 ofASBE—Employee Compensation (revised in 2014), No. 33 ofASBE—Consolidation Financial Statement (revised in 2014). No. 40 ofASBE—Joint Venture Arrangement, No. 2 ofASBE—Long-term Investment (revised in 2014) and No. 41 ofASBE—Equity Disclosure of Other Entities which respectively by C-H[2014] No.6, No. 7, No. 8, No. 10, No. 11, No. 14 and No. 16 which be required to execute among the enterprises that applied the ASBE since 1 Jul. 2014 as well as encouraged the enterprises listed overseas to execute in advance. At the same time, the Ministry of Finance issued No. 37 ofASBE—Presentation of Financial Instruments (revised in 2014) as C-H[2014] No. 23 (hereinafter referred to Presentation Guidelines of Financial Instruments for short), which be required to present the financial instruments according to the requirements of the guidelines in Y2014 and the following period among the financial statement. The Company began to execute the above 7 new issued or revised enterprises principles except for the presentation guidelines of financial instruments since 1 Jul. 2014 and began to execute the presentation guidelines of financial instruments when compiling the 2014 financial report.
The Company adjusted according to the relative requirements of each guideline, while the influences on the financial statement items during each term of the comparable period of the presentation as well as the amount were as follows:
|||||
|-|-|-|-|
|Content of the changed accountingpolicies|Report items significantlyinfluenced|2013|2012|
|According to No. 2 of ASBE-Long-termEquity Investment (revised in 2014)|Long-term equity investment|-45,200,000.00|-45,200,000.00|
||Available-for-sale financialassets|45,200,000.00|45,200,000.00|
|According to No. 30 ofASBE-Presentation of FinancialStatement (revised in 2014)|Other non-current liabilities|-61,894,052.94|-62,558,726.56|
||Deferred income|61,894,052.94|62,558,726.56|
||Capital reserve|-277,847,575.00|-377,934,225.00|
||Translation reserve|66,730.67|32,070.75|
||Other comprehensive income|277,780,844.33|377,902,154.25|

 XII. Explanation on retrospective restatement of significant accounting error correction during the reporting period
□ Applicable√ Inapplicable
There was no any retrospective restatement of significant accounting error correction of the Company during the reporting period. XIII. Explanation on changes of scopes of consolidated statement compared to previousyear’s financial report
√ Applicable□ Inapplicable
There was one combined unit reduced of 2014 of the Company– Changsheng Company.
Changsheng Company was the wholly owned subsidiary of the Company with the register capital of USD 0.2 million and had not
efficiently develop the operating business since established.
2014 Annual Report of Changchai Company, Limited XIV. Profit allocation and dividend distribution
Formulation, execution or adjustment of theCompany’s profit distribution policy, especially the cash dividend policy, during the reporting period:
√ Applicable□Inapplicable
The Articles of Association had specified the specific profit allocation policy; the conditions, standards and ratios for cash dividends; and the decision-making procedure for formulating and revising the profit allocation policy. The revised article fully safeguards the opportunity of minority shareholders to play a role and express their opinions and requests. Cash dividend distribution of the Company for the recent three years is in compliance with its Articles of Association. Independent directors expressed their independent opinion during the decision-making procedure of the profit allocation plans, with opinions of minority shareholders being fully respected. TheCompany’s preplans for profit distribution and turning capital reserve into share capital for the reporting period were in compliance with relevant rules such as theCompany’s Articles of Association.
|||
|-|-|
|Special explanation of the cash dividend policy||
|Whether conformed with the regulations of the Articles of associationor the requirements of the resolutions of||
||Yes|
|the shareholders’ meeting:||
|Whether the dividend standard and the proportion were definite and clear:|Yes|
|Whether the relevant decision-making process and the system were complete:|Yes|
|Whether the independent director acted dutifully and exerted the proper function:|Yes|
|Whether the medium and small shareholders had the chances to fully express their suggestions and appeals, of||
||Yes|
|which their legal interest had gained fully protection:||
|Whether the conditions and the process met the regulations and was transparent of the adjustment or altered of||
||Yes|
|the cash dividend policy:||

TheCompany’s preplans or plans for profit distribution and turning capital reserve into share capital for the recent three years (including the reporting year):
|||||
|-|-|-|-|
|Year|Profit allocation plan|Plan for turning capitalreserve into share capital|Execution|
|2014|RMB 0.20 (tax included) for every 10 shares|No|To be submitted to thegeneral meeting|
|2013|RMB 0.15 (tax included) for every 10 shares|No|Execution completed|
|2012|RMB 0.25 (tax included) for every 10 shares|No|Execution completed|

 Cash dividend in the recent three years
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|||Net profit belonging|The ratio accounting|The amount offeredand re-purchased theshares by cash thatincluded in the cashbonus|The proportion|
|||to shareholders of|in net profit which||offered and|
||Amount of cash|||||
|||the listed company|belongs to||re-purchased the|
|Dividend year|dividend (including|||||
|||in consolidated|shareholders of the||shares by cash that|
||tax)|||||
|||statement of|listed company in||included in the cash|
|||dividend year|consolidated||bonus|

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
||||statement|||
|2014|11,227,486.52|64,202,144.29|17.49%|0.00|0.00%|
|2013|8,420,614.89|75,712,361.04|11.12%|0.00|0.00%|
|2012|14,034,358.15|55,434,031.99|25.32%|0.00|0.00%|

 Although the company obtains profits and the parentcompany’s undistributed profit is positive during the reporting period, no cash dividend distribution pre-plan is put forward.
□Applicable√Inapplicable
XV. Preplan for profit distribution and turning capital reserve into share capital in the reporting period
√ Applicable□ Inapplicable
|||
|-|-|
|Bonus to every 10 shares (shares)|0|
|Dividends to every 10 shares (shares) (tax included)|0.20|
|Equity base of the preplan for distribution (shares)|0|
|Total of cash bonus (RMB Yuan) (tax included)|561,374,326|
|Attributable profit ((RMB Yuan)|11,227,486.52|
|Proportion of cash bonus in the total of profit distribution (%)|503,957,842.86|
|Bonus to every 10 shares (shares)|100.00%|
|Cash dividend policy:||
|Other||
|Specific explanation of preplan for profit distribution or preplan for turning capital reserve into share capital||
|The preplan of the profit allocation reviewed and approved by the Board of Directors of the Company: Based on the total share||
|capital on 31 Dec. 2014, the Company distributed a cash dividend of RMB 0.20(tax included) to every 10 shares; no bonus and no||
|capitalization of capital reserves will be conducted.||

XVI. Social Responsibility
□Applicable√Inapplicable
XVII. Particulars about researches, visits and interviews received in this reporting period√ Applicable□ Inapplicable
|||||||
|-|-|-|-|-|-|
||||||Main discussion and|
|Time of reception|Place of reception|Way of reception|Visitor type|Visitor|materials provided by the|
||||||Company|
|7 Jan. 2014|||||The influences on the future|
||http://irm.cninfo.co|||||
|||Other|Individual|Individual investor|of the Company of the|
||m.cn/szse/|||||
||||||state-owned assets reform|

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
||||||The operation situation and|
|18 Apr. 2014|The Company|By phone|Individual|Individual investor||
||||||the future development|
||||||The operation situation and|
|28 Apr. 2014|The Company|By phone|Individual|Individual investor||
||||||the future development|
||http://irm.cninfo.co||||The operation situation and|
|11 Jun. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the future development|
||||||The operation situation and|
|23 Jun. 2014|The Company|By phone|Individual|Individual investor||
||||||the future development|
||||||Purchasing and progress|
||http://irm.cninfo.co||||process of the|
|1 Jul. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||single-cylinder engine base|
||||||of the Company|
||||||List of the equities of other|
||http://irm.cninfo.co|||||
|10 Jul. 2014||Other|Individual|Individual investor|companies held by the|
||m.cn/szse/|||||
||||||Company|
||||||Relevant situation of the|
||http://irm.cninfo.co||||wholly owned subsidiary|
|11 Jul. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Housheng Investment of|
||||||the Company|
||http://irm.cninfo.co||||Future development plan of|
|11 Aug. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the Company|
||http://irm.cninfo.co||||Future development plan of|
|13 Aug. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the Company|
||http://irm.cninfo.co||||Business situation of the|
|15 Aug. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Company|
||||||Influences on the Company|
||http://irm.cninfo.co|||||
|24 Aug. 2014||Other|Individual|Individual investor|of the state-owned assets|
||m.cn/szse/|||||
||||||reform in Jiangsu|
|||||Shanghai Zexi||
|||||Investment||
|||||Management Co.,|Basic situation of the|
|||||Ltd., Yueyang|Company and the|
|25 Aug. 2014|The Company|Field research|Institution|||
|||||(Shanghai)|state-owned assets reform|
|||||Investment|in Jiangsu etc.|
|||||Development Co.||
|||||Ltd.||
||http://irm.cninfo.co||||List of the human resources|
|9 Sep. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||of the Company|
||http://irm.cninfo.co||||List of the Intelligent|
|11 Sep. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||equipment of the Company|

2014 Annual Report of Changchai Company, Limited
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||||||Plan of the state-owned|
||http://irm.cninfo.co|||||
|17 Sep. 2014||Other|Individual|Individual investor|enterprise reform of the|
||m.cn/szse/|||||
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||http://irm.cninfo.co||||Shareholders number of the|
|18 Sep. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Company|
||http://irm.cninfo.co||||Shareholders number of the|
|9 Oct. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Company|
||http://irm.cninfo.co||||List of the products of the|
|10 Oct. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Company|
||||||Know of the list of the|
||http://irm.cninfo.co|||||
|11 Oct. 2014||Other|Individual|Individual investor|research of other|
||m.cn/szse/|||||
||||||institutions|
||||||Relevant situation of the|
||http://irm.cninfo.co|||||
|22 Oct. 2014||Other|Individual|Individual investor|state-owned enterprise|
||m.cn/szse/|||||
||||||reform|
||||||List of the state-owned|
||http://irm.cninfo.co|||||
|22 Oct. 2014||Other|Individual|Individual investor|enterprise reform in|
||m.cn/szse/|||||
||||||Changzhou|
||http://irm.cninfo.co||||Development plan of the|
|29 Oct. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||new products|
||||||Whether the major|
||http://irm.cninfo.co|||||
|29 Oct. 2014||Other|Individual|Individual investor|shareholders had capital|
||m.cn/szse/|||||
||||||injection plan|
||http://irm.cninfo.co||||List of the resignation of|
|6 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the Independent Directors|
||http://irm.cninfo.co||||Future development plan of|
|7 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the Company|
||http://irm.cninfo.co||||Plan of the products of the|
|7 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||Company|
||http://irm.cninfo.co||||List of the state-owned|
|10 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||assets reform|
||http://irm.cninfo.co||||List of the position holding|
|11 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||of the private equity firms|
||||||Influences on the|
||http://irm.cninfo.co|||||
|13 Nov. 2014||Other|Individual|Individual investor|agricultural modernization|
||m.cn/szse/|||||
||||||of the Company|
||http://irm.cninfo.co||||Stocks price movements of|
|14 Nov. 2014||Other|Individual|Individual investor||
||m.cn/szse/||||the Company|
|14 Nov. 2014日|http://irm.cninfo.co|Other|Individual|Individual investor|List of the Company took|

2014 Annual Report of Changchai Company, Limited
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|-|-|-|-|-|-|-|
||m.cn/szse/|||||part in the agricultural|
|||||||machinery exhibition|
||http://irm.cninfo.co|||||Plan of the future products|
|14 Nov. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||of the Company|
||http://irm.cninfo.co|||||List of the B Share of the|
|14 Nov. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||Company|
||http://irm.cninfo.co|||||List of the supporting usage|
|18 Nov. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||of the products|
||http://irm.cninfo.co|||||List of the state-owned|
|23 Nov. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||assets reform|
||http://irm.cninfo.co|||||Stocks price movements of|
|11 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||the Company|
||http://irm.cninfo.co|||||List of the products of the|
|12 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||Company|
||http://irm.cninfo.co|||||Stocks price movements of|
|12 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||the Company|
||http://irm.cninfo.co|||||List of the products of the|
|15 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||Company|
|||||||Plan of the agricultural|
||http://irm.cninfo.co||||||
|15 Dec. 2014||Other|Individual|Individual investor||machinery financing|
||m.cn/szse/||||||
|||||||business|
||http://irm.cninfo.co|||||List of the shareholders|
|15 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||number of the Company|
||http://irm.cninfo.co|||||List of the shareholders|
|26 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||number of the Company|
||http://irm.cninfo.co|||||List of the shareholders|
|27 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||number of the Company|
|||||||Problems such as the|
||http://irm.cninfo.co|||||technology path of the|
|30 Dec. 2014||Other|Individual|Individual investor|||
||m.cn/szse/|||||future products of the|
|||||||Company|
|Reception times|||||45||
|Number of reception institutions|||||1||
|Number of reception person|||||44||
|Number of receipting other targets|||||0||
|Whether disclose, reveal or let out unpublished significant information|||||No||

2014 Annual Report of Changchai Company, Limited Section V. Significant Events
I. Significant litigations and arbitrations
√Applicable□ Inapplicable
|||||||||
|-|-|-|-|-|-|-|-|
||Amount||||Execution|||
|||Forming the|Progress of|Trial result and||||
|Basic situation of|involved in||||situation on the|||
|||estimated|the|influence of the||Disclosure|Disclosure|
|the litigation|the litigation||||judgment of the|||
|||liabilities or|litigation|litigation||date|index|
|(arbitration)|(arbitration)||||litigation|||
|||not?|(arbitration)|(arbitration)||||
||(RMB 0’000)||||(arbitration)|||
|About the lawsuit||||||||
|case of Shandong||||||||
|Hongli Group Co.,||||||||
|Ltd., the accused||||||||
|company owed||||||||
|accumulatively||||||||
|RMB 14.36||||||||
|million to the|||||Under the|||
|Company. The|||||compulsory|||
|Company sued to|||Judged for||execution by the|||
|Changzhou|1,436|No|the second||court and in the|||
|Intermediate|||trial||process of|||
|People’s Court in|||||liquidation and|||
|2001 and sued for|||||bankruptcy|||
|compulsory||||||||
|execution in April,||||||||
|2002. Currently,||||||||
|the defendant has||||||||
|started the||||||||
|bankruptcy||||||||
|procedure.||||||||
|About the lawsuit|||Had|||||
|case of Beijing|||mediated.|||||
|Baic Changsheng|||Up the end||||http//www.cn|
|Automobile Co.,|||of the||||info.com.cn.|
||||||Under|||
|Ltd., the accused|||reporting||||Announceme|
||806.36|No|||compulsory|30 Aug. 2013||
|company owed|||period, Baic||||nt No.:|
||||||execution|||
|accumulatively|||Changsheng||||2013-015,|
|RMB 8.0636|||had paid||||019|
|million to the|||RMB 4.5|||||
|Company.|||million to|||||

2014 Annual Report of Changchai Company, Limited
|||
|-|-|
|According to the|the|
|paper of civil|Company.|
|mediation issued||
|by the people's||
|court of Beijing||
|Shunyi on 31 Oct.||
|2013, the||
|Company will||
|amortize the||
|arrears of RMB||
|8.0636 million. If||
|Baic Changsheng||
|failed to execute||
|the reconciliation||
|agreement on time,||
|the Company||
|should applied for||
|the compulsory||
|execution of the||
|whole unpaid||
|accounts at one||
|time and the Baic||
|Changsheng||
|should pay for the||
|otherwise||
|liquidated||
|damages of RMB||
|40,000 and the||
|interests of the||
|overdue payment.||

II. Asset transactions
1. Acquisition of assets
√Applicable□ Inapplicable
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||Ratio of||Relationsh|||
||||||Influences||||||
|||||||the net|Whethe|ip with the|||
|Counter|Being|Transactio|||on the||||||
|||||||profits|r was|counterpar|||
|party or|purchased|n price||Influences on the|gains and||||Disclosure||
||||Process|||contributed|the|ty (suitable||Disclosure|
|ultimate|or|(RMB Ten||operation of the|losses of||||date||
||||(Notes 2)|||by the|related|for the||index|
|control|imbedded|Thousand||Company (Notes 3)|the||||(Notes 5)||
|||||||listed|transact|related|||
|party|assets|Yuan)|||Company||||||
|||||||companies|ion|transaction|||
||||||(Notes 4)||||||
|||||||of the||s)|||

2014 Annual Report of Changchai Company, Limited
||||||||||
|-|-|-|-|-|-|-|-|-|
||||||assets to||||
||||||the total||||
||||||amount of||||
||||||the net||||
||||||profits||||
|||||In view of the|||||
|||||Changben|||||
|||||Company was the|||||
|||||important parts|||||
|||||production base|||||
|||||and the new|||||
|||||products parts|||||
|||||development base|||||
|||||of the Company,|||||
|||||and at the same|||||
|||||time for|||||
|||||straightening out|||||
|||||the relationship and|||||
|||||further enhancing|||||
|||||the products quality|||||
||15.34%|||of the Changben|||||
||||Had||||||
|Qiang|equity of|||Company, as well|||4 Jun.||
|||2,260|completed|||No||2014-011|
|Jinlong|Changben|||as strengthen the|||2014||
||||transfer||||||
||Company|||main business of|||||
|||||the diesel engine of|||||
|||||the Company, the|||||
|||||Company and the|||||
|||||subordinate wholly|||||
|||||owned subsidiary,|||||
|||||Changzhou|||||
|||||Housheng|||||
|||||Investment Co.,|||||
|||||Ltd.|||||
|||||purchased15.34%|||||
|||||equity of Changben|||||
|||||Company which|||||
|||||held by|||||
|||||Qiangjinlong by|||||
|||||self-owned funds.|||||

2. Sales of assets
□ Applicable√ Inapplicable
There was no sale of assets during the reporting period.
2014 Annual Report of Changchai Company, Limited 3. Business combination
□ Applicable√ Inapplicable
There was no business combination during the reporting period.
III. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
|||
|-|-|
||Jiangsu Gongzheng Tianye Certified PublicAccountants Company Limited (LLP)|
|Name of domestic CPAs firm||
|Remuneration of domestic CPAs firm (RMB 0’000)|70|
|Consecutive years of the audit services provided by domestic CPAs firm|13|
|Name of the certified public accountants from the domestic CPAs firm|Wang Wenkai, He Taifeng|

Reengage the CPAs firm at current period or not?
□ Yes√ No
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√ Applicable□ Inapplicable
The Company engaged Jiangsu Gongzheng Tianye Certified Public Accountants Company Limited (LLP) as the audit firm for the internal control for the year with the auditing fee of RMB 150,000.
IV. Explanation of the Board of Supervisors and Independent Directors (If Applicable) on “Non-standard Auditing Report” Issued by the CPA Firm
□ Applicable√ Inapplicable
2014 Annual Report of Changchai Company, Limited Section VI. Change in Share Capital and Particulars about
Shareholders
I. Particulars about the changes in share capital
1. Changes in share capital
Unit: Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Increase/decrease (+, -)|||||After the change||
||||Issuance||Capitalizatio|||||
|||Proportion||Bonus|||||Proportio|
||Amount||of new||n of public|Others|Subtotal|Amount||
|||(%)||shares|||||n (%)|
||||shares||reserve fund|||||
|I. Shares subject to||||||||||
||0|0%||||||0|0%|
|moratorium||||||||||
|1. Shares held by the State|0|0%||||||0|0%|
|2. Shares held by||||||||||
||0|0%||||||0|0%|
|state-owned corporation||||||||||
|3. Other shares held by||||||||||
||0|0%||||||0|0%|
|domestic investors||||||||||
|Including: shares held by||||||||||
|domestic non-state-owned|0|0%||||||0|0%|
|corporation||||||||||
|Shares held by domestic||||||||||
||0|0%||||||0|0%|
|natural person||||||||||
|4. Shares held by foreign||||||||||
||0|0%||||||0|0%|
|investors||||||||||
|Including: shares held by||||||||||
||0|0%||||||0|0%|
|foreign corporation||||||||||
|Shares held by foreign||||||||||
||0|0%||||||0|0%|
|natural person||||||||||
|5. Shares held by senior||||||||||
||0|0%||||||0|0%|
|executives||||||||||
|II. Shares not subject to|561,374,32|||||||561,374,3||
|||100%|||||||100%|
|trading moratorium|6|||||||26||
||411,374,32|||||||411,374,3||
|1. RMB ordinary shares||73.28%|||||||73.28%|
||6|||||||26||
|2. Domestically listed|150,000,00|26.72%||||||150,000,0|26.72%|

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|foreign shares|0||00||
|3. Overseas listed foreign|||||
||0|0%|0|0%|
|shares|||||
|4. Others|0|0%|0|0%|
||561,374,32||561,374,3||
|III. Total shares||100%||100%|
||6||26||

Reason for the changes in share capital
□ Applicable√ Inapplicable
Approval for changes in share capital
□ Applicable√ Inapplicable
Transfer for changes in share capital
□ Applicable√ Inapplicable
Effects of changes in share capital on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and last period
□ Applicable√ Inapplicable
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose
□ Applicable√ Inapplicable
2. Changes in restricted shares
□ Applicable√ Inapplicable
II. Issuance and listing of securities
1. Issuance of securities over the past three years
□ Applicable√ Inapplicable
2. Explanation on changes in share capital& the structure of shareholders, the structure of assets and liabilities
□ Applicable√ Inapplicable
3. Existent shares held by internal staffs of the Company
□ Applicable√ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: Share
2014 Annual Report of Changchai Company, Limited
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||Total number of||||||||||
|||||shareholders on the fifth||||||Total number of||||
|Total number of shareholders at||||||||||||||
|||67,414||trading day before the|||62,804|||preferred stockholder|||0|
|the reporting period||||||||||||||
|||||disclosure date of the||||||with vote right restored||||
|||||annual report||||||||||
|Shareholding of shareholders holding more than 5% shares||||||||||||||
|||||||Increase||Number|||Pledged or frozen shares|||
||||||Number of|and||of shares|Number of|||||
||||Holding||shareholding|decrease||held|shares held|||||
||Nature of|||||||||||||
|Name of shareholder|||percentag||at the end of|of shares||subject to|not subject to||Status of|Number of||
||shareholder|||||||||||||
||||e (%)||the reporting|during||trading|trading||shares|shares||
||||||period|reporting||moratoriu|moratorium|||||
|||||||period||m||||||
|State-owned AssetsSupervision andAdministration Commissionof Changzhou MunicipalPeople’s Government|On behalf of theState||30.02%||168,497,736|||0|168,497,736|||||
|KGI ASIA LIMITED|Foreigncorporation||0.92%||5,140,894|||0|5,140,894|||||
|SUN HUNG KAIINVESTMENT SERVICESLTD-CUSTOMERS A/C|Foreigncorporation||0.66%||3,701,566|||0|3,701,566|||||
|BANK J SAFRA SARASINLTD,HONG KONGBRANCH|Foreigncorporation||0.64%||3,609,881|||0|3,609,881|||||
|BNP PARIBAS WEALTHMANAGEMENT HONGKONG BRANCH|Foreigncorporation||0.55%||3,099,873|||0|3,099,873|||||
|Jiang Xuezhen|Domesticindividual||0.54%||3,050,000|||0|3,050,000|||||
|Southwest Securities-CCB-Aggregate AssetManagement Plan of ZhufengNo. 1 of Southwest Securities|Other||0.53%||2,960,333|||0|2,960,333|||||
|Zha Genlou|Domesticindividual||0.37%||2,080,000|||0|2,080,000|||||
|COREPACIFIC-YAMAICHIINTERNATIONAL (H.K.)LIMITED|Foreigncorporation||0.33%||1,872,400|||0|1,872,400|||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
|Warburg Trust Co., Ltd.-－Assembled Funds Trust ofNo. 21 of Shijiehaoyu|Other|0.29%|1,630,643|0||1,630,643||
|Strategic investor or general corporation||||||||
|becoming a top ten shareholder due to placing||Naught||||||
|of new shares (if any)||||||||
|||It is unknown whether there was any associated relationship among the top ten tradable||||||
|Explanation on associated relationship or/and||||||||
|||shareholders and among the top ten shareholders not subject to trading moratorium, or||||||
|persons acting in concert among the||||||||
|||whether they are persons acting in concert as described by Measures for the||||||
|above-mentioned shareholders:||||||||
|||Administrative of Disclosure of Shareholder Equity Changes.||||||
|Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium||||||||
||||Number of tradable shares||Type of shares|||
|Name of shareholder||||||||
||||held at the period-end||Type||Number|
|State-owned Assets Supervision and AdministrationCommission of Changzhou Municipal People’sGovernment|||168,497,736|||||
||||||RMB ordinary share||168,497,736|
|KGI ASIA LIMITED|||5,140,894||Domestically listed foreign|||
||||||||5,140,894|
||||||shares|||
|SUN HUNG KAI INVESTMENT SERVICESLTD-CUSTOMERS A/C|||3,701,566||Domestically listed foreign|||
||||||||3,701,566|
||||||shares|||
|BANK J SAFRA SARASIN LTD,HONG KONGBRANCH|||3,609,881||Domestically listed foreign|||
||||||||3,609,881|
||||||shares|||
|BNP PARIBAS WEALTH MANAGEMENT HONGKONG BRANCH|||3,099,873||Domestically listed foreign|||
||||||||3,099,873|
||||||shares|||
|Jiang Xuezhen|||3,050,000||RMB ordinary share||3,050,000|
|Southwest Securities- CCB-Aggregate Asset Management Plan ofZhufeng No. 1 of Southwest Securities|||2,960,333|||||
||||||RMB ordinary share||2,960,333|
|Zha Genlou|||2,080,000||RMB ordinary share||2,080,000|
|CORE PACIFIC-YAMAICHI INTERNATIONAL (H.K.)LIMITED|||1,872,400||Domestically listed foreign|||
||||||||1,872,400|
||||||shares|||
|Warburg Trust Co., Ltd.-－Assembled Funds Trust of No.21 of Shijiehaoyu|||1,630,643|||||
||||||RMB ordinary share||1,630,643|
||||It is unknown whether there was any associated relationship among the top|||||
|Explanation on associated relationship or/and persons||||||||
||||ten tradable shareholders and among the top ten shareholders not subject to|||||
|acting in concert among the top ten tradable shareholders||||||||
||||trading moratorium, or whether they are persons acting in concert as|||||
|and between the top ten tradable shareholders and the top||||||||
||||described by Measures for the Administrative of Disclosure of Shareholder|||||
|ten shareholders||||||||
||||Equity Changes.|||||
|Explanation on the top 10 common shareholders||||||||
||||Naught|||||
|participating in the financing and securities loans business||||||||

2014 Annual Report of Changchai Company, Limited
||
|-|
|(if any)|

Did any shareholder of the top 10 common shareholders and top 10 shareholders holding not subject to trading moratorium the Company carries out an agreed buy-back in the reporting period?
□ Yes√ No
There was no shareholder of the top 10 common shareholders and top 10 shareholders holding not subject to trading moratorium the Company carries out an agreed buy-back in the reporting period
2. Controlling shareholders of the company
Legal person
||||||||
|-|-|-|-|-|-|-|
||Legal||||||
|Name of actual|representative/resp|Date of||Code of|||
||||||Registered capital|Main business|
|controller|onsible person of|establishment||organization|||
||unit||||||
|State-owned Assets|||||||
|Supervision and|||||||
|Administration|||||||
||Lu Qiang|||01411025-1|||
|Commission of|||||||
|Changzhou Municipal|||||||
|People’s Government|||||||
|Future development strategy|||Inapplicable||||
|Operating results, financial situation, cash flow and|||||||
||||Inapplicable||||
|future development strategy, etc.|||||||
|Equity of shareholding and participating shares of|||||||
|controlling shareholders in other domestic and foreign|||Inapplicable||||
|listed company during the reporting period|||||||

Changes of controlling shareholders during the reporting period
□ Applicable√ Inapplicable
There was no change of controlling shareholders during the reporting period
3. Actual controller of the Company
Legal person
|||||||
|-|-|-|-|-|-|
||Legal|||||
|Name of actual|representative/resp|Date of|Code of|||
|||||Registered capital|Main business|
|controller|onsible person of|establishment|organization|||
||unit|||||
|State-owned Assets||||||
|Supervision and||||||
||Lu Qiang||01411025-1|||
|Administration||||||
|Commission of||||||

2014 Annual Report of Changchai Company, Limited
|||
|-|-|
|Changzhou Municipal||
|People’s Government||
|Future development strategy|Inapplicable|
|Operating results, financial situation, cash flow and||
||Inapplicable|
|future development strategy, etc.||
|Equity of shareholding and participating shares of||
|controlling shareholders in other domestic and|Inapplicable|
|foreign listed company during the reporting period||

Changes on actual controller during the reporting period
□ Applicable√ Inapplicable
There was no change of actual controlling shareholders during the reporting period
Block diagram of equity and control relationship between the company and actual controller
STATE-OWNED ASSETS SUPERVISION AND ADMINISTRATION
COMMISSION OF CHANGZHOU MUNICIPALPEOPLE’S GOVERNMENT
30.02%
CHANGCHAI COMPANY, LIMITED
The actual controller controls the Company via trust or other ways of asset management
□ Applicable√ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over10%
□ Applicable√ Inapplicable
IV. Particulars on shareholding increase scheme during the reporting period proposed or implemented by the shareholders and act-in-concert persons
□ Applicable√ Inapplicable
There was no shareholding increase scheme during the reporting period proposed or implemented by the shareholders and act-in-concert persons in the known scope of the Company.
Section VII. Preferred stock
□ Applicable√ Inapplicable
There was no preferred stock during reporting period.
2014 Annual Report of Changchai Company, Limited Section VIII. Directors, Supervisors, Senior Management Staffs and Employees
I. Changes in shareholding of directors, supervisors and senior management staffs
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount of|Amount of||
|||||||||shares|shares|Amount|
||||||||Shares||||
|||||||||increased|decreased|shares held|
|||Tenure||||Ending|held at the||||
|Name|Office title||Sex|Age|Start date|||at the|at the|at the|
|||status||||date|year-begin||||
|||||||||reporting|reporting|period-end|
||||||||(share)||||
|||||||||period|period|(share)|
|||||||||(share)|(share)||
||Chairman||||||||||
|Xue|||||26 Jun.|25 Jun.|||||
||of the|Current|Male|52|||0|0|0|0|
|Guojun|||||2013|2016|||||
||Board||||||||||
|Jiang|||||26 Jun.|31 Mar.|||||
||Director|Left|Male|52|||0|0|0|0|
|Huaping|||||2013|2015|||||
||Director,||||||||||
||General||||||||||
|He|||||26 Jun.|25 Jun.|||||
||Manager,|Current|Male|51|||0|0|0|0|
|Jianguang|||||2013|2016|||||
||Chief||||||||||
||Engineer||||||||||
||Director,||||||||||
||Deputy||||||||||
||General||||||||||
|Shi|||||26 Jun.|25 Jun.|||||
||Manager,|Current|Male|53|||0|0|0|0|
|Jianchun|||||2013|2016|||||
||Secretary||||||||||
||of the||||||||||
||Board||||||||||
|Xu|||||26 Jun.|25 Jun.|||||
||Director|Current|Male|58|||0|0|0|0|
|Zhenping|||||2013|2016|||||
|Zhuang|Director||||26 Jun.|25 Jun.|||||
|||Current|Male|71|||0|0|0|0|
|Rongfa|||||2013|2016|||||
|Shen|Independe||||26 Jun.|25 Jun.|||||
|||Current|Male|73|||0|0|0|0|
|Ningwu|nt Director||||2013|2016|||||
|Zhu|Independe|Left|||26 Jun.|31 Mar.|||||
||||Male|59|||0|0|0|0|
|Jianming|nt Director||||2013|2015|||||
|Cao|Independe|Left|Male|66|26 Jun.|31 Mar.|0|0|0|0|

2014 Annual Report of Changchai Company, Limited
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Huiming|nt Director||||2013|2015|||||
||Deputy||||||||||
||||||26 Jun.|25 Jun.|||||
|Yin Lihou|General|Current|Male|51|||0|0|0|0|
||||||2013|2016|||||
||Manager||||||||||
||Deputy||||||||||
||||||26 Jun.|25 Jun.|||||
|Xu Yi|General|Current|Male|51|||0|0|0|0|
||||||2013|2016|||||
||Manager||||||||||
||Deputy||||||||||
|Liu|||||26 Jun.|25 Jun.|||||
||General|Current|Male|53|||0|0|0|0|
|Xiaoyun|||||2013|2016|||||
||Manager||||||||||
||Deputy||||||||||
|Wei|||||26 Jun.|25 Jun.|||||
||General|Current|Male|52|||0|0|0|0|
|Jinxiang|||||2013|2016|||||
||Manager||||||||||
||Chairman||||||||||
|Ni|of the||||26 Jun.|25 Jun.|||||
|||Current|Male|48|||0|0|0|0|
|Mingliang|Supervisor||||2013|2016|||||
||y||||||||||
||||||26 Jun.|25 Jun.|||||
|Zhong Lei|Supervisor|Current|Male|46|||0|0|0|0|
||||||2013|2016|||||
|Lu|||||26 Jun.|25 Jun.|||||
||Supervisor|Current|Male|48|||0|0|0|0|
|Zhonggui|||||2013|2016|||||
|Xie|||||26 Jun.|25 Jun.|||||
||Supervisor|Current|Male|46|||0|0|0|0|
|Guozhong|||||2013|2016|||||
||||||26 Jun.|25 Jun.|||||
|Liu Yi|Supervisor|Current|Male|46|||0|0|0|0|
||||||2013|2016|||||

II. Post-holding situation
Main working experience of current directors, supervisors and senior management staffs over the past five years: Xue Guojun: Now he acts as Chairman of the Board, Deputy Secretary of Party Committee of the Company. Jiang Huaping: He successively held the posts of Deputy Secretary General of Changzhou Government, Party Secretary of Changzhou Food Bureau. He acted as Chairman and Party Secretary of State-owned Assets Supervision and Administration Commission of Changzhou MunicipalPeople’s Government. And now acts as Deputy Secretary General Changzhou People's Political Consultative Conference.
He Jianguang: Now he acts as Director, General Manager, and Chief Engineer of the Company.
Shi Jianchun: Now he acts as Party Secretary, Director, Deputy General Manager and Secretary of the Board of the Company, and Chairman of the Board of Changzhou Housheng Investment Co., Ltd.
Xu Zhenping: He successively held the posts of Director and Deputy General Manager of the Company. Now he
acts as Director and Senior of the Company as well as Chairman of The Board of Housheng Agricultural
Equipment Co., Ltd.
Zhuang Rongfa: He successively took the posts of Deputy Director, Deputy Secretary of CPC in Changzhou
2014 Annual Report of Changchai Company, Limited Municipal Economic Committee. Now he acts as the director of the Company.
Shen Ningwu: Now he acts the consultant in China Association of Automobile Manufacturers, the Independent Director in Hangzhou Zhaofeng Autoparts Manufacturing Co., Ltd., and the Company.
Zhu Jianming: Now he acts as Deputy Chief in Technique Centre of China FAW Group Corporation, Chief of Wuxi Fuel Injection Equipment Research Institute, Commissioner in Wuxi MunicipalPeople’ Congress and the Independent Director of the Company.
Cao Huiming: He successively took the posts of President of Changzhou Institute of Certified Public Accountant and now he acts as Independent Director of the Company.
Yin Lihou: Now he acts as Deputy General Manager of the Company, and the Chairman of the Board of Directors of Changchai Wanzhou Diesel Engine Co., Ltd.
Xu Yi: Now he acts as Deputy General Manager of the Company.
Ni Shiyuan: Now he acts as Deputy General Manager of the Company.
Liu Xiaoyun: Now he acts as Deputy General Manager of the Company.
Wei Jinxiang: He successively held the posts of Department Director of Quality Assurance Department, General Manager Assistant of the Company. Now he acts as Deputy General Manager of the Company.
Ni Mingliang: Now he acts as Deputy Secretary, Vice Chairman of Labor Union and Chairman of the Supervisory. Zhong Lei: Now he acts as Section Chief of the General Office of State-owned Assets Supervision and Administration Commission of Changzhou MunicipalPeople’s Government.
Lu Zhonggui: Now he acts as Special Discipline Inspector of Discipline Inspection Committee and Secretary of Organ Party General Branch as well as supervisor of the Company.
Xie Guozhong: Now he acts as Secretary of Party General Branch of the sales company, Deputy General Manager and Supervisor of the Company and Supervisor of Housheng Agriculture Equipment.
Liu Yi: He successively took the posts of Assistant Minister of Enterprise Management Department. Now he acts as Deputy Director of Finance Department and Supervisor of the Company and Supervisor of Changwan Company.
Post-holding inshareholders’ units
√Applicable□Inapplicable
|||||||
|-|-|-|-|-|-|
|Name of the||||||
|person holding||||||
|||Position in|||Receives payment|
|any post in|Name of shareholder’s unit|shareholder’s|Beginning date|Ending date of|from shareholder’s|
||||of office term|office term||
|shareholder’s||unit|||unit?|
|unit||||||
|||Section Chief||||
||State-owned Assets Supervision and|||||
|||of the||||
|Zhong Lei|Administration Commission of Changzhou||1 Aug. 2009||Yes|
|||General||||
||Municipal People’s Government|||||
|||Office||||

Post-holding in other units
√Applicable□Inapplicable
|||||||
|-|-|-|-|-|-|
|Name of the||||||
||Name of other unit|Position in|Beginning date|Ending date of|Receives payment|
|person holding||other unit|of office term|office term|from other unit?|

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|any post in|||||
|other unit|||||
||Wuxi Fuel Injection Equipment Research||||
|Zhu Jianming||Chief|1 Mar. 2000|Yes|
||Institute||||

III. Remuneration for directors, supervisors and senior management staffs
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior management staffs
In 2014, the annual remuneration drawn by directors, supervisors and senior management from the Company was paid on monthly according to the relevant provisions of wage management and rank standard established by the Company, and paid bonus at the end of the year based on the business performance of the Company and appraisal results. The Supervisor Zhong Lei withdrew remuneration fromshareholders’ units.
Remuneration for directors, supervisors and senior management staffs of the Company during the reporting period
Unit: RMB Ten Thousand Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|||||||Total||
||||||Total||Actual|
|||||||remuneration||
||||||remuneration||remuneration|
|Name|Office title|Sex|Age|Tenure status||gained from||
||||||gained from the||gained at the|
|||||||shareholder’s||
||||||Company||period-end|
|||||||unit||
||Chairman of|||||||
|Xue Guojun||Male|52|Current|73.94||73.94|
||the Board|||||||
|Jiang Huaping|Director|Male|52|Left|0||0|
||Director,|Male||Current||||
||General|||||||
|He Jianguang|||51||73.16||73.16|
||Manager, Chief|||||||
||Engineer|||||||
||Director,|Male||Current||||
||Deputy|||||||
||General|||||||
|Shi Jianchun|||53||68.08||68.08|
||Manager,|||||||
||Secretary of|||||||
||the Board|||||||
|Xu Zhenping|Director|Male|58|Current|48.8||48.8|
|Zhuang Rongfa|Director|Male|71|Current|0||0|
||Independent|Male||Current||||
|Shen Ningwu|||73||5||5|
||Director|||||||
||Independent|Male||Left||||
|Zhu Jianming|||59||5||5|
||Director|||||||
||Independent|Male||Left||||
|Cao Huiming|||66||5||5|
||Director|||||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
||Deputy|Male||Current||||
|Yin Lihou|General||51||63.18||63.18|
||Manager|||||||
||Deputy|Male||Current||||
|Xu Yi|General||51||64.28||64.28|
||Manager|||||||
||Deputy|Male||Current||||
|Liu Xiaoyun|General||53||58.4||58.4|
||Manager|||||||
||Deputy|Male||Current||||
|Wei Jinxiang|General||52||58.39||58.39|
||Manager|||||||
||Chairman of the|Male||Current||||
|Ni Mingliang|||48||38.67||38.67|
||Supervisory|||||||
|Zhong Lei|Supervisor|Male|46|Current|0||0|
|Lu Zhonggui|Supervisor|Male|48|Current|12.35||12.35|
|Xie Guozhong|Supervisor|Male|46|Current|24.48||24.48|
|Liu Yi|Supervisor|Male|46|Current|11.88||11.88|
|Total|--|--|--|--|610.61|0|610.61|

 Particulars about the equity incentives awarded for the directors, supervisors and senior management staffs of the Company during the reporting period
□Applicable√Inapplicable
IV. Particulars about changes in core technical team or key technicians during the reporting period (not directors, supervisors or senior management staffs)
There was no any change of the core technical team or key technicians during the reporting period.
V. About employees
1. Structure of employees
As at the end of 2014, the Company had totally 3,070 employees registered in book, including 2,201 production personnel, 220 salespersons, 147 technicians, 36 financial personnel and 333 administrative personnel.
2014 Annual Report of Changchai Company, Limited
|||
|-|-|
||Administrative personnel|
|Financial personnel||

Technicians
Production personnel
Salespersons
Salespersons
Technicians
||
|-|
|7.49%|

 2. Education level of employees
17 staffs with master degree; 271 staffs with bachelor degree; 419 staffs graduated from college and technical secondary school; 1,010 staff graduated from senior high school and 1,353 persons graduated from junior high school or lower.
|||
|-|-|
|Bachelor degree|8.83%|

Junior high College and technical secondary school
school or lower
13.65% Master degree
Bachelor degree
College and technical secondary school Junior high school
Junior high school or lower Junior high school
32.90%
3.Employee’s remuneration policy
The Company always adhered to the principle of tilting the remuneration incentive mechanism towards excellent talents, so as to display the roles of various professional technicians, management staffs and skilled backbones. Besides, it adhered to the principle of increasing theemployee’s income integrated with increasing labor production efficiency and production& operation efficiency, so as to perfect the salary structure and further increaseemployees’ income steadily.
4.Employee’s training plan
The Company established the Management Rules on the Education& Training for Employees, aiming to enhance
employees’ quality and try its best to cultivate a team of faithful and highly professional talents. Besides, it
2014 Annual Report of Changchai Company, Limited innovated the training mechanism, optimized the training environment, and reinforced to encourage employees to attend various training, so as to inspire theemployees’ potential to the maximum extent and further promote the sustainable development of the Company.
5. No costs of retirees need be paid by the Company.
Section IX. Corporate Governance
I. Basic information of corporate governance
In the reporting period, the Company was strictly in line with laws, statutes such as Company Law, Securities Laws, Code of Corporate Governance of Listed Companies, Guide Opinion on Establishment of Independent Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and so on, continuously perfected corporate governance, established and accomplished internal management and control system, consistently and deeply put forward corporate governance activities, so as to further normalized operation of the Company, raising corporate governance level, laying a guard for steady and healthy development of the Company, protect legal rights and interests of the Company and all shareholders.
The Company promulgated or revised a series of internal control system through all aspects of normal operation and management activities in accordance with each national laws and regulations, characteristics of the industry, operation and self-managing business, and improved it continuously, and finally formed a normative management system. And formulated a series of management system, process and standard covered each operation link and level of the financial assets control, human resources management, quality environment management and internal audit supervisor etc., which ensured all the work had rules to follow.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?□ Yes√ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
Progress of corporate governance activities, promulgation and implementation of Registration System for Information Insiders According to requirements of Shenzhen Stock Exchange, Jiangsu Bureau of CSRC, and other regulators, the Company has established Management for Insiders Knowing Insider Information and Management System for External Information Users, and has strictly done well in management for insiders knowing insider information in light of the aforesaid systems and rules. In the reporting period, the Companydidn’t find any insider knowing insider information trade stocks of the Company before the disclosure of significant and sensitive information that can effect on the stock price of the Company by using insider information, andhasn’t been investigated, punished or rectified by regulators because of the aforesaid reasons either.
2014 Annual Report of Changchai Company, Limited II. Particulars about annualshareholders’ general meeting and specialshareholders’ general meeting held during the reporting period
1. Particulars about annualshareholders’ general meeting held during the reporting period
|||||||
|-|-|-|-|-|-|
|Session|Convening date|Name of proposal|Resolution|Disclosure date|Disclosure index|
|||1. Text of the 2013||||
|||Annual Report and||||
|||Its Abstract; 2. Work||||
|||Report of the Board||||
|||of Director in 2013;||||
|||3. Work Report of||||
|||the Supervisory||||
|||Committee in 2013;||||
|||4. Preplan of 2013||||
|||Annual Profits||||
|||Distribution and||||
||||||Announcement on|
|||Capital Reserve||||
||||||Resolutions Made at|
|||Transfer into Shares;||||
|2013 Annual|||||the 2013 Annual|
|||5. Proposal on||||
|Shareholders’|14 May 2014||Approved|15 May 2014|Shareholders’|
|||Reengagement of the||||
|General Meeting|||||General Meeting|
|||Audit Firm in 2014||||
||||||(Announcement|
|||for the Company and||||
||||||No.:2014-009)|
|||Its Auditing Fee; 6.||||
|||Proposal on||||
|||Reengagement of the||||
|||2014 Internal||||
|||Control Audit||||
|||Institution; 7.||||
|||Proposal on||||
|||Revising the Articles of||||
|||Association; 8. Shareholder||||
|||Returns Planning of Recent 3||||
|||Years (Y2014-Y2016).||||

2. Particulars about specialshareholders’ general meeting held during the reporting period
□Applicable√Inapplicable
2014 Annual Report of Changchai Company, Limited III. Performance of the Independent Directors during the Reporting Period
1. Particulars about the independent directors attending the board sessions and theshareholders’ general meetings
||||||||
|-|-|-|-|-|-|-|
|Particulars about the independent directors attending the board sessions|||||||
|||||||Failing to present|
||||Presence by||||
|Name of independent|Due presence|Presence in||Entrusted||in person for two|
||||telecommunicati||Absence (times)||
|directors|(times)|person (times)||presence (times)||consecutive|
||||on (times)||||
|||||||sessions or not|
|Shen Ningwu|7|3|4|0|0|No|
|Cao Huiming|7|3|4|0|0|No|
|Zhu Jianming|7|1|4|2|0|No|
|Presence of independent directors in|||||||
|||1|||||
|shareholders’ general meeting (times)|||||||

Explanation on failing to present in person for two consecutive sessions
2. Particulars about independent directors propose objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes√ No
The independent directorsdidn’t propose objection on relevant events during the reporting period.
IV. Duty Fulfillment of the Special Committees under the Board during the reporting period 1. Summary Report on Responsibility Performance of the Audit Committee under the Board of Directors: During the reporting period, the Audit Committee under the Board of Directors performed its duty according to the diligent and responsible principle, based on relevant regulations such as the Company Law, the Guidelines for Corporate Governance of Listed Companies, the Articles of Association as well as provisions in the Enforcement Regulation of the Audit Committee under the Board of Director of the Company.
(1) Major work of Audit Committee in reporting period:
1) Periodically examined the working plan and execution of inner control of the Company;
2) Communicated fully with the CPAs firm on plan and content of audit;
3) Urged the CPAs firm to summit report as scheduled;
4) The Audit Committee reviewed the financial statements of the Company before the audit and after the issuance of preliminary opinion by the CPAs firm. After it communicated with the CPAs firm on some important items as well as major accounting estimation items, audit adjustment items and important accounting policies which were likely to have potential influence on the financial statements, it considered that the financial statements reflected the overall situation of the Company authentically, accurately and completely.
5) Submitted the summary report on annual audit of the Company conducted by the CPAs firm to the Board of
Directors;
6) Advised to continue the appointment of Jiangsu Gongzheng Certified Public Accountants Co., Ltd as the audit
2014 Annual Report of Changchai Company, Limited institution of the Company in 2014.
(2) Written opinions on financial statements of the Company issued by the Audit Committee
1) On 1 Apr. 2015, the Audit Committee the Audit Committee examined the financial statements of the Company after the certified public accountants had issued the preliminary opinion on the statements, and issued a written opinion as follows: The financial statements of the Company were prepared in accordance with the New Accounting Standards for Enterprises and relevant financial rules of the Company, and faithfully reflected the financial position of the Company as at 31 Dec. 2014, as well as the business results and cash flows in 2014 in all material aspects.
2) With regard to the audited financial statements 2014, on 20 Apr. 2015, the Audit Committee made the following resolution: the Audit Committee reviewed the financial statements 2014 audited by auditors, and believed that the said financial statements faithfully reflected the financial position of the Company as at 31 Dec. 2014, as well as the business results and cash flows in 2014 in all material aspects. It agreed to submit the statements to the Board of Directors for examination and approval.
(3) Summary report on the audit work conducted by the CPAs firm in 2014:
According to the annual audit plan jointly formulated by the Audit Committee and Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd, auditors communicated fully with the management personnel of the Company and members of the Audit Committee on the consolidation of financial statements, accounting adjustment, accounting policy and other accounting work needed to be improved, which helped both parties acquire a deeper understanding about the operation, financial process and implementation of the New Accounting Standards for Business Enterprises in the Company. With such understanding, the annual audit accountants would make more mature judgment to issue a fair audit conclusion.
The Audit Committee held that the CPAs firm conducted the audit strictly in accordance with provisions stipulated in the Independent Auditing Standards for CPAs of the PRC. The time of audit was sufficient, and the auditors with excellent ability to practice were deployed reasonably. The issuedauditor’s report fully reflected the financial position of the Company as at 31 Dec. 2014, as well as the business results and cash flows in 2014, and the audit conclusion was in line with the actual situation of the Company.
(4) Resolution letter on renewing the employment of the CPAs firm:
The Audit Committee convened a meeting on 20 Apr. 2015 to review the matter concerning the employment of a CPAs firm for the audit in 2015, and the review opinion was as follows:
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd had accomplished the audit of the Company 2014, and theauditor’s report reflected the actual financial status of the Company in 2014 objectively and fairly. The Audit Committee was satisfied with the audit conducted by Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd and decided to continue to engage it as the audit institution of the Company in 2015. The said proposal was agreed to be submitted to the
11th
Session of the
7th
Board of Directors for review.
2. Summary Report on Responsibility Performance of Remuneration& Appraisal Committee under the Board of Directors:
The Remuneration& Appraisal Committee under the Board of Directors was composed of three Directors, including 2 Independent Directors and 1 Inner Director. And one of the Independent Directors assumed the position of Chairman of the Committee.
In the reporting period, the Remuneration& Appraisal Committee raised the proposal on implementing the appraisal of senior executives in 2014, based on the fulfillment of the main financial indicators and operation targets in 2014, which were determined in the Contract for Appraisal of Senior Executives in 2014. The Contract was reviewed and approved by the
4th
Session of the
7th
Board of Directors on 9 Jan. 2014.
2014 Annual Report of Changchai Company, Limited In the reporting period, based on relevant regulations and rules, the Remuneration& Appraisal Committee examined the remuneration of theCompany’s senior executives in 2014 and issued opinions as follows:
The Remuneration& Appraisal Committee held that, the remuneration of theCompany’s senior executives in 2014 was in accordance with provisions in the Contract for Appraisal of Senior Executives in 2014, as well as the laws, regulations and rules of the Company.
V. Performance of the Supervisory Committee
Whether the Supervisory Committee finds the Company existing risks or not in the supervisory activities during the reporting period?□ Yes√ No
The Supervisory Committee has no objection on the supervised events during the reporting period
VI. Particulars about theCompany’s “five-separation” from the controlling shareholder in respect of business, personnel, assets, organization and financing
The Company was totally independent from the controlling shareholder State-owned Assets Supervision and Administration Commission of Changzhou MunicipalPeople’s Government in terms of assets, business, personnel, organization and financing, with independent& complete business and capability to operate independently.
VII. Particulars on horizontal competition
□Applicable√Inapplicable
VIII. Performance appraisal and incentive mechanism for senior management staffs
The Company has established a fair and objective performance appraisal and incentive restraint mechanism for senior management staffs. The annual remuneration of senior management staffs consisted of the basic annual salary and performance appraisal bonus, and the basic annual salary was distributed monthly with a certain proportion, while the performance appraisal bonus was distributed after being appraised according to the appraisal scheme for senior management staffs signed between the Board of Directors and the managers for each year. Section X. Internal Control
I. Construction of internal control of the Company
In order to implement the Basic Rules for Internal Control of Enterprises and its mating guidelines, and according to the Notice on Doing Well in the Implementation of Internal Control Rules by Listed Companies in Jiangsu (Su-Zheng-Jian-Zi[2012] No. 101) and other documents issued by CSRC Jiangsu Bureau, the Company carried out various works on construction of internal control system orderly in 2012. And it combed, described, sampled, tested and appraised the key departments and business procedures, and overall rectified the defects of internal control. Besides, it completed the compilation of the working paper on appraisal of internal control, internal control brochure and self-appraisal report on internal control, so as to systematically reflect the overview of
2014 Annual Report of Changchai Company, Limited internal control of the Company.
In 2014, the Company continued to further develop the construction activities of the internal control system, promulgated or revised a series of internal control system through all aspects of normal operation and management activities in accordance with each national laws and regulations, characteristics of the industry, operation and self-managing business, and improved it continuously, and finally formed the normative documents such as Internal Control Manual of Suzhou Changchai and Assembly of the Internal Control System of Suzhou Changchai with the content contained a series of management system, procedure and standard that including each operation aspect and level such as procurement, sales, finance, assets, human resources, internal audit& inspection, etc.
II. Statement of the Board of Directors on its responsibilities towards internal control
The Board of Directors stated that: in accordance with laws and statutes such as Company Law, Securities Laws, Code of Corporate Governance of Listed Companies, Guide Opinion on Establishment of Independent Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and so on, and actuality of the Company, the Company established various internal control system that contains up and down of operation activities of the Company. These systems had been effectively conducted and reasonably ensured legitimacy of enterprise operation and management, safety of assets, faculty and completeness of financial report and relevant information. In the process, risks were effectively controlled and normal operation of the operation activities of the Company was assured. The actuality of internal control of the Company was in line with regulations and requirements of documentary files. The Company will consistently improved, enhanced and perfected internal control system in accordance with requirements of development of the Company and insufficiency arising from execution, thereof, lay a solid foundation for the healthy and steady development of the Company.
III. Basis on establishing the internal control for financial report
In accordance with laws and regulations of Accounting Law of PRC, Enterprises Accounting Code, Basic Standard for Enterprises Internal Control as well as enterprises business characteristics and management requirements, the Company established and perfected internal control relevant to financial report. There were no particulars about any material flaw in internal control of financial report.
IV. Self-appraisal report on internal control
|||
|-|-|
|Particulars about significant defects of internal control found during the reporting period in the Self-appraisal Report on Internal||
|Control||
|Disclosure date of the Self-appraisal Report on Internal Control|22 Apr. 2014|
||The relevant announcement was disclosed on|
|Disclosure index of the Self-appraisal Report on Internal Control||
||www.cninfo.com.cn dated 22 Apr. 2014.|

V.Auditor’s report on internal control or verification
Auditor’s report on internal control
Audit opinion paragraph in theAuditor’s Report for the Internal Control
2014 Annual Report of Changchai Company, Limited
|||
|-|-|
|We considered that, the Changchai Shares maintained effective internal control of the financial report in significant aspects||
|according to the Basic Norms of Internal Control and relevant regulations on 31 Dec. 2014.||
|Disclosure date of the Auditor’s Report on Internal Control|22 Apr. 2014|
||The relevant announcement was disclosed on|
|Disclosure index of the Auditor’s Report on Internal Control||
||www.cninfo.com.cn dated 22 Apr. 2014.|

Whether the CPAs firm issues anAuditor’s Report on Internal Control with non-standard opinion or not?
□ Yes√ No
Whether theAuditor’s Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or not?
√ Yes□ No
VI. Establishment and execution of rules of accountability for significant mistakes in annual report information disclosure
On 9 Mar. 2010, the
19th
Session of the
5th
Board of Directors reviewed and approved Rules of Accountability for Significant Mistakes in Annual Report Information Disclosure. In the reporting period, there was no particular about material correction of accounting, complement of significant information omission, or amendment of prediction of performance etc.
2014 Annual Report of Changchai Company, Limited Section XI. Financial Report
I.Auditor’s Report
|||
|-|-|
|Type of audit opinion|Standard unqualified opinion|
|Date of signing the auditor’s report|20 Apr. 2015|
||Jiangsu Gongzheng Tianye Certified Public Accountants|
|Name of the audit firm||
||Company Limited (LLP)|
|Reference number of the auditor’s report|SG W [2015] No. A610|
|Name of the CPA|Wang Wenkai, He Taifeng|

Text of theAuditor’s Report
All shareholders of Changchai Co., Ltd.:
We have audited the attached financial statements of Changchai Co., Ltd. (hereinafter referred to as “the Company”), including the consolidated and theCompany’s financial statements as at 31 Dec. 2014, the consolidated and theCompany’s income statement, the consolidated and theCompany’s cash flow statement, and the consolidated and theCompany’s statement of changes in equity for the year then ended, as well as the notes to the financial statements.
I. Responsibility of the management on the financial statements
It is the responsibility of theCompany’s management to prepare the financial statements according to the enterprise accounting standards, which includes: (1) designing, implementing and maintaining the internal control related to the financial statement preparation, so as to avoid significant errors in the financial statements caused by malpractices or mistakes; (2) choosing and adopting proper accounting policies; and (3) making rational accounting estimates.
II. Responsibility of the certified public accountants
Our responsibility is to express our auditing opinion based on our audit. And we have conducted the audit according to the Auditing Standards for Chinese Registered Accountants, which requires us to conform to ethical standards, plan and carry out the audit, so as to reasonably ensure that there exist no significant errors in the financial statements.
The audit work involves implementing the auditing procedure so as to acquire audit evidences for the data carried in the financial statements. The choice of auditing procedures depends on the judgment of the registered accountants, including the risk assessment of significant financial statement errors caused by malpractices or mistakes. When conducting the risk assessment, we will consider the internal control related to financial statement preparation so as to design a proper auditing procedure, with no purpose to express opinions on the effectiveness of the internal control. Our audit work also involves evaluating the rationality of the accounting policy chosen and the accounting estimates made by the management, as well as the general presentation of the financial statements. We believe that the auditing evidences we obtained are sufficient and proper, which provides a foundation for us
to express our auditing opinion.
III. Audit opinion
We believe that the financial statements of the Company have been prepared in accordance with the requirements
2014 Annual Report of Changchai Company, Limited of the Enterprises Accounting Standards, and presented fairly, in all material respects, the financial position of the Company as at 31 Dec. 2014, and the results of its operations and its cash flows for the year then ended.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. (LLP) CPA of China: Wang Wenkai Wuxi· China CPA of China: He Taifeng 20 Apr. 2015
II. Financial statements
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Changchai Company, Limited
31 Dec. 2014
Unit: RMB Yuan
||||
|-|-|-|
|Item|31 Dec. 2014|31 Dec. 2013|
|Current Assets:|||
|Monetary funds|531,969,747.91|688,297,469.30|
|Settlement reserves|||
|Intra-group lendings|||
|Financial assets measured at fair|||
|value of which changes are recorded in|2,109,642.19||
|current profits and losses|||
|Derivative financial assets|||
|Notes receivable|314,236,128.92|257,845,729.93|
|Accounts receivable|374,335,355.22|317,295,375.34|
|Accounts paid in advance|15,092,855.36|14,659,048.00|
|Premiums receivable|||
|Reinsurance premiums receivable|||
|Receivable reinsurance contract|||
|reserves|||
|Interest receivable|||
|Dividend receivable|||
|Other accounts receivable|8,662,701.30|12,723,300.47|
|Financial assets purchased under|||
|agreements to resell|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Inventories|497,588,717.86|473,238,876.29|
|Assets held for sale|||
|Non-current assets due within 1 year|||
|Other current assets|31,729,042.18|39,990,829.02|
|Total current assets|1,775,724,190.94|1,804,050,628.35|
|Non-current assets:|||
|Loans by mandate and advances|||
|granted|||
|Available-for-sale financial assets|497,850,000.00|413,954,000.00|
|Held-to-maturity investments|||
|Long-term accounts receivable|||
|Long-term equity investment|20,459,975.99|19,548,325.73|
|Investing real estate|59,489,370.83|61,697,711.63|
|Fixed assets|572,785,946.61|619,468,246.18|
|Construction in progress|134,948,317.87|78,207,347.80|
|Engineering materials|||
|Disposal of fixed assets|||
|Production biological assets|||
|Oil-gas assets|||
|Intangible assets|104,441,092.62|84,217,899.70|
|R&D expense|||
|Goodwill|||
|Long-term deferred expenses|||
|Deferred income tax assets|1,084,863.32|1,195,990.26|
|Other non-current assets|||
|Total of non-current assets|1,391,059,567.24|1,278,289,521.30|
|Total assets|3,166,783,758.18|3,082,340,149.65|
|Current liabilities:|||
|Short-term borrowings|20,000,000.00|30,000,000.00|
|Borrowings from Central Bank|||
|Customer bank deposits and due to|||
|banks and other financial institutions|||
|Intra-group borrowings|||
|Financial liabilities measured at fair|||
|value of which changes are recorded in|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|current profits and losses|||
|Derivative financial liabilities|||
|Notes payable|218,351,400.00|246,300,000.00|
|Accounts payable|550,858,517.60|577,327,834.60|
|Accounts received in advance|29,364,756.16|38,090,958.80|
|Financial assets sold for repurchase|||
|Handling charges and commissions|||
|payable|||
|Payroll payable|61,303,762.60|57,122,045.12|
|Tax payable|14,511,976.27|16,228,953.19|
|Interest payable|||
|Dividend payable|3,891,433.83|3,891,433.83|
|Other accounts payable|196,560,865.32|174,454,382.17|
|Reinsurance premiums payable|||
|Insurance contract reserves|||
|Payables for acting trading of|||
|securities|||
|Payables for acting underwriting of|||
|securities|||
|Liabilities held for sale|||
|Non-current liabilities due within 1|||
|year|||
|Other current liabilities|2,992,996.74|1,939,407.40|
|Total current liabilities|1,097,835,708.52|1,145,355,015.11|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Of which: preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payables|||
|Specific payables|||
|Estimated liabilities|||
|Deferred income|54,185,979.32|61,894,052.94|
|Deferred income tax liabilities|61,616,325.00|49,031,925.00|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Other non-current liabilities|||
|Total non-current liabilities|115,802,304.32|110,925,977.94|
|Total liabilities|1,213,638,012.84|1,256,280,993.05|
|Owners’ equity:|||
|Share capital|561,374,326.00|561,374,326.00|
|Other equity instruments|||
|Of which: preferred shares|||
|Perpetual bonds|||
|Capital reserves|164,328,665.43|171,016,154.25|
|Less: Treasury stock|||
|Other comprehensive income|349,159,175.00|277,780,844.33|
|Specific reserves|8,332,077.21|6,996,256.56|
|Surplus reserves|298,151,696.96|289,629,574.39|
|Provisions for general risks|||
|Retained profits|555,590,894.67|502,779,906.92|
|Total equity attributable to owners of|||
||1,936,936,835.27|1,809,577,062.45|
|the Company|||
|Minority interests|16,208,910.07|16,482,094.15|
|Total owners’ equity|1,953,145,745.34|1,826,059,156.60|
|Total liabilities and owners’ equity|3,166,783,758.18|3,082,340,149.65|

 Legal representative: Xue Guojun Person-in-charge of the accounting work: He Jianguang Chief of the accounting division: Jiang He
2. Balance sheet of the Company
Unit: RMB Yuan
||||
|-|-|-|
|Item|31 Dec. 2014|31 Dec. 2013|
|Current Assets:|||
|Monetary funds|494,366,603.39|649,755,641.89|
|Financial assets measured at fair|||
|value of which changes are recorded in|||
|current profits and losses|||
|Derivative financial assets|||
|Notes receivable|312,466,128.92|257,695,729.93|
|Accounts receivable|331,239,446.99|287,405,670.66|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Accounts paid in advance|10,139,747.15|10,821,513.13|
|Interest receivable|||
|Dividend receivable|||
|Other accounts receivable|5,712,047.44|10,397,443.72|
|Inventories|426,235,429.74|401,992,702.79|
|Assets held for sale|||
|Non-current assets due within 1 year|||
|Other current assets|20,637,141.03|29,892,916.57|
|Total current assets|1,600,796,544.66|1,647,961,618.69|
|Non-current assets:|||
|Available-for-sale financial assets|490,650,000.00|406,754,000.00|
|Held-to-maturity investments|||
|Long-term accounts receivable|||
|Long-term equity investment|204,926,475.99|150,666,565.73|
|Investing real estate|59,489,370.83|61,697,711.63|
|Fixed assets|454,717,057.95|496,473,706.65|
|Construction in progress|134,948,317.87|77,785,739.64|
|Engineering materials|||
|Disposal of fixed assets|||
|Production biological assets|||
|Oil-gas assets|||
|Intangible assets|81,914,372.57|82,161,279.41|
|R&D expense|||
|Goodwill|||
|Long-term deferred expenses|||
|Deferred income tax assets|1,084,863.32|1,195,990.26|
|Other non-current assets|||
|Total of non-current assets|1,427,730,458.53|1,276,734,993.32|
|Total assets|3,028,527,003.19|2,924,696,612.01|
|Current liabilities:|||
|Short-term borrowings|||
|Financial liabilities measured at fair|||
|value of which changes are recorded in|||
|current profits and losses|||
|Derivative financial liabilities|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Notes payable|206,351,400.00|239,300,000.00|
|Accounts payable|501,904,239.41|534,436,105.73|
|Accounts received in advance|37,247,846.51|48,173,277.25|
|Payroll payable|56,426,935.61|52,616,431.17|
|Tax payable|12,438,714.42|13,672,231.50|
|Interest payable|||
|Dividend payable|3,243,179.97|3,243,179.97|
|Other accounts payable|191,066,117.22|167,758,011.92|
|Liabilities held for sale|||
|Non-current liabilities due within 1|||
|year|||
|Other current liabilities|||
|Total current liabilities|1,008,678,433.14|1,059,199,237.54|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Of which: preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payables|||
|Specific payables|||
|Estimated liabilities|||
|Deferred income|54,185,979.32|61,894,052.94|
|Deferred income tax liabilities|61,616,325.00|49,031,925.00|
|Other non-current liabilities|||
|Total non-current liabilities|115,802,304.32|110,925,977.94|
|Total liabilities|1,124,480,737.46|1,170,125,215.48|
|Owners’ equity:|||
|Share capital|561,374,326.00|561,374,326.00|
|Other equity instruments|||
|Of which: preferred shares|||
|Perpetual bonds|||
|Capital reserves|183,071,147.70|183,044,309.95|
|Less: Treasury stock|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Other comprehensive income|349,159,175.00|277,847,575.00|
|Specific reserves|8,332,077.21|6,996,256.56|
|Surplus reserves|298,151,696.96|289,629,574.39|
|Retained profits|503,957,842.86|435,679,354.63|
|Total owners’ equity|1,904,046,265.73|1,754,571,396.53|
|Total liabilities and owners’ equity|3,028,527,003.19|2,924,696,612.01|

 3. Consolidated income statement
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|I. Total operating revenues|2,489,792,063.33|2,927,593,052.78|
|Including: Sales income|2,489,792,063.33|2,927,593,052.78|
|Interest income|||
|Premium income|||
|Handling charge and commission|||
|income|||
|II. Total operating costs|2,418,623,839.64|2,845,243,353.68|
|Including: Cost of sales|2,157,062,245.66|2,530,625,259.11|
|Interest expenses|||
|Handling charge and commission|||
|expenses|||
|Surrenders|||
|Net claims paid|||
|Net amount withdrawn for the|||
|insurance contract reserve|||
|Expenditure on policy dividends|||
|Reinsurance premium|||
|Taxes and associate charges|749,136.23|401,625.56|
|Selling and distribution expenses|92,235,311.13|122,731,331.97|
|Administrative expenses|146,002,446.70|165,237,477.97|
|Financial expenses|-10,932,468.28|-12,404,044.54|
|Asset impairment loss|33,507,168.20|38,651,703.61|
|Add: Gain/(loss) from change in fair|||
||109,642.19||
|value (“-” means loss)|||
|Gain/(loss) from investment (“-”|12,014,333.27|15,969,511.56|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|means loss)|||
|Including: share of profits in|||
||1,366,650.26|929,669.90|
|associates and joint ventures|||
|Foreign exchange gains (“-” means|||
|loss)|||
|III. Business profit (“-” means loss)|83,292,199.15|98,319,210.66|
|Add: non-operating income|12,619,459.28|5,039,710.56|
|Including: Gains on disposal of|||
||437,606.94|617,108.66|
|non-current assets|||
|Less: non-operating expense|10,654,493.23|4,367,523.58|
|Including: Losses on disposal of|||
||318,704.95|49,053.88|
|non-current assets|||
|IV. Total profit (“-” means loss)|85,257,165.20|98,991,397.64|
|Less: Income tax expense|19,587,550.64|23,190,324.77|
|V. Net profit (“-” means loss)|65,669,614.56|75,801,072.87|
|Net profit attributable to owners of|||
||64,202,144.29|75,712,361.04|
|the Company|||
|Minority shareholders’ income|1,467,470.27|88,711.83|
|VI. After-tax net amount of other|||
||71,378,330.67|-100,121,309.92|
|comprehensive incomes|||
|After-tax net amount of other|||
|comprehensive incomes attributable to|71,378,330.67|-100,121,309.92|
|owners of the Company|||
|(I) Other comprehensive incomes|||
|that will not be reclassified into gains and|||
|losses|||
|1. Changes in net liabilities or|||
|assets with a defined benefit plan upon|||
|re-measurement|||
|2. Enjoyable shares in other|||
|comprehensive incomes in investees that|||
|cannot be reclassified into gains and|||
|losses under the equity method|||
|(II) Other comprehensive incomes|||
|that will be reclassified into gains and|71,378,330.67|-100,121,309.92|
|losses|||
|1. Enjoyable shares in other|||
|comprehensive incomes in investees that|||
|will be reclassified into gains and losses|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|under the equity method|||
|2. Gains and losses on fair|||
|value changes of available-for-sale|71,311,600.00|-100,086,650.00|
|financial assets|||
|3. Gains and losses on|||
|reclassifying held-to-maturity|||
|investments into available-for-sale|||
|financial assets|||
|4. Effective hedging gains and|||
|losses on cash flows|||
|5. Foreign-currency financial|66,730.67||
|||-34,659.92|
|statement translation difference|||
|6. Other|||
|After-tax net amount of other|||
|comprehensive incomes attributable to|||
|minority shareholders|||
|VII. Total comprehensive incomes|137,047,945.23|-24,320,237.05|
|Attributable to owners of the|135,580,474.96||
|||-24,408,948.88|
|Company|||
|Attributable to minority|1,467,470.27||
|||88,711.83|
|shareholders|||
|VIII. Earnings per share|||
|(I) Basic earnings per share|0.11|0.13|
|(II) Diluted earnings per share|0.11|0.13|

 Legal representative: Xue Guojun Person-in-charge of the accounting work: He Jianguang Chief of the accounting division: Jiang He
4. Income statement of the Company
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|I. Total sales|2,494,339,556.14|2,941,316,332.95|
|Less: cost of sales|2,186,465,573.99|2,572,113,340.98|
|Business taxes and surcharges|||
|Distribution expenses|87,132,202.53|117,569,014.76|
|Administrative expenses|129,574,125.75|149,382,515.66|
|Financial costs|-13,220,902.08|-14,380,093.58|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Impairment loss|15,048,198.38|36,286,559.05|
|Add: gain/(loss) from change in fair|||
|value (“-” means loss)|||
|Gain/(loss) from investment (“-”|||
||13,682,952.59|15,529,669.90|
|means loss)|||
|Including: income form investment|||
||1,366,650.26|929,669.90|
|on associates and joint ventures|||
|II. Business profit (“-” means loss)|103,023,310.16|95,874,665.98|
|Add: non-operating income|11,180,798.60|3,020,552.53|
|Including: Gains on disposal of|||
||257,729.86|437,188.33|
|non-current assets|||
|Less: non-operating expense|10,476,546.75|4,267,410.08|
|Including: Losses on disposal of|||
||318,266.72|49,053.88|
|non-current assets|||
|III. Total profit (“-” means loss)|103,727,562.01|94,627,808.43|
|Less: Income tax expense|18,506,336.32|21,981,238.15|
|IV. Net profit (“-” means loss)|85,221,225.69|72,646,570.28|
|V. After-tax net amount of other|||
||71,311,600.00|-100,086,650.00|
|comprehensive incomes|||
|(I) Other comprehensive incomes that|||
|will not be reclassified into gains and|||
|losses|||
|1. Changes in net liabilities or|||
|assets with a defined benefit plan upon|||
|re-measurement|||
|2. Enjoyable shares in other|||
|comprehensive incomes in investees|||
|that cannot be reclassified into gains|||
|and losses under the equity method|||
|(II) Other comprehensive incomes|||
|that will be reclassified into gains and|71,311,600.00|-100,086,650.00|
|losses|||
|1. Enjoyable shares in other|||
|comprehensive incomes in investees|||
|that will be reclassified into gains and|||
|losses under the equity method|||
|2. Gains and losses on fair value|||
|changes of available-for-sale financial|71,311,600.00|-100,086,650.00|
|assets|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|3. Gains and losses on|||
|reclassifying held-to-maturity|||
|investments into available-for-sale|||
|financial assets|||
|4. Effective hedging gains and|||
|losses on cash flows|||
|5. Foreign-currency financial|||
|statement translation difference|||
|6. Other|||
|VI. Total comprehensive incomes|156,532,825.69|-27,440,079.72|
|VII. Earnings per share|||
|(I) Basic earnings per share|||
|(II) Diluted earnings per share|||

5. Consolidated cash flow statement
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|I. Cash flows from operating activities:|||
|Cash received from sale of|||
||2,688,286,109.60|3,257,078,344.84|
|commodities and rendering of service|||
|Net increase of deposits from|||
|customers and dues from banks|||
|Net increase of loans from the central|||
|bank|||
|Net increase of funds borrowed from|||
|other financial institutions|||
|Cash received from premium of|||
|original insurance contracts|||
|Net cash received from reinsurance|||
|business|||
|Net increase of deposits of policy|||
|holders and investment fund|||
|Net increase of disposal of financial|||
|assets measured at fair value of which|||
|changes are recorded into current gains|||
|and losses|||
|Cash received from interest, handling|||
|charges and commissions|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Net increase of intra-group|||
|borrowings|||
|Net increase of funds in repurchase|||
|business|||
|Tax refunds received|33,639,405.87|48,010,329.98|
|Other cash received relating to|||
||14,125,214.83|12,409,392.86|
|operating activities|||
|Subtotal of cash inflows from operating|||
||2,736,050,730.30|3,317,498,067.68|
|activities|||
|Cash paid for goods and services|2,375,158,372.15|2,860,474,897.96|
|Net increase of customer lendings|||
|and advances|||
|Net increase of funds deposited in the|||
|central bank and amount due from|||
|banks|||
|Cash for paying claims of the original|||
|insurance contracts|||
|Cash for paying interest, handling|||
|charges and commissions|||
|Cash for paying policy dividends|||
|Cash paid to and for employees|286,745,413.05|297,595,259.85|
|Various taxes paid|40,280,909.48|31,596,731.79|
|Other cash payment relating to|||
||85,373,391.14|96,424,329.60|
|operating activities|||
|Subtotal of cash outflows from|||
||2,787,558,085.82|3,286,091,219.20|
|operating activities|||
|Net cash flows from operating activities|-51,507,355.52|31,406,848.48|
|II. Cash flows from investing activities:|||
|Cash received from withdrawal of|||
|investments|||
|Cash received from return on|||
||11,151,322.56|15,039,841.66|
|investments|||
|Net cash received from disposal of|||
|fixed assets, intangible assets and other|336,880.83|1,566,155.00|
|long-term assets|||
|Net cash received from disposal of|||
|subsidiaries or other business units|||
|Other cash received relating to|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|investing activities|||
|Subtotal of cash inflows from investing|||
||11,488,203.39|16,605,996.66|
|activities|||
|Cash paid to acquire fixed assets,|||
|intangible assets and other long-term|60,611,666.98|67,808,515.95|
|assets|||
|Cash paid for investment|2,000,000.00||
|Net increase of pledged loans|||
|Net cash paid to acquire subsidiaries|||
||22,600,000.00||
|and other business units|||
|Other cash payments relating to|||
|investing activities|||
|Subtotal of cash outflows from|||
||85,211,666.98|67,808,515.95|
|investing activities|||
|Net cash flows from investing activities|-73,723,463.59|-51,202,519.29|
|III. Cash Flows from Financing|||
|Activities:|||
|Cash received from capital|||
||280,600.00|250,000.00|
|contributions|||
|Including: Cash received from|||
|minority shareholder investments by|280,600.00|250,000.00|
|subsidiaries|||
|Cash received from borrowings|20,000,000.00|60,000,000.00|
|Cash received from issuance of|||
|bonds|||
|Other cash received relating to|||
|financing activities|||
|Subtotal of cash inflows from financing|||
||20,280,600.00|60,250,000.00|
|activities|||
|Repayment of borrowings|30,000,000.00|50,000,000.00|
|Cash paid for interest expenses and|||
||10,794,562.05|16,114,667.28|
|distribution of dividends or profit|||
|Including: dividends or profit paid|||
||553,400.00||
|by subsidiaries to minority shareholders|||
|Other cash payments relating to|||
||400,000.00|400,000.00|
|financing activities|||
|Sub-total of cash outflows from|||
||41,194,562.05|66,514,667.28|
|financing activities|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Net cash flows from financing activities|-20,913,962.05|-6,264,667.28|
|IV. Effect of foreign exchange rate|||
||24,385.48|-62,269.00|
|changes on cash and cash equivalents|||
|V. Net increase in cash and cash|||
||-146,120,395.68|-26,122,607.09|
|equivalents|||
|Add: Opening balance of cash and|||
||610,882,216.18|637,004,823.27|
|cash equivalents|||
|VI. Closing balance of cash and cash|||
||464,761,820.50|610,882,216.18|
|equivalents|||

6. Cash flow statement of the Company
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|I. Cash flows from operating activities:|||
|Cash received from sale of|||
||2,699,873,240.85|3,231,684,006.61|
|commodities and rendering of service|||
|Tax refunds received|33,639,405.87|48,010,329.98|
|Other cash received relating to|||
||11,580,677.83|10,372,226.32|
|operating activities|||
|Subtotal of cash inflows from operating|||
||2,745,093,324.55|3,290,066,562.91|
|activities|||
|Cash paid for goods and services|2,426,842,672.28|2,884,278,297.49|
|Cash paid to and for employees|252,341,688.21|264,654,948.92|
|Various taxes paid|29,401,425.57|24,780,441.70|
|Other cash payment relating to|||
||77,786,287.60|89,199,191.26|
|operating activities|||
|Subtotal of cash outflows from|||
||2,786,372,073.66|3,262,912,879.37|
|operating activities|||
|Net cash flows from operating activities|-41,278,749.11|27,153,683.54|
|II. Cash flows from investing activities:|||
|Cash received from retraction of|||
|investments|||
|Cash received from return on|||
||13,022,100.00|14,600,000.00|
|investments|||
|Net cash received from disposal of|||
|fixed assets, intangible assets and other|838,078.00|395,430.00|
|long-term assets|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Net cash received from disposal of|||
||1,027,642.33||
|subsidiaries or other business units|||
|Other cash received relating to|||
|investing activities|||
|Subtotal of cash inflows from investing|||
||14,887,820.33|14,995,430.00|
|activities|||
|Cash paid to acquire fixed assets,|||
|intangible assets and other long-term|54,243,469.12|55,433,565.57|
|assets|||
|Cash paid for investment|33,500,000.00|3,500,000.00|
|Net cash paid to acquire subsidiaries|||
||21,126,700.00||
|and other business units|||
|Other cash payments relating to|||
|investing activities|||
|Subtotal of cash outflows from|||
||108,870,169.12|58,933,565.57|
|investing activities|||
|Net cash flows from investing activities|-93,982,348.79|-43,938,135.57|
|III. Cash Flows from Financing|||
|Activities:|||
|Cash received from capital|||
|contributions|||
|Cash received from borrowings|||
|Cash received from issuance of|||
|bonds|||
|Other cash received relating to|||
|financing activities|||
|Subtotal of cash inflows from financing|||
|activities|||
|Repayment of borrowings|||
|Cash paid for interest expenses and|||
||8,420,614.89|14,034,358.15|
|distribution of dividends or profit|||
|Other cash payments relating to|||
|financing activities|||
|Sub-total of cash outflows from|||
||8,420,614.89|14,034,358.15|
|financing activities|||
|Net cash flows from financing activities|-8,420,614.89|-14,034,358.15|
|IV. Effect of foreign exchange rate|||
|changes on cash and cash equivalents|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|V. Net increase in cash and cashequivalents|||
||-143,681,712.79|-30,818,810.18|
|Add: Opening balance of cash andcash equivalents|||
||574,440,388.77|605,259,198.95|
|VI. Closing balance of cash and cashequivalents|||
||430,758,675.98|574,440,388.77|

7. Consolidated statement of changes inowners’ equity
2014
Unit: RMB Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||2014|||||||||||||
||Equity attributable to owners of the Company|||||||||||||
|||Other equity||||||||||||
||||||||Other|||||Minorit|Total|
|Item||||||||||||||
|||instruments||||Less:||||General||||
||Share||||Capital||compre|Specific|Surplus||Retaine|y|owners’|
|||Prefer|Perpet|||treasury||||risk||||
||capital||||reserve||hensive|reserve|reserve||d profit|interests|equity|
|||red|ual|Other||stock||||reserve||||
||||||||incomes|||||||
|||shares|bonds|||||||||||
|I. Balance at the|561,37||||||||||||1,826,0|
||||||171,016||277,780|6,996,2|289,629||502,779|16,482,||
|end of the|4,326.||||||||||||59,156.|
||||||,154.25||,844.33|56.56|,574.39||,906.92|094.15||
|previous year|00||||||||||||60|
|Add: change of||||||||||||||
|accounting policy||||||||||||||
|Correction of||||||||||||||
|errors in previous||||||||||||||
|periods||||||||||||||
|Business||||||||||||||
|mergers under the||||||||||||||
|same control||||||||||||||
|Other||||||||||||||
|II. Balance at the|561,37||||||||||||1,826,0|
||||||171,016||277,780|6,996,2|289,629||502,779|16,482,||
|beginning of the|4,326.||||||||||||59,156.|
||||||,154.25||,844.33|56.56|,574.39||,906.92|094.15||
|year|00||||||||||||60|
|III. Increase/||||||||||||||
|decrease in the|||||-6,687,4||71,378,|1,335,8|8,522,1||52,810,|-273,18|127,086|
|period (“-” means|||||88.82||330.67|20.65|22.57||987.75|4.08|,588.74|
|decrease)||||||||||||||
|(I) Total||||||||||||||
||||||||71,378,||||64,202,|1,467,4|137,047|
|comprehensive||||||||||||||
||||||||330.67||||144.29|70.27|,945.23|
|incomes||||||||||||||

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|(II) Capital||||||
||-6,714,3|||4,210,9|-2,503,4|
|increased and||||||
||26.57|||26.57|00.00|
|reduced by owners||||||
|1. Common||||||
|||||20,250,|20,250,|
|shares increased||||||
|||||000.00|000.00|
|by shareholders||||||
|2. Capital||||||
|increased by||||||
|holders of other||||||
|equity instruments||||||
|3. Amounts||||||
|of share-based||||||
|payments||||||
|recognized in||||||
|owners’ equity||||||
||-6,714,3|||-16,039,|-22,753,|
|4. Other||||||
||26.57|||073.43|400.00|
|(III) Profit||8,522,1|-16,942,|-400,00|-8,820,6|
|distribution||22.57|737.46|0.00|14.89|
|1.||||||
|||8,522,1|-8,522,1|||
|Appropriations to||||||
|||22.57|22.57|||
|surplus reserves||||||
|2.||||||
|Appropriations to||||||
|general risk||||||
|provisions||||||
|3.||||||
|Appropriations to|||-8,420,6|-400,00|-8,820,6|
|owners (or|||14.89|0.00|14.89|
|shareholders)||||||
|4. Other||||||
|(IV) Internal||||||
|carry-forward of||||||
|owners’ equity||||||
|1. New||||||
|increase of capital||||||
|(or share capital)||||||
|from capital public||||||
|reserves||||||
|2. New||||||
|increase of capital||||||

2014 Annual Report of Changchai Company, Limited
||||||||||
|-|-|-|-|-|-|-|-|-|
|(or share capital)|||||||||
|from surplus|||||||||
|reserves|||||||||
|3. Surplus|||||||||
|reserves for|||||||||
|making up losses|||||||||
|4. Other|||||||||
|(V) Specific||||1,335,8||||1,335,8|
|reserve||||20.65||||20.65|
|1. Withdrawn||||4,841,3||||4,841,3|
|for the period||||16.33||||16.33|
|2. Used in the||||3,505,4||||3,505,4|
|period||||95.68||||95.68|
|||26,837.||||5,551,5|-5,551,5|26,837.|
|(VI) Other|||||||||
|||75||||80.92|80.92|75|
||561,37|||||||1,953,145,745.34|
|IV. Closing||164,328|349,159|8,332,0|298,151|555,590|16,208,||
||4,326.||||||||
|balance||,665.43|,175.00|77.21|,696.96|,894.67|910.07||
||00||||||||

 2013
Unit: RMB Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||2013|||||||||||||
||Equity attributable to owners of the Company|||||||||||||
|||Other equity||||||||||Minorit||
||||||||Other||||||Total|
|Item||||||||||||||
|||instruments||||Less:||||General||y||
||Share||||Capital||compre|Specific|Surplus||Retaine||owners’|
|||Prefer|Perpet|||treasury||||risk||interest||
||capital||||reserve||hensive|reserve|reserve||d profit||equity|
|||red|ual|Other||stock||||reserve||s||
||||||||incomes|||||||
|||shares|bonds|||||||||||
|I. Balance at the|561,37||||||||||||1,861,3|
||||||171,016||377,902|4,169,0|282,364||448,366|16,143,||
|end of the|4,326.||||||||||||36,582.|
||||||,154.25||,154.25|87.73|,917.36||,561.06|382.32||
|previous year|00||||||||||||97|
|Add: change of||||||||||||||
|accounting policy||||||||||||||
|Correction of||||||||||||||
|errors in previous||||||||||||||
|periods||||||||||||||
|Business||||||||||||||
|mergers under the||||||||||||||
|same control||||||||||||||
|Other||||||||||||||

2014 Annual Report of Changchai Company, Limited
||||||||||
|-|-|-|-|-|-|-|-|-|
|II. Balance at the|561,37|||||||1,861,3|
|||171,016|377,902|4,169,0|282,364|448,366|16,143,||
|beginning of the|4,326.|||||||36,582.|
|||,154.25|,154.25|87.73|,917.36|,561.06|382.32||
|year|00|||||||97|
|III. Increase/|||||||||
||||-100,12||||||
|decrease in the||||2,827,1|7,264,6|54,413,|338,711|-35,277,|
||||1,309.9||||||
|period (“-” means||||68.83|57.03|345.86|.83|426.37|
||||2||||||
|decrease)|||||||||
|(I) Total|||-100,12||||||
|||||||75,712,|88,711.|-24,320,|
|comprehensive|||1,309.9||||||
|||||||361.04|83|237.05|
|incomes|||2||||||
|(II) Capital|||||||||
||||||||250,000|250,000|
|increased and|||||||||
||||||||.00|.00|
|reduced by owners|||||||||
|1. Common|||||||||
||||||||250,000|250,000|
|shares increased|||||||||
||||||||.00|.00|
|by shareholders|||||||||
|2. Capital|||||||||
|increased by|||||||||
|holders of other|||||||||
|equity instruments|||||||||
|3. Amounts|||||||||
|of share-based|||||||||
|payments|||||||||
|recognized in|||||||||
|owners’ equity|||||||||
|4. Other|||||||||
|(III) Profit|||||7,264,6|-21,299,||-14,034,|
|distribution|||||57.03|015.18||358.15|
|1.|||||||||
||||||7,264,6|-7,264,6|||
|Appropriations to|||||||||
||||||57.03|57.03|||
|surplus reserves|||||||||
|2.|||||||||
|Appropriations to|||||||||
|general risk|||||||||
|provisions|||||||||
|3.|||||||||
|Appropriations to||||||-14,034,||-14,034,|
|owners (or||||||358.15||358.15|
|shareholders)|||||||||
|4. Other|||||||||

2014 Annual Report of Changchai Company, Limited
||||||||||
|-|-|-|-|-|-|-|-|-|
|(IV) Internal|||||||||
|carry-forward of|||||||||
|owners’ equity|||||||||
|1. New|||||||||
|increase of capital|||||||||
|(or share capital)|||||||||
|from capital public|||||||||
|reserves|||||||||
|2. New|||||||||
|increase of capital|||||||||
|(or share capital)|||||||||
|from surplus|||||||||
|reserves|||||||||
|3. Surplus|||||||||
|reserves for|||||||||
|making up losses|||||||||
|4. Other|||||||||
|(V) Specific||||2,827,1||||2,827,1|
|reserve||||68.83||||68.83|
|1. Withdrawn||||4,865,2||||4,865,2|
|for the period||||06.81||||06.81|
|2. Used in the||||2,038,0||||2,038,0|
|period||||37.98||||37.98|
|(VI) Other|||||||||
||561,37|||||||1,826,0|
|IV. Closing||171,016|277,780|6,996,2|289,629|502,779|16,482,||
||4,326.|||||||59,156.|
|balance||,154.25|,844.33|56.56|,574.39|,906.92|094.15||
||00|||||||60|

 8. Statement of changes inowners’ equity of the Company
2014
Unit: RMB Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||2014|||||||||||
|||Other equity instruments|||||Other|||||
|||||||Less:|||||Total|
|Item|Share||||Capital||comprehe|Specific|Surplus|Retaine||
|||Preferre|Perpetu|||treasury|||||owners’|
||capital|||Other|reserve||nsive|reserve|reserve|d profit||
|||d shares|al bonds|||stock|||||equity|
||||||||incomes|||||
|I. Balance at the||||||||||||
||561,374,||||183,044,3||277,847,5|6,996,256|289,629,5|435,679|1,754,571|
|end of the previous||||||||||||
||326.00||||09.95||75.00|.56|74.39|,354.63|,396.53|
|year||||||||||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
|Add: change of||||||||
|accounting policy||||||||
|Correction of||||||||
|errors in previous||||||||
|periods||||||||
|Other||||||||
|II. Balance at the||||||||
||561,374,|183,044,3|277,847,5|6,996,256|289,629,5|435,679|1,754,571|
|beginning of the||||||||
||326.00|09.95|75.00|.56|74.39|,354.63|,396.53|
|year||||||||
|III. Increase/||||||||
|decrease in the|||71,311,60|1,335,820|8,522,122|68,278,|149,474,8|
|||26,837.75||||||
|period (“-” means|||0.00|.65|.57|488.23|69.20|
|decrease)||||||||
|(I) Total||||||||
||||71,311,60|||85,221,|156,532,8|
|comprehensive||||||||
||||0.00|||225.69|25.69|
|incomes||||||||
|(II) Capital||||||||
|increased and||||||||
|reduced by owners||||||||
|1. Common||||||||
|shares increased||||||||
|by shareholders||||||||
|2. Capital||||||||
|increased by||||||||
|holders of other||||||||
|equity instruments||||||||
|3. Amounts||||||||
|of share-based||||||||
|payments||||||||
|recognized in||||||||
|owners’ equity||||||||
|4. Other||||||||
|(III) Profit|||||8,522,122|-16,942,|-8,420,61|
|distribution|||||.57|737.46|4.89|
|1.||||||||
||||||8,522,122|-8,522,1||
|Appropriations to||||||||
||||||.57|22.57||
|surplus reserves||||||||
|2.||||||||
|||||||-8,420,6|-8,420,61|
|Appropriations to||||||||
|||||||14.89|4.89|
|owners (or||||||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
|shareholders)||||||||
|3. Other||||||||
|(IV) Internal||||||||
|carry-forward of||||||||
|owners’ equity||||||||
|1. New||||||||
|increase of capital||||||||
|(or share capital)||||||||
|from capital public||||||||
|reserves||||||||
|2. New||||||||
|increase of capital||||||||
|(or share capital)||||||||
|from surplus||||||||
|reserves||||||||
|3. Surplus||||||||
|reserves for||||||||
|making up losses||||||||
|4. Other||||||||
|(V) Specific||||1,335,820|||1,335,820|
|reserve||||.65|||.65|
|1. Withdrawn||||4,841,316|||4,841,316|
|for the period||||.33|||.33|
|2. Used in the||||3,505,495|||3,505,495|
|period||||.68|||.68|
|(VI) Other||26,837.75|||||26,837.75|
|IV. Closing|561,374,|183,071,1|349,159,1|8,332,077|298,151,6|503,957|1,904,046,265.73|
|balance|326.00|47.70|75.00|.21|96.96|,842.86||

 2013
Unit: RMB Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||2013|||||||||||
|||Other equity instruments|||||Other|||||
|||||||Less:|||||Total|
|Item|Share||||Capital||comprehe|Specific|Surplus|Retaine||
|||Preferre|Perpetu|||treasury|||||owners’|
||capital|||Other|reserve||nsive|reserve|reserve|d profit||
|||d shares|al bonds|||stock|||||equity|
||||||||incomes|||||
|I. Balance at the||||||||||||
||561,374,||||183,044,3||377,934,2|4,169,087|282,364,9|384,331|1,793,218|
|end of the previous||||||||||||
||326.00||||09.95||25.00|.73|17.36|,799.53|,665.57|
|year||||||||||||
|Add: change of||||||||||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
|accounting policy||||||||
|Correction of||||||||
|errors in previous||||||||
|periods||||||||
|Other||||||||
|II. Balance at the||||||||
||561,374,|183,044,3|377,934,2|4,169,087|282,364,9|384,331|1,793,218|
|beginning of the||||||||
||326.00|09.95|25.00|.73|17.36|,799.53|,665.57|
|year||||||||
|III. Increase/||||||||
|decrease in the|||-100,086,|2,827,168|7,264,657|51,347,|-38,647,2|
|period (“-” means|||650.00|.83|.03|555.10|69.04|
|decrease)||||||||
|(I) Total||||||||
||||-100,086,|||72,646,|-27,440,0|
|comprehensive||||||||
||||650.00|||570.28|79.72|
|incomes||||||||
|(II) Capital||||||||
|increased and||||||||
|reduced by owners||||||||
|1. Common||||||||
|shares increased||||||||
|by shareholders||||||||
|2. Capital||||||||
|increased by||||||||
|holders of other||||||||
|equity instruments||||||||
|3. Amounts||||||||
|of share-based||||||||
|payments||||||||
|recognized in||||||||
|owners’ equity||||||||
|4. Other||||||||
|(III) Profit|||||7,264,657|-21,299,|-14,034,3|
|distribution|||||.03|015.18|58.15|
|1.||||||||
||||||7,264,657|-7,264,6||
|Appropriations to||||||||
||||||.03|57.03||
|surplus reserves||||||||
|2.||||||||
|Appropriations to||||||-14,034,|-14,034,3|
|owners (or||||||358.15|58.15|
|shareholders)||||||||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
|3. Other||||||||
|(IV) Internal||||||||
|carry-forward of||||||||
|owners’ equity||||||||
|1. New||||||||
|increase of capital||||||||
|(or share capital)||||||||
|from capital public||||||||
|reserves||||||||
|2. New||||||||
|increase of capital||||||||
|(or share capital)||||||||
|from surplus||||||||
|reserves||||||||
|3. Surplus||||||||
|reserves for||||||||
|making up losses||||||||
|4. Other||||||||
|(V) Specific||||2,827,168|||2,827,168|
|reserve||||.83|||.83|
|1. Withdrawn||||4,865,206|||4,865,206|
|for the period||||.81|||.81|
|2. Used in the||||2,038,037|||2,038,037|
|period||||.98|||.98|
|(VI) Other||||||||
|IV. Closing|561,374,|183,044,3|277,847,5|6,996,256|289,629,5|435,679|1,754,571|
|balance|326.00|09.95|75.00|.56|74.39|,354.63|,396.53|

 III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which is a company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the State Commission for Restructuring the Economic Systems with document TGS[1993] No. 9 on 15 Jan. 1993 by way of public offering of shares. With the approved of the People's Government of Jiangsu Province SZF[1993] No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 Mar. 1994 to 30 Mar. 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such tradable shares of the public got listing on 1 Jul. 1994 at Shenzhen Stock Exchange with “Su Changchai A” for short of stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People's Government of Jiangsu Province SZBH[1996] No. 13, as well as
first review by Shenzhen Municipal Securities Administration Office through SZBZ[1996] No. 24, and approval of the State Council
Securities Commission ZWF[1996] No. 27, the Company issued 100 million B shares to qualified investors on 27 Aug. 1996 to 30
Aug. 1996, getting listed on 13 Sep. 1996.
2014 Annual Report of Changchai Company, Limited On 9 Jun. 2006, the Company held ashareholders’ general meeting related to A shares market to examine and approve share merger reform plan, and performed the share merger reform on 19 Jun. 2006.
As examined and approved at the 2009 2nd ExtraordinaryShareholders’ General Meeting in Sep. 2009, based on the total share capital of 374,249,551 shares as at 30 Jun. 2009, the Company implemented the profit distribution plan, i.e. to distribute 5 bonus shares and cash of RMB 0.8 for every 10 shares, with registered capital increased by RMB 187,124,775.00, as well as registered capital of RMB 561,374,326.00 after change. As at 31 Dec. 2013, the total share capital of the Company is 561,374,326 shares, as well as registered capital of RMB 561,374,326.00, which verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company Limited with issuing Capital Verification Report SGC[2010] No. B002. The Company had registered the change with the administrative authorities for industry and commerce, and obtained the renewed business license as legal person with No. 320400000004012.
TheCompany’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures, assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets and shipborne machinery and equipment, etc. TheCompany’s main business remained unchanged in the reporting period.
The Company established theShareholders’ General Meeting, the Board of Directors and the Board ofSupervisors，Corporate office, Financial Department, Political Department, Investment and Development Department, Enterprise Management Department, Human Recourses Department, Production Department, Procurement Department, Sales Company, Market Department, Chief Engineer Office, Technology Center, QA Department, Foundry Branch, Machine Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine Branch and Overseas Business Department in the Company.
The financial report has been approved to be issued by the Board of Directors on 20 Apr. 2015.
The consolidated scope of the Company of the reporting period including the parent company and 4 subsidiaries, which decrease 1 subsidiary compared with the last period. The reason was the Company written the Changsheng International Co., Ltd. during the reporting period and would not be included in the consolidated scope at the period-end. For the details of the consolidated scope of the reporting period and the changes situation, please refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities among other entities.
Ⅳ. Basis for preparation of the financial report
1. Basis for preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Group prepared financial statements in accordance with<The Accounting Standards for BusinessEnterprises—BasicStandard> issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for
Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of
2014 Annual Report of Changchai Company, Limited Public Offering Companies No.15– General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.
2. Continuation
The Company comprehensively evaluated the information acquired recently that there would be no such factors in the 12 months from the end of the reporting period that would obviously influence the continuation capability of the Company and predicted that the operating activities would continue in the future 12 months of the Company. The financial statement compiled base on the continuous operation.
V. Important accounting policies and estimations
The Company and each subsidiary according to the actual production and operation characteristics and in accord with the regulations of the relevant ASBE, formulated certain specific accounting polices and accounting estimations, which mainly reflected in the withdrawal method of the bad debt provision of the accounts receivable (Notes III, 11), the measurement of the inventory (Notes III, 12) and the depreciation of the fixed assets (Notes III, 16) etc. As for the details of the significant accounting judgment and the estimations made by the management layer, please refer to Notes III, 30 “Important accounting judgment and estimations”.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present theCompany’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 Jan. 1 to Dec. 31 and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for the liquidity of its assets and liabilities. 4. Currency used in bookkeeping
Renminbi is functional currency of the Company.
2014 Annual Report of Changchai Company, Limited 5. Accounting methods for business combinations under the same control and business combinations not under the same control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be recorded into the profits and losses at the current period. The expenses such as the handling charges and commission etc, premium income of deducting the equity securities, and as for the premium income was insufficient to dilute, the retained earnings shall be written down. Owning to the reasons such as the additional investment, for the equity investment held before acquiring the control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and the changes of other net assets since the date of the earlier one between the date when acquiring the original equity right and the date when the combine parties and combined ones were under the same control to the combination date, should be respectively written down and compared with the beginning balance of retained earnings or the current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business reputation. The direct relevant expenses occurred from the enterprise combination should be included in the current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The difference between the fair value of the assets paid out by the Company and its book value should be included in the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the acquiree.
For the business combinations not under the same control realized through step by step multiple transaction, as for the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed by the acquiree which involved with the other comprehensive income and the otherowners’ equities changes except for the net gains and losses, other comprehensive income and the profits distribution and other related comprehensive gains and otherowners’ equities which in relation to the equity interests that the Group holds in the acquiree before the acquiring date should be transferred into the current investment income on the acquiring date, except for the other comprehensive income occurred from the re-measurement of the net profits of the defined benefit plans or the changes of the net
2014 Annual Report of Changchai Company, Limited assets of the investees.
6. Methods for preparing consolidated financial statements
The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the consolidated financial statement. The portion of asubsidiary’sshareholders’ equity and the portion of asubsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and minority shareholder profits and losses respectively and presented separately undershareholders’ equity and net profits in the consolidation financial statements. The portion of asubsidiary’s net profits and losses for the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minority shareholders in thesubsidiary’s openingowners’ equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company, which shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the Company when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial statement, shall adjust individual financial statement based on the fair value of the identifiable net assets on the acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the financial statement, shall not adjust the financial statement of the subsidiaries, namely survived by integration as participating in the consolidation when the final control party starts implementing control and should adjust the period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the current period, should not be adjusted the period-begin amount of the consolidated balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in the originalsubsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when theGroup’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment and the otherowners’ equities changes except for the net gains and losses, other comprehensive income and profits distribution in the original subsidiary are treated on the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard for Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred into the current profits and losses in the lose of control, when the Group losing control on its subsidiary.
2014 Annual Report of Changchai Company, Limited For the disposal of the equity investment not belongs to a package deal, should be executed accounting treatment according to the relevant policies of partly disposing the equity investment of the subsidiaries under the situation not lose the control right before losing the control right; when losing the control right, the former should be executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.
7. Classification of joint arrangements and accounting treatment of joint operations
The Group classifies joint arrangements into joint operations and jointventures。
A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the following items related to the interests share among the joint operations and executes accounting treatment according to the regulations of the relevant ASBE:
(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets according to theGroup’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities according to theGroup’s stake in the joint operation;
(3) Recognizes the income from sale of theGroup’s share in the output of the joint operation
(4) Recognizes the income from sale of the jointoperation’s outputs according to theGroup’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according to theGroup’s stake in it.
8. Recognition standard for cash and cash equivalents
In theGroup’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible into known amount of cash and whose risks in change of value are minimal.
9. Foreign currency businesses and translation of foreign currency financial statements
(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the recording currency according to the middle price of the market exchange rate disclosed by thePeople’s Bank of China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be converted into the recoding currency according to the middle price of the market exchange rates disclosed by thePeople’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted according to the middle price of the market exchange disclosed by thePeople’s Bank of China on the date of the transaction, with no changes in the
2014 Annual Report of Changchai Company, Limited original recording-currency amount; while the foreign-currency non-monetary items measured by fair value shall be converted according to the middle price of the market exchange disclosed by thePeople’s Bank of China on the date when the fair value is recognized, and the exchange gain/loss caused thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot exchange rate on the balance sheet date. Among theowner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the revenues and expenses items among the balance sheet of the foreign operation shall be translated at the approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign currency statement should be listed in the other comprehensive income among theowners’ equities. 10. Financial instruments
(1) Category of financial instruments
The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale financial assets, accounts receivable and held-to-maturity investment according to the investment purpose and the economy nature.
The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by fair value with the changes included in the current gains and losses and the other financial liabilities measured by amortized cost according to the economy nature.
(2) Recognition basis and measurement methods of financial instruments
The trading financial assets should be measured by fair value with the changes of fair value included in the current gains and losses; the available-for-sale financial assets should be measured by fair value with the changes of fair value included in theowners’ equities; and the accounts receivable and the held-to-maturity investment should be measured by amortized cost.
(3) Recognition basis and measurement methods of financial instruments transformation
The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and the transformation of the financial assets could be whole of the financial assets or a part of it, which including two methods:
The enterprise transfers the right to another party for receiving the cash flow of the financial asset;
The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the Company has transferred a part or nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset and the difference between the consideration received and the book value of the transferred financial assets should be recognized as gains and losses and at the same time transfers the accumulative gains or losses from the recognized financial assets among the originalowners’ equities in the gains and losses; if it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall continue to recognize the whole or part of the financial assets and the consideration received be recognized as financial liabilities.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset.
(4) De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly.
(5) Recognition methods of the fair value of main financial assets and financial liabilities
2014 Annual Report of Changchai Company, Limited As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists active market, should adopt the current offering price in the active market, and as for the financial assets plans to be purchased by the Company or the financial liabilities undertook, should adopt the current offering in the active market, and if there is no current offering price or asking price, should adopt the market quotation of the recent transactions or the adjusted market quotation of the recent transactions, except for there is definite evidence indicate the market quotation is not the fair value.
Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature etc.
(6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding accounts receivable) The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than those measured at their fair values and of which the variation is recorded into the profits and losses of the current period. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. For the financial assets with significant single amount, if there is objective evidence indicates the occurred impairment, should recognize the impairment losses and should include which in the current gains and losses. As for the financial assets with insignificant single amount but not occur impairment, the Company should execute the impairment test by credit groups according to the credit degree of the customers and the actual situation of the happen of the bad debts over the years for recognizing the impairment losses.
The expression “objective evidence proving that the financial asset has been impaired” refers to the actually incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash flow of the said financial asset that can be reliably measured by the enterprise.
The objective evidences that can prove the impairment of a financial asset shall include:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;
The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal factors, etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of the issuer; It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets has decreased or not. But after making an overall appraisal according to the public data available, it is found that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was initially recognized and such decrease can be measured, for example, the ability of the debtor of the said combination of financial assets worsens gradually, the unemployment rate of the country or region where the debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the industrial sector concerned is in slump, etc.;
Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its investment;
Where the fair value of the equity instrument investment drops significantly or not contemporarily;
Other objective evidences showing the impairment of the financial asset.
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying amount of the said financial asset shall be calculated by the difference between the book value and the current value of the predicted future cash flow of the impairment losses.
Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be
2014 Annual Report of Changchai Company, Limited recorded into the profits and losses of the current period.
Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been terminated, the accumulative losses arising from the decrease of the fair value of theowner’s equity which was directly included shall be transferred out and recorded into the profits and losses of the current period.
11. Receivables
(1) Accounts receivable with significant single amount for which the bad debt provision is made individually
Recognition criteria of accounts receivable with individual and significant amount: significant single amounts refers to the accounts receivable of the single amount more than RMB 1 million (RMB 1 million include) (including accounts receivable and other accounts receivable)
Withdrawal method of the bad debt provision of the accounts receivable with significant single amounts: The Company makes an independent impairment test on the accounts receivable with significant single amount, and provision for bad debts shall withdrawn on the basis of the balance between the current values of the predicted future cash flow lower than book value. Upon independent impairment test, the accounts receivable with significant single amounts has not been impaired, it shall be withdrawn bad debt provision based on ending balance by adopting aging analysis method.
(2) Method of recognizing the group basis and bad debt provision according to the accounts receivable which withdrew the bad debt provision by group:
The Company divided the groups by taking the age of the accounts receivable as the credit risk portfolio and withdrew the bad debt provision by adopting aging analysis method.
(3) Receivables with insignificant amount but being individually withdrawn the provision for bad debts
Recognition criteria of accounts receivable with individual but insignificant amount: insignificant single amounts refers to the accounts receivable of the single amount lower than RMB 1 million (RMB 1 million include) (including accounts receivable and other accounts receivable).
The reason and the withdrawal method of the bad debt provision of the accounts receivable with insignificant single amounts: As for an account receivable with an insignificant single amount and which can not show its risk feature when withdrawing a bad-bet provision for it on the group basis, the bad-debt provision for the account receivable shall be withdrawn based on the difference of the expected present value of the future cash flows of the account receivable that less than its carrying amount. The Company shall withdraw the bad-debt provision for such an account receivable by combining the aging method and individual judgment based on the debtorentity’s actual financial position, cash flows and other relevant information.
(4) Proportion of the withdrawal of bad debts provision of accounts receivable by adopting aging analysis method:
||||
|-|-|-|
|Aging|Withdrawal proportion of accountsreceivable (%)|Withdrawal proportion of other accountsreceivable (%)|
|Within 1 year|2|2|
|1 to 2 years|5|5|
|2 to 3 years|15|15|
|3 to 4 years|30|30|
|4 to 5 years|60|60|
|Over 5 years|100|100|

Withdrawal policy of bad debts provision of the related parties: According to the 4th Session of the 9th Board of Directors, as for the
2014 Annual Report of Changchai Company, Limited accounts receivable of the related parties of the Company which owned the sustainable operation ability, the bad debts provision should not exceed60% at best.
12. Inventory
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed in the production process or the process providing the labor service etc. Inventory is mainly including the raw materials, low priced and easily worn articles, unfinished products, inventories and work inprocess–outsourced etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch be calculated according to the weighted average method; carried forward the cost of the finished products according to the actual cost of the current period and the sales cost according to the weighted average method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for falling price of inventory At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. When all the inventories are checked roundly, for those which were destroyed, outdated in all or in part, sold at a loss, etc, the Company shall estimate the irrecoverable part of its cost and withdrawal the inventory falling price reserve at the year-end. Where the cost of the single inventory item is higher than the net realizable value, the inventory falling price reserve shall be withdrawn and recorded into profits and losses of the current period. Of which: in the normal production and operating process, as for the commodities inventory directly for sales such as the finished products, commodities and the materials for sales, should recognize the net realizable value according to the amount of the estimated selling price of the inventory minuses the estimated selling expenses and the relevant taxes; as for the materials inventory needs to be processed in the normal production and operating process, should recognize its net realizable value according to the amount of the estimated selling price of the finished products minuses the cost predicts to be occur when the production completes and the estimated selling expenses as well as the relevant taxes; on the balance sheet date, for the same inventory with one part agreed by the contract price and other parts not by the contract price, should be respectively recognized the net realizable value. For items of inventories relating to a product line that are produced and marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product line provision for decline in value is determined on an aggregate basis; for large quantity and low value items of inventories, provision for decline in value is made based on categories of inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumption goods and packages
Is one time amortization method of low-value consumption goods and packages when consuming.
13. Divided as assets held for sale
The Company recognizes the components (or the non-current assets) which meet with the following conditions as assets held for sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of components under the current conditions;
(2) The Company had made solutions on disposing the components (or the non-current assets), for example, the Company should gain the approval from the shareholders according to the regulations and had acquired the approved from the Annual General Meeting or the relevant authority institutions;
2014 Annual Report of Changchai Company, Limited (3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.
14. Long-term equity investments
(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the relevant activities of the arrangement should be decided only after the participants which share the control right make consensus. Significant influence refers to the power of the Group which could anticipate in the finance and the operation polices of the investees, but could not control or jointly control the formulation of the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways in accordance with different methods of acquisition:
① As for those forms under the same control of the enterprise combine, if the combine party takes the cash payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination consideration, should take the shares of the book value by the ultimate control party in the consolidate financial statement of theowners’ equities of the combiners acquired on the merger date as the initial investment cost. The difference between the initial investment cost and the book value of the paid combination consideration or the total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant expense occurred when executing the enterprise merger into the current gains and losses; while the handling charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of theshareholders’ equities or the liabilities.
② As for long-term equity investment acquired through the merger of enterprises not under the same control, its initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability) undertaken on the combining date shall be measured at the fair value without considering the amount of minority interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree into the consolidated income statement directly. The agent expense and other relevant management expenses such as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the current gains and losses when occur; while the handling charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of theshareholders’ equities or the liabilities.
③ Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment received; where it is not commercial in
2014 Annual Report of Changchai Company, Limited nature, the book value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment received. The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
① An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the invested entity shall be its subsidiary company. Where the Company holds the shares of an entity over50%, or, while the Company holds the shares of an entity below50%, but has a real control to the said entity, then the said entity shall be its subsidiary company.
② An investment in the joint enterprise or associated enterprise shall be measured by employing the equity method
Where the Company hold, and is able to do equity investment with joint control with other parties over an invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have equity investment with significant influences on an invested entity, the invested entity shall be its associated entity.
After the Company acquired the long-term equity investment, should respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and theowners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in theowners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity.
If the accounting polices adopted by the investees is not accord with that of the Group, should be adjusted according to the accounting policies of the Group and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized.
The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of all, to write down the book value of the long-term equity investment. Secondly, if the book value of the long-term equity investment is insufficient for written down, should be continued to recognized the investment losses limited to the book value of other long-term equity which forms of the net investment of the investees and to written down the book value of the long-term accounts receivable etc. Lastly, through the above handling, for those should still undertake the additional obligations according to the investment contracts or the agreements, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits.
In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right
2014 Annual Report of Changchai Company, Limited on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded intoowners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded intoowners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. Theowners’ equity recognized owning to the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the remained equity after disposal could execute joint control or significant influences on the investees, should change to measure by equity method when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the investees, should change the accounting disposal according to the relevant regulations of the recognition and measurement standards of financial instrument, and its difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or the recognition and measurement standards of financial instrument before the Group acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other comprehensive income and the otherowners’ equity should be carried forward according to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of financial instrument, the other comprehensive income and the otherowners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed remained equity should change to calculate according to the recognition and measurement standards of financial instrument, and difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized from the original equity investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the equity method for measurement, while for theowners’ equity recognized owning to the changes of the otherowner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current investment income with full amount when terminate adopting the equity method.
15. Investment real estates
2014 Annual Report of Changchai Company, Limited Measurement mode of investment real estates:
Measurement of cost method
Depreciation or amortization method:
The investment real estate shall be measured at its cost. Of which, the cost of an investment real estate by acquisition consists of the acquisition price, relevant taxes, and other expense directly relegated to the asset; the cost of a self-built investment real estate composes of the necessary expenses for building the asset to the hoped condition for use. The investment real estates invested by investors shall be recorded at the value stipulated in the investment contracts or agreements, but the unfair value appointed in the contract or agreement shall be entered into the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal method for provision for impairment of fixed assets.
16. Fixed assets
(1) Conditions for recognition
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be reliable measured.
(2) Depreciation method of various fixed assets
|||||
|-|-|-|-|
|Category of fixed assets|Method|Useful life (Year)|Annual deprecation (%)|
|Houses and buildings|Average method of useful life|20-40|2.50-5|
|Machine equipment|Average method of useful life|6-15|6.67-16.67|
|Transportation equipment|Average method of useful life|5-10|10-20|
|Other equipment|Average method of useful life|5-10|10-20|

(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by finance lease:
① The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred to the Company;
② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing right, so the Company could execute the choosing right reasonably on the lease starting date;
③ Even if the ownership of the fixed assets not be transferred, the lease period is of75% or above of the useful life of the lease fixed assets;
④ The current value of the minimum lease payment on the lease starting date of the Company is equal to90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease receipts on the lease starting date of the leaser is equal to90% or above of the fair value of the lease fixed assets on the lease starting date;
⑤ The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the current value of the
minimum lease payment on the lease starting date as the entry value. As for the minimum lease payment which be regarded as the
entry value of the long-term accounts payable, its difference should be regarded as the unrecognized financing expense. For the
2014 Annual Report of Changchai Company, Limited initial direct expenses occur in the lease negotiations and the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing expenses should be amortized by adopting the actual interest rate during the period of the lease term. The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life
17. Construction in process
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct materials, direct wages and direct construction fees; construction contract shall be measured at project price payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation, trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses, which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward fixed assets on schedule. The one thathasn’t audit the final accounting shall recognize the cost and make depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its historical cost but not adjust the depreciation that has been made after auditing the final accounting.
18. Borrowing costs
(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction of investment real estates and inventories over one year (including one year) shall be capitalized, and record into relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized unless they simultaneously meet the following three requirements: (1) The asset disbursements have already incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the
2014 Annual Report of Changchai Company, Limited to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing.
19. Intangible assets
(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.
For the intangible assets invested by the investors should be recognized the actual cost according to the value of the investment contracts or agreements, however, for the value of the contracts or agreements is not fair, the actual cost should be recognized according to the fair value.
For the intangible assets acquires from the exchange of the non-currency assets, if own the commercial nature, should be recorded according to the fair value of the swap-out assets; for those not own the commercial nature, should be recorded according to the book value of the swap-out assets.
For the intangible assets acquires from the debts reorganization should be recognized by the fair value.
(2) Amortization method and term of intangible assets
As for the intangible assets with limited service life, which are amortized by straight-line method when it is available for use within the service period, shall be recorded into the current profits and losses. The Company shall, at least at the end of each year, check the service life and the amortization method of intangible assets with limited service life. When the service life and the amortization method of intangible assets are different from those before, the years and method of the amortization shall be changed.
Intangible assets with uncertain service life may not be amortized. However, the Company shall check the service life of intangible assets with uncertain service life during each accounting period. Where there are evidences to prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized according to the above method mentioned.
The rights to use land of the Company shall be amortized according to the rest service life.
(3) Accounting polices of internal R& D expenses
The internal research and development projects of an enterprise shall be classified into research phase and development phase: the term “research” refers to the creative and planned investigation to acquire and understand new scientific or technological knowledge; the term “development” refers to the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product.
The Company collects the expenses of the corresponding phases according to the above standard of classifying the research phase and the development phase. The research expenditures for its internal research and development projects of an enterprise shall be recorded into the profit or loss for the current period. The development expenditures for its internal research and development projects of an enterprise may be capitalized when they satisfy the following conditions simultaneously: it is feasible technically to finish intangible assets for use or sale; it is intended to finish and use or sell the intangible assets; the usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible
2014 Annual Report of Changchai Company, Limited assets will be used internally; it is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; the development expenditures of the intangible assets can be reliably measured.
20. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Group should judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair value should be determined according to theBuyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination, then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset group combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
21. Amortization method of long-term deferred expenses
Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure, and amortized averagely within benefit period. In case of no benefit in the future accounting period, the amortized value of such project that fails to be amortized shall be transferred into the profits and losses of the current period.
22. Payroll
(1) Accounting treatment of short-term compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and
2014 Annual Report of Changchai Company, Limited losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.
(2) Accounting treatment of the welfare after demission
The Company classifies the welfare plans after demission into defined contribution plans and defined benefit plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the Company and the employees, or the regulations or methods formulated by the Company for providing the welfare after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission that the Company no more undertake the further payment obligations after the payment of the fixed expenses for the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined contribution plans.
Defined contribution plans
During the accounting period that the Company providing the service for the employees, the Company should recognize the liabilities according to the deposited amount calculated by defined contribution plans, and should be included in the current gains and losses or the relevant assets cost.
(3) Accounting treatment of the demission welfare
The Company should recognize the payroll payment liabilities occur from the demission welfare according to the earlier date between the following two conditions and include which in the current gains and losses when providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the costs or expenses related to the reorganization involves with the demission welfare payments.
23. Estimated liabilities
(1) Criteria of estimated liabilities
Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when the following conditions are satisfied simultaneously:
① That obligation is a current obligation of the Company;
② It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; and
③ The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated liabilities
The Company shall measure the estimated debts in accordance with the best estimate of the necessary expenses for the performance of the current obligation.
The Company shall check the book value of the estimated debts on the Balance Sheet Date. If there is any conclusive evidence proving that the said book valuecan’t truly reflect the current best estimate, the Company shall, subject to change, make adjustment to carrying value to reflect the current best estimate.
24. Revenue
(1) Recognition of revenue from sale of goods: the revenue from selling shall be recognized by the following conditions: The significant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; the Company retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant revenue and costs of selling goods can be measured in a reliable way. The amount of the revenue from selling shall ascertain the revenue incurred by selling goods in accordance with the received or receivable price stipulated in the contract or agreement signed between the enterprise and the buyer, unless the received
2014 Annual Report of Changchai Company, Limited or receivable amount as stipulated in the contract or agreement is unfair.
(2) Recognition of revenue from providing labor services: When the total revenue and costs from providing labor can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the schedule of completion under the transaction can be measured in a reliable way, the revenue from providing labor shall be recognized. If the Company can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the date of the balance sheet, otherwise the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to be compensated. The Company recognized the completion process of the transaction concerning the labor services according to the proportion of the occurred cost of the estimated total cost. The total amount of the revenue from providing services should be recognized according to the contract price received or receivable from the accepting of the labor services or the agreement price except for those unfair prices. (3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits are likely to flow into the enterprises and the amount of revenues can be measured in a reliable way, the revenue from abalienating the right to use assets shall be recognized. The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual interestrate；the amount of royalty revenue should be measured and confirmed in accordance with the period and method of charging as stipulated in the relevant contract oragreement；as for the rental revenue: the amount of the rental revenue from the operation lease should be recognized according to the straight-line method during each period of the lease term or accrued into the current gains and losses if rental actual occurred.
25. Government subsidies
(1) Category
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the government. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income according to the relevant government documents.
For those the government documents not definite stipulate the assistance object, the judgment basis of the Company classifies the government subsidies pertinent to assets and government subsidies pertinent to income is: whether are used for purchasing or constructing or for forming the long-term assets by other methods.
(2) Recognition of the government subsidies
The government subsidies should be recognized only when meet with the attached conditions of the government subsidies as well as could be acquired.
If the government subsidies are the monetary assets, should be measured according to the received or receivable amount; and for the government subsidies are the non-monetary assets, should be measured by fair value.
(3) Accounting treatments
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current profits and losses.
26. Deferred income tax assets and liabilities
2014 Annual Report of Changchai Company, Limited (1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax assets shall be measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence showing that sufficient taxable profit will be available against which the deductible temporary difference can be utilized, the deferred tax asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. Ifit’s probable that sufficient taxable profit will not be available against which the deductible temporary difference can be utilized, the Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later whenit’s probable that sufficient taxable profit will be available
(2) Basis of recognizing the deferred income tax liabilities
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax liabilities shall be measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. 27. Lease
(1) Accounting treatment of operating lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the lease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct expenses occur should be directly included in the current gains and losses except for those with larger amount and be capitalized as well as be included in the gains and losses by stages. Contingent rents shall be charged as expenses in the periods in which they are incurred.
(2) Accounting treatments of financial lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges and the occurred initial direct expenses, should be recorded in the lease assets value. During each lease period, should recognize the current financing expenses by adopting the actual interest rate.
When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income. During each lease period, should recognize the current financing revenues adopting the actual interest rate. 28. Other significant accounting policies and estimates
(1) Operation termination
Operation termination refers to the compose part that meet with one of the following conditions which had been disposed by the
2014 Annual Report of Changchai Company, Limited Group or be classified to held-to-sold as well as could be individually distinguished in operating and compiling the financial statement:
① The compose part represents an individual main business or a main operation area;
② The compose part is a part intends to dispose and plan an individual main business or a main operation area;
③ The compose part is a subsidiary which be acquired only for resold.
（2） Hedging accounting
The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item.
The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise for hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative financial asset or non-derivative financial liability may be used as a hedging instrument.
The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value or cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following conditions at the same time:① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the relationship between the hedging instrument and the hedged item) and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging.
② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by enterprise at the very beginning.
③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses.
④ The effectiveness of hedging can be reliably measured.
⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified.
29. Changes in main accounting policies and estimates
(1) Change of accounting policies
Alteration of the accounting polices led by executing the new ASBE
At the year-begin of 2014, the Ministry of Finance issued No. 39 ofASBE—Fair Value Measurement, No. 30 ofASBE—Presentation of Financial Statements (revised in 2014), No. 9 ofASBE—Employee Compensation (revised in 2014), No. 33 ofASBE—Consolidation Financial Statement (revised in 2014). No. 40 ofASBE—Joint Venture Arrangement, No. 2 ofASBE—Long-term Investment (revised in 2014) and No. 41 ofASBE—Equity Disclosure of Other Entities which respectively by C-H[2014] No.6, No. 7, No. 8, No. 10, No. 11, No. 14 and No. 16 which be required to execute among the enterprises that applied the ASBE since 1 Jul. 2014 as well as encouraged the enterprises listed overseas to execute in advance. At the same time, the Ministry of Finance issued No. 37 ofASBE—Presentation of Financial Instruments (revised in 2014) as C-H[2014] No. 23 (hereinafter referred to Presentation Guidelines of Financial Instruments for short), which be required to present the financial instruments according to the requirements of the guidelines in Y2014 and the following period among the financial statement. The Company began to execute the above 7 new issued or revised enterprises principles except for the presentation guidelines of financial instruments since 1 Jul. 2014 and began to execute the presentation guidelines of financial instruments when compiling the 2014 financial report.
2014 Annual Report of Changchai Company, Limited The Company adjusted according to the relative requirements of each guideline, while the influences on the financial statement items during each term of the comparable period of the presentation as well as the amount were as follows:
|||||
|-|-|-|-|
|Content of the changed accountingpolicies|Report items significantlyinfluenced|2013|2012|
|According to No. 2 of ASBE-Long-termEquity Investment (revised in 2014)|Long-term equity investment|-45,200,000.00|-45,200,000.00|
||Available-for-sale financialassets|45,200,000.00|45,200,000.00|
|According to No. 30 ofASBE-Presentation of FinancialStatement (revised in 2014)|Other non-current liabilities|-61,894,052.94|-62,558,726.56|
||Deferred income|61,894,052.94|62,558,726.56|
||Capital reserve|-277,847,575.00|-377,934,225.00|
||Translation reserve|66,730.67|32,070.75|
||Other comprehensive income|277,780,844.33|377,902,154.25|

(2) Change of main accounting estimates
There was no any change of main accounting estimates during the reporting period.
30. Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments, estimates and assumption on the book value of the accounts without accurate measurement during the employment of accounting policies. And these judgments, estimates and assumption were made basing on the prior experience of the senior executives of the Group, as well as in consideration of other factors. These judgments, estimates and assumption would also affect the report amount of income, costs, assets and liabilities, as well as the disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these estimates was likely to cause significant adjustment on the book value of the affected assets and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the basis of continuing operation. For the changes in accounting estimates only affected on the current period, the influence should be recognized at the period of change occurred; for the changes in accounting estimates affected the current period and also the future period, the influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption on the accounts in the following important items:
(1) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the losses for bad debts by adopting
allowance method. The impairment of accounts receivable was based on the appraisal of the recoverability of accounts receivable.
The impairment of accounts receivable was dependent on the judgment and estimates. The actual amount and the difference of
2014 Annual Report of Changchai Company, Limited previous estimates would affect the book value of accounts receivable and the withdrawal and reversal on provision for bad debts of accounts receivable during the period of estimates being changed.
(2) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs were more than the net realizable value as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for falling price of inventories on the lower one between costs and net realizable value. Evaluating the falling price of inventories needed the management level gain the valid evidence and take full consideration of the purpose of inventories, influence of events after balance sheet date and other factors, and then made relevant judgments and estimates. The actual amount and the difference of previous estimates would affect the book value of inventories and the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being changed.
(3) Held-to-maturity investment
The Company classifies the non-derivative financial assets which meet with conditions with fixed or confirmable repayment amount and fixed maturity date as well as the Company owns definite intention and ability to hold until mature as the held-to-maturity investment. To execute the classification needs large judgment. In the process of executing the judgment, the Company would assess the intention and ability of the investment which hold until the due date. Except for the particular situation (for example, selling the investment with insignificant amount when approaching the due date), if the Company fails to hold the investment until the due date, should re-classify the investment to the available-for-sale financial assets and would no more be classified as the held-to-maturity investment in the current fiscal year as well as the afterward two complete fiscal years. If there exits such situation, that would probably cause significant influences on the value of the relevant financial assets presented on the financial statement and may influence the risks management strategies of the financial instruments of the Company.
(4) Held-to-maturity investment impairment
The Company confirms whether the held-to-maturity investment has impairment depends on the judgment from the management layer to a large extent. The objective evidences of the impairments including the issuers which occur serious financial difficulties that lead the financial assets could not continue to trade in the active market and to execute the contracts regulations (for example, to return the interests or the principal violates a treaty) etc. In the process of executing judgment, the Company needs to evaluate the influences of the objective evidences of the impairment on the estimated future cash flow.
(5) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment and assumption of the management team, so as to decide whether recognized the impairment losses in the income statement. During the process of making the judgment and assumption, the Group needed to appraise the balance of the cost of the investment exceeding its fair value and the continuous period, the financial status and business forecast in a short period, including the industrial situation, technical reform, credit level, default rate and risk of counterparty.
(6) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether they had any indication of impairment on the balance sheet date. For the intangible assets without finite service life, other than the annual impairment test, they should be subject to the impairment test when there was any indication of impairment. For other non-current non-financial assets, which should be subjected to impairment test when there was indication of impairment indicated that the book valuecan’t be recoverable. When the book value of the assets or assets portfolio was more than the recoverable amount, which was the higher one between the net amount of fair value after deducting the disposal expenses and the discounted amount of the estimated future cash flow, it means impairment incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale agreement for similar assets in the fair transaction minus the increased costs directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make important judgment on the output, selling price,
2014 Annual Report of Changchai Company, Limited relevant costs and the discount rate for calculating the discounted amount, etc. When estimated the recoverable amount, the Group would adopt all the available documents, including the prediction for relevant output, selling price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required to predict the discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which, the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property discounted rate to decide the discounted amount of future cash flow. (7) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and amortization by adopting the straight-line method during the service life after full consideration of the salvage value. The Group checked the service life periodically so as to decide the amount of depreciation and amortization at each reporting period. The service life was fixed by the Group in accordance with the previous experience of the similar assets and the expected technical update. If there was any significant change on the previous estimates, the depreciation and amortization expenses should be adjusted.
(8) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax treatment and calculation for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures only after the approval of taxation authorities. If there were any differences between the ultimate result of recognition for these taxation maters and their initial estimates, the differences would affect the current income tax and deferred income tax at the period of ultimate recognition.
Ⅵ. Taxation
1. Main taxes and tax rate of the reporting period
||||
|-|-|-|
|Type of tax|Taxation basis|Tax rates|
|VAT|Payable to sales revenue|13%, 17%|
|Business tax|Taxable operating revenue|5%|
|Urban maintenance and construction tax|Taxable turnover amount|Tax paid in accordance with the taxregulations of tax units location|
|Education surcharge|Taxable turnover amount|5%|
|Corporate income tax|Taxable income|25% or 15%|

2. Tax preference
In 2012, the Company has been identified as High-tech Enterprises, therefore, it enjoys 15-percent preferential rate for corporate income tax; theCompany’s controllingsubsidiary—Changchai Wanzhou Diesel Engine Co., Ltd., the controlling subsidiary company, shall pay the corporate income tax at tax rate15% from 1 Jan. 2011 to 31 Dec. 2020 in accordance with the Notice of the Ministry of Finance, the General Administration of Customs of PRC and the National Administration of Taxation about the Preferential Tax Policies for the Western Development.
2014 Annual Report of Changchai Company, Limited VII. Notes on major items in consolidated financial statements of the Company (The unit was RMB, if there was no special illustration)
1. Monetary funds
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Cash on hand|557,508.42|626,951.84|
|Bank deposits|464,204,312.08|610,255,264.34|
|Other monetary funds|67,207,927.41|77,415,253.12|
|Total|531,969,747.91|688,297,469.30|

 At period end, the restricted monetary fund was RMB 67,207,927.41 in total, of which: the bank acceptance deposit was RMB 67,207,927.41.
2. Financial assets measured by fair value and the changes be included in the current gains and losses Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Tradable financial assets|2,109,642.19||
|Total|2,109,642.19||

Tradable financial assets in period end was Hai Heng Xin No. 5 priority growth funds
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Bank acceptance bill|314,236,128.92|257,845,729.93|
|Total|314,236,128.92|257,845,729.93|

 (2) Notes receivable pledged by the Company at the period-end
N/A
(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the
balance sheet date at the period-end
Unit: RMB Yuan
2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Item|Amount of recognition terminationat the period-end|Amount of not terminatedrecognition at the period-end|
|Bank acceptance bill|398,890,678.46||
|Total|398,890,678.46||

(4) There was no notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement
4. Accounts receivable
(1) Accounts receivable disclosed by category
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Closing balance|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion|Amount|Withdrawalproportion||
|Accounts receivable withsignificant single amountfor which bad debtprovision separatelyaccrued|28,819,671.25|4.75%|23,459,404.33|81.40%|5,360,266.92|
|Accounts receivablewithdrawn bad debtprovision according tocredit risks characteristics|576,527,035.06|94.96%|207,915,091.26|36.06%|368,611,943.80|
|Accounts receivable withinsignificant single amountfor which bad debtprovision separatelyaccrued|1,776,159.00|0.29%|1,413,014.50|79.55%|363,144.50|
|Total|607,122,865.31|100.00%|232,787,510.09|38.34%|374,335,355.22|

 Unit: RMB Yuan
|||
|-|-|
|Opening balance||
|Book balance|Bad debt provision|

Withdrawal
Book value
Amount Proportion Amount
proportion
2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|Accounts receivable withsignificant single amountfor which bad debtprovision separatelyaccrued|23,125,776.05|4.26%|19,563,556.61|84.60%|3,562,219.44|
|Accounts receivablewithdrawn bad debtprovision according tocredit risks characteristics|519,100,454.00|95.53%|205,629,123.10|39.61%|313,471,330.90|
|Accounts receivable withinsignificant single amountfor which bad debtprovision separatelyaccrued|1,155,900.00|0.21%|894,075.00|77.35%|261,825.00|
|Total|543,382,130.05|100.00%|226,086,754.71|41.61%|317,295,375.34|

 Accounts receivable with significant single amount for which bad debt provision separately accrued at period end
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Account receivable|Book balance|Bad debt provision|Withdrawalproportion|Withdrawal reason|
|Customer 1|7,063,600.00|3,531,800.00|50.00|Estimated difficultto recover|
|Customer 2|1,902,326.58|1,902,326.58|100.00|Difficult torecovered|
|Customer 3|6,215,662.64|6,188,445.25|99.56|Difficult torecovered|
|Customer 4|3,562,225.80|2,199,465.49|61.74|Estimated difficultto recover|
|Customer 5|1,096,223.05|657,733.83|60.00|Estimated difficultto recover|
|Customer 6|1,035,446.35|1,035,446.35|100.00|Difficult torecovered|
|Customer 7|5,359,381.00|5,359,381.00|100.00|Difficult torecovered|
|Customer 8|2,584,805.83|2,584,805.83|100.00|Difficult torecovered|
|Total|28,819,671.25|23,459,404.33|||

In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
2014 Annual Report of Changchai Company, Limited Unit: RMB Yuan
|||||
|-|-|-|-|
|Aging|Closing balance|||
||Accounts receivable|Bad debt provision|Withdrawal proportion|
|Within 1 year|367,801,403.14|7,356,028.60|2.00|
|1 to 2 years|1,177,407.16|58,870.40|5.00|
|2 to 3 years|7,510,469.63|1,126,570.48|15.00|
|Over 3 years|740,345.40|222,103.63|30.00|
|3 to 4 years|364,728.92|218,837.34|60.00|
|4 to 5 years|198,932,680.81|198,932,680.81|100.00|
|Over 5 years|576,527,035.06|207,915,091.26||

(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB 8,568,158.91; the amount of the reversed or collected part during the reporting period was of RMB 1,867,403.53.
(3) The actual write-off accounts receivable
N/A
(4) Top 5 of the closing balance of the accounts receivable collected according to the arrears party
At period end, the total amount of top 5 of the closing balance of the accounts receivable collected according to the arrears party was RMB 175,947,397.35,28.98% of the closing balance of the accounts receivable and the relevant closing balance of bad debt provision was RMB 4,222,196.60.
5. Prepayment
(1) List by aging analysis:
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Aging|Closing balance||Opening balance||
||Amount|Proportion|Amount|Proportion|
|Within 1 year|14,026,514.13|92.93|13,699,155.24|93.45|
|1 to 2 years|127,345.30|0.84|70,049.80|0.48|
|2 to 3 years|70,049.80|0.46|3,075.10|0.02|
|3 to 4 years|||||
|4 to 5 years|||||

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|Over 5 years|868,946.13|5.77|886,767.86|6.05|
|Total|15,092,855.36|100.00|14,659,048.00|100.00|

 (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target
At period end, the total amount of top 5 of the closing balance of the prepayment collected according to the prepayment target was RMB 13,505,769.61,89.48% of the closing balance of the accounts receivable.
6. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Closing balance|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion|Amount|Withdrawalproportion||
|Other accounts receivablewith significant singleamount for which bad debtprovision separately accrued|2,853,188.02|7.24%|2,853,188.02|100.00%||
|Other accounts receivablewithdrawn bad debtprovision according to creditrisks characteristics|34,618,397.46|87.90%|25,955,696.16|74.98%|8,662,701.30|
|Other accounts receivablewith insignificant singleamount for which bad debtprovision separately accrued|1,910,737.23|4.86%|1,910,737.23|100.00%||
|Total|39,382,322.71|100.00%|30,719,621.41|78.00%|8,662,701.30|

 Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Opening balance|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion|Amount|Withdrawalproportion||
|Other accounts receivablewith significant singleamount for which bad debtprovision separately accrued|2,853,188.02|6.59%|2,853,188.02|100.00%||

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|Other accounts receivablewithdrawn bad debtprovision according to creditrisks characteristics|38,550,324.54|89.01%|25,827,024.07|67.00%|12,723,300.47|
|Other accounts receivablewith insignificant singleamount for which bad debtprovision separately accrued|1,907,662.13|4.40%|1,907,662.13|100.00%||
|Total|43,311,174.69|100.00%|30,587,874.22|70.62%|12,723,300.47|

 Other accounts receivable with significant single amount for which bad debt provision separately accrued
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Other account receivable|Book balance|Bad provision|Withdrawalproportion (%)|Withdrawal reason|
|Changchai Group Import & ExportCompany|2,853,188.02|2,853,188.02|100|Difficult to recover|
|Total|2,853,188.02|2,853,188.02|||

In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
Unit: RMB Yuan
|||||
|-|-|-|-|
|Aging|Closing balance|||
||Other accounts receivable|Bad debt provision|Withdrawal proportion (%)|
|Within 1 year|6,031,900.41|120,638.00|2.00|
|1 to 2 years|906,804.30|45,340.21|5.00|
|2 to 3 years|508,076.57|76,211.49|15.00|
|3 to 4 years|1,503,366.49|451,009.95|30.00|
|4 to 5 years|1,014,382.94|608,629.76|60.00|
|Over 5 years|24,653,866.75|24,653,866.75|100.00|
|Total|34,618,397.46|25,955,696.16||

(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB 773,812.15; the amount of the reversed or collected part during the reporting period was of RMB 642,064.96.
(3) The actual write-off other accounts receivable
N/A
2014 Annual Report of Changchai Company, Limited (4) Other accounts receivable classified by the nature of accounts
Unit: RMB Yuan
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Margin and cash pledge|2,004,200.00|2,004,200.00|
|Unit current amount|20,035,808.86|23,934,917.69|
|Employee loan|2,584,081.29|2,620,427.28|
|Other|14,758,232.56|14,751,629.72|
|Total|39,382,322.71|43,311,174.69|

 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Name of units|Nature|Closing balance|Aging|Proportion of thetotal year endbalance of theaccountsreceivable (%)|Closing balance ofbad debt provision|
|Changzhou Compressor Co., Ltd.|Current|2,940,000.00|Over 5 years|7.47|2,940,000.00|
|Import and Export Company ofChangchai Group|Current|2,853,188.02|Over 5 years|7.24|2,853,188.02|
|Chongqing Wanzhou DistrictState-Owned Assets Guarantee Co.,Ltd|Current|2,000,000.00|Within 1 years|5.08|40,000.00|
|Changzhou New District AccountingCenter|Current|1,626,483.25|Over 5 years|4.13|1,626,483.25|
|OEM Group Settlement Center|Current|1,140,722.16|Over 5 years|2.90|1,140,722.16|
|Total||10,560,393.43||26.82|8,600,393.43|

 7. Inventory
(1) Category of inventory
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Item|Closing balance|||Opening balance|||
||Book balance|Falling pricereserves|Book value|Book balance|Falling pricereserves|Book value|

Raw material 121,329,364.38 2,739,224.97 118,590,139.41 101,823,136.99 2,816,113.21 99,007,023.78
2014 Annual Report of Changchai Company, Limited
||||||||
|-|-|-|-|-|-|-|
|Materialsprocessed oncommission|12,478,276.04||12,478,276.04|7,970,829.33||7,970,829.33|
|Goods in process|134,613,551.41|19,830,684.94|114,782,866.47|128,872,052.38|18,032,036.95|110,840,015.43|
|Finished product|269,416,214.26|19,634,150.34|249,782,063.92|272,010,816.14|18,035,127.65|253,975,688.49|
|Low price andeasily wornarticles|1,955,372.02||1,955,372.02|1,445,319.26||1,445,319.26|
|Total|539,792,778.11|42,204,060.25|497,588,717.86|512,122,154.10|38,883,277.81|473,238,876.29|

 (2) Falling price reserves of inventory
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Item|Opening balance|Increased amount||Decreased amount||Closing balance|
|||Withdrawal|Other|Reverse orwrite-off|Other||
|Raw materials|2,816,113.21|45,266.73||122,154.97||2,739,224.97|
|Goods in process|18,035,127.65|5,495,313.65||3,896,290.96||19,634,150.34|
|Inventory goods|18,032,036.95|19,830,684.94||18,032,036.95||19,830,684.94|
|Total|38,883,277.81|25,371,265.32||22,050,482.88||42,204,060.25|

 8. Other current assets
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|The VAT tax credits|28,131,657.32|39,990,829.02|
|Export drawback receivable|3,597,384.86||
|Total|31,729,042.18|39,990,829.02|

 9. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Unit: RMB Yuan
|||
|-|-|
|Closing balance|Opening balance|

Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
2014 Annual Report of Changchai Company, Limited
||||||||
|-|-|-|-|-|-|-|
|Available-for-saleequity instruments:|||||||
|Measured by fair value|452,650,000.00||452,650,000.00|368,754,000.00||368,754,000.00|
|Measured by costmethod|46,410,000.00|1,210,000.00|45,200,000.00|46,410,000.00|1,210,000.00|45,200,000.00|
|Total|499,060,000.00|1,210,000.00|497,850,000.00|415,164,000.00|1,210,000.00|413,954,000.00|

 (2) Available-for-sale financial assets measured by fair value at the period-end
Unit: RMB Yuan
||||
|-|-|-|
|Category|Available-for-sale equity instruments|Total|
|Cost of equity instruments|41,874,500.00|41,874,500.00|
|Fair value|452,650,000.00|452,650,000.00|
|Changes of fair value accumulated recorded into othercomprehensive income|349,159,175.00|349,159,175.00|
|Amount withdrawn bad debt provision|||

(3) Available-for-sale financial assets measured by cost at the period-end
Unit: RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Investee|Book balance||||Impairment provision||||Shareholdingproportionamongtheinvestees|Cash bonus ofthe reportingperiod|
||Period-begin|Increase|Decrease|Period-end|Period-begin|Increase|Decrease|Period-end|||
|Jiangsu Bank|38,000,000.00|||38,000,000.00|||||0.42|3,040,000.00|
|QidongLiantongDynamometerCo., Ltd.|7,200,000.00|||7,200,000.00|||||4||
|Others|1,210,000.00|||1,210,000.00|1,210,000.00|||1,210,000.00|||
|Total|46,410,000.00|||46,410,000.00|1,210,000.00|||1,210,000.00|||

Other: RMB 510,000 in Chengdu Changwan Diesel Engine Marketing Corp., and RMB 2900,000 in Wanzhou Changwan Diesel
Engine Fitting Corp. and RMB 20,000 in Changzhou Economic and Technological Development Co., Ltd., RMB 100,000 in
Changzhou Tractors Co., Ltd., RMB 200,000 in the Industrial Financing Mutual Benefit Association of Changzhou Economic and
Information Technology Commission and RMB 90,000 in Beijing Engineering and Agricultural Machinery Co., Ltd.. Due to
2014 Annual Report of Changchai Company, Limited difficulty in recovery, full-amount impairment provisions were made for the aforesaid accounts.
(4) Changes of the impairment of the available-for-sale financial assets during the reporting period
Unit: RMB Yuan
||||
|-|-|-|
|Category|Available for sale equity instruments|Total|
|Balance of the withdrawn impairment at theperiod-begin|1,210,000.00|1,210,000.00|
|Balance of the withdrawn impairment at theperiod-begin|||
|Decrease in reporting period|||
|Balance of the withdrawn impairment at the period-end|1,210,000.00|1,210,000.00|

 10. Long-term equity investment
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Investees||Opening balance||Increase/decrease||||
|||||Additionalinvestment|Reducedinvestment|Gains and lossesrecognized underthe equity method|Adjustment of othercomprehensive income|
||Associated enterprises|||||||
||Changzhou Fuji|19,548,325.73||||1,366,650.26||
||Changchai Robin|||||||
||Gasoline Engine Co.,|||||||
||Ltd.|||||||
||Beijing Tsinghua|||||||
||Industrial Investment|||||||
||Management Co., Ltd.|||||||
||Total||19,548,325.73|||1,366,650.26||

(Continued) Unit: RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Investees||Increase/decrease||||||Closing balance||Closing balance ofimpairment provision|
|||Changes ofother equity|Cash bonus orprofitsannounced toissue||i|Withdra|Other||||
|||||||wal of|||||
|||||||mpairm|||||
|||||||ent|||||
|||||||provisio|||||
|||||||n|||||
||Associated enterprises||||||||||
||Changzhou Fuji|||455,000.00|||||20,459,975.99||

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|Changchai Robin|||||
|Gasoline Engine Co.,|||||
|Ltd.|||||
|Beijing Tsinghua|||44,182.50||
|Industrial Investment|||||
|Management Co., Ltd.|||||
|Total|455,000.00|20,459,975.99||44,182.50|

 11. Investment property
(1) Investment property adopted the cost measurement mode
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Houses and buildings|Land use right|construction inprogress|Total|
|I. Original book value|||||
|1. Opening balance|87,632,571.14|||87,632,571.14|
|2. Increased amount of the period|||||
|(1) Outsourcing|||||
|(2) Transfer of inventory\fixedassets\project under construction|||||
|3. Decreased amount of the period|||||
|(1) Disposal|||||
|(2) Other transfer|||||
|4.Closing balance|87,632,571.14|||87,632,571.14|
|II. The accumulative depreciation andaccumulative amortization|||||
|1. Opening balance|25,934,859.51|||25,934,859.51|
|2. Increased amount of the period|2,208,340.80|||2,208,340.80|
|(1) The depreciation or amortization|2,208,340.80|||2,208,340.80|
|3. Decreased amount of the period|||||
|(1) Disposal|||||
|(2) Other transfer|||||
|4.Closing balance|28,143,200.31|||28,143,200.31|
|III. Impairment provision|||||
|1. Opening balance|||||
|2. Increased amount of the period|||||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|(1) Disposal|||
|3. Decreased amount of the period|||
|(1) Disposal|||
|(2) Other transfer|||
|4.Closing balance|||
|IV. Book value|||
|1.Closing book value|59,489,370.83|59,489,370.83|
|2.Opening book value|61,697,711.63|61,697,711.63|

 12. Fixed assets
(1) List of fixed assets
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Item|Houses andbuildings|Machineryequipment|Electronicequipment|Transportationequipment|Other|
|I. Original book value||||||
|1. Opening balance|405,042,760.27|755,476,414.32|24,733,895.14|34,613,775.99|1,219,866,845.72|
|2. Increased amount ofthe period|3,131,844.58|25,232,994.08|1,385,542.08|2,656,913.83|32,407,294.57|
|(1) Purchase|241,618.68|2,012,104.36|12,820.51|530,761.52|2,797,305.07|
|(2) Construction projecttransfer|2,890,225.90|23,220,889.72|1,372,721.57|2,126,152.31|29,609,989.50|
|3. Decreased amount of theperiod|11,350,440.58|10,394,349.36|1,147,128.92|3,086,827.58|25,978,746.44|
|(1) Disposal or Scrap|11,350,440.58|10,394,349.36|1,147,128.92|3,086,827.58|25,978,746.44|
|4. Closing balance|396,824,164.27|770,315,059.04|24,972,308.30|34,183,862.24|1,226,295,393.85|
|II. The accumulativedepreciation||||||
|1. Opening balance|182,152,928.40|366,362,257.67|14,762,073.63|26,649,504.88|589,926,764.58|
|2. Increased amount ofthe period|14,714,069.10|56,451,259.38|2,184,942.29|2,484,919.34|75,835,190.11|
|(1) Withdrawal|14,714,069.10|56,451,259.38|2,184,942.29|2,484,919.34|75,835,190.11|
|(2) Enterprise combinationand increase||||||
|3. Decreased amount of theperiod|3,454,029.33|8,739,197.73|1,086,654.52|3,006,078.46|16,285,960.04|

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|(1) Disposal or Scrap|3,454,029.33|8,739,197.73|1,086,654.52|3,006,078.46|16,285,960.04|
|4. Closing balance|193,412,968.17|414,074,319.32|15,860,361.40|26,128,345.76|649,475,994.65|
|III. Impairment provision||||||
|1. Opening balance|7,633,328.53|2,838,506.43|||10,471,834.96|
|2. Increased amount ofthe period||1,303,400.31|||1,303,400.31|
|(1) Withdrawal||1,303,400.31|||1,303,400.31|
|3. Decreased amount of theperiod|7,633,328.53|108,454.15|||7,741,782.68|
|(1) Disposal or Scrap|7,633,328.53|108,454.15|||7,741,782.68|
|4. Closing balance||4,033,452.59|||4,033,452.59|
|IV. Book value||||||
|1.Closing book value|203,411,196.10|352,207,287.13|9,111,946.90|8,055,516.48|572,785,946.61|
|2.Opening book value|215,256,503.34|386,275,650.22|9,971,821.51|7,964,271.11|619,468,246.18|

 The accumulative depreciation in reporting period was RMB 75,835,190.11; the original value of construction in progress transfer into fix assets was RMB 29,609,989.50.
13. Construction in progress
(1) List of construction in progress
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Item|Closing amount|||Opening amount|||
||Book balance|Bad debtprovision|Book value|Book balance|Bad debtprovision|Book value|
|Trial productionworkshop projecttechnology center|27,883,095.92||27,883,095.92|27,883,095.92||27,883,095.92|
|Castingrenovation project|741,568.90||741,568.90|1,233,832.09||1,233,832.09|
|Expansioncapacity ofmulti-cylinder(The 2nd Period)|27,757,667.58||27,757,667.58|2,609,879.95||2,609,879.95|
|Non-road electricgenerator Project||||336,503.39||336,503.39|

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|Base of land inHehai Road|748,806.82|748,806.82|3,661,472.03|3,661,472.03|
|Diesel EngineCylinder BodyFlexibleManufacturingLine|10,913,075.99|10,913,075.99|7,845,686.59|7,845,686.59|
|Equipment to beinstalled andpayment forprojects|66,904,102.66|66,904,102.66|34,636,877.83|34,636,877.83|
|Total|134,948,317.87|134,948,317.87|78,207,347.80|78,207,347.80|

 (2) Changes of significant construction in progress
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Name o f item|Opening balance|Increasedamount of theperiod|Amount thattransferred tofixed assets of theperiod|Otherdecreasedamount of theperiod|Closing balance|Capitalizationrate of theinterests of theperiod|Capitalresources|
|Trial productionworkshop projecttechnology center|27,883,095.92||||27,883,095.92||Self raised|
|Casting renovationproject|1,233,832.09|196,919.57|689,182.76||741,568.90||Self raised|
|Expansion capacityof multi-cylinder(The 2nd Period)|2,609,879.95|25,206,580.63|38,793.00|20,000.00|27,757,667.58||Self raised|
|Non-road electricgenerator Project|336,503.39||336,503.39||||Self raised|
|Base of land inHehai Road|3,661,472.03|1,563,435.24|4,096,100.45|380,000.00|748,806.82|||
|Diesel EngineCylinder BodyFlexibleManufacturingLine|7,845,686.59|3,417,139.44|349,750.04||10,913,075.99||Self raised|
|Total|43,570,469.97|30,384,074.88|5,510,329.64|400,000.00|68,044,215.21|||

2014 Annual Report of Changchai Company, Limited 14. Intangible assets
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Land use right|Software|Other|Total|
|I. Original book value|||||
|1. Opening balance|117,212,266.30|518,119.66||117,730,385.96|
|2. Increased amount of theperiod|20,570,679.00|2,476,639.31||23,047,318.31|
|(1) Purchase||2,476,639.31||2,476,639.31|
|(2) Equity investment|20,570,679.00|||20,570,679.00|
|3. Decreased amount of theperiod|||||
|(1) Withdrawal|||||
|4. Closing balance|137,782,945.30|2,994,758.97||140,777,704.27|
|II. Accumulated amortization|||||
|1. Opening balance|33,411,740.79|100,745.47||33,512,486.26|
|2. Increased amount of theperiod|2,307,514.96|516,610.43||2,824,125.39|
|(1) Withdrawal|2,307,514.96|516,610.43||2,824,125.39|
|3. Decreased amount of theperiod|||||
|(1) Disposal|||||
|4. Closing balance|35,719,255.75|617,355.90||36,336,611.65|
|III.Impairment provision|||||
|1. Opening balance|||||
|2. Increased amount of theperiod|||||
|(1) Withdrawal|||||
|3. Decreased amount of theperiod|||||
|(1) Disposal|||||
|4. Closing balance|||||
|IV. Book value|||||
|1.Closing book value|102,063,689.55|2,377,403.07||104,441,092.62|
|2.Opening book value|83,800,525.51|417,374.19||84,217,899.70|

2014 Annual Report of Changchai Company, Limited 15. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Closing balance||Opening balance||
||Deductible temporarydifference|Deferred income taxassets|Deductible temporarydifference|Deferred income taxassets|
|Assets impairmentprovision|7,232,422.11|1,084,863.32|7,973,268.43|1,195,990.26|
|Total|7,232,422.11|1,084,863.32|7,973,268.43|1,195,990.26|

 (2) Deferred income tax liabilities had not been off-set
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Closing balance||Opening balance||
||Deductible temporarydifference|Deferred income taxliabilities|Deductible temporarydifference|Deferred income taxliabilities|
|Change in fair value ofavailable financial assets|410,775,500.00|61,616,325.00|326,879,500.00|49,031,925.00|
|Total|410,775,500.00|61,616,325.00|326,879,500.00|49,031,925.00|

 (3) List of unrecognized deferred income tax assets
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing amount|Opening amount|
|Bad debt provision|256,274,709.39|248,701,360.50|
|Inventory falling pricereserves|42,204,060.25|38,883,277.81|
|Total|298,478,769.64|287,584,638.31|

 16. Other non-current assets
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Closing balance|Closingimpairmentprovision|Opening balance|Opening impairmentprovision|
|Entrust loans|14,000,000.00|14,000,000.00|14,000,000.00|14,000,000.00|
|Total|14,000,000.00|14,000,000.00|14,000,000.00|14,000,000.00|

2014 Annual Report of Changchai Company, Limited 17. Short-term loans
(1) Category of short-term loans
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Guaranteed loan|20,000,000.00|20,000,000.00|
|Mortgage loan||10,000,000.00|
|Total|20,000,000.00|30,000,000.00|

 (2) List of the short-term loans overdue but not return
18. Notes payable
Unit: RMB Yuan
||||
|-|-|-|
|Category|Closing balance|Opening balance|
|Bank acceptance bill|218,351,400.00|246,300,000.00|
|Total|218,351,400.00|246,300,000.00|

 There was no due but not pay notes payable at the period-end.
19. Accounts payable
(1) List of accounts payable
Unit: RMB Yuan
||||
|-|-|-|
|Category|Closing balance|Opening balance|
|Payment for goods|550,858,517.60|577,327,834.60|
|Total|550,858,517.60|577,327,834.60|

 (2) Notes of the accounts payable aging over one year
20. Advance from customers
(1) List of advance from customers
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Payment for goods|29,364,756.16|38,090,958.80|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Total|29,364,756.16|38,090,958.80|

 (2) Significant advance from customers aging over one year
21. Payroll payable
(1) List of Payroll payable
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|I. Short-term salary|57,122,045.12|253,543,512.24|249,361,794.76|61,303,762.60|
|II. welfare after departure- definedcontribution plan||37,383,618.29|37,383,618.29||
|III. Termination benefits|||||
|Total|57,122,045.12|290,927,130.53|286,745,413.05|61,303,762.60|

 (2) List of Short-term salary
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|1. Salary, bonus, allowance, subsidy|51,549,910.49|208,372,596.45|204,525,107.32|55,397,399.62|
|2. Employee welfare||6,599,933.75|6,599,933.75||
|3. Social insurance||18,178,873.25|18,178,873.25||
|Including: 1. Medical insurancepremiums||13,878,068.74|13,878,068.74||
|Work-related injury insurance||3,039,400.04|3,039,400.04||
|Maternity insurance||1,261,404.47|1,261,404.47||
|4. Housing fund||16,240,542.37|16,240,542.37||
|5. Labor union budget and employeeeducation budget|5,572,134.63|4,151,566.42|3,817,338.07|5,906,362.98|
|6. Other short-term compensation|||||
|Total|57,122,045.12|253,543,512.24|249,361,794.76|61,303,762.60|

 (3) List of drawing scheme
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|1. Basic endowment insurance||34,779,621.15|34,779,621.15||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|2. Unemployment insurance expense|2,603,997.14|2,603,997.14|
|Total|37,383,618.29|37,383,618.29|

22. Taxes payable
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|VAT|2,537.79|207,491.91|
|Business tax||2,235.00|
|Urban maintenance and construction tax|830,449.50|834,829.37|
|Corporate income tax|11,517,844.35|12,330,315.34|
|Property tax|343,204.46|343,204.41|
|Personal income tax|211,204.93|703,880.69|
|Education Surcharge|136.60|4,471.75|
|The comprehensive fee|1,606,598.64|1,802,524.72|
|Total|14,511,976.27|16,228,953.19|

 23. Dividends payable
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Common stock dividends|3,243,179.97|3,243,179.97|
|Minority shareholder dividends|648,253.86|648,253.86|
|Total|3,891,433.83|3,891,433.83|

 Reason of unpaid dividends payable over one year: the shareholder has not get.
24. Other accounts payable
(1) Other accounts payable listed by nature of the account
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Margin and cash pledge|3,260,188.79|3,064,963.79|
|Unit current amount|10,133,775.91|10,741,412.54|
|Personal amount payable|965,413.51|2,727,538.53|
|Sales discount and promotion|141,620,797.47|119,099,482.76|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Three guarantees|40,580,689.64|38,820,984.55|
|Other|196,560,865.32|174,454,382.17|
|Total|3,260,188.79|3,064,963.79|

 (2) Other significant accounts payable with aging over one year
Other significant accounts payable with aging over one year mainly was temporarily closed and owe payment unsettled.
25. Other current-liabilities
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Sewage charge|200,000.00|105,000.00|
|Electric charge|2,214,092.24|1,663,500.90|
|Other|578,904.50|170,906.50|
|Total|2,992,996.74|1,939,407.40|

 26. Deferred income
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|Formation reasons|
|Governmentsubsidies|61,894,052.94||7,708,073.62|54,185,979.32|Governmentallocations|
|Total|61,894,052.94||7,708,073.62|54,185,979.32||

Items involved in government subsidies:
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Item|Opening balance|Amount of newlysubsidy|Amount accruedin non-businessincome|Other changes|Closing balance|Related to theassets/ income|
|National high technologyresearch and developmentplan|2,720,000.00||2,720,000.00|||Related to theincome|
|Electric control of dieselengine research anddevelopment andindustrializationallocations|6,562,500.00||4,322,100.00||2,240,400.00|Related to theassets/ income|
|National major projectspecial allocations|28,770,000.00||||28,770,000.00|Related to theassets|
|Remove compensation|23,841,552.94||665,973.62||23,175,579.32|Related to theassets|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Total|61,894,052.94|7,708,073.62|54,185,979.32|

27. Share capital
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
||Opening balance|Increase/decrease (+/-)|||||Closing balance|
|||Newly issueshare|Bonusshares|Capitalizationof publicreserves|Other|Subtotal||
|The sum ofshares|561,374,326.00||||||561,374,326.00|

28. Capital reserves
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|Capital premium|150,705,016.81||6,714,326.57|143,990,690.24|
|Other capital reserves|20,311,137.44|26,837.75||20,337,975.19|
|Total|171,016,154.25|26,837.75|6,714,326.57|164,328,665.43|

 Increase of RMB 26,837.75 was obtained from the sale of odd lots formed by equity distribution due to history reason that transferred by China Securities Depository and Clearing Co. , Ltd. entrusted by the Company. Decrease of RMB 6,714,326.57 was the minority holding of15.34% remained from the Company purchasing subsidiary Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd., difference between the considerations of payment and share of net assets should enjoy from subsidiary continuously calculated since purchase date and in line with the new shareholding proportion, adjusting capital reserves (equity premium).
29. Other comprehensive income
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Openingbalance|Reporting period|||||Closing balance|
|||Amountincurred beforeincome tax|Less:Amounttransferredinto profitand loss inthe currentperiod that|Less:incometaxexpense|After-taxattribute to theparent company|After-taxattributetominority||

2014 Annual Report of Changchai Company, Limited
|||||||||
|-|-|-|-|-|-|-|-|
||||recognizedinto othercomprehensiveincome inpriorperiod|||shareholder||
|I. Other comprehensiveincome can notreclassify into profitsand losses in future||||||||
|Of which: changes ofnet assets and liabilitiesof defined benefit plansrecalculated||||||||
|Share in othercomprehensive incomecan not be reclassifiedinto profits or losses ininvestment entity underthe equity method||||||||
|II. Othercomprehensive incomereclassify into profitsand losses in future||||||||
|Of which: Share inother comprehensiveincome reclassify intoprofits or losses ininvestment entity underthe equity method infuture||||||||
|Changes of fair valueof available for salefinancial assets|277,847,575.00|83,896,000.00||12,584,400.00|71,311,600.00||349,159,175.00|
|Converting differenceof foreign currencyfinancial statements|-66,730.67||-66,730.67||66,730.67|||
|Total of othercomprehensive income|277,780,844.33|83,896,000.00|-66,730.67|12,584,400.00|71,378,330.67||349,159,175.00|

2014 Annual Report of Changchai Company, Limited 30. Specific reserves
Unit: RMB yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|Safety production cost|6,996,256.56|4,841,316.33|3,505,495.68|8,332,077.21|
|Total|6,996,256.56|4,841,316.33|3,505,495.68|8,332,077.21|

 31 Specific reserves
Unit: RMB yuan
||||||
|-|-|-|-|-|
|Item|Opening balance|Increase|Decrease|Closing balance|
|Statutory surplus reserves|276,472,716.49|8,522,122.57||284,994,839.06|
|Discretional surplus reserves|13,156,857.90|||13,156,857.90|
|Total|289,629,574.39|8,522,122.57||298,151,696.96|

 32. Retained profits
Unit: RMB yuan
||||
|-|-|-|
|Item|2014|2013|
|Closing balance of retained profits before adjustments of last period|502,779,906.92|448,366,561.06|
|Total opening balance of retained profits before adjustments (Increase+，decrease-)|||
|Opening balance of retained profits after adjustments|502,779,906.92|448,366,561.06|
|Add: Net profit attributable to owners of the Company|64,202,144.29|75,712,361.04|
|Less: Withdrawal of statutory surplusreserves|8,522,122.57|7,264,657.03|
|Withdrawal of discretional surplus reserves|||
|Dividend of common stock payable|8,420,614.89|14,034,358.15|
|Dividend of common stock transfer into share capital|||
|Other transferation(Minority shareholders accumulated excesslosses born by the parent Company)|5,551,580.92||
|Closing retained profits|555,590,894.67|502,779,906.92|

2014 Annual Report of Changchai Company, Limited 33. Revenue and Cost of Sales
(1) Revenue, Cost of Sales
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2014||2013||
||Revenue|Cost|Revenue|Cost|
|Main operation|2,461,692,196.75|2,141,415,126.02|2,895,264,442.45|2,510,740,550.52|
|Other operation|28,099,866.58|15,647,119.64|32,328,610.33|19,884,708.59|
|Total|2,489,792,063.33|2,157,062,245.66|2,927,593,052.78|2,530,625,259.11|

 34. Business tax and surcharges
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Business tax|9,950.00|56,535.00|
|Urban maintenance and construction tax|369,692.62|173,141.25|
|Education surtax|369,493.61|171,949.31|
|Total|749,136.23|401,625.56|

 35. Sales expenses
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Office expenses|26,726,523.60|25,008,399.92|
|Employee’s remuneration|28,030,498.73|27,319,148.35|
|Sales promotional expense|9,108,769.40|12,643,326.08|
|three guarantees|19,044,277.38|45,118,964.23|
|Transportation|9,026,772.82|11,922,564.96|
|Other|298,469.20|718,928.43|
|Total|92,235,311.13|122,731,331.97|

 36. Administrative expenses
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Office expenses|18,191,537.02|25,875,598.14|
|Employee’s remuneration|73,871,877.47|78,587,858.78|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Depreciation and amortization|14,832,161.62|13,979,514.99|
|Research and development expense|7,596,151.45|6,652,451.30|
|Transportation|2,663,610.42|3,081,317.58|
|Repair charge|4,713,258.37|2,784,171.32|
|Taxation expense|8,691,401.52|9,207,768.39|
|Safety expenses|3,157,253.68|4,865,206.81|
|Other|12,285,195.15|20,203,590.66|
|Total|146,002,446.70|165,237,477.97|

 37. Financial expenses
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Interest expenses|2,185,973.83|2,387,638.46|
|Less: Interest income|6,996,180.56|9,374,958.31|
|Exchange net profit or loss|-350,929.60|3,079,454.55|
|Other|-5,771,331.95|-8,496,179.24|
|Total|-10,932,468.28|-12,404,044.54|

 38. Asset impairment loss
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Bad debt loss|6,832,502.57|1,789,143.05|
|Inventory falling price loss|25,371,265.32|36,862,560.56|
|Fixed assets impairment losses|1,303,400.31||
|Total|33,507,168.20|38,651,703.61|

 39. Gains on the changes in the fair value
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Financial assets measured by fair value and changesrecorded into current profits or losses|109,642.19||
|Of which: income from changes of fair value ofderivative financial instruments|||
|Total|109,642.19||

2014 Annual Report of Changchai Company, Limited 40. Investment income
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Income of long term equity investment measured byequity method|1,366,650.26|929,669.90|
|Investment income from disposal of long term equityinvestment|-48,639.55||
|Investment income obtained from the disposal offinancial assets measured by fair value and changesrecorded into current profit and losses|463,170.51|439,841.66|
|Investment income achieved during the period ofholding transactional financial assets|10,120,500.00|14,600,000.00|
|Investment income from disposal of bank financialproducts|112,652.05||
|Total|12,014,333.27|15,969,511.56|

 41. Non-operating gains
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2014|2013|Recorded in theamount of thenon-recurring gainsand losses|
|Total gains from disposal of non-current assets|437,606.94|617,108.66|437,606.94|
|Including: Gains from disposal of fixed assets|437,606.94|617,108.66|437,606.94|
|Gains from disposal of intangible assets||||
|Insurance compensation|640,183.28|287,174.94|640,183.28|
|Penalty incomes|107,879.30|113,834.00|107,879.30|
|Governmental subsidy|10,344,073.62|2,022,736.01|10,344,073.62|
|Income from disposal of current assets|480,726.00|1,038,172.00|480,726.00|
|Donation||218,803.40||
|Account payable no need to pay|233,293.74|426,537.36|233,293.74|
|Other|375,696.40|315,344.19|375,696.40|
|Total|12,619,459.28|5,039,710.56|12,619,459.28|

 (2) Lists of government subsidies
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2014|2013|Related to the assets/|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
||||income|
|The central budget investment plans|1,000,000.00||Related to the income|
|Ultra-low emissions of non-road diesel engine newclean combustion key technology|800,000.00||Related to the income|
|Special fund for Promoting the transformation ofindustrial economy steady growth|30,000.00|780,000.00|Related to the income|
|The mayor award|100,000.00|100,000.00|Related to the income|
|Energy conservation and circular economydevelopment special funds|260,000.00||Related to the income|
|Science and Technology Progress Award||70,000.00|Related to the income|
|Water saving measures project subsidies||60,000.00|Related to the income|
|Talent development funds|10,000.00|56,200.00|Related to the income|
|Other science and technology project allocations|310,000.00|50,000.00|Related to the income|
|Other incentives and subsidies|126,000.00|240,562.39|Related to the income|
|compensation for demolition|665,973.62|665,973.62|Related to the assets|
|The special national high technology research anddevelopment plan|2,720,000.00||Related to the income|
|R & D and industrialization of electric non-roaddiesel engine|4,322,100.00||Related to the assets/income|
|Total|10,344,073.62|2,022,736.01||

42. Non-operating expenses
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2014|2013|The amount included inthe currentnon-recurring gains andlosses|
|Loss on disposal of non-current assets|318,704.95|49,053.88|318,704.95|
|Including: Loss on disposal of fixed assets|318,704.95|49,053.88|318,704.95|
|Loss on disposal of intangible assets||||
|Donation|320,000.00|180,000.00|320,000.00|
|Penalty expense|205,760.11|113.50|205,760.11|
|The flood control security fund|2,468,996.84|2,917,920.63||
|Loss on disposal of current assets|7,130,347.68|1,188,442.48|7,130,347.68|
|Other|210,683.65|31,993.09|210,683.65|
|Total|10,654,493.23|4,367,523.58|8,185,496.39|

2014 Annual Report of Changchai Company, Limited 43. Income tax expense
(1) Lists of income tax expense
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Current income tax expense accounted by tax and relevantregulations|19,476,423.70|23,634,115.03|
|Deferred income taxes|111,126.94|-443,790.26|
|Total|19,587,550.64|23,190,324.77|

 (2) Adjustment process of accounting profit and income tax expense
Unit: RMB Yuan
|||
|-|-|
|Item|Reporting period|
|Total profits|85,257,165.20|
|Current income tax expense accounted by tax and relevantregulations|12,788,574.78|
|Influence of different tax rate suitable to subsidiary|128,066.79|
|Influence of income tax before adjustment|35,489.82|
|Influence of non taxable income||
|Influence of not deductable costs, expenses and losses|4,304,136.05|
|Influence of deductable losses of deferred income tax assetsderecognized used in previous period||
|Influence of deductible temporary difference or deductible lossesof deferred income tax assets derecognized in reporting period.|7,012,734.29|
|Tax preference incurred from qualified expense|-4,681,451.09|
|Deferred income tax|19,587,550.64|

 44. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Subsidies and grants|2,636,000.00|1,356,762.39|
|Cash received from other current account|4,493,034.27|1,677,672.16|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Interest income|6,996,180.56|9,374,958.31|
|Total|14,125,214.83|12,409,392.86|

 (2) Other cash paid relevant to operating activities
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Sale expense paid into cash|48,804,990.49|48,599,932.86|
|Management expense paid into cash|35,320,350.77|46,490,588.97|
|Commission Expenses|533,714.59|672,032.33|
|Other|714,335.29|661,775.44|
|Total|85,373,391.14|96,424,329.60|

 45. Supplementary information to the Cash Flow Statement
(1) Supplementary information to the Cash Flow Statement
Unit: RMB yuan
||||
|-|-|-|
|Supplementary information|Amount in the reportingperiod|Amount in the previousperiod|
|1. Information about converting net profits into cash for operatingactivities:|||
|Net income|65,669,614.56|75,801,072.87|
|Add: Asset impairment reserves|33,507,168.20|38,651,703.61|
|Depreciation of fixed assets, oil and gases and productivebiological assets|78,043,530.91|72,360,868.84|
|Amortization of intangible assets|2,824,125.39|2,363,831.90|
|Amortization of long-term expenses to be apportioned|||
|Loss on disposal of fixed assets, intangible assets and otherlong-term assets|-118,901.99|-568,054.78|
|Losses on scrapping of fixed assets|||
|Losses on change of fair value|-109,642.19||
|Financial expenses|2,185,973.83|2,787,638.46|
|Investment losses|-12,014,333.27|-15,969,511.56|
|Decrease in deferred income tax assets|111,126.94|-443,790.26|
|Increase of deferred income tax liabilities|||

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Decrease in inventories|-49,721,106.89|-31,969,689.87|
|Decrease in operating receivables|-76,391,851.77|-108,447,828.87|
|Increase of operating payables|-99,328,131.98|-36,061,072.37|
|Other|3,835,072.74|32,901,680.51|
|Net cash flows from operating activities|-51,507,355.52|31,406,848.48|
|2. Investing and financing activities that do not involve cashreceipts and payments:|||
|Conversion of debt into capital|||
|Convertible bonds to be expired within one year|||
|Fixed assets under finance lease|||
|3. Net increase in cash and cash equivalents|||
|Cash at the end of the period|464,761,820.50|610,882,216.18|
|Less: Cash at the beginning of the period|610,882,216.18|637,004,823.27|
|Add: Cash equivalents at the end of the period|||
|Less: Cash equivalents at the beginning of the period|||
|Net increase in cash and cash equivalents|-146,120,395.68|-26,122,607.09|

 (2) Net Cash paid of obtaining the subsidiary
Unit: RMB Yuan
|||
|-|-|
|Item|Amount|
|Cash and cash equivalents received from the disposal of subsidiary in reportingperiod. .|1,027,642.33|
|Of which: Chansun International (Pte.) Ltd.|1,027,642.33|
|Less: Cash and cash equivalents held by the subsidiaryon the date that losing control|1,027,642.33|
|Of which: Chansun International (Pte.) Ltd.|1,027,642.33|
|Net cash received from disposal of subsidiary||

(3) Composition of cash and cash equivalents
Unit: RMB yuan
||||
|-|-|-|
|Item|Closing amount|Opening amount|
|1.Cash|464,761,820.50|610,882,216.18|
|Of which: cash in hand|557,508.42|626,951.84|
|Bank deposits available for payment at any time|464,204,312.08|610,255,264.34|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|2. Cash equivalents|||
|Of which: Bond investment due with 3 months|||
|3. Balance of cash and cash equivalents at the period-end|464,761,820.50|610,882,216.18|

 46. The assets with the ownership or use right restricted
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing book value|Restricted reason|
|Monetary capital|67,207,927.41|Bank acceptance draft deposited in themargin|
|Total|67,207,927.41||

47. Foreign currency monetary items
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|Closing foreign currencybalance|Exchange rate|Closing convert to RMBbalance|
|Monetary capital||||
|Of which: USD|2,119,923.57|6.119|12,971,812.32|
|HKD|1,388.09|0.7889|1,095.02|
|SGD|54,427.95|4.6396|252,523.92|
|accounts receivable||||
|Of which: USD|13,900,324.27|6.119|85,056,084.24|

 VIII. Changes of merge scope
The subsidiary of the Company Chansun International (Pte.) Ltd. was cancelled in reporting period, and will not be included in the consolidated financial statement scope
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
||||||||
|-|-|-|-|-|-|-|
|Name of the subsidiary|Mainoperatingplace|Registration place|Natureofbusines|Proportion ofshareholding (%)||Way of gaining|
|||||Directly|Indirectly||

2014 Annual Report of Changchai Company, Limited
||||||||
|-|-|-|-|-|-|-|
||||s||||
|Changchai Wanzhou Diesel Engine Co.,Ltd.|Chongqing City|ChongqingCity|Industry|60||Set-up|
|Changzhou Changchai Benniu DieselEngine Fittings Co., Ltd.|Changzhou City|Changzhou City|Industry|99|1|Set-up|
|Changzhou Housheng Investment Co., Ltd.|Changzhou City|Changzhou City|Service|100||Set-up|
|Changzhou Changchai HoushengAgricultural Equipment Co., Ltd.|Changzhou City|Changzhou City|Industry|70|25|Set-up|

(2) Significant not wholly owned subsidiary
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Name|Shareholdingproportion ofminorityshareholder|The profits andlosses arbitrate tothe minorityshareholders|Declaringdividendsdistribute tominorityshareholder|Balance ofminorityshareholder atclosing period|
|CHANGCHAI WANZHOU DIESELENGINE CO., LTD.|40|1,771,429.80|400,000.00|15,819,848.88|
|Changzhou Changchai HoushengAgricultural Equipment Co., Ltd.|5|-110,758.02||389,061.19|

(3) The main financial information of significant not wholly owned subsidiary
Unit: RMB 00000 Yuan
||||||||
|-|-|-|-|-|-|-|
|Name|Closing balance||||||
||Currentassets|Non-currentassets|Total assets|Currentliabilities|Non-currentliability|Total liability|
|CHANGCHAIWANZHOUDIESEL ENGINECO., LTD.|5,520.35|2,964.02|8,484.37|4,529.41||4,529.41|
|ChangzhouChangchaiHoushengAgriculturalEquipment Co., Ltd.|1,034.87|49.13|1,084.00|305.88||305.88|

Unit: RMB 00000 Yuan
|||
|-|-|
|Name|Opening balance|

2014 Annual Report of Changchai Company, Limited
||||||||
|-|-|-|-|-|-|-|
||Currentassets|Non-currentassets|Total assets|Currentliabilities|Non-currentliability|Total liability|
|CHANGCHAIWANZHOUDIESEL ENGINECO., LTD.|3,653.59|957.25|4,610.84|5,998.73||5,998.73|
|ChangzhouChangchaiHoushengAgriculturalEquipment Co., Ltd.|499.64||499.64||||

Unit: RMB 00000 Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name|2014||||2013||||
||Operationrevenue|Net profit|Totalcomprehensiveincome|Operatingcash flow|Operationrevenue|Net profit|Totalcomprehensiveincome|Operatingcash flow|
|CHANGCHAIWANZHOUDIESELENGINE CO.,LTD.|10,025.71|442.86|442.86|-2,372.81|11,020.77|354.51|354.51|-44.18|
|ChangzhouChangchaiHoushengAgriculturalEquipment Co.,Ltd.|175.25|-221.52|-221.52|-372.34||-0.36|-0.36|-54.18|

2. The transaction of the Company with itsowner’s equity share changed but still controlling the subsidiary (1) Note toowner’s equity share changed in subsidiary
TheCompany’s remaining minority equity of15.34% from the purchase of Changchai Benniu Diesel Engine Fittings Co., Ltd., of which, the parent company purchasing14.34% share equity, the wholly controlling subsidiary Changzhou Housheng Investment Co., Ltd. purchasing1% share equity, the parentcompany’sholding’s of Changchai Benniu Diesel Engine Fittings Co., Ltd., share equity of84.66%, after the purchase, the parent company directly held99% share equity, indirectly held1%.
2014 Annual Report of Changchai Company, Limited (2) Thetransaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company
Unit: RMB Yuan
|||
|-|-|
||Changzhou Changchai Benniu Diesel EngineFittings Co., Ltd.|
|Purchase cost/ Disposal of consideration||
|-Cash|22,600,000.00|
|Total purchase cost/ disposal of consideration|22,600,000.00|
|Less: Share of net assets in line with obtained/ disposal of subsidiarycalculated by equity proportion|15,885,673.43|
|Difference|6,714,326.57|
|Of which: adjusting the capital reserves|-6,714,326.57|

 3. Equity in joint venture arrangement or associated enterprise
(1) Significant joint venture arrangement or associated enterprise
||||||||
|-|-|-|-|-|-|-|
|Name|Mainoperatingplace|Registrationplace|Business nature|Proportion (%)||Accounting treatmentof the investment ofjoint venture orassociated enterprise|
|||||Directly|Indirectly||
|Changzhou Fuji Changchai Robin GasolineEngine Co., Ltd.|Changzhou|Changzhou|Industrial|33||Equity method|

(2) Main financial information of significant joint venture
Unit: RMB Yuan
||||
|-|-|-|
|Item|Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.||
||Closing balance / 2014|Opening balance/ 2013|
|Current assets|87,055,557.40|84,885,665.88|
|Non-current assets|13,200,248.78|14,189,958.27|
|Total assets|100,255,806.18|99,075,624.15|
|Current liabilities|38,255,878.32|39,820,128.67|
|Non-current liabilities|||
|Total liabilities|38,255,878.32|39,820,128.67|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Minority interests|||
|equity attributable to owners of the Company|61,999,927.86|59,255,495.48|
|Net assets proportion calculated by shareholding ratio|20,459,975.99|19,548,325.73|
|Adjusting events|||
|-Goodwill|||
|-Retained profits of internal transaction|||
|-Other|||
|Book value of investment to associated enterprise|20,459,975.99|19,548,325.73|
|Operating income|223,014,821.84|213,038,991.55|
|Net profits|4,326,770.93|3,635,371.58|
|Other comprehensive income|||
|Total comprehensive income|4,326,770.93|3,635,371.58|
|Equity received from associated enterprises in reportingperiod|455,000.00||

(3) Summary financial information of insignificant joint venture or associated enterprise
Unit: RMB Yuan
||||
|-|-|-|
||Closing balance / 2014|Opening balance/ 2013|
|Joint venture:|||
|The total of following items according to the shareholdingproportions|||
|Total of the following items in line with shareholdingproportion calculated|--|--|
|-Net profits|||
|- Other comprehensive income|||
|- Total comprehensive income|||

X. Risk related to financial instruments
The goal of theCompany’s risk management was gaining the balance between the risk and income, and reduced the negative impact
2014 Annual Report of Changchai Company, Limited to the operation performance of the Company in the lowest level and maximized the interests of shareholders and other equity investors, base on the risk management goal, the basis strategy of theCompany’s risk management was to recognized and analyse all kinds of risk that the Company faced, set up suitable risk bottom line and conduct risk management, and supervised the risks timely and reliably and control the risk within the limited scope.
The main risks that the financial instruments of the Company faced were: credit risk, liquidity risk and market risk. The management level had reviewed and approved the policies to manage the risks, which summarized as follows:
(I) Credit risk
Credit risk is referred to the one party of financial instrument fail to perform its obligation lead to the financial losses of the other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the Company conduct the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the policy of the Company, the Company need to conduct credit-check for the clients adopting way of credit to conduct transaction. In addition, the Company continuously monitors the balance of account receivable to ensure the Company would not face the significant bad debt risk. (II) Liquidity risk
Liquidity risk is referred to the risk of capital shortage when performing the obligation of cash or other financial assets settlement. The policy o f the Company was to ensure sufficient cash to pay the due liabilities.
Liquidity risk was centrally controlled by the financial department of the Company, the financial department through supervising the balance of cash and securities that can be converted into cash at any time and roll forecast of cash flow in future 12 months, ensured the Company own sufficient cash to pay the maturity loan under the condition of reasonable forecast.
(III) Market risk
Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the change of market price, including: foreign exchange rate risk, interest rate risk.
1. Interest rate risk
2014 Annual Report of Changchai Company, Limited Interest rate risk is referred to risk of the fair value or future cash flow of financial instrument changed due to the change of market interest risk.
2. Foreign exchange rate risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. The export sales of the Company mainly was market of Southeast Asia region which settled by USD. Though theCompany’s export business receiving part of payment for goods in advance, but the balance had a certain credit term, if the RMB appreciates against the dollar, the company's accounts receivable will incur foreign currency exchange loss.
XI. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Closing fair value||||
||Fair valuemeasurement itemsat level 1|Fair valuemeasurementitems at level 2|Fair valuemeasurement itemsat level 3|Total|
|I. Consistent fair value measurement|||||
|(I) Financial assets measured by fair value andchanges recorded into current profits and losses|2,109,642.19|||2,109,642.19|
|1. Tradable financial assets|2,109,642.19|||2,109,642.19|
|(1) Debt instruments investment|||||
|(2) Equity instrument investment|2,109,642.19|||2,109,642.19|
|(3) Derivative financial assets|||||
|2. Financial assets appointed measuring by fairvalue and changes recorded into current profits andlosses|||||
|(1) Debt instruments investment|||||
|(2) Equity instrument investment|||||
|（II）(II) Available for sale financial assets|452,650,000.00|||452,650,000.00|
|(1) Debt instruments investment|||||
|(2) Equity instrument investment|452,650,000.00|||452,650,000.00|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|(3) Other|||
|Total assets inconsistently calculated by fair value|454,759,642.19|454,759,642.19|

 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 Tradable financial assets and available for sale financial assets of the Company were funds and shares with the closing price as the basis of fair value calculation at period-end.
XII. Related party and related Transaction
1. Information related to parent company of the Company
The actual controller of the Company is Changzhou Government State-owned Assets Supervision and Administration Commission. As of Dec. 31 2014, it held30.02% shares of the Company (state owned shares).
2. Subsidiaries of the Company
The details of subsidiaries of the Company please refer to equity in other entities in note to financial statements.
3. Information on the joint ventures and associated enterprises of the Company
The details of the joint ventures and associated enterprises of the Company please refer to equity in other entities in note to financial statements.
4. The Company had no other related party.
5. The Company had no other related transaction need to be disclosed.
XIII. Commitments and contingency
1. Significant commitments
As of 31 Dec. 2014, there was no significant commitment or contingency in the Company.
2014 Annual Report of Changchai Company, Limited 2. Contingency
Litigation and arbitration in the reporting period
1. In the reporting period, the litigation the Company involved in from previous year continuing to the reportingperiod：
||||||
|-|-|-|-|-|
|Name of the entity|Date of accepted|Name of the litigation orarbitration institutions|Amount involved(RMB ten thousand)|Remark|
|Shandong Hongli Group Co., Ltd.|2001.6.27|Changzhou IntermediatePeople's Court|1,436.00|Under thebankruptcy andliquidation|
|Beijing Beiqi Changsheng AutomobileCo., Ltd.|2013.8.12|Beijing Shunyi DistrictPeople's Court|806.36|Enforcing conduct|
|Total|2,242.36||||

Note to the case:
(1) As the litigation of Shandong Hongli Group Co., Ltd. the company owned our Company RMB of 14.36 million payments for good. In 2001, the Company instituted litigation from Changzhou Intermediate People's Court, in Apr. 2002, applied to the court for compulsory execution, so far, the company has entered bankruptcy proceedings, the aforesaid payment has arranged for the full provision for bad debts.
(2) As the litigation of Beijing Beiqi Changsheng Automobile Co., Ltd., the company owned our Company 8.0636 million; Beijing Shunyi District People's Court accepted the case on Aug. 12 2013. Under the auspices, two sides concluded mediation agreement. Beiqi Changsheng pays RMB 8,063,600.00 to the Company by stage.
Although the Company bombarded many times, Beijing Beiqi Changsheng Automobile Co., Ltd did not perform its obligation of payment in line with mediation agreement. As of the end of reporting period, the Company had paid the payment of goods RMB 4.1 million, the Company had applied to the Court for compulsory execution.
XIV. Events after balance sheet date
Profit distribution after balance sheet date
Unit: RMB Yuan
|||
|-|-|
|Profits or dividends plan to distributed|11,227,486.52|

2014 Annual Report of Changchai Company, Limited
|||
|-|-|
|Profits or dividends declare to distribute through reviewed and approved|11,227,486.52|

 XV. Other significant events
1. Segment Information
Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common management, did not divide business unit, so the Company only made single branch report.
2. Other important transactions and events have an impact oninvestor’s decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation procedures of 2014 annual enterprise income tax.
XVI. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Closing balance|||||
||Book balance||Provision for bad debts||Book value|
||Amount|Proportion(%)|Amount|Withdrawalproportion(%)||
|Accounts receivable withsignificant single amountand individually withdrawnbad debt provision|43,791,478.96|7.96|31,949,287.94|72.96|11,842,191.02|
|Accounts receivablewithdrawal of bad debtprovision of by credit riskscharacteristics:|504,838,706.00|91.72|185,804,594.53|36.80|319,034,111.47|
|Accounts receivable withinsignificant single amountand individually withdrawn|1,776,159.00|0.32|1,413,014.50|79.55|363,144.50|

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
|bad debt provision||||||
|Total|550,406,343.96|100.00|219,166,896.97|39.82|331,239,446.99|

 Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Opening balance|||||
||Book balance||Provision for bad debts||Book value|
||Amount|Proportion(%)|Amount|Withdrawalproportion(%)||
|Accounts receivable withsignificant single amount andindividually withdrawn baddebt provision|68,044,928.76|13.14|45,827,025.23|67.35|22,217,903.53|
|Accounts receivablewithdrawal of bad debtprovision of by credit riskscharacteristics:|448,468,597.96|86.63|183,542,655.83|40.93|264,925,942.13|
|Accounts receivable withinsignificant single amountand individually withdrawnbad debt provision|1,155,900.00|0.23|894,075.00|77.35|261,825.00|
|Total|517,669,426.72|100.00|230,263,756.06|44.48|287,405,670.66|

 Accounts receivable with significant single amount and individually withdrawn bad debt provision
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Book balance|Provision for baddebts|Withdrawalproportion (%)|Withdrawal reason|
|Customer 1|7,063,600.00|3,531,800.00|50.00|Estimated difficultto recover|
|Customer 2|1,902,326.58|1,902,326.58|100.00|Difficult to recover|
|Customer 3|6,215,662.64|6,188,445.25|99.56|Difficult to recover|
|Customer 4|3,562,225.80|2,199,465.49|61.74|Estimated difficultto recover|

2014 Annual Report of Changchai Company, Limited
||||||
|-|-|-|-|-|
|Customer 5|1,096,223.05|657,733.83|60.00|Estimated difficultto recover|
|Customer 6|1,035,446.35|1,035,446.35|100.00|Difficult to recover|
|Customer 7|5,359,381.00|5,359,381.00|100.00|Difficult to recover|
|Customer 8|2,584,805.83|2,584,805.83|100.00|Difficult to recover|
|Customer 9|14,971,807.71|8,489,883.61|56.71|Estimated difficultto recover|
|Total|43,791,478.96|31,949,287.94|||

In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB Yuan
|||||
|-|-|-|-|
|Aging|Closing balance|||
||Account receivable|Provision for bad debts|Withdrawal proportion (%)|
|Within 1 year|317,211,777.82|6,344,235.61|2.00|
|1-2 years|1,177,407.16|58,870.40|5.00|
|2-3 years|7,510,469.63|1,126,570.48|15.00|
|3-4 years|740,345.40|222,103.63|30.00|
|4-5 years|364,728.92|218,837.34|60.00|
|Over 5 years|177,833,977.07|177,833,977.07|100.00|
|Total|504,838,706.00|185,804,594.53||

(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB 8,544,129.45; the amount of reversed or recovered bad debt provision in the report period was of RMB 19,640,988.54.
Significant amount of reversed or recovered bad debt provision
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Entity|Amount|Method|Reason|Basis of recognition ofbad debt provision|
|CHANGCHAI WANZHOU DIESELENGINE CO., LTD.|30,000,000.00|Cash|Repay loan|Long aging，estimateddifficult to recover|
|Total|30,000,000.00|Cash|Repay loan|Long aging，estimateddifficult to recover|

2014 Annual Report of Changchai Company, Limited (3) Particulars of the actual verification of accounts receivable during the reporting period
N/A
(4) Top five of account receivable of closing balance collected by arrears party
At period-end, the total amount of top five of account receivable of closing balance collected by arrears party was of RMB175,947,397.35 and 31.97% of relevant account receivable withdrawn bad debt provision, and the closing amount bad debt provision was RMB 4,222,196.60.
2. Other account receivable
(1) Other account receivable classified by category
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Category|Closing balance|||||
||Book balance||Provision for bad debts||Book value|
||Amount|Proportion(%)|Amount|Withdrawalproportion(%)||
|Other accounts receivablewith significant singleamount and individuallywithdrawn bad debt provision|2,853,188.02|8.44|2,853,188.02|100||
|Other accounts receivablewithdrawal of bad debtprovision of by credit riskscharacteristics:|29,055,589.24|85.91|23,343,541.80|80.34|5,712,047.44|
|Other accounts receivablewith insignificant singleamount and individuallywithdrawn bad debt provision|1,910,737.23|5.65|1,910,737.23|100||
|Total|33,819,514.49|100.00|28,107,467.05|83.11|5,712,047.44|

Unit: RMB Yuan
|||
|-|-|
|Category|Opening balance|

2014 Annual Report of Changchai Company, Limited
|||||||
|-|-|-|-|-|-|
||Book balance||Provision for bad debts||Book value|
||Amount|Proportion(%)|Amount|Withdrawalproportion(%)||
|Other accounts receivablewith significant singleamount and individuallywithdrawn bad debt provision|2,853,188.02|7.56|2,853,188.02|100||
|Other accounts receivablewithdrawal of bad debtprovision of by credit riskscharacteristics:|32,970,268.47|87.38|22,572,824.75|68.46|10,397,443.72|
|Other accounts receivablewith insignificant singleamount and individuallywithdrawn bad debt provision|1,907,662.13|5.06|1,907,662.13|100||
|Total|37,731,118.62|100.00|27,333,674.90|72.44|10,397,443.72|

 Closing other accounts receivable with significant single amount and individually withdrawn bad debt provision
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Other account receivable|Book balance|Provision for baddebts|Withdrawalproportion (%)|Withdrawal reason|
|Changchai Group Import & ExportCo., Ltd.|2,853,188.02|2,853,188.02|100|Irrecovable|
|Total|2,853,188.02|2,853,188.02|||

In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB Yuan
|||||
|-|-|-|-|
|Aging|Closing amount|||
||Other account receivable|Provision for bad debts|Withdrawal proportion (%)|
|Within 1 year|3,200,521.73|64,010.43|2.00|
|1-2 years|844,618.61|42,230.93|5.00|
|2-3 years|503,130.38|75,469.56|15.00|
|3-4 years|1,503,366.09|451,009.83|30.00|
|4-5 years|732,828.44|439,697.06|60.00|

Over 5 years 22,271,123.99 22,271,123.99 100.00
2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Total|29,055,589.24|23,343,541.80|

(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB 773,792.15; the amount of reversed or recovered bad debt provision in the report period was of RMB 0.
(3) Particulars of the actual verification of accounts receivable during the reporting period
N/A
(4) Other account receivable classified by nature
Unit: RMB Yuan
||||
|-|-|-|
|Nature of the item|Closing amount|Opening amount|
|Guarantee and cash pledge a|4,200.00|4,200.00|
|Unit current amount|17,481,166.27|21,218,401.11|
|Employee borrowing|1,575,915.66|1,756,887.79|
|Other|14,758,232.56|14,751,629.72|
|Total|33,819,514.49|37,731,118.62|

 (5) Top five of account receivable of closing balance collected by arrears party
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Entity|Nature of theaccount|Closing balance|Aging|Proportion intotal closingbalance of otheraccountreceivable (%)|Bad debt provision|
|Changzhou Compressor Co., Ltd.|Current amount|2,940,000.00|Over 5 years|8.69|2,940,000.00|
|Import and Export Company ofChangchai Group|Current amount|2,853,188.02|Over 5 years|8.44|2,853,188.02|
|Changzhou New District AccountingCenter|Current amount|1,626,483.25|Over 5 years|4.81|1,626,483.25|
|OEM Group Settlement Center|Current amount|1,140,722.16|Over 5 years|3.37|1,140,722.16|
|Changzhou Xingsheng PropertyManagement Co., Ltd.|Current amount|717,813.89|Within 1 year|2.12|14,356.28|
|Total||9,278,207.32||27.43|8,574,749.71|

2014 Annual Report of Changchai Company, Limited 3. Long-term equity investment
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Investees|Closing balance|||Opening balance|||
||Book balance|Bad debtprovision|Book value|Book balance|Bad debtprovision|Book value|
|Investment to the subsidiary|184,466,500.00||184,466,500.00|131,118,240.00||131,118,240.00|
|Investment to joint ventureand associated enterprise|20,504,158.49|44,182.50|20,459,975.99|19,592,508.23|44,182.50|19,548,325.73|
|Total|204,970,658.49|44,182.50|204,926,475.99|150,710,748.23|44,182.50|150,666,565.73|

 (1) Investment to the subsidiary
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Investee|Openingbalance|Increase|Decrease|Closing balance|Withdrawalof bad debtprovision|Closingbalance ofbad debtprovision|
|Changchai Wanzhou DieselEngine Co., Ltd.|21,000,000.00|30,000,000.00||51,000,000.00|||
|Changzhou ChangchaiBenniu Diesel EngineFittings Co., Ltd.|75,339,800.00|21,126,700.00||96,466,500.00|||
|Changzhou HoushengInvestment Co., Ltd.|30,000,000.00|||30,000,000.00|||
|Chansun International(Pte.) Ltd.|1,278,440.00||1,278,440.00||||
|Changzhou ChangchaiHousheng AgriculturalEquipment Co., Ltd.|3,500,000.00|3,500,000.00||7,000,000.00|||
|Total|131,118,240.00|54,626,700.00|1,278,440.00|184,466,500.00|||

(2) Investment to associated enterprise and joint venture
Unit: RMB yuan
|||||||
|-|-|-|-|-|-|
|Investee|Opening balance|Increase/decrease||||
|||Additionalinvestment|Reducedinvestment|Gains and lossesrecognized underthe equity method|Adjustment of othercomprehensive income|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Associated enterprises||||
|Changzhou Fuji|19,548,325.73||1,366,650.26|
|Changchai Robin Diesel||||
|Engine Co., Ltd.||||
|Beijing Tsinghua Xingye|44,182.50|||
|Industrial Investment||||
|Management Co., Ltd.||||
|Total||19,592,508.23|1,366,650.26|

(Continued)
Unit: RMB yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Investee||Increase/decrease||||||Closing balance||Closing balance ofimpairment provision|
|||Changes ofother equity|Cash bonus orprofitsannounced toissue||i|Withdra|Other||||
|||||||wal of|||||
|||||||mpairm|||||
|||||||ent|||||
|||||||provisio|||||
|||||||n|||||
||Associated enterprises||||||||||
||Changzhou Fuji||455,000.00|||||20,459,975.99|||
||Changchai Robin Diesel||||||||||
||Engine Co., Ltd.||||||||||
||Beijing Tsinghua Xingye|||||||44,182.50||44,182.50|
||Industrial Investment||||||||||
||Management Co., Ltd.||||||||||
||Total|||455,000.00|||||20,504,158.49|44,182.50|

 4. Revenue, Cost of Sales
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Reporting period||Same period of last year||
||Revenue|Cost|Revenue|Cost|
|Main business|2,469,762,995.76|2,172,427,255.26|2,914,260,438.20|2,557,397,591.91|
|Other business|24,576,560.38|14,038,318.73|27,055,894.75|14,715,749.07|
|Total|2,494,339,556.14|2,186,465,573.99|2,941,316,332.95|2,572,113,340.98|

2014 Annual Report of Changchai Company, Limited
||||
|-|-|-|
|Item|Reporting period|Same period of lastyear|
|Long-term equity investment income accounted by cost method|2,446,600.00||
|Long-term equity investment income accounted by equity method|1,366,650.26|929,669.90|
|Investment income from the disposal of long term equity investment|-250,797.67||
|Investment income from available for sale assets during holding period|10,120,500.00|14,600,000.00|
|Total|13,682,952.59|15,529,669.90|

 XVII. Supplementary materials
1. Items and amounts of extraordinary gains and losses
Unit: RMB Yuan
||||
|-|-|-|
|Item|2014|2013|
|Gains/losses on the disposal of non-current assets|118,901.99||
|Government grants recognized in the current period, except for thoseacquired in the ordinary course of business or granted at certainquotas or amounts according to the government’s unified standards|10,344,073.62||
|Included in current profit and loss against the non-financialenterprises occupation fee funds collected|1,505,666.68||
|Gain/loss from change of fair value of transactional assets andliabilities, and investment gains from disposal of transactionalfinancial assets and liabilities and available-for-sale financial assets,other than valid hedging related to the Company’s commonbusinesses|572,812.70||
|Reversal of impairment provisions of receivables separatelyconducted for impairment test|||
|Other non-business income and expenditures other than theabove|-6,029,012.72||
|Influenced amount of income tax|995,341.14||
|Influenced amount of minor shareholders’ gains and losses|-8.59||
|Total|5,517,109.72||

2. Return on equity (ROE) and earnings per share (EPS)
Unit: RMB Yuan
|||||
|-|-|-|-|
|Profit as of reporting period|Weighted average ROE (%)|EPS (Yuan/share)||
|||EPS-basic|EPS-diluted|
|Net profit attributable to commonshareholders of the Company|3.28|0.11|0.11|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Net profit attributable to commonshareholders of the Company afterdeduction of non-recurring profit andloss|3.00|0.10|0.10|

3. Supplementary materials of changes in accounting policies
√ Applicable□ Inapplicable
The Company according to such eight accounting rules of Accounting Standards for Enterprises No.2—Long Term Equity Investment released in 2014 by Ministry of Finance change related accounting policies and retroactive restate the comparative financial statements, after restatement, the consolidated balance sheet of 1 Jan. 2013 and 31 Dec. 2013:
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|1 Jan. 2013|31 Dec. 2013|31 Dec. 2014|
|Current Assets:||||
|Monetary funds|744,494,588.07|688,297,469.30|531,969,747.91|
|Deposit reservation for balance||||
|Lending funds||||
|Financial assets measured by fair value andchanges recorded into current profits andassets|||2,109,642.19|
|Derivative financial assets||||
|Notes receivable|205,845,568.10|257,845,729.93|314,236,128.92|
|Accounts receivable|299,208,278.88|317,295,375.34|374,335,355.22|
|Accounts paid in advance|15,111,761.78|14,659,048.00|15,092,855.36|
|Receivable premium||||
|Reinsurance accounts receivable||||
|Provision of cession receivable||||
|Interest receivable||||
|Dividend receivable||||
|Other account receivable|12,892,742.09|12,723,300.47|8,662,701.30|
|Redemptory monetary capital for sale||||
|Inventory|452,271,304.37|473,238,876.29|497,588,717.86|
|Classified as holding available for sale assets||||
|Non-current assets due within one year||||
|Other current assets|64,814,786.45|39,990,829.02|31,729,042.18|
|Total current assets|1,794,639,029.74|1,804,050,628.35|1,775,724,190.94|
|Non- current assets:||||

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|loans and payments on behalf||||
|Available for sale financial assets|531,703,000.00|413,954,000.00|497,850,000.00|
|Investment held to maturity||||
|Long term receivable||||
|Long term equity investment|18,618,655.83|19,548,325.73|20,459,975.99|
|Investment property|63,906,052.43|61,697,711.63|59,489,370.83|
|Fix assets|566,044,962.19|619,468,246.18|572,785,946.61|
|Construction in progress|119,576,338.33|78,207,347.80|134,948,317.87|
|Engineering material||||
|Disposal of fixed assets||||
|Productive biological asset||||
|Oil and gas assets||||
|Intangible assets|86,063,611.94|84,217,899.70|104,441,092.62|
|Development expenditure||||
|Goodwill||||
|Long-term unamortized expenses||||
|Deferred income tax assets|752,200.00|1,195,990.26|1,084,863.32|
|Other non-current assets||||
|Total non- current assets|1,386,664,820.72|1,278,289,521.30|1,391,059,567.24|
|Total assets|3,181,303,850.46|3,082,340,149.65|3,166,783,758.18|
|Current liabilities:||||
|Short term loan|20,000,000.00|30,000,000.00|20,000,000.00|
|Borrowings from central bank||||
|Deposits from customers and interbank||||
|Borrowing funds||||
|Financial liabilities measured by fair value andchanges recorded into current profits andlosses||||
|Derivative financial liabilities||||
|Note payable|346,039,002.00|246,300,000.00|218,351,400.00|
|Account payable|599,455,800.00|577,327,834.60|550,858,517.60|
|Account receivable in advance|31,650,567.34|38,090,958.80|29,364,756.16|
|Sale of financial assets for repurchase||||
|Handling charges and commissions payable||||
|Payroll payable|44,726,018.55|57,122,045.12|61,303,762.60|

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Tax payable|7,078,014.74|16,228,953.19|14,511,976.27|
|Accrual interest payable||||
|Dividends payable|3,891,433.83|3,891,433.83|3,891,433.83|
|Other amounts payable|135,442,533.37|174,454,382.17|196,560,865.32|
|Dividend payable for reinsurance||||
|Reserve fund for insurance contracts||||
|Acting trading securities||||
|Acting underwriting securities||||
|Classified as holding available for saleliabilities||||
|Non-current liabilities due within year||||
|Other current liabilities|2,430,896.10|1,939,407.40|2,992,996.74|
|Total current liabilities|1,190,714,265.93|1,145,355,015.11|1,097,835,708.52|
|Non current liabilities||||
|Long term loan||||
|Bond payable||||
|Of which: preferred stock||||
|Perpetual capital securities||||
|Long term account receivable||||
|Long term payroll payable||||
|Special account payable||||
|Estimated liabilities||||
|Deferred income|62,558,726.56|61,894,052.94|54,185,979.32|
|Deferred income tax liabilities|66,694,275.00|49,031,925.00|61,616,325.00|
|Other non-current liabilities||||
|Total non-current liabilities|129,253,001.56|110,925,977.94|115,802,304.32|
|Total liabilities|1,319,967,267.49|1,256,280,993.05|1,213,638,012.84|
|Owner’s equity:||||
|Share capital|561,374,326.00|561,374,326.00|561,374,326.00|
|Deferred income tax liabilities||||
|Of which: preferred stock||||
|Perpetual capital securities||||
|Capital reserve|171,016,154.25|171,016,154.25|164,328,665.43|
|Less: treasury stock||||

2014 Annual Report of Changchai Company, Limited
|||||
|-|-|-|-|
|Other comprehensive income|377,902,154.25|277,780,844.33|349,159,175.00|
|Special reserve|4,169,087.73|6,996,256.56|8,332,077.21|
|Surplus reserves|282,364,917.36|289,629,574.39|298,151,696.96|
|General risk preparation||||
|Retained profits|448,366,561.06|502,779,906.92|555,590,894.67|
|Total equity attributable to owners of theCompany|1,845,193,200.65|1,809,577,062.45|1,936,936,835.27|
|Minority interests|16,143,382.32|16,482,094.15|16,208,910.07|
|Total owners’ (or shareholders’) equity|1,861,336,582.97|1,826,059,156.60|1,953,145,745.34|
|Total liabilities and owners’ (or shareholders’)equity|3,181,303,850.46|3,082,340,149.65|3,166,783,758.18|

2014 Annual Report of Changchai Company, Limited Section XII. Documents Available For Reference
Including the following documents:
1. 2014 annual report with signatures and seals of the Chairman.
2. Financial Statements carried with signatures and seals of responsible person of the Company, Accounting Principal, as well as Head of the Accounting Organ;
3. Text of theAuditor’s Report with the seals of accounting firm and the signatures and seals of certified public accountants;
4. In the reporting period, originals of all documents of the Company ever disclosed publicly in media designated by China Securities Regulatory Commission such as the Securities Times and Ta Kung Pao and the originals of all the public notices.
5. Articles of Association
The above documents available for reference were all completely deposited in the Secretariat of the Board of Directors of the Company.
This report is prepared in both Chinese and English. Should there be any understanding discrepancy between the two versions, the Chinese version shall prevail.