Income tax expense (Tables)

12 Months Ended

Dec. 31, 2017

Income tax expense in the consolidated statement of profit or loss consists of:


	31.12.2015			31.12.2016		31.12.2017			31.12.2017
	RMB’000			RMB’000		RMB’000			US$’000

Current income tax
- Current year		104,584			104,149		197,264			31,167
- (Over)/under provision in respect of prior years		(47	)		7,175		(2,867	)		(453	)

Deferred tax
- Movement in temporary differences		72,281			48,946		25,770			4,071

Consolidated income tax expense reported in the statement of profit or loss		176,818			160,270		220,167			34,785

Reconciliation of Income Tax Expense

Income tax expense reported in the consolidated statement of profit or loss differs from the amount computed by applying the PRC income tax rate of 15% (being tax rate of Yuchai) for the years ended December 31, 2017, 2016 and 2015 for the following reasons:


	31.12.2015			31.12.2016			31.12.2017			31.12.2017
	RMB’000			RMB’000			RMB’000			US$’000
Accounting profit before tax		686,138			883,878			1,625,237			256,776
Computed tax expense of 15%		102,921			132,582			243,786			38,517
Adjustments resulting from:
Non-deductible expenses		9,815			7,039			21,982			3,473
Tax-exempt income		(5,574	)		(178	)		(58,324	)		(9,215	)
Utilization of deferred tax benefits previously not recognized		(2,001	)		(3,157	)		(7,374	)		(1,165	)
Deferred tax benefits not recognized		61,299			9,045			8,084			1,277
Tax credits for research and development expense		(27,087	)		(34,482	)		(34,428	)		(5,439	)
Tax rate differential		24,249			25,321			21,061			3,328
(Over)/under provision in respect of previous years current tax		(47	)		7,175			(2,867	)		(453	)
Withholding tax expense		13,126			16,925			29,447			4,652
Others		117			—			(1,200	)		(190	)

Total		176,818			160,270			220,167			34,785

Summary of Deferred Tax

Deferred tax relates to the following:


	Consolidated statement of financial position									Consolidated statement of profit or loss
	31.12.2016			31.12.2017			31.12.2017			31.12.2015			31.12.2016			31.12.2017			31.12.2017
	RMB’000			RMB’000			US$’000			RMB’000			RMB’000			RMB’000			US$’000
Deferred tax liabilities
Accelerated tax depreciation		(10,521	)		(15,122	)		(2,389	)		(10,852	)		373			(4,601	)		(727	)
Unremitted earnings from overseas source income		(437	)		—			—			—			(25	)		—			—
Interest receivable		(1,453	)		(774	)		(122	)		—			(1,471	)		679			107
Derivatives not designated as hedges- foreign exchange forward contract		—			—			—			(2,326	)		2,326			—			—
PRC withholding tax on dividend income ⁽ⁱ⁾		(103,347	)		(100,572	)		(15,890	)		(12,549	)		(16,628	)		(29,031	)		(4,587	)

		(115,758	)		(116,468	)		(18,401	)		(25,727	)		(15,425	)		(32,953	)		(5,207	)

Deferred tax assets
Impairment of property, plant and equipment		2,876			12,319			1,946			409			(9,005	)		9,443			1,492
Write-down of inventories		21,209			17,493			2,764			(3,867	)		(4,421	)		(3,716	)		(587	)
Allowance for doubtful account receivables		9,340			7,376			1,165			(3,361	)		7,196			(1,964	)		(310	)
Accruals		185,952			204,730			32,346			17,253			(46,350	)		18,778			2,967
Deferred income		70,931			51,679			8,165			(44,232	)		10,045			(19,252	)		(3,042	)
Write down of intangible asset		—			—			—			(15,000	)		—			—			—
Others		17,899			21,793			3,443			2,244			9,014			3,894			616

		308,207			315,390			49,829			(46,554	)		(33,521	)		7,183			1,136

											(72,281	)		(48,946	)		(25,770	)		(4,071	)

Note:

⁽ⁱ⁾

The movement of PRC withholding tax on dividend income is as follows:


	31.12.2016			31.12.2017			31.12.2017
	RMB’000			RMB’000			US$’000
At January 1		(113,805	)		(103,347	)		(16,328	)
Provision made to consolidated statement of profit or loss		(16,628	)		(29,031	)		(4,587	)
Utilization		27,107			31,806			5,025
Translation differences		(21	)		—			—

December 31		(103,347	)		(100,572	)		(15,890	)

Classification of the Group's Net Deferred Tax Assets

The following table represents the classification of the Group’s net deferred tax assets:


	31.12.2016			31.12.2017			31.12.2017
	RMB’000			RMB’000			US$’000
Deferred tax assets		308,207			315,390			49,829
Deferred tax liabilities		(115,758	)		(116,468	)		(18,401	)

		192,449			198,922			31,428

Deferred Tax Assets That Have Not Been Recognized

Deferred tax assets have not been recognized in respect of the following items:


	31.12.2016		31.12.2017		31.12.2017
	RMB’000		RMB’000		US$’000
Unutilized tax losses		515,207		479,410		75,743
Unutilized capital allowances and investment allowances		106,781		107,266		16,947
Other unrecognized temporary differences relating to provisions and deferred grants		224,087		230,269		36,381

		846,075		816,945		129,071