Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd Stock code: 200054 Stock Abbreviation: Jianshe Vehicle B Announcement No.: 2019-033 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd 1. Important notes The summary is abstract from full-text of annual report, for more details information , investors should found in the full-text of annual report that published on website of Shenzhen Stock Exchange and other website appointed by CSRC. Objections of the directors, supervisors and senior management Name Office title Objection & reason Statement Other directors attending the Meeting for annual report deliberation except for the followed: Name of director absent Title for absent director Reasons for absent Attorney Except the following directors, all the directors attended the board meeting for reviewing the annual Report. The name of the directors absent Positions Reasons for the absence Name of the consignee Yan Xuechuan Director Business trip Lv Hongxian Hao Lin Director Business trip Li Dingqing Liu Zhiqiang Independent Director Business trip Peng Jue Non-standard auditor’s opinion □ Applicable √Not applicable Preliminary plan for profit distribution to the common shareholders or turning the capital reserve into the share capital for the reporting period, which has been reviewed and approved at the board meeting □ Applicable √Not applicable The Company will not distribute cash dividend or bonus shares, neither capitalizing of common reserves for the report period. Plans for profit distribution on preference shares for the reporting period approved by the Board □ Applicable √Not applicable II.Company Information 1.Company Profile Stock ID Jianshe Vehicle B Stock Code 200054 Stock Exchange Listed Shenzhen Stock Exchange Contact person and contact manner Board secretary Securities affairs Representative Name Zhang Hushan Li Wenling No.1 Jianshe Road, Huaxi Industrial Zone, No.1 Jianshe Road, Huaxi Industrial Zone, Address Ba’nan District, Chongqing Ba’nan District, Chongqing Tel. 023-66295333 023-66295333 1 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd Fax. 023-66295333 023-66295333 Email. cqjsmc@jianshe.com.cn cqjsmc@jianshe.com.cn 2. Brief introduction to the main business or products in the reporting period The company engages mainly in production and sales of the vehicle air compressor including the vane iron and aluminous compressor, piston swash-plate fixed discharge rate compressor, piston swash-plate variable discharge rate compressor and motor compressor (with the discharge rate from 32cc to 480cc), has been awarded “China Famous Brand”, “High-quality Product of French Technological Quality Surveillance Evaluation Commission” and “China Recommended Product for Entry into WTO”, etc. for products and has the strategical cooperative partners including the leading production and sales volume in terms of finished automobile such as PEUGEOT, Great Wall Motors,Chanan Auto and Dongfeng Nissan , etc. 3. Accounting and financial highlights 1.Accounting and financial highlights for the past three years Indicate by tick mark whether the Company needs to retroactively restate any of its accounting data. □Yes √No In RMB Changed over last year 2018 2017 2016 (%) Operation revenue(Yuan) 971,804,000.23 1,009,531,078.68 -3.74% 873,286,486.75 Net profit attributable to the shareholders of the listed company 10,543,247.05 14,375,111.84 -26.66% 12,267,006.14 (Yuan) Net profit after deducting of non-recurring gain/loss attributable 9,074,662.19 13,866,734.69 -34.56% 12,908,428.98 to the shareholders of listed company(Yuan) Net Cash flow generated by 162,824,513.55 62,980,107.16 158.53% 108,619,119.02 business operation(Yuan) Basic earning per 0.088 0.120 -26.67% 0.103 share(Yuan/Share) Diluted gains per 0.088 0.120 -26.67% 0.103 share(Yuan/Share)(Yuan/Share) Net asset earning ratio(%) 3.66% 5.22% -1.56% 4.68% End of Changed over last year End of 2018 End of 2016 2017 (%) Gross assets(Yuan) 1,461,770,573.54 1,302,238,427.15 12.25% 1,559,334,881.03 Net assets attributable to shareholders of the listed company 293,301,450.54 282,758,203.49 3.73% 268,383,091.65 (Yuan) 2.Main Financial Index by Quarters In RMB First quarter Second quarter Third quarter Fourth quarter Operation revenue 266,811,269.51 244,885,461.90 215,629,758.62 244,477,510.20 Net profit attributable to the 55,789.60 66,020,738.88 -1,585,147.13 -53,948,134.3 shareholders of the listed company Net profit after deducting of non-recurring gain/loss attributable -275,476.62 66,071,417.34 -3,124,094.71 -53,597,183.82 to the shareholders of listed company 2 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd Net Cash flow generated by 18,706,058.10 9,779,972.15 56,259,518.62 78,078,964.68 business operation Whether significant variances exist between the above financial index or the index with its sum and the financial index of the quarterly report as well as semi-annual report index disclosed by the Company. □ Yes √No 4. Share capital and shareholders 1. Numbers of the common shareholders and the preference shareholders with resumed voting rights as well as the shareholdings of the top 10 shareholders In shares The total Total number o number of f preferre Total common Total shareholders at d shareho preferred sharehold shareholder the end of the month lders voti ers at the end of the s at the end 8,191 from the date of 8,126 ng rights r 0 month from the date 0 of the disclosing the annual estored at of disclosing the report period-en annual report(if reporting d(if any)(See Notes 8) period any)(See Notes 8) Shareholdings of top 10 shareholders Number of Number of share Nature of Proportion of shares held pledged/frozen Shareholders Amount of restricted shares held shareholder shares held(%) at period -end State of share Amount China Military State-owned Equipment 71.13% 84,906,250 84,906,250 legal person Group Co., Ltd. Domestic Gu Zuocheng 1.89% 2,261,000 2,218,750 natural person Domestic Hengsheng Sun non-state-owne 1.47% 1,750,000 1,750,000 Freeze 1,750,000 Group Co., Ltd. d legal person Domestic Liu Dan 0.86% 1,032,201 0 natural person Domestic Xu Yuanhui 0.56% 666,789 0 natural person Overseas Yu Lingfeng 0.51% 612,921 0 natural person Domestic Chen Xinqiang 0.51% 612,400 0 natural person Domestic Zhang Meilan 0.43% 513,560 0 natural person Domestic Feng Yonghui 0.42% 500,000 500,000 natural person Domestic Li Jianping 0.38% 455,569 0 natural person There isn’t any associated relationship between the sponsoring shareholder and the other Explanation on associated shareholders among the top-10 list. None of them are regarded as ‘Acting in concert’ in relationship among the aforesaid accordance with ‘The rules of information disclosure on change of shareholding.’ Foreign shareholders shareholders are unknown for their condition of ‘Associated relationship’ and ‘Acting in concert’. 2.Number of the preference shareholders and the shareholdings of the top 10 of them □ Applicable √Not applicable No preference shareholders in the reporting period 3 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd 3.Relationship between the Company and its actual controller in the form of diagram 5.Corporate bonds Whether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and not yet due or due but not fully cashed on the approval date of annual report No III. Management’s Discussion and Analysis 1.Business review for the reporting period Whether the company needs to comply with the disclosure requirements of the particular industry No In 2018, facing the unstable international environment, Sino-US trade friction, more intense market competition and adjustment of national policies, we made great efforts to promote the transformation and upgrading of enterprises, improve quality and increase efficiency. the auto air-conditioning industry continued to maintain steady development, with sales volume of 2.3532 million units, operating income of 970 million yuan and profit of 10.54 million yuan, accounting for 98% of the annual sales budget and 105% of the revenue budget. 1. Main business income and cost During the reporting period, the sales volume of automobile air-conditioning compressors reached 2.3532 million units, with a year-on-year increase of 1.61%. Influenced by factors such as the price reduction of the automobile main engine factory and the price increase of manufacturing factors, the company's main business income decreased by 6.87% year on year, the main business cost decreased by 4.77% year on year, and the gross profit margin decreased by 1.87% year on year. 2. Charges During the reporting period, the company incurred a total of 154 million yuan in expenses, up 17 million yuan from the previous year, with a year-on-year increase of 12.65%. This is mainly due to the corresponding increase in staff salaries, depreciation, repair and other expenses after the new auto parts processing business was added, resulting in a 29.96% year-on-year increase in management expenses. 3. Research and development investment This year, the company has invested 23.85 million yuan in research and development on projects such as "electric compressor project", "aluminum machine project" and "key customer project of rotary blade iron machine", accounting for 2.45% of operating income, with a year-on-year decrease of 32%. 2.Significant changes in the main business in the reporting period □ Yes √No 4 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd 3.Products contributing over 10% of the main business revenue or profit √Applicable □ Not applicable In RMB Increase/decrease Increase/decrease Increase/decrease of revenue in the of business cost of gross profit Gross profit Name Turnover Operation cost same period of over the same rate over the same rate(%) the previous period of period of the year(%) previous year (%) previous year (%) Compressor 911,621,983.96 138,998,964.91 15.25% -7.16% -16.69% -1.75% 4.Seasonal or periodic characteristics in the operating performance that need special attention □ Yes √ No 5. Significant YoY changes in the operating revenues, operating costs and net profits attributable to the common shareholders or their composition √Applicable □ Not applicable Operating income: due to the price reduction of the main engine factory during the year, the operating income decreased by 3.74% from the last period under that there was an increase in product sales. Investment income: In the current year, the Company transferred the 51% equity of Shanghai Construction, and obtained investment income of 53.04 million yuan. The investment income increased by 1587.57% compared with the last period. Impairment loss of assets: The provision for impairment of fixed assets and bad debts for the period was RMB 34.7137 million, an increase of 140.34% over the last period. 6. Suspension in trading or delisting □ Applicable √ Not applicable 7. Events relating to the financial report (1) Reason for changes in accounting policies, accounting estimates and accounting methods as compared to the financial report for the prior year √ Applicable □Not applicable 1. Changes in accounting policies (1) Reason for Change On June 15, 2018, the Ministry of Finance issued the "Notice on the Revision and Issuance of the Format of Financial Statements for General Enterprises in 2018" (No. 15-[2018] Accounting) (hereinafter referred to as the " Notice"). According to the requirement of the “Notice”, the Company will prepare the 2018 financial statements in accordance with the general corporate financial statement format (applicable to enterprises that have not yet implemented the new financial standards and new revenue standards). (2) Date of change: The above-mentioned enterprise accounting standard shall be implemented in accordance with the starting date stipulated in the above document. (3) The Accounting Policy adopted before the change Prior to this change, the Company implemented the "Enterprise Accounting Standards-Basic Standards" and various specific accounting standards, subsequently enacted and revised corporate accounting standards, application guidelines for business accounting standards, corporate accounting standards interpretation announcements and other related provisions promulgated by the Ministry of Finance. (4) The Accounting Policy adopted after the change 5 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd After this change, the company will implement the provisions of the "Notice on the Revision and Issuance of the Format of Financial Statements for General Enterprises in 2018" (No. 15-[2018] Accounting), and the other unchanged contents are implemented in accordance with the current documents of the Ministry of Finance. II. The impact of this accounting policy change on the Company (I) According to the requirements of the “Notice”, the company adjusts the presentation of the following in the financial statements: 1. The original “notes receivable” and “accounts receivable” items are combined into the newly added “notes receivable and accounts receivable” item; 2. The original “interest receivable”, “dividends receivable” and “other receivables” items are combined into the “other receivables” item; 3. The original “fixed assets disposal” and “fixed assets” items are combined into the “fixed assets” item; 4. The original “engineering materials” item is merged into the “construction in progress” item; 5. The original “notes payable” and “accounts payable” items are combined into the newly added “notes payable and accounts payable” item; 6. The original “interest payable”, “dividend payable” and “other payables” items are combined into the “other payables” item; 7. The original “special payables” item is merged into the “long-term payables” item; 8. The “R&D Expenses” item will be added. The R&D expenses originally included in the “Management Expenses” item will be separately listed as “R&D Expenses” item; 9. The “Interest expense” and “interest income” details items are shown below the “Financial Expenses” item. (II) The impact on the presentation of the items and amounts of the previous financial statements is as follows: No Name of affected item in the statements Affected amount of December 31, 2017 / 2017 Increase + / decrease - (yuan) 1 Notes receivable -17,800,808.72 Account receivable -280,383,810.21 Notes receivable & account receivable +298,184,618.93 2 Interest receivable Dividend receivable Other receivable 3 Fixed assets Liquidation of fixed assets 4 Construction in progress Engineering Material 5 Notes payable -411,410,000.00 Account payable -179,749,230.79 Notes payable & account payable +591,159,230.79 6 Interest payable Dividend payable Other account payable 7 Special payable Long-term payable 8 Administrative expenses -11,848,985.86 R & D enpenses +11,848,985.86 Except for the above items’ adjustments, this accounting policy change does not involve the retrospective adjustment for the Company's previous annual statements. Changes in the Company's accounting policy will not 6 Summary of 2018 Annual Report of Chongqing Jianshe Vehicle System Co., Ltd affect the Company's current profit and loss and will not have a significant impact on the Company's financial statements. (2) Reason for retrospective restatement to correct major accounting errors during the reporting period □ Applicable √ Not applicable Nil (3) Reason for changes in scope of the consolidated financial statements as compared to the financial report for the prior year □ Applicable √ Not applicable √ Applicable □Not applicable Dispose branch company (1) Loss of control upon a single disposal of investment in a subsidiary Subsidiary Disposition of Proportion Basis to The difference equity of equity Share Loss of control determine the between the disposal - PRICES disposition disposal Timing time of losing the price and the share of (%) way control power the subsidiary's net assets at the consolidated statement level corresponding to the disposal investment Shanghai 61,200,000.00 51.00 Transfer by June 15,2018 After signing the 59,095,066.65 Jianshe listing property right Motorcycle agreement transaction Co., Ltd. contract, receiving the transfer money, the company has gone through the procedures for the transfer of equity rights and lost control of financial management activities Note: In January 2019, Shanghai Jianshe Motorcycle Co., Ltd. completed the equity change procedures and received the updated Business License for Enterprise Legal Person. 7