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苏常柴B:2022年年度报告(英文版)2023-04-12  

                        Changchai Company, Limited                        Annual Report 2022




             CHANGCHAI COMPANY, LIMITED

                             ANNUAL REPORT 2022




                                 April 2023




                                     1
Changchai Company, Limited                                                      Annual Report 2022




            Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Changchai Company, Limited (hereinafter referred to
as the “Company”) hereby guarantee the factuality, accuracy and completeness of the
contents of this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Shi Xinkun, the Company’s legal representative, Zhang Xin, the Company’s General Manager,
and Jiang He, head of the Company’s financial department (equivalent to financial manager)
hereby guarantee that the Financial Statements carried in this Report are factual, accurate
and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
Any plans for the future and other forward-looking statements mentioned in this Report shall
NOT be considered as absolute promises of the Company to investors. Therefore, investors
are kindly reminded to pay attention to possible investment risks.
The Company has described in detail the risks it might face in “XI Prospects” in “Part III
Management Discussion and Analysis” herein.
The Board has approved a final dividend plan as follows: based on the 705,692,507 shares, a
cash dividend of RMB0.10 (tax inclusive) per 10 shares is to be distributed to the shareholders,
with no bonus issue from either profit or capital reserves.




                                               2
Changchai Company, Limited                                                                                                  Annual Report 2022




                                                    Table of Contents




Part I Important Notes, Table of Contents and Definitions........................................................... 2

Part II Corporate Information and Key Financial Information................................................... 6

Part III Management Discussion and Analysis..............................................................................11

Part IV Corporate Governance.......................................................................................................46

Part V Environmental and Social Responsibility.......................................................................... 65

Part VI Significant Events............................................................................................................... 66

Part VII Share Changes and Shareholder Information................................................................77

Part VIII Preferred Shares.............................................................................................................. 86

Part IX Bonds................................................................................................................................... 87

Part X Financial Statements............................................................................................................88




                                                                        3
Changchai Company, Limited                                                         Annual Report 2022



                             Documents Available for Reference
1. The financial statements signed and sealed by the Company’s legal representative, General
Manager and head of the financial department.
2. The original copy of the Independent Auditor’s Report signed and sealed by the CPAs, as well as
sealed by the CPA firm.
3. The originals of all the Company’s documents and announcements which were disclosed on
Securities Time and Ta Kung Pao (HK) (newspapers designated by the CSRC for information
disclosure) during the Reporting Period.
4. The Annual Report disclosed in other securities markets.
The above-mentioned documents available for reference are all kept in the Secretariat of the Board
of Directors of the Company .
This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.




                                                 4
Changchai Company, Limited                                                            Annual Report 2022



                                             Definitions


                  Term                                             Definition
“Changchai”,    the “Company”       or Changchai Company, Limited and its consolidated
“we”                                     subsidiaries, except where the context otherwise requires
                                            Changzhou Changchai Benniu Diesel Engine Fittings Co.,
Changchai Benniu
                                            Ltd.
Changchai Wanzhou                           Changchai Wanzhou Diesel Engine Co., Ltd.
Horizon Investment                          Changzhou Horizon Investment Co., Ltd.
                                            Changzhou Changchai Horizon Agricultural Equipment
Horizon Agricultural Equipment
                                            Co., Ltd.
                                            Changzhou Fuji Changchai Robin Gasoline Engine Co.,
Changchai Robin
                                            Ltd.
Xingsheng Real Estate Management            Changzhou Xingsheng Real Estate Management Co., Ltd.
Changchai Machinery                         Jiangsu Changchai Machinery Co., Ltd.
Zhenjiang Siyang                            Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.
                                            Expressed in the Chinese currency of Renminbi, expressed
RMB, RMB’0,000
                                            in tens of thousands of Renminbi
The “Reporting Period” or “Current
                                            The period from 1 January 2022 to 31 December 2022
Period”




                                                    5
Changchai Company, Limited                                                                      Annual Report 2022




        Part II Corporate Information and Key Financial Information

I Corporate Information

 Stock name                                 Changchai, Changchai-B        Stock code    000570, 200570
 Stock exchange for stock listing           Shenzhen Stock Exchange
 Company name in Chinese                    常柴股份有限公司
 Abbr.                                      苏常柴
 Company name in English (if any)           CHANGCHAI COMPANY,LIMITED
 Abbr. (if any)                             CHANGCAHI CO.,LTD.
 Legal representative                       Shi Xinkun
 Registered address                         123 Huaide Middle Road, Changzhou, Jiangsu, China
 Registered addresses previously used       N/A
 Zip code                                   213002
 Office address                             123 Huaide Middle Road, Changzhou, Jiangsu, China
 Zip code                                   213002
 Company website                            http://www.changchai.com.cn
 Email address                              cctqm@public.cz.js.cn


II Contact Information

                                                  Board Secretary                 Securities Representative
 Name                                   He Jianjiang
                                        123 Huaide Middle Road,
 Address
                                        Changzhou, Jiangsu, China
 Tel.                                   (86)519-68683155
 Fax                                    (86)519-86630954
 Email address                          cchjj@changchai.com


III Media for Information Disclosure and Place where this Report Is Lodged

 Newspapers designated by the Company for
                                                       Securities Times, Ta Kung Pao (HK)
 information disclosure
 Website designated by CSRC for publication of
                                                       http://www.cninfo.com.cn
 this Report
 Place where this Report is lodged                     Board Secretariat of the Company


IV Change to Company Registered Information

 Unified social credit code             91320400134792410W



                                                         6
Changchai Company, Limited                                                                         Annual Report 2022


 Change to principal activity of the
                                          No change
 Company since going public
                                          On 22 November 2018, the State-owned Assets Supervision and
                                          Administration Commission of Changzhou Municipal People’s
 Every change of controlling              Government transferred its entire holdings of 170,845,236 shares in the
 shareholder since incorporation          Company (a stake of 30.43%) to Changzhou Investment Group Co.,
                                          Ltd. for no compensation, which has thus become the controlling
                                          shareholder of the Company.


V Other Information

The independent audit firm hired by the Company:
 Name                                     Gongzheng Tianye Certified Public Accountants LLP
 Office address                           Yingtong Commerce Building, Changzhou, Jiangsu, China
 Accountants writing signatures           Wang Wenkai, Qin Zhijun
The independent sponsor hired by the Company to exercise constant supervision over the Company in the
Reporting Period:
√ Applicable □ Not applicable
            Name                       Office address               Representatives          Supervision period
                             10/F, China Industrial
 China Industrial            Securities Plaza, 36                Wang Lingxiao, Li        5 July 2021-31
 Securities Co., Ltd.        Changliu Road, Pudong               Lihong                   December 2022
                             New District, Shanghai
                             6/F, Donghai Securities
 Donghai Securities Co.,     Plaza, 1928 Dongfang                                         5 July 2021-31
                                                                 Wang Jiangqin, Xu Qin
 Ltd.                        Road, Pudong New District,                                   December 2022
                             Shanghai
The independent financial advisor hired by the Company to exercise constant supervision over the Company in
the Reporting Period:
□ Applicable √ Not applicable

VI Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
                                                                            2022-over-2021
                                      2022                   2021                                     2020
                                                                              change (%)
Operating          revenue
                                  2,182,043,095.61      2,452,430,515.60              -11.03%    2,296,464,711.24
(RMB)
Net profit attributable to
the listed company’s               76,684,796.91        103,006,232.54               -25.55%       52,432,443.05
shareholders (RMB)
Net profit attributable to
                                    -73,636,511.02         5,329,092.87                  ——       25,483,147.57
the listed company’s

                                                             7
Changchai Company, Limited                                                                         Annual Report 2022


shareholders     before
exceptional gains and
losses (RMB)
Net      cash  generated
from/used in operating             364,930,277.84    -266,323,779.30                   ——        251,796,654.53
activities (RMB)
Basic earnings per share
                                           0.1087               0.1657              -34.40%                0.0934
(RMB/share)
Diluted earnings       per
                                           0.1087               0.1657              -34.40%                0.0934
share (RMB/share)
Weighted average return
                                            2.51%                3.86%               -1.35%                 2.40%
on equity (%)
                                                                           Change of 31
                                                      31 December         December 2022
                             31 December 2022                                                  31 December 2020
                                                          2021           over 31 December
                                                                             2021 (%)
Total assets (RMB)                5,219,359,853.42   4,860,382,961.26                 7.39%      3,952,954,464.45
Equity attributable to the
listed         company’s         3,284,710,665.90   3,077,550,018.33                 6.73%      2,273,349,347.02
shareholders (RMB)


Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before
and after exceptional gains and losses was negative for the last three accounting years, and the latest independent
auditor’s report indicated that there was uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before
and after exceptional gains and losses was negative.
√ Yes □ No
             Item                          2022                   2021                         Note
                                                                                 Production and sales of the
                                                                                 Company’s primary products of
Operating revenue (RMB)               2,182,043,095.61        2,452,430,515.60
                                                                                 diesel engines, gasoline engines,
                                                                                 etc.
Deductions from operating                                                        Other business revenue than the
                                         36,475,111.66          48,310,768.54
revenue (RMB)                                                                    main operations
Operating revenue exclusive of                                                   Diesel engines, gasoline engines,
                                      2,145,567,983.95        2,404,119,747.06
deductions (RMB)                                                                 and accessories


VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable


                                                          8
Changchai Company, Limited                                                                     Annual Report 2022


No difference for the Reporting Period.

2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable
No difference for the Reporting Period.

VIII Key Financial Information by Quarter

                                                                                                     Unit: RMB
                                            Q1                    Q2                Q3               Q4
 Operating revenue                   675,718,729.65        502,503,762.39    545,599,669.07    458,220,934.50
 Net profit attributable to the
                                      -31,087,265.83        16,491,996.22    150,405,621.57    -59,125,555.05
 listed company’s shareholders
 Net profit attributable to the
 listed company’s shareholders
                                      -12,317,891.45         6,508,531.38      -5,566,500.16   -62,260,650.79
 before exceptional gains and
 losses
 Net cash generated from/used in
                                      -47,199,474.48       -27,101,026.64      -8,250,338.30   447,481,117.26
 operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs
materially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No

IX Exceptional Gains and Losses

√ Applicable □ Not applicable
                                                                                                     Unit: RMB
            Item                     2022                  2021              2020                Note
Gain or loss on disposal of
non-current assets (inclusive
                                     393,161.73            155,515.49        263,408.53
of impairment allowance
write-offs)
Government grants through
profit or loss (exclusive of
government              grants
consistently given in the
Company’s ordinary course         3,774,298.59        4,268,950.18         7,763,215.65
of business at fixed quotas or
amounts          as        per
governmental policies or
standards)
Capital occupation charges
                                                                             344,842.86
on non-financial enterprises


                                                       9
Changchai Company, Limited                                                                    Annual Report 2022


that are recognized in profit
or loss
                                                                                         Increase in the fair
Gain or loss on fair-value                                                               value of the
                                                                                         Company’s interest
changes on held-for-trading                                                              in Jiangsu Horizon
financial      assets    and                                                             New Energy
liabilities & income from                                                                Technology Co.,
                                                                                         Ltd., as well as
disposal of held-for-trading
                                                                                         decreased prices of
financial      assets    and                                                             the shares held by
                                 162,319,373.53     114,738,153.54       27,526,935.85
liabilities              and                                                             wholly-owned
                                                                                         subsidiary Horizon
available-for-sale financial
                                                                                         Investment in
assets (exclusive of the                                                                 Jiangsu Liance
effective portion of hedges                                                              Electromechanical
that arise in the Company’s                                                             Technology Co.,
                                                                                         Ltd. and Kailong
ordinary course of business)                                                             High Technology
                                                                                         Co., Ltd.
Reversed       portions   of
impairment allowances for
                                      30,000.00         147,611.25
receivables which are tested
individually for impairment
Non-operating income and
                                   1,735,346.51       2,400,863.71       -1,571,453.49
expense other than the above
Negative goodwill due to
business combination not           1,904,132.58
under common control
Less: Income tax effects          19,859,063.58      24,027,164.56        7,122,148.63
       Non-controlling
                                     -24,058.57            6,789.94         255,505.29
interests effects (net of tax)
Total                            150,321,307.93      97,677,139.67       26,949,295.48            --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.




                                                      10
Changchai Company, Limited                                                                      Annual Report 2022




                    Part III Management Discussion and Analysis

I Industry Overview for the Reporting Period

We are a manufacturer of internal combustion engines and fittings in general equipment manufacturing. According
to the classification of fuel used, internal combustion engines are mainly divided into diesel engines and gasoline
engines. Our diesel engines and gasoline engines are mainly used in non-road mobile machinery fields such as
harvesters, tractors, plant protection machinery, small engineering machinery, and shipborne machinery.
(1) Basic information on the industry
The internal combustion engine is an important support for China's manufacturing industry security, energy
security and national defense security, and an important basic industry of national economy and national defense
construction. The internal combustion engine is the most power-dense, thermally efficient and widely used heat
engine power unit.
In order to implement the national overall development strategy of energy conservation, emission reduction,
transformation, and upgrading, the internal combustion engine industry and agricultural machinery industry will
strengthen independent innovation and research and development, accelerate the construction of a common basic
technology platform, optimize the construction of the upstream and downstream industry chain, implement
intelligent manufacturing, and actively carry out international exchange and cooperation to accelerate the
realization of industrial technology upgrading.
(2) Development pattern and trend of the industry
In terms of policies, at the beginning of 2023, the 20th No. 1 Document guiding the work on agriculture, rural
areas, and farmers issued by the central government demonstrated the government’s intention to attach greater
importance to agriculture and strengthen agricultural development. In a bid to do so, the government will step up
efforts to enhance agricultural science and technology and provide more equipment, drive to tackle key problems
of key and core technologies in agriculture, and make agricultural machinery more intelligent and automated. In
terms of industry concerns, the upgrade and conversion to products that meet the National Emission Standard IV
raise challenges to enterprises. At the end of 2022, the central government appropriated RMB211.5 billion of
agriculture-related transfer payment funds for 2023 in advance, including RMB14.5 billion for subsidies of
agricultural machinery procurement and application. The central government allocated substantive funds for
subsidies and implemented policies to strengthen agriculture and benefit farmers, indicating that the state will
continue to attach great importance to agricultural mechanization.
In terms of industrial development, after a ten-year golden period of development, since 2016, the entire
agricultural machinery industry has entered a period of deep adjustment that has lasted for years. Although
short-term explosive growth was seen in 2020, it went down again, entering a phase of updating existing
machinery from the growth of new machine procurement. 2022, the first year of switching to the National
Emission Standard IV for Non-road Vehicles, the agricultural machinery industry faced pressures such as the
shrinking of the demand side, premature market overdraft, participation of tycoons from other industries, and the
impact of new energy market on the traditional market. Currently, multiple segmented scenarios still require
all-weather and continuous input and output, which is an advantage of diesel engines that cannot be substituted in
a short time. Furthermore, new development opportunities have been brought about in the process of national
strategic deployment and acceleration of transformation and upgrade. Therefore, the traditional market of
agricultural machinery still has a brilliant future.

                                                        11
Changchai Company, Limited                                                                       Annual Report 2022


China's diesel engine and gasoline engine industries present a pattern of multiple competitions. As the state adopts
increasingly strict environmental protection policy and the emission standards continue to upgrade, the core
technology and key parts of internal combustion engines will be rapidly developed and applied, and the research,
development, promoting and application of environmentally friendly and efficient diesel engines and gasoline
engines will become the mainstream trend, which promotes the wide use of the fuel injection system,
high-efficiency supercharger and high-efficiency after-treatment. In the new normal, the internal combustion
engine industry and agricultural machinery industry will improve the industry's capability of independent
innovation, support the whole machine development, and organize and implement green manufacturing and
intelligent manufacturing, so as to improve the overall strength of the industry. The market share of diesel and
gasoline engines is gradually concentrated in a few large-scale enterprises with technical and capital strength.
The present development trend of internal combustion engine industry is as follows: (1) energy saving and
emission reduction; (2) intelligent manufacturing; (3) lightweight. Medium- and low-end internal combustion
engines with low technical content and low added value will be gradually squeezed out of the market. The
upgrade of emission standards and the market's demand for high-end products will eliminate those small
enterprises with low level of research and development or less technology reserves.
(3) Sales of internal combustion engine industry in 2022
The total volume of the market dropped significantly due to factors such as subsidy policy change, tight supply
chain, upgrading of the National Emission Standard IV for Non-road Vehicles, and intensified existing
competition. The total sales of internal combustion engines in 2022 were 43,154,700 units, a decrease of 14.51%
compared to 2021. The total sales of diesel engines for the year were 4,286,600 units, down by 29.82% year on
year. Specifically, 837,200 engines for construction machinery, 1,222,300 engines for agricultural machinery,
39,700 engines for shipborne machinery, and 311,700 engines for electricity generation were sold. The sales of
gasoline internal combustion engines were 38,856,000, a drop of 12.39% year on year.
On the whole, the internal combustion engine market showed a declining tendency for the whole year, with the
construction and agricultural machinery still showing an adjustment trend. The agricultural machinery industry
faced a major shakeout, focusing on the switching of products that meet the China IV emission standards for
non-road mobile machinery. According to the information on the subsidies of agricultural machinery procurement,
the main terminal products that need to be upgraded to meet China IV emission standards are large and medium
tractors, wheat harvesters, forage harvesters, and spray rod-type sprayers. The market paid more attention to
whether they can be adequately verified to meet China IV emission standards and whether mass production can be
realized. In the second half of 2022, the sales of large and medium tractors, wheat harvesters, and corn harvesters
peaked, showing that the traditional demand cycle was altered.
In terms of the segments of the internal combustion engine market, in 2022, 897,300 units of construction
machinery were sold, down by 21.00% year on year; 4,141,300 units of agricultural machinery were sold, down
by 22.87% year on year; 39,700 units of shipborne machinery were sold, down by 1.18% year on year; 1,253,000
units of generator sets were sold, down by 19.02 year on year; and 1,645,400 units of horticultural machinery
were sold, down by 34.15% year on year. Compared with last year, the year-over-year growth of all kinds of
machinery was negative.
Due to the impact of international trade and the characteristics of the enterprise scale, the internal combustion
engine industry was steady and showed a positive trend on the whole. In 2022, the total volume of imports and
exports was USD30,086 million, down by 2.47% year on year; specifically, the import volume was USD8,803
million, down by 18.63% year on year and the export volume was USD21,284 million, up by 6.27% year on year.




                                                        12
  Changchai Company, Limited                                                                      Annual Report 2022


 II Principal Activity of the Company in the Reporting Period

 1. Principal Operations of the Company
 We mainly specialize in the R&D, manufacture and sales of diesel engines under the brand "Changchai" and
 gasoline engines under the brand "Robin". Our products are mainly used in agricultural machinery, small
 engineering machinery, light commercial vehicles, generator sets and shipborne machinery and other fields closely
 related to people's livelihood.
 In the Reporting Period, there were no major changes in the Company's core business and main products.
 2. Main Products of the Company
 Our main products are divided into two categories: diesel engines and gasoline engines. The details are as follows:
 Main                                                                                Product            Application
                Graphic display                 Product description
products                                                                             features             fields
                                       Our diesel engine products include
                                       single-cylinder diesel engines and
                                                                                 High power, low        Agricultural
                                       multi-cylinder engines, covering
                                                                                 oil consumption,        machinery,
                                       power range from 1.62kW to
                                                                                 low noise,             construction
 Diesel                                117.6kW, and cylinder diameters from
                                                                                 compact                 machinery,
 engine                                65mm to 135mm, with one or more
                                                                                 structure, low        generator sets,
                                       cylinders. Besides sale in domestic
                                                                                 emission, good          shipborne
                                       market, our diesel engines are sold to
                                                                                 reliability             machinery
                                       Southeast Asia, South America, the
                                       Middle East and Africa.
                                       Our gasoline engines are mainly
                                       general-purpose small gasoline
                                       engines, covering the power range         Simple structure,    Agricultural
Gasoline                               from 1.5kW to 7.0kW. Besides sale in      good reliability,   machinery, small
 engine                                domestic market, our gasoline engines     easy                 construction
                                       are sold to Southeast Asia, the Middle    maintenance           machinery
                                       East, Europe and America, Africa,
                                       Japan and other countries and regions.
 3. Major Business Models
 (1) R&D model
 We have established an innovative technology management system for internal combustion engine based on
 market demand and forward-looking technologies. Prior to the new products or new technologies development,
 the marketing department first conducts market assessment and customer research, and then initiates a project
 according to the forecasted market demand; the technology center conducts development according to the project
 materials, and collects feedback information from the market and customers in real time during the development
 process to ensure technology leadership and product suitability.
 (2) Purchasing model
 We adopt the "purchase-to-order" purchasing model. The ERP system converts the sales orders, the sales plan
 developed by the sales department and the production plan drawn up by the production department into the
 demand of parts needed, and the purchasing department organizes the purchase according to such demand.
 Meanwhile, the purchasing department makes a plan to guide parts procurement according to the sales


                                                         13
Changchai Company, Limited                                                                         Annual Report 2022


department's sales plan, and provide it to the supplier, and urge the supplier to prepare for the goods.
(3) Production model
We adopt the "make-to-order" production management model. The sales department makes sales plans for
different stages according to the orders in hand, sales data in previous years, market demand judgment and
feedback of existing customers' purchasing intentions. The Company's production department makes the
production plan according to the sales orders displayed in the ERP system, the sales plan made by the sales
department and the reserve inventory demand, and organizes the production task in strict accordance with the plan.
During the production process, the quality assurance department arranges regular inspection to ensure the product
quality.
(4) Sale model
We adopt the sales model of "direct selling + distribution", i.e. the direct selling model for the main engine factory,
and the distribution model for the individual circulation market represented by farmers and overseas market.
4. The Company's position in the market
We mainly specialize in the R&D, manufacture and sales of diesel engines under the brand "Changchai" and
gasoline engines under the brand "Robin". Up to now, we have successfully developed a number of advanced core
technologies with independent intellectual property rights. In terms of diesel engine, according to the statistics of
China Internal Combustion Engine Industry Association (CICEIA), as the largest small- and medium-sized
single-cylinder diesel engine manufacturer in the agricultural machinery industry of China, we have maintained a
high market share of single-cylinder engines, and our market share of single-cylinder diesel engines of some
power ranges has ranked first in China. For many years, in the process of achieving steady economic development
of the enterprise, we developed in a sound manner and cultivated the "Changchai" brand, a famous small diesel
engine brand of China with independent intellectual property rights.
5. Key Performance Drivers
(1) National policy driver
In recent years, various departments of the state have introduced a series of preferential policies to encourage the
development of internal combustion engine industry. In terms of agricultural machinery, the central government
has taken solving the problems relating to "agriculture, rural areas and farmers" as the top priority of the work of
the Party and the government, and issued a series of policies to benefit farmers, creating a good atmosphere for
promoting the development of agriculture and economy and society in rural areas; in terms of construction
machinery, the strategy of "western development", the "eight vertical and eight horizontal" high-speed railway
network plan and the policy of "new rural construction" have all created a good policy environment for the
application of internal combustion engine in downstream construction machinery.
(2) Industrial chain synergy empowers the sustainable development of the Company
We have built our own casting manufacturing and processing plants to meet the use requirements of some diesel
engine parts. In terms of production and quality, we have formed a significant synergy with its own internal
combustion engine assembly team. Our casting manufacturing team and internal combustion engine assembly
team work together to form a mutually reinforcing positive feedback loop to assist the Company in integrating the
internal combustion engine industry chain and building differentiated industry barriers. In terms of collaborative
production, the reduction of external purchase is of great significance for the Company to reduce process flow,
reduce intermediate loss, improve production efficiency, shorten delivery time and increase purchasing bargaining
power. In terms of quality coordination, the self-built foundry can improve our quality control of parts to improve
the yield and reliability of internal combustion engines.
(3) Stable and efficient R&D team
We have experienced technical management team and perfect technical support team. Our key technical personnel


                                                          14
Changchai Company, Limited                                                                        Annual Report 2022


and R&D management personnel have been engaged in internal combustion engine R&D design, production and
manufacturing for a long time. With profound professional knowledge and rich practical experience, they can
make strong forward-looking and scientific judgment in the market direction and technical route. Also, we have
established an effective training mechanism to foster talented persons for the follow-up R&D.
(4) Well-known brand with many well-known customers
The Company, formerly known as Changzhou Diesel Engine Factory, is a national industrial enterprise with a
history of a hundred years and one of the earliest professional internal combustion engine manufacturers in China.
Our diesel and gasoline engines, as power sources of agricultural machinery, construction machinery and
commercial vehicles, show excellent performance in power range, reliability, power per litre, noise control and
emission standards, and have been recognized by customers. We maintained a long-term partnership with major
customers, with cumulative partnership time exceeding 15 years. Many main engine plant customers of the
Company are well-known enterprises in the agricultural machinery industry, with their market shares being at the
forefront of the market.

III Core Competitiveness Analysis

1. Advantages in Brand
Changchai is a national industrial enterprise with a history of over one hundred years. It is one of the earliest
professional manufacturers of internal combustion engines in China. The brand "Changchai" is the earliest
domestic trademark of production goods known as China's well-known trademarks. The diesel engine of
"Changchai" brand is China's brand-name product. The enterprise has been certified by ISO9001 and IATF16949
quality systems, ISO14001 environmental management system, IATF16949 automotive product quality
management system, and accessed to the national export-free enterprise qualification. Changchai was honorably
ranked among “the Top One Hundred Chinese Enterprises in Engineering Industry” and “China Pacesetter
Enterprise of Industrial Industry” for several times, and was awarded the honorary title of “State-level Enterprise
of Observing Contracts and Keeping Promise”, “China's Agricultural Machinery Parts and Components Leading
Enterprises”, “China's Agricultural Machinery AAA Credit Enterprise”, “Quality Management Excellence Award
of Jiangsu Province” and “Mayor Quality Award of Changzhou City”. The Company has been among the 10
users’ most satisfied leading brands in “Jing Geng” competition for many years. In 2022, the Company was
awarded honorary titles such as Top 500 Machinery Industry In China, National Demonstration Enterprise of
Product and Service Quality Integrity, National Quality Leader of Internal Combustion Engine Industry, National
Quality Leading Brand of Internal Combustion Engine Industry, Product with Guaranteed Quality and Reputation
in China, Stable Qualified Product in National Quality Inspection, Top Ten Enterprises of Agricultural Machinery
and Equipment Industry in Jiangsu Province, and Three Star Enterprise in Changzhou. For many years, in the
process of achieving steady economic development of the enterprise, we developed in a sound manner and
cultivated the “Changchai” brand, a famous small diesel engine brand of China with independent intellectual
property rights.
2. Advantages in Technology
The Company has a state-level technology center and post-doctoral research station, and a research center of small
and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently, it is
mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel engine. It has
a complete product range, a wide power level coverage, a high reputation and intellectual property rights for its
main products. During the Reporting Period, the Company obtained the Re-assessment Certificate of the National
Enterprise Technology Centre, and seven models including EH36 and ZN490B were recognized as High-tech


                                                         15
Changchai Company, Limited                                                                      Annual Report 2022


Products of Changzhou City. In addition, the Company won the honor of the research and development base of the
intelligent and lightweight diesel engine of the agricultural machinery and equipment industry in Jiangsu Province.
During the Reporting Period, the Company was granted 23 patents. As of the end of 2022, it has a total of 159
valid patents at home and abroad, including 13 invention patents.
3. Advantages in Marketing
Changchai has built up a sales service network covering the whole country, with 5 sales business units, 26 sales
service centers, and 698 designated maintenance stations. In addition, in order to meet the National Emission
Standard IV for Non-Road Vehicles and provide better after-sales service for customers, a service monitoring
platform with Changchai characteristics has been put in place. With a perfect diesel sales service network system,
the Company is able to provide high quality, efficient and timely services for customers.

IV Core Business Analysis

1. Overview

In 2022, the domestic and international political and economic situation was complex and volatile. China’s
economy continued to face multiple pressures such as shrinking demand, supply interruptions, and weakened
expectations. The total volume of the market dropped due to factors such as subsidy policy change, tight supply
chain, upgrading of the National Emission Standard IV for Non-road Vehicles, and intensified existing
competition. Facing the new normal of the complicated and volatile development and declining trend of the
agricultural machinery industry, the Company united all employees and further focused on products, market, and
quality to seek progress while maintaining stability and innovation. The Company spared no effort to advance the
implementation of the annual operation policy and objectives, effectively combined product operation and capital
management, and accelerated production upgrade and industrial chain expansion to maintain a stable and orderly
development tendency. During the Reporting Period, the Company sold approximately 607,300 diesel engines,
gasoline engines and generator sets, including approximately 147,000 gasoline engines, generating total sales
revenue of RMB2.182 billion, a decrease of 11.03% year-on-year.
In terms of product development and support, the Company completed the development and support certification
for mainstream models of single-cylinder and multi-cylinder engines that met the National Emission Standard IV
for Non-road Vehicles and launched them to the market through mass production. The Company orderly advanced
the extension of multi-cylinder engines’ upper and lower power ranges. The high-power multi-cylinder engines
were launched to the market through mass production after completing support verification and the optimized
multi-cylinder products with small cylinder diameters made breakthroughs in terms of the supporting fields. In
addition, the development of the diesel outboard engine made phased progress and passed RCD, MED EU
certification, and CCS certification.
In terms of market services, domestic and overseas sales maintained the stability of the foundation and expanded
new markets. The single-cylinder orderly completed the switch of accessories that met the National Emission
Standard IV for Non-Road Engines of main engine factories and promoted the sales of products in the
non-agriculture fields by active guidance and network optimization. In terms of multi-cylinder engines, the market
share of accessories in the key fields was increased. In addition, the foreign trade market maintained sales growth
in core market segments and made breakthroughs in the emerging market. The Company stepped up efforts to
manage the appraisals of service sites in the service process and further optimized the resource allocation of the
service sites. The Company completed the function iteration and development of the remote monitoring platform
of engines, which will provide effective technical support for the Company’s product design and development and


                                                        16
Changchai Company, Limited                                                                       Annual Report 2022


the after-sales services of repair, replacement and return.
In terms of quality management, the Company stepped up efforts to develop the quality management system,
implemented the quality responsibility system, strengthened the quality loss control of the entire production and
manufacturing process, and effectively reduced quality loss. The Company organized to implement the
management review, internal review of the quality system, product review, and process review and properly adjust
the content of the system documents based on reality, and successfully passed the annual external audit of the
quality management system.
In terms of internal management, the Company continued to carry out the three-year action of special safety
rectification of safety production, promoted the “safety code” in all respects, made the hidden risk screening and
governance institutionalized and standardized, and successfully passed the ISO14001 environmental system
supervision and review during the year. The Company initiated the standard implementation of the management
system of the integration of “information technology and industrialization” within the year and successfully
passed the assessment of the AA-grade integration of “information technology and industrialization” management
system. During the Reporting Period, the Company adopted multiple measures to reduce costs and increase
efficiency to cope with the continuous rise in raw material prices at home and abroad. Great efforts were made to
resolutely crack down on infringements in the market and the Company’s intellectual property was effectively
safeguarded through innovative measures.
In the Reporting Period, the Company acquired 41.5% of the equity of Zhenjiang Siyang Diesel Engine
Manufacturing Co., Ltd. by bidding. On 16 May 2022, Zhenjiang Siyang convened a general meeting of
shareholders, a meeting of the Board of Directors and a meeting of the Supervisory Committee to re-elect
members for the Board of Directors, the Supervisory Committee and management. Zhenjiang Siyang has been
included in the consolidated financial statements of the Company.

2. Revenue and Cost Analysis

(1) Breakdown of Operating Revenue

                                                                                                        Unit: RMB
                                  2022                                   2021
                                                                                   As % of
                                         As % of total
                                                                                     total        Change (%)
                   Operating revenue       operating      Operating revenue
                                                                                   operating
                                         revenue (%)
                                                                                 revenue (%)
Total                 2,182,043,095.61           100%         2,452,430,515.60          100%            -11.03%
By operating division
Internal
combustion            2,145,567,983.95         98.33%         2,404,119,747.06        98.03%            -10.75%
engines
Other                    36,475,111.66          1.67%           48,310,768.54          1.97%            -24.50%
By product category
Diesel engines        1,971,005,207.88         90.33%         2,241,032,641.05        91.38%            -12.05%
Gasoline
                        148,144,749.68          6.79%          149,717,934.82          6.10%             -1.05%
engines
Other                    62,893,138.05          2.88%           61,679,939.73          2.52%              1.97%


                                                         17
Changchai Company, Limited                                                                             Annual Report 2022


By operating segment
Domestic              1,857,845,869.48            85.14%          2,038,317,678.97        83.11%               -8.85%
Overseas                324,197,226.13            14.86%           414,112,836.63         16.89%              -21.71%
By marketing model
Distribution            770,975,653.30            35.33%           689,413,386.97         28.11%              11.83%
Direct sales          1,411,067,442.31            64.67%          1,763,017,128.63        71.89%              -19.96%

(2) Operating Division, Product Category, Operating Segment or Marketing Model Contributing over 10%
of Operating Revenue or Operating Profit

√ Applicable □ Not applicable
                                                                                                             Unit: RMB
                                                                                                        YoY change
                                                                        YoY change     YoY change
                  Operating                            Gross profit                                        in gross
                                  Cost of sales                         in operating    in cost of
                   revenue                               margin                                         profit margin
                                                                        revenue (%)     sales (%)
                                                                                                             (%)
By operating division
Internal
                 2,145,567,98     1,924,209,35
combustion                                                  10.32%           -10.75%          -6.22%           -4.33%
                         3.95             0.48
engines
By product category
Diesel           1,971,005,20     1,795,214,08
                                                             8.92%           -12.05%          -6.77%           -5.16%
engines                  7.88             0.08
Gasoline         148,144,749.     125,625,016.
                                                            15.20%            -1.05%          -2.60%            1.35%
engines                    68               85
By operating segment
                 1,857,845,86     1,633,460,07
Domestic                                                    12.08%            -8.85%          -3.08%           -5.23%
                         9.48             3.55
                 324,197,226.     315,216,962.
Overseas                                                     2.77%           -21.71%       -21.69%             -0.03%
                           13               97
By marketing model
                 770,975,653.     678,293,018.
Distribution                                                12.02%           11.83%           18.49%           -4.95%
                           30               21
                 1,411,067,44     1,270,384,01
Direct sales                                                 9.97%           -19.96%       -16.17%             -4.07%
                         2.31             8.31
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable

(3) Whether Revenue from Physical Sales Is Higher than Service Revenue

√ Yes □ No
   Operating
                          Item                  Unit                  2022             2021             Change (%)
    division
Diesel engines     Unit sales            Unit                           458,300        596,279.00             -23.14%

                                                             18
Changchai Company, Limited                                                                          Annual Report 2022


                    Output             Unit                       439,604           601,253.00             -26.89%
                    Inventory          Unit                        64,867            83,563.00             -22.37%
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable

(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period

□ Applicable √ Not applicable

(5) Breakdown of Cost of Sales

                                                                                                          Unit: RMB
                                              2022                            2021
                                                      As % of                           As % of
  Product
                      Item                           total cost                        total cost     Change (%)
  category                          Cost of sales                   Cost of sales
                                                      of sales                          of sales
                                                        (%)                               (%)
Diesel            Raw
                                  1,560,381,852.91     80.07%     1,659,710,451.07       79.61%             -5.98%
engines           materials
Diesel
                  Labor cost       229,434,494.85      11.77%      240,110,930.78        11.52%             -4.45%
engines
Diesel
                  Depreciation      56,624,131.58       2.91%       71,198,110.78         3.42%            -20.47%
engines
Diesel
                  Energy            15,340,866.19       0.79%       30,044,125.27         1.44%            -48.94%
engines

(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period

 √ Yes   □ No
The Sixth Extraordinary Meeting of the Board of Directors in 2021 held by the Company on 28 October 2021
deliberated on and approved the Proposal on Participation in Bidding for 41.5% Equity Interests in Zhenjiang
Siyang Diesel Engine Manufacturing Co., Ltd., authorizing the Management of the Company to participate in
bidding for 41.5% equity interest in Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. (hereinafter referred
to as "Zhenjiang Siyang") that had been put out for sale by Jiangsu Keda Assets Marketing Co., Ltd. (hereinafter,
“Keda Assets”). On 12 January 2022, Jiangsu Assets and Equity Exchange Co., Ltd. issued the Confirmation of
Transaction on the Transfer of 41.5% Equity Interests (Corresponding to Capital Contribution of RMB830,000) in
Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. The Company won the bid for the 41.5% equity
interests in Zhenjiang Siyang at a price of RMB33,520,800.00. On 23 February 2022, the Company signed the
Contract on Transfer of State-owned Property Rights with Keda Assets. On 9 March 2022, Zhenjiang Siyang has
completed the relevant registration alteration formalities with the competent industrial and commercial
administration. On 16 May 2022, Zhenjiang Siyang held meetings of shareholders, the Board of Directors and the
Supervisory Committee to elect and appoint new members for the Board of Directors, the Supervisory Committee
and management, with the Company taking over half of the seats in the Board of Zhenjiang Siyang. As such,
Zhenjiang Siyang has been included in the consolidated financial statements of the Company, bringing the number
of consolidated subsidiaries to eight.

                                                        19
Changchai Company, Limited                                                                   Annual Report 2022


(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period

□ Applicable √ Not applicable

(8) Major Customers and Suppliers

Major customers:
 Total sales to top five customers (RMB)                                                   1,054,121,258.48
 Total sales to top five customers as % of total sales of the
                                                                                                     48.31%
 Reporting Period (%)
 Total sales to related parties among top five customers as % of
                                                                                                      0.00%
 total sales of the Reporting Period (%)
Information about top five customers:
                                            Sales revenue contributed for the   As % of total sales revenue
     No.              Customer
                                                Reporting Period (RMB)                     (%)
 1         Customer 1                                         550,073,305.21                         25.21%
 2         Customer 2                                         207,614,866.65                          9.51%
 3         Customer 3                                         174,674,496.40                          8.01%
 4         Customer 4                                          66,280,122.00                          3.04%
 5         Customer 5                                          55,478,468.22                          2.54%
 Total                     --                               1,054,121,258.48                         48.31%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
 Total purchases from top five suppliers (RMB)                                               288,156,794.05
 Total purchases from top five suppliers as % of total purchases
 of the Reporting Period (%)                                                                         18.39%
 Total purchases from related parties among top five suppliers
                                                                                                      0.00%
 as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
                                            Purchase in the Reporting Period
     No.                 Supplier                                               As % of total purchases (%)
                                                         (RMB)
 1          Supplier 1                                        128,212,300.00                          8.18%
 2          Supplier 2                                         57,147,375.28                          3.65%
 3          Supplier 3                                         43,433,746.37                          2.77%
 4          Supplier 4                                         35,757,706.62                          2.28%
 5          Supplier 5                                         23,605,665.79                          1.51%
 Total                       --                               288,156,794.05                         18.39%
Other information about major suppliers:
□ Applicable √ Not applicable




                                                       20
Changchai Company, Limited                                                                         Annual Report 2022


3. Expense

                                                                                                          Unit: RMB
                                                                                                 Reason for any
                                  2022                 2021               Change (%)
                                                                                               significant change
Selling expense              102,630,223.71          117,242,290.32                  -12.46%
Administrative
                             119,511,189.72           98,890,284.22                  20.85%
expense
                                                                                               Increased exchange
Finance costs                -21,589,704.63            1,203,615.80                    ——    gains and interest
                                                                                               income
R&D expenses                  81,239,597.06           82,390,284.14                   -1.40%

4. R&D Investments

√ Applicable □ Not applicable
   Major R&D                                                                               Expected impact on the
                          Purpose         Progress             Specific objectives
    project                                                                                      Company
                   Developing the
                                                         Optimizing and upgrading
                   multi-cylinder
                                                         based on the M series diesel
                   diesel engine with
                                                         engine. Increasing engine         After the
                   small cylinder
 Development                                             power by adopting the             implementation of the
                   diameters that can
 project of the                                          high-pressure common rail         project, the upgraded
                   meet the supporting
 lightweight,                                            system, electronic control        diesel engine will have
                   requirements of rice   In
 low-emission                                            technical route, supercharger     a broad and good
                   transplanters, plant   progress
 diesel engine                                           and post-processing               market application
                   protection spray
 of common rail                                          technology to meet the            prospects and will be
                   machines, tractors,
 series                                                  National Emission Standard        more competitive in the
                   small construction
                                                         IV for Non-Road Vehicles and      market.
                   machinery, and
                                                         expand market supporting
                   horticultural
                                                         fields.
                   machinery
                                                         Making an optimal design of
                                                                                           After the
                                                         the engine’s structure and
                                                                                           implementation of the
                                                         performance to significantly
                   Developing                                                              project, the product will
                                                         improve product indicators
 The power and     efficient,                                                              meet the requirements
                                                         such as reliability, fuel
 assembly R&D      eco-friendly, and                                                       of the National
                                          In             consumption, and emission to
 project of        energy-saving                                                           Emission Standard IV
                                          progress       meet the advanced level of
 diesel outboard   power and                                                               for Non-road Vehicles
                                                         similar products abroad as
 engines           assembly of diesel                                                      and will have extensive
                                                         well as the requirements of
                   outboard engines.                                                       application scenarios
                                                         the National Emission
                                                                                           and broad market
                                                         Standard IV for Non-road
                                                                                           prospects.
                                                         Vehicles.
 Development       Developing             In             Realizing energy saving,          After the

                                                          21
Changchai Company, Limited                                                                    Annual Report 2022


project of the     efficient,             progress   meeting the requirements of      implementation of the
special diesel     eco-friendly, and                 the National Emission            project, the product will
engine of the      energy-saving                     Standard IV for Non-road         have salient advantages
high               outboard engines                  Vehicles, and meeting the        in terms of power
horsepower                                           supporting requirements of       performance, safety,
outboard                                             various types of small fishery   economic efficiency,
engines                                              machinery by applying            and environmental
                                                     high-performance                 protection and meet the
                                                     technologies such as diesel      requirements of the
                                                     engine energy saving, noise      National Emission
                                                     reduction, environmental         Standard IV for
                                                     protection, material saving,     Non-road Vehicles.
                                                     and service life extension.
                   Developing                                                         Diversifying the
                                                     Making major optimization of
                   lightweight                                                        Company’s products,
                                                     the diesel engine’s structure
Development        single-cylinder,                                                   further expanding the
                                                     and performance to meet the
project of the     water-cooled,                                                      power market, and
                                          In         advanced level of similar
special diesel     high-speed diesel                                                  meeting non-emission
                                          progress   products abroad as well as the
engine of the      engines to meet the                                                regulatory requirements
                                                     requirements of the National
motorcycle         power requirements                                                 can bring about new
                                                     Emission Standard IV for
                   of motor-tricycle in                                               growth points for the
                                                     Three-wheelers.
                   the market                                                         Company’s benefits.
                                                                                      After the
                                                     Further making diesel engines
                                                                                      implementation of the
                                                     more technical and lowering
                                                                                      project, the upgraded
                                                     the harmful substance
                                                                                      diesel engine will meet
                   Developing diesel                 emissions of diesel engines to
                                                                                      the requirements of the
Development        engines that have                 make their indicators better,
                                                                                      National Emission
project of         higher performance     In         meet domestically advanced
                                                                                      Standard IV for
4G29 diesel        and meet the           progress   level in terms of economic
                                                                                      Non-road Vehicles and
engine             emission                          efficiency and power
                                                                                      drive the Company’s
                   requirements                      performance and meet the
                                                                                      non-road vehicle
                                                     requirements of the National
                                                                                      technologies to be more
                                                     Emission Standard IV for
                                                                                      mature and
                                                     Non-road Vehicles.
                                                                                      well-developed.
Development        Developing                        Improving diesel engine’s       After the
project of         single-cylinder                   power performance, economic      implementation of the
single-cylinder    diesel engines with               efficiency of fuel, and other    project, the product will
diesel engines     a mechanical pump                 performance indicators, as       meet the requirements
                                          In
with a             that have higher                  well as service life and         of the National
                                          progress
mechanical         performance and                   making the emission              Emission Standard IV
pump that can      meet the National                 indicators meet the National     for Non-road Vehicles
meet the           Emission Standard                 Emission Standard IV for         in terms of the emission
National           IV for Non-road                   Non-road Vehicles                indicators and meet the


                                                      22
Changchai Company, Limited                                                                           Annual Report 2022


 Emission          Vehicles                                                                  supporting
 Standard IV                                                                                 requirements of
 for Non-road                                                                                machinery, bringing
 Vehicles                                                                                    about new growth
                                                                                             points for the
                                                                                             Company’s benefits.
                                                                                             After the
                                                                                             implementation of the
                                                                                             project, the product will
                   Developing a
                                                             Conducting structural           meet the requirements
                   higher-performance
 Development                                                 optimization of diesel engine   of non-road China IV
                   light multi-cylinder     In
 of V402 diesel                                              components to improve           vehicle emission
                   diesel engine that       progress
 engine                                                      product performance and         regulations, the
                   meets the emission
                                                             reliability.                    supporting
                   requirements
                                                                                             requirements of
                                                                                             machinery, and market
                                                                                             demand.
                                                             Conducting major design         After the
                   Developing more                           optimization of the engine      implementation of the
                   efficient,                                structure and performance to    project, the product will
 Development
                   environmentally                           improve the reliability, fuel   meet the requirements
 of D15 diesel                              In
                   friendly and                              consumption, emissions and      of non-road China IV
 outboard                                   progress
                   energy-saving                             other indicators of the         vehicle emission
 engine
                   diesel-powered                            product, so as to reach the     regulations and open up
                   products                                  advanced level of similar       the market of ship
                                                             foreign products.               machinery.
                                                                                             After the
                                                                                             implementation of the
                                                                                             project, the product
                                                             Improving the emission          meets the market
                   Developing
 Development                                                 characteristics and economic    demand and makes the
                   efficient and
 of                                                          characteristics of              goods quality and
                   environmentally          In
 diesel-electric                                             diesel-electric hybrid diesel   logistics efficiency of
                   friendly                 progress
 hybrid                                                      engines to enhance the energy   the cold chain timely,
                   diesel-powered
 products                                                    efficiency, endurance and       safe and efficient,
                   products
                                                             reliability.                    providing a
                                                                                             whole-procedure
                                                                                             temperature and quality
                                                                                             management solution.
Details about R&D personnel:
                                          2022                           2021                    Change (%)
Number    of     R&D
                                                       236                           264                    -10.61%
personnel
R&D personnel as % of                            8.89%                            9.55%                       -0.66%


                                                              23
Changchai Company, Limited                                                                  Annual Report 2022


total employees
Educational background of R&D personnel
Bachelor’s degree                              101                           117                   -13.68%
Master’s degree                                    7                         13                    -46.15%
Age structure of R&D personnel
Below 30                                           25                         34                    -26.47%
30~40                                              84                         95                    -11.59%
Details about R&D investments:
                                                 2022                      2021                 Change (%)
R&D investments (RMB)                               81,239,597.06           82,390,284.14            -1.40%
R&D investments as % of operating
                                                             3.72%                   3.36%            0.36%
revenue
Capitalized R&D investments (RMB)                              0.00                    0.00            ——
Capitalized R&D investments as % of
                                                             0.00%                   0.00%             ——
total R&D investments
Reasons for any significant change in the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reasons for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable

5. Cash Flows

                                                                                                    Unit: RMB
              Item                          2022                       2021                 Change (%)
Subtotal of cash generated from
                                          2,150,597,784.38           1,878,728,640.47                14.47%
operating activities
Subtotal of cash       used   in
                                          1,785,667,506.54           2,145,052,419.77               -16.75%
operating activities
Net cash generated from/used in
                                            364,930,277.84            -266,323,779.30                  ——
operating activities
Subtotal of cash generated from
                                            944,067,348.19             385,166,151.68               145.11%
investing activities
Subtotal of cash       used   in
                                          1,082,020,854.62             850,680,343.34                27.19%
investing activities
Net cash generated from/used in
                                           -137,953,506.43            -465,514,191.66                  ——
investing activities
Subtotal of cash generated from
                                            135,437,700.65             711,844,747.79               -80.97%
financing activities
Subtotal of cash       used   in
                                            114,312,925.54              45,328,892.65               152.19%
financing activities
Net cash generated from/used in
                                             21,124,775.11             666,515,855.14               -96.83%
financing activities
Net increase in cash and cash               247,948,744.46             -67,537,318.91                  ——

                                                        24
Changchai Company, Limited                                                                         Annual Report 2022


equivalents
Explanation of why any of the data above varies significantly:
√Applicable  Not applicable
The significant year-on-year change in net cash generated from/used in operating activities was primarily because
the Company strengthened the collection of payments by customers, destocked due to the rising emission
standards (resulting in decreased procurement expenditure), and discounted certain bank acceptance notes from
customers with high credit levels for cash management purposes in pursuit of higher income in the Reporting
Period.
The significant year-on-year change in net cash generated from/used in investing activities was primarily due to
the Company’s acquisition of a 41.5% interest in Zhenjiang Siyang, a capital increase to Jiangsu Horizon New
Energy Technology Co., Ltd., and the proper use of idle funds for cash management purposes, in the Reporting
Period.
The significant year-on-year change in net cash generated from/used in financing activities was primarily because
the Company raised a gross amount of RMB634,999,936.40 (net proceeds: RMB620,665,733.97) in a private
placement of 144,318,181 shares of the RMB-denominated ordinary stock (A-stock) last year, while there were no
such financing activities during the Reporting Period.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
√Applicable  Not applicable
The big difference between the net operating cash flow and the net profit for this Reporting Period was mainly
because of the impact on the current income of the fair value changes of the financial assets held by the Company,
and the discounting of certain bank acceptance notes with high credit levels.

V Analysis of Non-Core Businesses

√Applicable  Not applicable
                                                                                                         Unit: RMB
                                             As % of                                                   Recurrent
                             Amount                                         Source
                                            gross profit                                                or not
Return on                                                   Stock dividends and income from cash
                             7,969,467.19        9.75%                                                    Yes
investment                                                  management
                                                            increased fair value of the Company’s
                                                            interest in Jiangsu Horizon New Energy
                                                            Technology Co., Ltd., as well as the
Gains/losses on
                                                            decreased prices of the shares held by
changes in fair         145,243,457.17        177.75%                                                      No
                                                            wholly-owned subsidiary Horizon
value
                                                            Investment in Jiangsu Liance
                                                            Electromechanical Technology Co., Ltd.
                                                            and Kailong High Technology Co., Ltd.
Asset impairment
                         -14,367,197.27        -17.58%      Inventory valuation loss                       No
loss
                                                            Negative goodwill and amounts that
Non-operating
                             4,257,942.65        5.21%      require no payment due to business             No
income
                                                            combination not under common control
Non-operating
                              618,463.56         0.76%      Loss on retirement of non-current assets       No
expense



                                                           25
Changchai Company, Limited                                                                       Annual Report 2022


VI Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

                                                                                                        Unit: RMB
                     31 December 2022                 1 January 2022           Change
                                      As %                          As % of       in          Reason for any
                      Amount         of total       Amount            total    percenta     significant change
                                      assets                         assets     ge (%)
                                                                                          The strengthened
                                                                                          collection of payments
Monetary                                                                                  by customers, and the
                  930,013,350.97     17.82%     707,966,678.74       14.57%      3.25%    discounting of certain
assets                                                                                    bank acceptance notes
                                                                                          from customers in the
                                                                                          Reporting Period.
Accounts
                  370,322,179.77      7.10%     375,209,126.48         7.72%    -0.62%
receivable
Inventories       571,996,881.74     10.96%     651,083,758.18       13.40%     -2.44%
Investment
                   42,160,779.65      0.81%       44,597,255.21        0.92%    -0.11%
property
                                                                                          Majority-owned
                                                                                          subsidiary Changchai
                                                                                          Machinery’s
                                                                                          lightweight engine and
                                                                                          casting relocation
Fixed assets      720,061,387.76     13.80%     402,915,521.65         8.29%     5.51%
                                                                                          project was transferred
                                                                                          from construction in
                                                                                          progress to fixed
                                                                                          assets in the Reporting
                                                                                          Period.
                                                                                          Majority-owned
                                                                                          subsidiary Changchai
                                                                                          Machinery’s
                                                                                          lightweight engine and
Construction                                                                              casting relocation
                   30,281,547.56      0.58%     270,305,690.91         5.56%    -4.98%
in progress                                                                               project was transferred
                                                                                          from construction in
                                                                                          progress to fixed
                                                                                          assets in the Reporting
                                                                                          Period.
                                                                                          Certain bank
                                                                                          acceptance notes with
Short-term                                                                                low credit levels were
                  115,437,700.65      2.21%       73,971,466.65        1.52%     0.69%    discounted in the
borrowings                                                                                Reporting Period,
                                                                                          which were undue at
                                                                                          the period-end.
Contract
                   32,843,692.83      0.63%       26,864,081.97        0.55%     0.08%
liabilities
Indicate whether overseas assets take up a high percentage in total assets.

                                                         26
Changchai Company, Limited                                                                       Annual Report 2022


□ Applicable √ Not applicable

2. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable
                                                                                                       Unit: RMB
                          Gain/loss
                                       Cumulati     Impairme
                              on
                                            ve          nt      Purchase     Sold in
                          fair-value
              Beginnin                 fair-value   allowance    d in the      the          Other      Ending
     Item                  changes
              g amount                   changes      for the   Reporting   Reporting      change      amount
                            in the
                                         charged    Reporting    Period      Period
                          Reporting
                                        to equity     Period
                            Period
Financial assets
1.
Held-for-t
rading
financial
assets
              404,053,2   -42,836,7                             969,060,7   960,173,6                 370,103,6
(derivativ
                  61.57       41.19                                 67.00       84.81                     02.57
e
financial
assets
exclusive
)
4.
Investme
nt in
              779,877,6                770,990,2                                                      955,560,2
other
                  46.53                    40.08                                                          40.08
equity
instrumen
ts
Subtotal
of            1,183,930   -42,836,7    770,990,2                969,060,7   960,173,6                 1,325,663
financial       ,908.10       41.19        40.08                    67.00       84.81                   ,842.65
assets
              150,398,2   187,411,3                             75,000,00                             412,809,5
Other
                  26.39       61.54                                  0.00                                 87.93
Total of      1,334,329   144,574,6    770,990,2                1,044,060   960,173,6                 1,738,473
above           ,134.49       20.35        40.08                  ,767.00       84.81                   ,430.58
Financial
                   0.00                                                                                     0.00
liabilities
Significant changes to the measurement attributes of the major assets in the Reporting Period:

                                                        27
Changchai Company, Limited                                                                                Annual Report 2022


□ Yes √ No

3. Restricted Asset Rights as at the Period-End

                 Item                    Ending carrying value                          Reasons
                                                                   Security deposits associated with bank acceptance
Monetary assets                                    95,662,384.92
                                                                   notes, environment, etc.
Buildings                                           1,530,890.90 Collateral for bank loan
Land use right                                          879,275.35 Collateral for bank loan
Plant and equipment                                31,222,420.22 Collateral for bank loan
Payment obligations in relation to
                                                  110,000,000.00
discounted notes that were undue
Payment obligations in relation to
                                                   66,395,231.83
transferred notes that were undue
                 Total                            305,690,203.22


VII Investments Made

1. Total Investment Amount

√ Applicable □ Not applicable
  Investments made in Reporting           Investments made in same period
                                                                                                  +/-%
          Period (RMB)                           of last year (RMB)
         108,520,800.00                           160,000,000.00                                 -32.17%

2. Major Equity Investments Made in the Reporting Period

√ Applicable □ Not applicable
                                                                                                                Unit: RMB
                                                                                        Profi
                                                                                        ts or
                                                                         Prog           losse
                                                                         ress             s of    Invo
                                  Shar                                                                      Disc    Disc
                 Inve    Inve            Capi                            as of   Esti    inve      lvin
        Mai                       ehol                   Inve    Type                                       losur   losur
                 stme    stme             tal                             the    mate   stme       g in
Inve     n                        ding           Part    stme     of                                           e       e
                   nt      nt            reso                            bala      d    nt in     laws
stee    busi                      perc           ner       nt    prod                                        date    inde
                 meth    amo             urce                             nce    inco     the       uit
        ness                      enta                   term    ucts                                         (if    x (if
                  od      unt              s                             shee     me     Rep        or
                                   ge                                                                       any)    any)
                                                                           t            ortin      not
                                                                         date               g
                                                                                         Peri
                                                                                           od


                                                            28
Changchai Company, Limited                                                                                             Annual Report 2022


                                                                                    Tran
        Man                                                             Man
Zhe                                                                                 sacti
        ufact                                                           ufact
njian                                                                               on
        urin                                                            urin
g                                                                                   com
        g                                                               g
Siya                                                                                plete
        and                                                             and
ng                                                                                  d
        mar                                                             mar
Dies                                                                                with
        ketin            33,5             Self-             Lon         ketin                                            29
el              Acq                               Non                               the                 1,90
        g of             20,8      41.5                                 g of                                             Octo     2021
Engi            uisiti                    fund              g-ter                   relev      0.00     4,13    Not
        dies             00.0       0%            e                     dies                                             ber      -068
ne              on                        ed                m                       ant                 2.58
        el                  0                                           el                                               2021
Man                                                                                 equit
        engi                                                            engi
ufact                                                                               y
        ne                                                              ne
urin                                                                                inter
        sets                                                            sets
g                                                                                   ests
        for                                                             for
Co.,                                                                                trans
        ship                                                            ship
Ltd.                                                                                ferre
        s                                                               s
                                                                                    d
                                                                                    Own
                                                                                    ershi
                                                                                    p
Jian                                                                                chan
gsu                                                                                 ge
Hori                                                                                regis
zon                                                                                 tered
        Lithi                                                           Lithi
New             Capi     75,0             Self-             Lon                     with                186,             27
        um                                        Non                   um
Ener            tal      00,0      5.36                                             the                 000,             Aug      2022
        diap                              fund              g-ter       diap                   0.00             Not
gy              incre    00.0        %            e                                 indu                000.             ust      -049
        hrag                              ed                m           hrag
Tech            ase         0                                                       strial               00              2022
        m                                                               m
nolo                                                                                and
gy                                                                                  com
Co.,                                                                                merc
Ltd.                                                                                ial
                                                                                    admi
                                                                                    nistr
                                                                                    ation
                         108,                                                                           187,
Tota                     520,                                                                           904,
         --       --               --       --      --           --          --       --       0.00               --       --       --
l                        800.                                                                           132.
                           00                                                                            58


3. Major Non-Equity Investments Ongoing in the Reporting Period

□ Applicable √ Not applicable

4. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable
                                                                                                                                Unit: RMB

Varie   Code     Nam      Initia    Acco     Begi        Gain/        Accu        Purc       Sold     Gain/    Endi     Acco      Fund
                                    untin    nnin        loss         mula        hase         in     loss      ng
ty of    of      e of       l         g       g           on           ted        d in        the      in      carry    untin      ing


                                                                  29
Changchai Company, Limited                                                                             Annual Report 2022


secur    secur   secur   inves    meas    carry     fair     fair       the    Repo     the     ing        g     sourc
                                  urem     ing    value     value      Repo    rting   Repo    amou
 ity      ity     ity    tmen                                                                            title     e
                                   ent    amou     chan     chan       rting   Perio   rting     nt
                         t cost   meth      nt      ges      ges       Perio     d     Perio
                                   od             in the    recor        d               d
                                                  Repo       ded
                                                   rting      in
                                                  Perio     equit
                                                     d        y
                                                                                                        Inves
                                                                                                        tmen
Dom                                                                                                     t in
                 Foto             Fair
estic/                                                          364,                            406,    other    Self-
                 n       41,78    value   497,0
         6001                                                   261,                            045,
forei                    4,000            80,00    0.00                 0.00    0.00    0.00            equit    fund
         66      Moto             meth                          000.                            000.
gn                         .00             0.00                                                         y        ed
                                                                  00                             00
                 r                od
stock                                                                                                   instr
                                                                                                        umen
                                                                                                        ts
                                                                                                     Inves
                                                                                                     tmen
Dom                                                                                                  t in
                 Bank             Fair
estic/                                                          127,                            170, other       Self-
                 of      42,78    value   136,4
         6009                                                   800,                            586,
forei                    6,000            22,00    0.00                 0.00    0.00    0.00         equit       fund
         19      Jiang            meth                          000.                            000.
gn                         .00             0.00
                                                                  00                              00 y           ed
                 su               od
stock                                                                                                instr
                                                                                                     umen
                                                                                                     ts
                 Kailo                                                                               Held
Dom                                                                                                  -for-t
                 ng               Fair                                                 -10,5         radin
estic/                   20,00            24,13   -10,5                                         13,5             Self-
         3009    High             value                                                 43,9         g
forei                    1,268            6,339   43,92         0.00    0.00    0.00           92,41             fund
         12      Tech             meth                                                  28.0         finan
gn                         .00              .00    8.00                                         1.00             ed
                                                                                           0         cial
                 nolo             od
stock                                                                                                asset
                 gy                                                                                  s
                                                                                                     Held
Dom              Lian                                                                                -for-t
                                  Fair                                                 -27,7    60,0 radin
estic/           ce      7,200            87,84   -27,7                                                          Self-
         6881                     value                                                 77,6    62,4 g
forei            Tech     ,000.           0,000   77,60         0.00    0.00    0.00                             fund
         13                       meth                                                  00.0    00.0 finan
gn               nolo       00              .00    0.00                                                          ed
                                                                                           0       0 cial
                                  od
stock            gy                                                                                  asset
                                                                                                     s
                                                                                                     Held
Dom                                                                                                  -for-t
                                  Fair                                                               radin
estic/           Lanti                                                                 -42,0    247,             Self-
         6053            160,7    value   289,0   -42,0                                              g
forei            an                                             0.00    0.00    0.00    00.0    000.             fund
         68              44.76    meth    00.00   00.00                                              finan
gn               Gas                                                                       0      00             ed
                                                                                                     cial
                                  od
stock                                                                                                asset
                                                                                                     s
Dom      8328    Stars   3,600    Fair    9,675   -4,83         0.00    0.00    0.00   -4,83    4,83 Held        Self-

                                                           30
Changchai Company, Limited                                                                                   Annual Report 2022


estic/    85        Scien   ,000.    value    ,000.   7,500                                7,50       7,50    -for-t    fund
                              00                00      .00                                0.00       0.00    radin
forei               ce               meth                                                                               ed
                                                                                                              g
gn                  and              od                                                                       finan
stock               Tech                                                                                      cial
                    nolo                                                                                      asset
                                                                                                              s
                    gy
                                                                   492,                    -43,2    655,
                            115,5             755,4   -43,2
                                                                   061,                     01,0    370,
Total                       32,01      --     42,33   01,02               0.00    0.00                            --      --
                                                                   000.                     28.0   311.0
                             2.76              9.00    8.00
                                                                     00                        0       0

(2) Investments in Derivative Financial Instruments

□ Applicable √ Not applicable
No such cases in the Reporting Period.

5. Use of Raised Funds

√ Applicable □ Not applicable

(1) Overall Use of Raised Funds

√ Applicable □ Not applicable
                                                                                                             Unit: RMB’0,000
                                                          Total
                                                                                 Proport                               Raised
                                     Total               raised
                                                Total                   Total     ion of     Total        Use           funds
                                    raised                funds
                                               raised                 accumu       total    raised        and            that
                                     funds                 with
                                               funds                   lative    accumu     funds       owners           have
 Year      Method                     that               altered
                         Total                  that                   raised     lative     that          hip           been
  for         of                      have               purpos
                        raised                  have                   funds      raised     have       change            left
fund-ra    fund-ra                    been                  es
                        funds                   been                    with      funds       not          of          unused
 ising      ising                   used in              during
                                                used                  altered      with      been       unused            for
                                       the                 the
                                              accumu                  purpos     altered     used        raised          over
                                    current              Reporti
                                              latively                   es      purpos       yet        funds           two
                                    period                  ng
                                                                                    es                                  years
                                                         Period
                                                                                                        Special
                                                                                                        account
           Non-pu
                                                                                                        for
           blic         63,500.     8,944.4   34,682.                                       28,817.
2021                                                          0.00        0.00    0.00%                 deposit           0.00
           offerin          00            5       81                                            19
                                                                                                        ing
           g
                                                                                                        raised
                                                                                                        funds
                        63,500.     8,944.4   34,682.                                       28,817.
 Total         --                                             0.00        0.00    0.00%                      --           0.00
                            00            5       81                                            19


                                                              31
Changchai Company, Limited                                                                            Annual Report 2022


                                   Explanation of the overall use of raised funds
On 17 December 2020, the Company received the Reply Concerning the Approval of the Non-public Offering
of Shares of Changchai Co., Ltd. (CSRC Permit [2020] No. 3374) from the China Securities Regulatory
Commission, which approved the non-public offering of up to 168,412,297 shares of the Company. On June 11,
2021, the subscribers of this non-public offering have fully remitted the subscription funds to the bank account
designated by the sponsor institution, and the total amount of funds raised was RMB634,999,996.40. After the
capital verification by Gongzheng Tianye Accounting Firm (Special General Partnership), the Capital
Verification Report of the Funds Raised by the Non-public Issuance of Changchai Co., Ltd. (S.G.W [2021]
B061) was issued. With the issuance expenses deducted, the actual net funds raised were RMB620,665,733.97.
On June 15, 2021, the aforementioned raised funds were remitted to the special account set up by the Company
for raised funds from the non-public offering of shares. After the capital verification by Gongzheng Tianye
Accounting Firm (Special General Partnership), the Capital Verification Report of the Funds Raised by the
Non-public Issuance of Changchai Co., Ltd. (S.G.W [2021] B062) was issued. The raised funds have all been
deposited in the special account for the raised funds and a tripartite supervision agreement has been signed with
the sponsor institution and the account opening bank for the funds raised. There is no material difference
between the tripartite supervision agreement and the model tripartite supervision agreement of Shenzhen Stock
Exchange, and the Company strictly complies with it when using the raised funds. As of 31 December 2022,
RMB346.8281 million of raised funds has been used cumulatively, with the unused raised funds being
RMB288.1719 million.

(2) Committed Projects of Raised Funds

√ Applicable □ Not applicable
                                                                                                      Unit: RMB’0,000
                                                                Accu
                      Wheth                                                                                     Wheth
                                                               mulati   Invest
                        er                                                                                         er
                                                     The          ve     ment      Date
                      projec                                                                Benefi               there
                                   Total            invest     invest   progre     when               Wheth
                        ts                 Adjust                                              ts                 are
    Committed                     comm               ment       ment     ss as       the               er the
                       have                  ed                                             record              materi
     investment                    itted            amou       amou     of the    projec              estima
                       been                 total                                              ed                  al
    projects and                  invest               nt       nt as   end of     ts are               ted
                      altere               invest                                           during              chang
   investment of                   ment             during     of the      the     ready              benefi
                         d                  ment                                              the                es in
  excessive raised                 with               the      end of   Repor        for               ts are
                      (inclu               amou                                             Repor                 the
        funds                     raised            Repor        the      ting      their             reache
                       ding                nt (1)                                            ting               projec
                                  funds              ting      Repor    Period    intend                  d
                      partial                                                               Period                  t
                                                    Period      ting     (3) =    ed use
                      altern                                                                                    feasibi
                                                               Period   (2)/(1)
                      ation)                                                                                      lity
                                                                 (2)
 Committed investment projects
 Relocation project                                                               31
                                  54,76    54,76    8,311.     32,41     59.19              -1,639
 of light engines     No                                                          May                    No        No
                                   6.71     6.71       17       8.32        %                   .88
 and casting                                                                      2022
 Innovation
                                                                                  31          Not       Not
 capacity building                8,733.   7,299.    633.2     759.2     10.40    Dece
                      No                                                                    applic    applic       No
 project of the                      29       86         8         1        %     mber
                                                                                  2023        able      able
 technical center
                                                                                            -1,639
 Subtotal of             --       63,50    62,06    8,944.     33,17      --        --                  --        --
                                                                                                .88

                                                          32
Changchai Company, Limited                                                                         Annual Report 2022


committed                          0.00    6.57        45      7.53
investment
projects
Investment of excessive raised funds
Not applicable
                                63,50     62,06    8,944.     33,17                      -1,639
Total                   --                                              --        --                 --        --
                                 0.00      6.57       45       7.53                          .88
                      The reasons for the failure to realize the benefits of the relocation project of light engines
                      and casting during the Reporting Period: The project met the hoped condition for use in
                      May 2022. However, due to market factors, the production line failed to achieve the
                      expected production volume. The sales revenue of the products was inadequate to cover
                      the costs of the depreciation of new fixed assets and administrative expenses. As a result,
                      the project failed to achieve the anticipated benefit as of 31 December 2022.
                      The reasons for the slow payment progress of the relocation project of light engines and
Cases and reasons     casting: As of 31 December 2022, the project did not complete the final account audit and
for failing to        final acceptance inspection of equipment, compromising the payment progress. As of 31
reach the planned     March 2023, the payment amount reached RMB476.1310 million, accounting for 86.94%
progress or           of the total amount. The unpaid funds mainly refer to the supporting working capital and
predicted return      the balance of the remaining unaccepted equipment.
(by specific          The reasons for the slow payment progress of the innovation capacity construction of the
projects)             technology centre: As of 31 December 2022, half of the construction period of the
                      innovation capacity construction of the technology centre was passed and some R&D
                      objectives were achieved. However, the payment progress of the project was slow for the
                      following specific reasons: 1. From the beginning of the project initiation, the Company
                      adhered to the principles of saving capital and increasing the asset utilisation rate. It
                      utilised existing equipment to complete some of the R&D processes, saving some
                      expenses of equipment. 2. The balance of some signed contracts was not paid. 2. The
                      balance of some signed contracts was not paid.
Explanations of
the material
                      Not applicable
changes in the
project feasibility
Amount, use, and
use progress of
                      Not applicable
excessive raised
funds
                      Applicable
Implementation        Occurred during the Reporting Period
of location           The Proposal on Adding Implementation Location to the Private Placement Raised Funds
changes in the        Investment Project of Innovation Capacity Building of the Technical Centre was approved
investment            at the 13th Meeting of the 9th Board of Directors and the 12th Meeting of the 9th
projects with the     Supervisory Committee of the Company on 22 August 2022. The Company decided to
raised funds          add the sites of certain branches of the Company as the parent and wholly-owned
                      subsidiary Changchai Machinery as locations to place the R&D equipment and

                                                         33
Changchai Company, Limited                                                                       Annual Report 2022


                      implement the R&D project. This change will not re-purpose the raised funds and will
                      help carry forward the technical innovation project.
Implementation
of method
adjustments to the
                      Not applicable
investment
projects with the
raised funds
                      Applicable
                      Prior to the availability of the raised funds, in order to ensure the smooth implementation
                      of the investment projects with raised funds, the Company used its own funds to invest in
                      part of the investment projects with raised funds and paid part of the issuance expenses.
                      As of 17 June 2021, the cumulative amount of the Company's self-financing funds
                      pre-invested in the investment projects with raised funds was RMB181,803,327.94, the
                      amount of issuance expenses advanced was RMB2,358,490.56, totaling
                      RMB184,161,818.50, and the proposed replacement amount was RMB184,161,818.50.
                      The capitals were verified by the Gongzheng Tianye Accounting Firm (Special General
Early investment
                      Partnership), and the Verification Report on the Pre-investment of Self-financing Funds
and placement
                      into the Investment Project with Raised Funds and the Payment of Issuance Expenses by
concerning the
                      Self-financing Funds of Changchai Co., Ltd. (S.G.W [2021] E1347) was issued on 25
investment
                      June 2021. On 28 June 2021, the Third Interim Meeting of the Board of Directors of the
projects with the
                      Company in 2021 deliberated and approved the Proposal on Replacing the Funds
raised funds
                      Pre-invested in the Project and Advanced Issuance Expenses with the Raised Funds,
                      agreeing to use the raised funds from the non-public offering of shares to replace the
                      self-financing funds totaling RMB184,161,818.50 that had been pre-invested in the
                      project prior to the availability of the raised funds. In addition, Xingye Securities Co.,
                      Ltd. and Donghai Securities Co., Ltd. issued a verification opinion on the use of raised
                      funds to replace self-financing funds that had been invested in advance in the projects
                      with raised funds. For details, see the Announcement on the Use of Raised Funds to
                      Replace Pre-invested Project Funds and Advanced Issue Expenses (Announcement No.
                      2021-036) published on Cninfo (http://www.cninfo.com.cn) on 30 June 2021.
Temporary
replenishment of
working capital       Not applicable
with the idle
raised funds
Surplus raised
funds for project
implementation        Not applicable
and reasons for
the surplus
Use and
                      Some are deposited in the special account for raised funds and some temporarily idle
ownership change
                      raised funds are used to purchase wealth management products
of unused raised


                                                        34
Changchai Company, Limited                                                                        Annual Report 2022


 funds
                         On 13 July 2021, the Fourth Interim Meeting of the Board of Directors of the Company in
                         2021 deliberated and approved the Proposal on Changing the Implementation Entity of
                         Some Investment Projects with Raised Funds, agreeing to change the implementation
                         entity of the Company's investment projects with funds raised through non-public
                         offering of shares, the "relocation project of light engines and casting", from Changchai
 Problems in the         Machinery, a wholly-owned subsidiary of the Company, to the parent company of
 use of raised           Changchai Co., Ltd. The matter did not change the use and implementation of the funds
 funds and               raised and was not a significant change in the investment projects with raised funds.
 disclosure, or          The Proposal on Adding Implementation Entity to the Private Placement Raised Funds
 other cases             Investment Project of Relocation of Light Engines and Casting was approved at the 13th
                         Meeting of the 9th Board of Directors and the 12th Meeting of the 9th Supervisory
                         Committee of the Company on 22 August 2022. As such, the Company has added
                         Changchai Machinery as another operating entity with the Company as the parent to joint
                         operate the relocation project for better operational flexibility and stronger market
                         competitiveness.

(3) Altered Projects of Raised Funds

□ Applicable √ Not applicable

VIII Sale of Major Assets and Equity Interests

1. Sale of Major Assets

□ Applicable √ Not applicable
No such cases in the Reporting Period.

2. Sale of Major Equity Interests

□ Applicable √ Not applicable

IX Major Subsidiaries

√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the
Company’s net profit:
                                                                                                        Unit: RMB

             Relations
             hip with       Principal    Registere     Total                  Operating    Operating
  Name                       activity                            Net assets                            Net profit
                the                      d capital     assets                  revenue      profit
             Company
                                        55,063,00
Changcha     Subsidiar      Productio                155,037,7   80,050,38    190,631,8    -9,633,75    -8,323,25
                                        0.00

                                                          35
Changchai Company, Limited                                                                      Annual Report 2022


i Benniu     y            n of                         13.45         1.90       59.08         8.49         6.01
                          diesel
                          engine
                          accessori
                          es
Changcha                  Diesel
             Subsidiar                 85,000,00   70,361,72    49,264,10   34,281,25    -658,955.    -652,107.
i                         engine
             y                         0.00             7.25         8.12        2.72          59           80
Wanzhou                   assembly
                          External
Horizon                   investme
             Subsidiar                 40,000,00   94,446,63    80,931,10                -40,971,2    -30,437,8
Investme                  nt and                                                 0.00
             y                         0.00             5.52         1.39                    43.24        09.17
nt                        consultin
                          g
                          agricultur
Horizon                   al
Agricultu                 machiner
             Subsidiar                 10,000,00   9,071,468    -15,054,4   3,513,853    -4,209,35    -4,209,35
ral                       y product
             y                         0.00              .38        66.60          .60        8.80         8.80
Equipme                   of rice
nt                        transplant
                          er etc.
                          Gasoline
Changcha     Subsidiar                 37,250,00   107,556,9    86,383,80   148,144,7    12,403,78    11,452,34
                          engines
i Robin      y                         0.00            55.89         8.82       49.68         4.38         7.12
                          assembly
                          Internal
                          combusti
Changcha
                          on engine
i            Subsidiar                 300,000,0   577,467,0    277,452,2   27,200,81    -23,984,3    -18,691,4
                          and
Machiner     y                         00.00           39.02        20.47        2.94        44.72        34.92
                          related
y
                          accessori
                          es
Xingshen                  Real
g Real                    estate
             Subsidiar                 1,000,000   2,614,116    559,218.0   4,640,127    197,076.5    141,777.6
Estate                    managem
             y                         .00               .80            4          .66           1            4
Managem                   ent
ent                       service
                          Manufact
                          uring and
Zhenjiang    Subsidiar    marketing    2,000,000   108,595,3    88,360,05   35,440,98    4,616,942    4,885,811
Siyang       y            of diesel    .00             10.06         3.89        3.37           .04         .05
                          engines
                          for ships
Subsidiaries obtained or disposed of in the Reporting Period:
√ Applicable □ Not applicable
                             How the subsidiary was obtained or disposed         Impact on the Company’s
    Company name
                                     of in the Reporting Period               operations and operating results


                                                        36
Changchai Company, Limited                                                                       Annual Report 2022


                             The Company won the bid of RMB33.5208
                                                                              This transaction will help the
                             million of own funds for the 41.5% equity
Zhenjiang Siyang Diesel                                                       Company expand its product
                             interests in Zhenjiang Siyang Diesel Engine
Engine Manufacturing                                                          chain, complete its business
                             Manufacturing Co., Ltd., which was put out for
Co., Ltd.                                                                     portfolio and promote long-term
                             sale by Jiangsu Keda Assets Marketing Co.,
                                                                              development.
                             Ltd.
Other information about principal subsidiaries and joint stock companies: N/A

X Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

XI Prospects

1. Development strategy of the Company
The Company’s development strategy is to base on farm machinery, become stronger in the engine business,
explore more markets and develop in a scientific way.
The state’s existing policies and new policies on comprehensively promoting rural revitalization and accelerating
to build China into an agricultural power will bring about significant and positive impacts for the industry. The
Company will make full use of the policy-based dividend of strong national support for agricultural production
and development of agricultural machinery and continue to promote innovative development, talent recruitment,
quality improvement, brand building, and capital boost to accelerate the technological upgrade of traditional
power products, expand new markets in new fields, and also to achieve diversified development of the industry.
The Company’s main development directions are as follows:
(1) Accelerating technological upgrading and area expansion for traditional products
First, the Company will continue to promote the mass production of the full range of models that meet the
National Emission Standard IV for Non-road Vehicles. It will further optimize the products that meet the National
Emission Standard IV for Non-road Vehicles and develop its capability of production, manufacturing, and
after-sales service to ensure that the products’ power performance, economic efficiency, and reliability can meet
market demands.
Second, traditional products will be developed in the direction of intelligent and networked high-end products.
Based on the electronic, networked and intelligent characteristics of the development of agricultural machinery
products, the Company will promote the application of advanced technologies such as the Internet, big data,
artificial intelligence and new materials to product development, further improve the diesel engines’ functions of
intelligent control, real-time monitoring and big data collection and analysis, accelerate the R&D of intelligent
terminals and hybrid power, promote the products to develop towards the high end, strengthen the existing
advantageous products, and raise the added value of products to better meet user demands.
Third, traditional products will be developed in the terminal direction. The diesel engine is an intermediate
product and a core product to develop in the terminal direction. At present, the Company’s main products are
small and medium-power diesel engines and general gasoline engines, the market of supporting facilities is mainly
distributed in agricultural machinery, plant protection machinery, construction machinery, shipborne machinery,
and other non-road areas. The Company is now focusing on terminal fields such as generating sets, outboard
engines, cold chains, fishing boats, and iron towers, with a broad prospect. Currently, the Company has
successfully acquired 41.5% of the equity of Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.,
(“Zhenjiang Siyang”) becoming the largest shareholder and gaining control. Zhenjiang Siyang mainly engages in
the diesel engine units of lifeboats and rescue boats, which is a top 1 brand of the main engine of lifeboats in the

                                                        37
Changchai Company, Limited                                                                         Annual Report 2022


world. Meanwhile, the outboard engine project has made phased progress, with the small-power outboard engines
gradually completing market verification. In addition, a domestic and overseas market sales system has been built,
which is conducive to expanding the product chain and improving the business structure. The Company will make
full use of the capital platform of the listed company to cut in at the right time through joint venture cooperation,
mergers and acquisitions, restructuring, etc., to accelerate the extension of the industrial chain and build new
competitive advantages.
(2) Promoting industrial transformation and development in the direction of combination with new energy
The irreversible development of new energy has impacted internal combustion engine products, but the
opportunity exists for a long time. While tapping the advantages of traditional industries, internal combustion
engines should develop with the development of new energy as well. At present, the Company has invested in
Jiangsu Horizon New Energy Technology Co., Ltd. through equity participation, mainly engaging in the products
of the project of wet-process separator film for lithium batteries, with a good development momentum. In the
future, the Company will seize the development opportunities of the “carbon peaking and carbon neutrality”
strategy raised by the state, continue to increase its efforts to explore new energy areas such as lithium battery and
hydrogen fuel, promote cooperation and penetration of related green industry, and drive it to expand to new fields.
2. Operation plan for the Year 2023:
The Company will consolidate the traditional market of agricultural machinery, explore the emerging area of
power, raise quality to create fine products with core technologies, highlight efficiency by integrating resources,
stimulate vitality by deepening reform, and leverage capital to promote development. In 2023, sales revenue is
expected to be RMB2.2 billion, with revenue of USD52 million through export.
The above operation plan does not represent the profit forecast of Y2023 by the listed company, and whether can
be realized depends on various factors on the changes of market conditions and the effort level of the management
team. There is a lot of uncertainty, and investors should pay special attention on it.
3. Possible future risks and countermeasures of the Company
(1) Market risk:
The total volume of the market will drop due to factors such as subsidy policy change, tight supply chain,
upgrading of the National Emission Standard IV for Non-road Vehicles, and intensified existing competition. In
recent years, the agricultural machinery industry has still been in a period of deep adjustment. The diesel engine
market faces limited total demand, the delivery capacity and environment of products need to be improved, and
the lower user revenue compromises the increase in the demand side.
Countermeasures: First, the Company solidifies the traditional supporting fields, further expands the Company’s
advantages in the field of agricultural machinery, and continues to promote the mass production of the full range
of models that meet the National Emission Standard IV for Non-road Vehicles to ensure the continuous supply
level of supply chains and meet market demands. Second, the Company expands applications in shipborne
generator sets, high-speed rice transplanters, cold chain vehicles, excavators and other small construction
machinery, conducts in-depth research and development in new areas and development and supporting of key
products. Third, the Company creates the “internal combustion engine+” mode, actively promotes the application
of advanced technologies such as the Internet, big data, artificial intelligence and new materials to product
development, further improves the diesel engines’ functions of intelligent control, real-time monitoring and big
data collection and analysis, accelerates the R&D of intelligent terminals and hybrid power, promotes the products
to develop towards the high end, and builds new competitive edges.
(2) Industrial risk
In recent years, the state advocates energy conservation and emission reduction. New energy power represented
by pure electric, hybrid power and hydrogen fuel power has grabbed the market share of diesel engine to a certain


                                                         38
Changchai Company, Limited                                                                         Annual Report 2022


extent. At present, new energy power is mainly used in vehicles. Its use in agricultural machinery is still facing
problems such as high cost and complex operating environment. However, as breakthroughs have been made in
new energy battery technology, the local application scenario of diesel engine may be replaced by new energy
power.
Countermeasures: The Company strengthens exploration in the new energy sector, and actively promotes project
construction and development. Meanwhile, the Company makes proper efforts in product R&D, develops efficient
and eco-friendly products, and expands new development directions and application areas.
(3) Foreign trade risk
In the context of the complex and changeable global economic environment and the turmoil in the breadbasket of
Europe caused by the Russia-Ukraine conflict, the prices of imported agricultural products, fertilizer, feed, oil, and
gas increase, which directly compromise the planting costs and purchasing power of farmers. The unstable factors
have brought about certain impacts on product export.
Countermeasures: The Company will actively deal with the foreign trade market changes, strengthen the
maintenance and management of overseas key markets and customers, intensify efforts in the development of
emerging markets and new users, and endeavor to improve the sales of high-value-added products.
(4) Foreign exchange risk
Some of the Company’s exports are settled in USD. In the future, due to the significant exchange rate fluctuation
of RMB against USD, the Company may face the risk of adverse impact on product sales due to exchange rate
fluctuation.
Countermeasures: First, the Company will enhance risk control to ensure its capital security, constantly pay
attention to the depreciation of currencies and shortage of USD in the market, and lower risk by changing
payment methods change and insuring export credit insurance. Second, the Company will promptly adjust product
prices and payment terms to cope with fluctuations in exchange rates and material prices.
(5) Talent risk:
The Company needs high-level talents, highly skilled talents and lacks talents to help the Company improve its
operational efficiency and strengthen technological innovation to cope with the increasingly fierce market
competition and industry development trend. Therefore, the demand for professional talents and senior
management talents has increased significantly.
Countermeasures: First, the Company has stepped up efforts to cultivate and appoint young leaders and recruited
more professional talents. Second, the Company has promoted the reform program of appraisal and motivation,
recruited advanced talents through multiple approaches, and constantly enhanced the development of skill experts,
technical and management personnel, and workers and technicians so as to raise the contribution rate of human
resources in all respects.

XII Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period

√ Applicable □ Not applicable
                                                Type
                                        Way                                                            Index to
                          Place of               of                      Contents and materials
    Date of visit                        of                Visitor                                   main inquiry
                            visit               visit                          provided
                                        visit                                                        information
                                                 or
                        http://irm.cn   Othe    Indiv   Individual      Product usage of Horizon     http://irm.cni
  4 January 2022
                        info.com.cn     r       idual   investor        New Energy Technology        nfo.com.cn


                                                         39
Changchai Company, Limited                                                                     Annual Report 2022


                                                                           Co., Ltd.
                                                                    Development, products,
                       http://irm.cn   Othe   Indiv   Individual   and financing of Horizon     http://irm.cni
  6 January 2022
                       info.com.cn     r      idual   investor     New Energy Technology         nfo.com.cn
                                                                           Co., Ltd.
                                                                      Product status and
                       http://irm.cn   Othe   Indiv   Individual   development suggestions      http://irm.cni
 12 January 2022
                       info.com.cn     r      idual   investor     of Horizon New Energy         nfo.com.cn
                                                                     Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual    Company’s production
                                                                                                http://irm.cni
 18 January 2022                                                   and operation status and
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                     product suggestions
                       http://irm.cn   Othe   Indiv   Individual   Impact of the results of
                                                                                                http://irm.cni
 20 January 2022                                                   Horizon New Energy on
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                        the Company
                       http://irm.cn   Othe   Indiv   Individual    The intention of the
                                                                                                http://irm.cni
 27 January 2022                                                   Company to repurchase
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                          shares
                                                                   The Company’s product
                       http://irm.cn   Othe   Indiv   Individual         R&D, market
                                                                                                http://irm.cni
 31 January 2022                                                   advantages, and situation
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                    of the outboard engine
                                                                            product
                       http://irm.cn   Othe   Indiv   Individual   The Company’s product
                                                                                                http://irm.cni
 8 February 2022                                                    R&D, application, and
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                     market advantages
                                                                   Product production and
                                                                    sales of Horizon New
                       http://irm.cn   Othe   Indiv   Individual   Energy Technology Co.,
                                                                                                http://irm.cni
 9 February 2022                                                   Ltd., the progress of the
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                    Company’s relocation
                                                                     project, and product
                                                                          application
                                                                   Product capacity release
                       http://irm.cn   Othe   Indiv   Individual   of Phase II Shanxi Base      http://irm.cni
 10 February 2022
                       info.com.cn     r      idual   investor     Project of Horizon New        nfo.com.cn
                                                                            Energy
                                                                          Impact of the
                                                                   development direction of
                       http://irm.cn   Othe   Indiv   Individual     Horizon New Energy
                                                                                                http://irm.cni
 13 February 2022                                                  Technology Co., Ltd. and
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                         progress of the
                                                                     Company’s relocation
                                                                    project on the Company
                       http://irm.cn   Othe   Indiv   Individual   The Company’s monthly       http://irm.cni
 22 February 2022
                       info.com.cn     r      idual   investor       production capacity         nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual   The monthly production
                                                                                                http://irm.cni
 28 February 2022                                                  capacity of Horizon New
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                       Energy Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual   The Company’s overseas      http://irm.cni
   3 March 2022
                       info.com.cn     r      idual   investor           customers               nfo.com.cn
  18 March 2022        http://irm.cn   Othe   Indiv   Individual    Product application of      http://irm.cni

                                                       40
Changchai Company, Limited                                                                     Annual Report 2022


                       info.com.cn     r      idual   investor      Horizon New Energy           nfo.com.cn
                                                                    Technology Co., Ltd.
                                                                    The Company’s share
                                                                    repurchase intention,
                       http://irm.cn   Othe   Indiv   Individual    production, and sales,      http://irm.cni
  21 March 2022
                       info.com.cn     r      idual   investor        and the results of         nfo.com.cn
                                                                    Horizon New Energy
                                                                    Technology Co., Ltd.
                                                                   The Company’s product
                                                                   expansion and R&D, the
                       http://irm.cn   Othe   Indiv   Individual     customer profile and
                                                                                                http://irm.cni
  30 March 2022                                                     production capacity in
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                    2021 of Horizon New
                                                                   Energy Technology Co.,
                                                                             Ltd.
                                                                   The monthly production
                       http://irm.cn   Othe   Indiv   Individual   capacity of the separator    http://irm.cni
   14 April 2022
                       info.com.cn     r      idual   investor       film of Horizon New         nfo.com.cn
                                                                            Energy
                                                                                                 Information
                                                                                                  on 000570
                                                                                                Changchai’s
                                                                                                   Results
                                                      Investors        The Company’s
                       Online          Othe   Othe                                              Presentation
                                                                   production and operating
   21 April 2022                                      and the                                         and
                       meeting         r      r                         activities, and
                                                      public                                    Roadshow on
                                                                         investments
                                                                                                www.cninfo.
                                                                                                com.cn dated
                                                                                                   21 April
                                                                                                     2022
                                                                   The Company’s assets,
                       http://irm.cn   Othe   Indiv   Individual   and intention to sell the    http://irm.cni
   28 April 2022
                       info.com.cn     r      idual   investor     held Liance Technology        nfo.com.cn
                                                                            shares
                       http://irm.cn   Othe   Indiv   Individual   The shipments in Q1 of
                                                                                                http://irm.cni
    6 May 2022                                                      Horizon New Energy
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                    Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual   The impact of the “Belt
                                                                                                http://irm.cni
   11 May 2022                                                       and Road” on the
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                         Company
                       http://irm.cn   Othe   Indiv   Individual   The Company’s sales in      http://irm.cni
   16 May 2022
                       info.com.cn     r      idual   investor       Q1 and customers            nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual   Supply and customers of
                                                                                                http://irm.cni
   13 June 2022                                                     Horizon New Energy
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                    Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual   Company’s shareholding
                                                                                                http://irm.cni
   14 June 2022                                                    in Horizon New Energy
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                     Technology Co., Ltd.
                                                                       The Company’s
                       http://irm.cn   Othe   Indiv   Individual    relocation project, the     http://irm.cni
   15 June 2022                                                    use of the funds raised,
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                   product R&D progress,
                                                                        the Company’s


                                                       41
Changchai Company, Limited                                                                      Annual Report 2022


                                                                    development direction
                                                                   and progress, assistance
                                                                        of controlling
                                                                     shareholders to the
                                                                   Company, and operation
                                                                      and customers of
                                                                    Horizon New Energy
                                                                    Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual      Product application
                                                                                                 http://irm.cni
   17 June 2022                                                     fields of the subsidiary,
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                       Zhenjiang Siyang
                       http://irm.cn   Othe   Indiv   Individual                                 http://irm.cni
   20 June 2022                                                      Purchase and storage
                       info.com.cn     r      idual   investor                                    nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual       The Company’s
                                                                                                 http://irm.cni
   23 June 2022                                                      application fields of
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                    diesel engine products
                       http://irm.cn   Othe   Indiv   Individual     The development
                                                                                                 http://irm.cni
   27 June 2022                                                      intentions of the
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                   Company’s subsidiaries
                       http://irm.cn   Othe   Indiv   Individual   The shipments in Q2 of
                                                                                                 http://irm.cni
   19 July 2022                                                     Horizon New Energy
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                    Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual       The development
                                                                                                 http://irm.cni
   21 July 2022                                                        intentions of the
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                           Company
                       http://irm.cn   Othe   Indiv   Individual       The shipments of
                                                                                                 http://irm.cni
   23 July 2022                                                      Horizon New Energy
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                     Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual       The shipments of
                                                                                                 http://irm.cni
   24 July 2022                                                      Horizon New Energy
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                     Technology Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual   The companies invested        http://irm.cni
   25 July 2022
                       info.com.cn     r      idual   investor        by the Company              nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual   Product applicability of
                                                                                                 http://irm.cni
   26 July 2022                                                     Horizon New Energy
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                    Technology Co., Ltd.
                                                                    Product applicability of
                                                                     Horizon New Energy
                       http://irm.cn   Othe   Indiv   Individual   Technology Co., Ltd. and      http://irm.cni
   27 July 2022
                       info.com.cn     r      idual   investor        the situation of its        nfo.com.cn
                                                                   subsidiary, Horizon New
                                                                           Material
                       http://irm.cn   Othe   Indiv   Individual                                 http://irm.cni
  1 August 2022                                                    Number of shareholders
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                       http://irm.cn   Othe   Indiv   Individual     Suggestions on the          http://irm.cni
  2 August 2022
                       info.com.cn     r      idual   investor     Company’s development         nfo.com.cn
                       http://irm.cn   Othe   Indiv   Individual     Suggestions on the          http://irm.cni
  2 August 2022
                       info.com.cn     r      idual   investor     Company’s development         nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual     Equity situation of         http://irm.cni
  3 August 2022                                                     Changzhou Synergetic
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                     Innovation Private

                                                       42
Changchai Company, Limited                                                                     Annual Report 2022


                                                                   Equity Fund invested by
                                                                        the Company
                       http://irm.cn   Othe   Indiv   Individual                                http://irm.cni
  5 August 2022                                                    The Company’s business
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                   The product capacity of
                       http://irm.cn   Othe   Indiv   Individual   Horizon New Material, a
                                                                                                http://irm.cni
  8 August 2022                                                     subsidiary of Horizon
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                   New Energy Technology
                                                                          Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual                                http://irm.cni
  11 August 2022                                                   The Company’s products
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                       http://irm.cn   Othe   Indiv   Individual   The Company’s products      http://irm.cni
  17 August 2022
                       info.com.cn     r      idual   investor          and business             nfo.com.cn
                       http://irm.cn   Othe   Indiv   Individual   The Company’s products      http://irm.cni
  18 August 2022
                       info.com.cn     r      idual   investor          and business             nfo.com.cn

                       http://irm.cn   Othe   Indiv   Individual    The application of the
                                                                                                http://irm.cni
  19 August 2022                                                    Company’s products in
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                     shipborne machinery
                                                                        The Company
                       http://irm.cn   Othe   Indiv   Individual   development suggestions
                                                                                                http://irm.cni
  22 August 2022                                                        and progress in
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                   relocation, purchase and
                                                                            storage
                                                                    Impact of the results of
                       http://irm.cn   Othe   Indiv   Individual   Horizon New Energy and
                                                                                                http://irm.cni
  25 August 2022                                                   subsidies of agricultural
                       info.com.cn     r      idual   investor                                   nfo.com.cn
                                                                      machinery on the
                                                                       Company’s sales
                       http://irm.cn   Othe   Indiv   Individual       The Company’s           http://irm.cni
  26 August 2022
                       info.com.cn     r      idual   investor          development              nfo.com.cn
                                                                   Impact of the Company’s
                                                                   investment in Changzhou
                       http://irm.cn   Othe   Indiv   Individual     Synergetic Innovation      http://irm.cni
  31 August 2022
                       info.com.cn     r      idual   investor        Private Equity Fund        nfo.com.cn
                                                                    (Limited Partnership) of
                                                                         the Company
                                                                    The Company’s capital
                       http://irm.cn   Othe   Indiv   Individual   increase in Horizon New      http://irm.cni
1 September 2022
                       info.com.cn     r      idual   investor     Energy Technology Co.,        nfo.com.cn
                                                                              Ltd.
                       http://irm.cn   Othe   Indiv   Individual   The Company’s product       http://irm.cni
13 September 2022
                       info.com.cn     r      idual   investor            export                 nfo.com.cn
                       http://irm.cn   Othe   Indiv   Individual   The supporting fields of     http://irm.cni
30 September 2022
                       info.com.cn     r      idual   investor     the Company’s products       nfo.com.cn
                                                                   The Company’s progress
                                                                    in purchase and storage,
                       http://irm.cn   Othe   Indiv   Individual   investment, shareholding     http://irm.cni
 12 October 2022
                       info.com.cn     r      idual   investor     intentions of employees,      nfo.com.cn
                                                                    and production capacity
                                                                       after the relocation


                                                       43
Changchai Company, Limited                                                                      Annual Report 2022


                                                                    Customers of Horizon
                       http://irm.cn   Othe   Indiv   Individual      New Material, a
                                                                                                 http://irm.cni
 20 October 2022                                                    subsidiary of Horizon
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                   New Energy Technology
                                                                          Co., Ltd.
                                                                    Customers of Horizon
                       http://irm.cn   Othe   Indiv   Individual      New Material, a
                                                                                                 http://irm.cni
 25 October 2022                                                    subsidiary of Horizon
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                   New Energy Technology
                                                                          Co., Ltd.
                       http://irm.cn   Othe   Indiv   Individual                                 http://irm.cni
 8 November 2022                                                     Relocation expenses
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                    Impact of the National
                                                                   Emission Standard IV for
                                                                   Non-road Vehicles on the
                       http://irm.cn   Othe   Indiv   Individual   Company’s products and       http://irm.cni
16 November 2022
                       info.com.cn     r      idual   investor     sales, and the Company’s      nfo.com.cn
                                                                   product certification and
                                                                        featured service
                                                                     monitoring platforms
                                                                       The Company’s
                                                                    production, sales, and
                       http://irm.cn   Othe   Indiv   Individual   market of diesel engines      http://irm.cni
17 November 2022
                       info.com.cn     r      idual   investor      that meet the National        nfo.com.cn
                                                                   Emission Standard IV for
                                                                      Non-road Vehicles
                                                                     The intention of going
                                                                        public, product
                       http://irm.cn   Othe   Indiv   Individual   applicability, and product    http://irm.cni
24 November 2022
                       info.com.cn     r      idual   investor      orders of Horizon New         nfo.com.cn
                                                                    Energy Technology Co.,
                                                                              Ltd.
                       http://irm.cn   Othe   Indiv   Individual   Customer cooperation of
                                                                                                 http://irm.cni
27 November 2022                                                    Horizon New Energy
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                    Technology Co., Ltd.
                                                                    The Company’s product
                                                                     application and sales,
                                                                     purchase and storage,
                                                                   prototyping testing of the
                       http://irm.cn   Othe   Indiv   Individual   cold chain hybrid power       http://irm.cni
30 November 2022
                       info.com.cn     r      idual   investor     product, and extension of      nfo.com.cn
                                                                    Changzhou Synergetic
                                                                      Innovation Private
                                                                     Equity Fund (Limited
                                                                         Partnership)
                       http://irm.cn   Othe   Indiv   Individual     Supporting fields of        http://irm.cni
 5 December 2022
                       info.com.cn     r      idual   investor         generating sets            nfo.com.cn
                                                                        The Company’s
                                                                         development
                       http://irm.cn   Othe   Indiv   Individual     suggestions, and the
                                                                                                 http://irm.cni
21 December 2022                                                      production line and
                       info.com.cn     r      idual   investor                                    nfo.com.cn
                                                                      product capacity of
                                                                     Horizon New Energy
                                                                     Technology Co., Ltd.

                                                       44
Changchai Company, Limited                                                                  Annual Report 2022



                       http://irm.cn   Othe   Indiv   Individual   Production capacity of
                                                                                             http://irm.cni
23 December 2022                                                   Horizon New Energy
                       info.com.cn     r      idual   investor                                nfo.com.cn
                                                                    Technology Co., Ltd.




                                                       45
Changchai Company, Limited                                                                      Annual Report 2022




                               Part IV Corporate Governance

I General 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.
Indicate by tick market whether there is any material incompliance with the applicable laws, administrative
regulations and regulations issued by the CSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.

II The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Asset, Personnel, Financial Affairs, Organization and Business

The Company was independent from the controlling shareholder Changzhou Investment Group Co., Ltd in terms
of assets, business, personnel, organization and financing, with independent & complete business and capability to
operate independently.
1. Assets: The property rights relationship between the Company and the controlling shareholder is clear, assets
are clearly defined, and there are no funds, assets and other resources being occupied or used without
compensation between them.
2. Personnel: The Company and the controlling shareholder are independent of each other in terms of labor,
personnel and salary management, and each has an independent management organization, a sound management
policy, and an independent personnel appraisal and assessment system.
3. Finance: The Company has set up a special finance department, established an independent accounting system
and financial management policy, opened an independent bank account, and implemented independent accounting
and independent tax payments. There is no interference in the financial activities of the Company by the
controlling shareholder.
4. Institution: The Company has a complete and independent corporate governance structure and has established a
sound organizational system that meets its own production and operation needs, which operates independently and
well, and there is no subordinate relationship with the functional departments of the controlling shareholder.
5. Business: The Company has an independent and complete business system with independent and autonomous

                                                       46
Changchai Company, Limited                                                                        Annual Report 2022


production and operational capability. The Company conducts related transactions reasonably on the principle of
independence.

III Horizontal Competition

□ Applicable √ Not applicable

IV Annual and Special General Meetings Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period

                                   Investor
                                                    Date of the
   Meeting             Type       participatio                           Disclosure date          Resolution
                                                     meeting
                                    n ratio
                                                                                           All proposals were
                                                                                           approved. See
 The 2021
                 Annual                                                                    Announcement No.
 Annual
                 General              32.33%     6 May 2022             7 May 2022         2022-027 on
 General
                 Meeting                                                                   Resolutions of the
 Meeting
                                                                                           2021 Annual General
                                                                                           Meeting.

2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights

□ Applicable √ Not applicable

V Directors, Supervisors and Senior Management

1. General Information


                                                                                                          Ending
                              Incumbent Gende
 Name         Office title                    Age            Start of tenure      End of tenure        shareholding
                               /Former    r
                                                                                                          (share)

   Shi      Chairman of the
                            Incumbent Male        59        18 October 2016          Ongoing                   0
                Board
 Xinkun

 Zhang         Director,
                              Incumbent Male      57        18 October 2016          Ongoing                   0
   Xin     General Manager

Lin Tian       Director       Incumbent Male      60    17 December 2018             Ongoing                   0

               Director,
 Xu Yi                        Incumbent Male      59         16 April 2020           Ongoing                   0
             Vice-general

                                                       47
Changchai Company, Limited                                                             Annual Report 2022



              Manager

           Director, Chief
Jiang He                     Incumbent Male      51         16 April 2020    Ongoing              0
             Accountant

 Yang
              Director       Incumbent Male      51         16 April 2020    Ongoing              0
 Feng

 Wang       Independent
                             Incumbent Male      60         16 April 2020    Ongoing              0
Mancang        director

 Xing       Independent
                             Incumbent Male      69         16 April 2020    Ongoing              0
  Min          director

 Zhang      Independent                  Femal
                             Incumbent           53         16 April 2020    Ongoing              0
  Yan          director                    e

  Yin       Vice-general
                             Incumbent Male      59        18 October 2016   Ongoing              0
 Lihou        Manager

  Xie
            Vice-general
Guozhon                      Incumbent Male      54         16 April 2020    Ongoing              0
              Manager
   g

  Sun
            Vice-general
Jianzhon                     Incumbent Male      51         16 April 2020    Ongoing              0
              Manager
   g

            Vice-general

  He        Manager and
                             Incumbent Male      44        18 October 2016   Ongoing              0
Jianjiang Secretary of the

               Board

  He       Chairman of the

Jianguan    Supervisory      Incumbent Male      59   17 December 2020       Ongoing              0

   g         Committee

   Lu

Zhonggu      Supervisor      Incumbent Male      56        18 October 2016   Ongoing              0

    i

 Liu Yi      Supervisor      Incumbent Male      54        18 October 2016   Ongoing              0

 Chen                                    Femal
             Supervisor      Incumbent           40         16 April 2020    Ongoing              0
  Lijia                                    e



                                                      48
Changchai Company, Limited                                                                    Annual Report 2022



   Ge                                    Femal
              Supervisor     Incumbent           53         16 April 2020        Ongoing                 0
 Jiangli                                   e

  Total           --            --        --      --             --                   --                 0
Indicate whether any director, supervisor or senior management resigned before the expiry of their tenure during
  the Reporting Period.
□ Yes √ No
Change of directors, supervisors and senior management:
□ Applicable √ Not applicable

2. Biographical Information

Professional backgrounds, major work experience and current duties in the Company of the incumbent directors,
supervisors and senior management:
Shi Xinkun: Now he acts as the Chairman of the Board and Party Secretary in the Company, the Chairman of the
Board in Jiangsu Horizon New Energy Technology Co., Ltd., the Chairman of the Board in Shanxi Horizon New
Material Technology Co., Ltd., and an Investment and Development Advisor for Changzhou Investment Group
Co., Ltd.
Zhang Xin: He successively took the posts of Sales Manager, General Manager Assistant, and vice-general
manager in our company. Now, he acts as Director, General Manager, deputy Party Secretary of the Company and
executive director of Jiangsu Changchai Machinery Co., Ltd.
Lin Tian: He successively worked as deputy director of enterprise development Dept., GM of investment
management Dept. II and I, assistant president and vice president in Changzhou Investment Group Co., Ltd. Now
he is an Investment and Development Advisor for Changzhou Investment Group Co., Ltd., and the director of the
Company.
Xu Yi: successively served as the director and assistant to the GM of the Company’s technology center, and
currently serves as the director and deputy GM of the Company, in addition to being a director of Horizon
Investment.
Jiang He: successively served as the accountant, assistant to the minister, and vice minister of the financial
department of the Company. He is currently a director, chief accountant and minister of the financial department
of the Company.
Yang Feng: successively served as the business manager of the Shanghai Investment Banking Department of
China Economic Development Trust and Investment Co., Ltd., business director of the investment banking
department of Orient Securities Co., Ltd., GM of and assistant chairman of AJ Securities’ investment banking
department, operation management headquarters, worked in the development finance department and investment
banking department, and served as the EGM in the equipment group, investment recommendation group, NEEQ
business department and comprehensive group of CITIC Securities Co., Ltd. Currently serving as an executive
director of De Xin Investment Manage Co., Limited, and the director of the Company.
Wang Mancang: successively served as a teacher and lecturer in the Department of Management, as well as a
financial lecturer and professor in the Department of Finance of the School of Economics and Management of
Northwest University, and currently serves as the director of the Department of Finance of the School of
Economics and Management of Northwest University, counselor of Xi'an municipal government, chairman of

                                                       49
Changchai Company, Limited                                                                      Annual Report 2022


Shaanxi Securities Research Society, as well as an independent director of Focuslight Technologies Inc., Ccoop
Group Co., Ltd., Shaanxi Construction Machinery Co., Ltd, Xi'an Wonder Energy Chemical Co., Ltd., and the
Company.
Xing Min: successively served as secretary of the Party Committee and administrative assistant general manager
(AGM) of China National Heavy Machinery Corporation; secretary of the Party Committee and GM of China
National Machine Tool Sales and Technical Service Corporation (CNMTC); currently Executive Vice Chairman
and Secretary-General of China Internal Combustion Engine Industry Association (CICEIA), Independent
Director of Zhejiang Zhongjian Technology Co., Ltd., Independent Director of Jiangsu Yunyi Electric Co., Ltd.,
Independent Director of Weifu High-Technology Group Co., Ltd., Independent Director of Zhejiang Xinchai Co.,
Ltd., director of ActBlue Co., Ltd., and Independent Director of the Company.
Zhang Yan: successively served as chief accountant of Changzhou Zhengda Certified Public Accountants Co.,
Ltd., executive deputy chief accountant of Jiangsu Gongzheng Certified Public Accountants Co., Ltd., currently
associate professor of Business School of Jiangsu University of Technology,independent non-executive director
of S-Enjoy Service Group Co., Limited, director of Changzhou Communications Industry Group Co., Ltd., as well
as independent director of Wuxi SAHAT Electric Technology Co., Ltd., Jiangsu Tianmu Lake Tourism Co., Ltd.,
and the Company.
Yin Lihou: He worked as Minister of Human Resources Department and General Manager Assistant. Now he acts
as Deputy General Manager of the Company, and the Chairman of the Board of Changchai Robin.
Xie Guozhong: He used to be General Manager Assistant, Secretary of Party General Branch and Supervisor of
the Company. He is now Deputy GM of the Company, GM of the Sales Company, Chairman of the Board of
Changchai Wanzhou, and Supervisor of Beiqi Foton Motor Co., Ltd.
Sun Jianzhong: successively served as the director of the technical center and assistant to the general manager of
the Company. He is currently the deputy general manager of the Company, the general manager of Changchai
Machinery, and the chairman of the board of Changchai Benniu.
He Jianjiang: He used to be the Staff Member, Assistant to the Chief, and Deputy Chief of the Investment and
Development Department, and Securities Representative of the Company. Now he is Deputy General Manager,
Secretary of the Board, and Chief of the Investment and Development Department of the Company, as well as
Chairman of the Board & GM of Horizon Investment, Director of Horizon Agricultural Equipment and Changchai
Wanzhou, Chairman of the Board of Zhenjiang Siyang, and Supervisor of Donghai Securities Co., Ltd.
He Jianguang: successively served as deputy chief of Design Section of Changzhou Diesel Engine Factory,
engineer of Product Development Department, deputy director of the Company’s Joint Venture Office, deputy
director of Technology Center, chief engineer, director, general manager, vice chairman of Changzhou Diesel
Engine Factory, a member of the Party committee, secretary of the Discipline Inspection Commission and
supervisor of Changzhou Investment Group Co., Ltd., currently an investment and development advisor of
Changzhou Investment Group Co., Ltd., and chairman of the Supervisory Committee of the Company.
Chen Lijia: Formerly vice president and general manager of risk control legal department of Changzhou
Investment Group Co., Ltd.; and currently deputy general manager of Changzhou Metro Group Co., Ltd., and
supervisor of the Company.


                                                       50
Changchai Company, Limited                                                                             Annual Report 2022


Ge Jiangli: Formerly head of Human Resources Department of the Company, and currently supervisor of the
Company.
Lu Zhonggui: Now he acts as Minister of political Department of the Company, Office Director, Secretary of
Organ Party General Branch as well as employee supervisor of the Company and Director of Xingsheng Real
Estate Management.
Liu Yi: He successively took the posts of Assistant Minister of Enterprise Management Department. Now he acts
as Director of Audit Department and Employee Supervisor of the Company, Director of the Company, Supervisor
of Changchai Wanzhou, Changchai Benniu, Horizon Investment, Horizon Agricultural Equipment, Changchai
Robin, Changchai Machinery, Xingsheng Real Estate Management and Jiangsu Horizon New Energy Technology
Co., Ltd.

Offices held concurrently in shareholding entities:
√ Applicable □ Not applicable
                                                                                                         Remuneration or
                                                Office held in the                            End of
    Name           Shareholding entity                                  Start of tenure                 allowance from the
                                               shareholding entity                            tenure
                                                                                                        shareholding entity
                                               Investment and
                 Changzhou Investment
   Lin Tian                                    Development              October 2021                   Yes
                    Group Co., Ltd.
                                               Advisor
                                               Investment and
                 Changzhou Investment                                   December
 Shi Xinkun                                    Development                                             No
                    Group Co., Ltd.                                     2022
                                               Advisor
                                               Investment and
 He             Changzhou Investment                                    December
                                               Development                                             Yes
 Jianguang      Group Co., Ltd.                                         2022
                                               Advisor


 Notes          N/A


Offices held concurrently in other entities:
√ Applicable □ Not applicable
                                                                                                             Remuneration or
                                                   Office held in the                             End of
  Name                  Other entity                                        Start of tenure                  allowance from
                                                         entity                                   tenure
                                                                                                                 the entity
               Jiangsu Horizon New Energy          Chairman of the
                                                                   19 November 2021                                No
   Shi             Technology Co., Ltd.            Board
 Xinkun       Shanxi Horizon New Material          Chairman of the
                                                                   7 February 2021                                 No
                  Technology Co., Ltd.             Board
   He
               Donghai Securities Co., Ltd.        Supervisor           18 January 2023                            No
Jianjiang
   Xie
Guozhon        Beiqi Foton Motor Co., Ltd.         Supervisor           15 November 2022                          Yes
    g


                                                          51
Changchai Company, Limited                                                                     Annual Report 2022



  Yang       De Xin Investment Manage Co.,      Executive
                                                                     1 June 2022                          No
  Feng                  Limited                 Director
            Finance Department of School of
               Economics & Management           Teacher              1 October 1996
                 Northwest University
                   Xi’an Government            Consultant           1 October 2015
           Shaanxi Securities Research Society Chairman              1 October 2017
            Xi’an Focuslight Technology Co., Independent
  Wang                                                               2 May 2019
                           Ltd.               Director                                                    Yes
Mancang
                                                Independent
                 Ccoop Group Co., Ltd.                               1 September 2020
                                                Director
            Shaanxi Construction Machinery      Independent
                                                                     16 November 2018
                      Co., Ltd.              Director
           Xi'an Wonder Energy Chemical Co., Independent
                                                                     1 June 2020
                         Ltd.                Director
                                            Standing     Vice
           China Internal Combustion Engine
                                            Chairman      and 1 December 2021
                  Industry Association
                                            Secretary-general
                                                Independent
             Zhongjian Technology Co.,Ltd                            20 June 2017
                                                Director
                                                Independent
           Jiangsu Yunyi Electronic Co.,Ltd.                         15 July 2019       May 2022
Xing Min                                        Director                                                  Yes
           Weifu High-Technology Group Co., Independent
                                                                     20 May 2021
                         Ltd.               Director
                                                Independent                             September
               Zhejiang Xinchai Co., Ltd.                            6 December 2019
                                                Director                                 2022
                    ActBlue Co., Ltd.           Director             22 November 2021
                                                Associate
            Jiangsu University of Technology                         1 August 2008
                                                professor
              Changzhou Communications          Director
                                                                     1 May 2022
               Industry Group Co., Ltd.
           Wuxi SAHAT Electric Technology Independent
 Zhang                                                               2 November 2020
                       Co., Ltd.            Director                                                      Yes
   Yan
           Jiangsu Tianmu Lake Tourism Co., Independent
                                                                     8 February 2021
                         Ltd.               Director
                                              Independent
           S-Enjoy Service Group Co., Limited non-executive          20 October 2018
                                              director
  Notes                                                       None
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors
and senior management as well as those who left in the Reporting Period:


                                                       52
Changchai Company, Limited                                                                      Annual Report 2022


□ Applicable √ Not applicable

3. Remuneration of Directors, Supervisors and Senior Management

Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors
and senior management:
In 2022, the monthly salaries of directors, supervisors and senior executives in the Company were in line with the
stipulations of relevant salary management and grade standards, and the benefits of the Company and assessment
results. Director Lin Tian and Supervisors He Jianguang obtained salaries in shareholders' entities.
Remuneration of directors, supervisors and senior management for the Reporting Period
                                                                                                  Unit: RMB’0,000
                                                                                    Total
                                                                                                       Any
                                                                                 before-tax
                                                                 Incumbent/For                    remuneration
     Name            Office title     Gender          Age                      remuneration
                                                                      mer                          from related
                                                                                  from the
                                                                                                      party
                                                                                 Company
                  Chairman of the
  Shi Xinkun                            Male           59          Incumbent          85.49             No
                      Board
                      Director,                                                       85.49
   Zhang Xin                            Male           57          Incumbent                            No
                  General Manager
    Lin Tian          Director          Male           60          Incumbent           0.00            Yes
                     Director,
     Xu Yi          Vice-general        Male           59          Incumbent          74.51             No
                     Manager
                   Director, Chief
    Jiang He                            Male           51          Incumbent          73.99             No
                    Accountant
   Yang Feng          Director          Male           51          Incumbent           0.00             No
     Wang           Independent
                                        Male           60          Incumbent          10.00             No
    Mancang           director
                    Independent
   Xing Min                             Male           69          Incumbent          10.00             No
                      director
                    Independent
   Zhang Yan                          Female           53          Incumbent          10.00             No
                      director
                    Vice-general
   Yin Lihou                            Male           59          Incumbent          73.99             No
                     Manager
                    Vice-general
 Xie Guozhong                           Male           54          Incumbent          74.51             No
                     Manager
                    Vice-general
 Sun Jianzhong                          Male           51          Incumbent          74.51             No
                     Manager
  He Jianjiang      Vice-general        Male           44          Incumbent          74.51             No


                                                       53
Changchai Company, Limited                                                                               Annual Report 2022


                       Manager and
                      Secretary of the
                          Board
                      Chairman of the
 He Jianguang          Supervisory          Male               59            Incumbent          0.00             Yes
                        Committee
   Chen Lijia           Supervisor          Female             40            Incumbent          0.00             Yes

  Lu Zhonggui           Supervisor          Male               56            Incumbent          19.92            No

   Ge Jiangli           Supervisor          Female             53            Incumbent          20.91            No

     Liu Yi             Supervisor          Male               54            Incumbent          23.18            No
      Total                  --               --               --                --            711.01             --


VI Performance of Duty by Directors in the Reporting Period

1. Board Meetings Convened in the Reporting Period

                             Date of
     Meeting                                 Disclosure date                             Resolution
                             meeting
The 1st
Extraordinary            19       January   21       January        The meeting deliberated on and approved the
Meeting of the                                                      Obligations on Conducting Forward Foreign
Board of Directors       2022               2022                    Exchange Settlement
in 2022
                                                                    The meeting deliberated on and approved the Report
                                                                    on the Work of the General Manager for the Year
                                                                    2021, the Business Policy Objectives of the
The 11th Meeting         21       January                           Company for the Year 2022, the Results of the
of the 9th Board of                         ——                    Performance Appraisal of the Senior Management of
Directors                2022                                       the Company for the Year 2021, the Contract on the
                                                                    Performance Appraisal of the Senior Management of
                                                                    the Company for the Year 2022, and the Proposal on
                                                                    Application for Bank Credit Line
                                                                    The meeting deliberated on and approved the Annual
                                                                    Report for 2021 and Its Summary, the Annual Work
                                                                    Report of the Board of Directors for 2021, Plan of
                                                                    the Profit Distribution and Conversion of Surplus
                                                                    Reserves into Share Capital for 2021, Proposal on
                                                                    the Re-appointment of the Financial Audit Institution
                                                                    for 2022 and Its Audit Expenses, Proposal on the
                                                                    Re-appointment of the Internal Control Audit
The 12th Meeting
                                                                    Institution for 2022, Proposal on Expanding the
of the 9th Board of      11 April 2022      13 April 2022
                                                                    Business Scope of the Company and Amending the
Directors
                                                                    Articles of Association of the Company, Proposal on
                                                                    Amending the Rules of Procedure of the Board
                                                                    Meeting, the Proposal on Amending the Rules of
                                                                    Procedure of the General Meeting, the Proposal on
                                                                    Amending the Policy of Independent Directors,
                                                                    Special Report on the Deposit and Use of Raised
                                                                    Funds for 2021, the Annual Self-Evaluation Report
                                                                    on Internal Control for 2021, the Proposal on the

                                                               54
Changchai Company, Limited                                                                       Annual Report 2022


                                                             Provision of Reserves for Credit Impairment and
                                                             Asset Impairment, the 2021 Social Responsibility
                                                             Report, and Proposal on Convening the Annual
                                                             General Meeting of the Company for 2021




The 2nd
Extraordinary
                                                             The meeting deliberated on and approved the Report
Meeting of the        28 April 2022    30 April 2022
                                                             for the First Quarter of 2022
Board of Directors
in 2022
The 3rd                                                      The meeting deliberated on and approved the
Extraordinary                                                Proposal on Using Own Idle Funds to Purchase
Meeting of the        11 July 2022     12 July 2022          Wealth Management Products and Proposal on
Board of Directors                                           Using Idle Funds to Purchase Wealth Management
in 2022                                                      Products
                                                             The meeting deliberated on and approved the
                                                             Semi-annual Report for 2022 and Its Summary,
                                                             Proposal on Provision of Reserves for Credit
                                                             Impairment and Asset Impairment, Proposal on
                                                             Change of Accounting Policy, Special Report on the
The 13th Meeting      22      August                         Deposit and Use of Raised Funds for the
of the 9th Board of                    24 August 2022        Semi-annual Period of 2022, Proposal on Adding
Directors             2022                                   Implementation Location to the Private Placement
                                                             Raised Funds Investment Project of Innovation
                                                             Capacity Building of the Technical Centre, Proposal
                                                             on Adding Implementation Entity to the Private
                                                             Placement Raised Funds Investment Project of
                                                             Relocation of Light Engines and Casting
                                                             The meeting deliberated on and approved the
The 4th
                                                             Proposal on Planning to Participate in Capital
Extraordinary         25      August                         Increase and Share Expansion and Related
Meeting of the                         27 August 2022
                      2022                                   Transactions of Jiangsu Horizon New Energy
Board of Directors
                                                             Technology Co., Ltd. and the Proposal on Planning
in 2022
                                                             to Sell Part of the Trading Financial Assets
The 5th
                                                             The meeting deliberated on and approved the
Extraordinary         29 September     30 September          Proposal on Planning to Use Bank Acceptances for
Meeting of the
                      2022             2022                  Part of the Payments of Fund-raising Projects and
Board of Directors
                                                             Equal Replacement of Raised Funds
in 2022
The 6th
                                                             The meeting deliberated on and approved the
Extraordinary         17     October   18     October        Proposal on Planning to Extend the Operation Period
Meeting of the
                      2022             2022                  of Changzhou Synergetic Innovation Private Equity
Board of Directors
                                                             Fund (Limited Partnership)
in 2022
The 14th Meeting      28     October   29     October        The meeting deliberated on and approved the Report
of the 9th Board of
                      2022             2022                  of the Third Quarter of 2022
Directors




                                                        55
Changchai Company, Limited                                                                           Annual Report 2022


The 7th
Extraordinary             15 December        16 December         The meeting deliberated on and approved the
Meeting of the                                                   Proposal on Using Idle Funds to Purchase the Limit
Board of Directors        2022               2022                of Wealth Management Products
in 2022

2. Attendance of Directors at Board Meetings and General Meetings

                           Attendance of directors at board meetings and general meetings
                   Total                                                                        The
                number of                        Board                                       director
                                                                   Board        Board
                   board          Board        meetings                                      failed to
                                                                 meetings     meetings                    General
                 meetings       meetings      attended by                                   attend two
 Director                                                         attended   the director                 meetings
               the director    attended on       way of                                     consecutiv
                                                                 through a     failed to                  attended
                    was            site       telecommu                                       e board
                                                                   proxy        attend
                eligible to                     nication                                     meetings
                  attend                                                                     (yes/no)
Shi Xinkun           11             2             9                 0             0            No             1
Zhang Xin            11             2             9                 0             0            No             1
Lin Tian             11             1             9                 1             0            No             1
Xu Yi                11             2             9                 0             0            No             1
Jiang He             11             2             9                 0             0            No             1
Yang Feng            11             2             9                 0             0            No             1
Xing Min             11             2             9                 0             0            No             1
Wang
                     11             2             9                 0             0            No             1
Mancang
Zhang Yan            11             2             9                 0             0            No             1
Explanation of why any director failed to attend two consecutive board meetings:
N/A

3. Objections Raised by Directors on Matters of the Company

Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.

4. Other Information about the Performance of Duty by Directors

Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company:
All directors of the Company in line with the law, rules, normative documents and obligations given by the
Company of the Company law, Article of Associations, Rules of Procedure of the Board and Independent
Directors Work Rules, comprehensively focused on the development and operation of the Company, actively
attended the general meeting of shareholder and meeting of board of directors. Independent directors given


                                                            56
Changchai Company, Limited                                                                                 Annual Report 2022


independent opinions for the significant events of the Company, and effectively maintained the profits of the
Company and all the shareholders. The Company actively listened to the suggestions from directors upon the
significant events and adopted them. For more details, please refer to the Report on the Work of the Board of
Directors for 2022 disclosed by the Company on http://www.cninfo.com.cn dated 12 April 2023.


VII Special Committees under the Board of Directors during the Reporting Period

                             Number                                                                                    Specific
                                                                                      Important             Other
  Name of                      of       Date of                                                                        disputed
              Members                                      Contents                 comments and         performance
 committee               meetings       meeting                                                                        matters
                                                                                     suggestions          of duties
                         convened                                                                                      (if any)
                                                                                 The       Company's
                                                                                 financial statements
                                                                                 have been prepared
                                                                                 in accordance with
                                                                                 the new Accounting
                                                                                 Standards         for
                                                                                 Business
                                                  The meeting discussed and      Enterprises and the
                                                  approved the Report on         provisions of the
                                                  Financial Pre-audit in 2021,   Company's relevant
                                                  Report on Audit Plan           financial    policies
                                        19        Arrangement     for    2021,   and presented fairly,
                                        January   Report on Internal Audit       in    all    material
                                        2022      Work in 2021 and Internal      respects,         the
                                                  Audit Plan for 2022 and        financial status of
                                                  Report on the Deposit and      the Company as of
                                                  Use of Raised Funds for        31 December 2021
                                                  2021                           and the operating
                                                                                 results and cash
              Zhang
                                                                                 flows for 2021. The
Audit         Yan,                                                               Company's financial
Committee     Wang                  3                                            and       accounting
              Mancang,                                                           statements        are
                                                                                 authentic        and
              Lin Tian
                                                                                 accurate.
                                                  The meeting reviewed and
                                                  approved      the    Annual
                                                  Financial Statements of the
                                                  Company for 2021, Proposal
                                                  on Provision of Reserves for
                                                  Asset Impairment, Special      It was consented
                                                  Report on the Deposit and
                                                                                 that both the
                                                  Use of Raised Funds for
                                        7 April   2021,       the      Annual    proposals shall be
                                        2022      Self-Evaluation Report on      submitted to the
                                                  Internal Control for 2021,
                                                                                 Board of Directors
                                                  Proposal        on       the
                                                  Re-appointment     of    the   for discussion
                                                  Financial Audit Institution
                                                  for 2022 and Its Audit
                                                  Expenses, and Proposal on
                                                  the Re-appointment of the
                                                  Internal   Control    Audit


                                                             57
Changchai Company, Limited                                                                         Annual Report 2022


                                             Institution for 2022
                                             The meeting deliberated on
                                             and         approved       the
                                             Semi-annual Work Summary
                                             of the Audit Department for
                                             2022,      the    Semi-annual
                                             Report for 2022, Proposal on
                                             Provision of Reserves for
                                             Credit Impairment and Asset
                                             Impairment, Special Report
                                             on the Deposit and Use of
                                             Raised Funds for the             It was consented
                                             Semi-annual Period of 2022,      that both the
                                   18        Proposal on Change of            proposals shall be
                                   August    Accounting Policy, Proposal
                                                                              submitted to the
                                   2022      on Adding Implementation
                                             Location to the Private          Board of Directors
                                             Placement Raised Funds           for discussion
                                             Investment       Project    of
                                             Innovation            Capacity
                                             Building of the Technical
                                             Centre and Proposal on
                                             Adding         Implementation
                                             Entity to the Private
                                             Placement Raised Funds
                                             Investment       Project    of
                                             Relocation of Light Engines
                                             and Casting
                                             The meeting deliberated on
                                             and approved the Contract
               Xing                          on       the      Performance    It was consented
Remuneration   Min,                          Appraisal of the Senior          that both the
                                   20        Management          of     the
and            Wang                                                           proposals shall be
                               1   January   Company for the Year 2021
Evaluation     Mancang,                                                       submitted to the
                                   2022      and the Contract on the
Committee      Shi                           Performance Appraisal of         Board of Directors
               Xinkun                        the Senior Management of         for discussion
                                             the Company for the Year
                                             2022


VIII Performance of Duty by the Supervisory Committee

Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in
the Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.


IX Employees

1. Number, Functions and Educational Backgrounds of Employees

 Number of in-service employees of the Company as the parent at
                                                                                                             2,114
 the period-end


                                                         58
Changchai Company, Limited                                                                     Annual Report 2022


 Number of in-service employees of major subsidiaries at the
                                                                                                           542
 period-end
 Total number of in-service employees at the period-end                                                  2,656
 Total number of paid employees in the Reporting Period                                                  2,656
 Number of retirees to whom the Company as the parent or its
                                                                                                             0
 major subsidiaries need to pay retirement pensions
                                                    Functions
                                  Function                                          Employees
 Production                                                                                              1,731
 Sales                                                                                                     195
 Technical                                                                                                 356
 Financial                                                                                                  42
 Administrative                                                                                            288
 Other                                                                                                      44
 Total                                                                                                   2,656
                                             Educational backgrounds
                       Educational background                                       Employees
 Junior high school graduates and below                                                                  1,133
 High school graduates                                                                                     747
 College graduates and technical secondary school graduates                                                487
 Bachelors                                                                                                 271
 Masters and above                                                                                          18
 Total                                                                                                   2,656


2. Employee 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 the employee’s income integrated with increasing labor
production efficiency and production & operation efficiency, so as to perfect the salary structure and further
increase employees’ income steadily.

3. Employee Training Plans

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
innovated the training mechanism, optimized the training environment, and reinforced to encourage employees to
attend various training, so as to inspire the employees’ potential to the maximum extent and further promote the
sustainable development of the Company.

4. Labor Outsourcing

□ Applicable √ Not applicable


                                                       59
Changchai Company, Limited                                                                       Annual Report 2022


X Profit Distributions (in the Form of Cash and/or Stock)

How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the
Reporting Period:
√ Applicable □ Not applicable
In Articles of Association, which had confirmed the specific profits distribution and cleared out the conditions,
standards and proportion of the cash bonus, stipulated the decision-making progress of the formulation and
alternation of the profits distribution policies and the chapters as well as the regulations fully ensure the
opportunities for the medium and small shareholders to exert the functions and to provide advices as well as
appeals. The cash bonus of recent 3 years of the Company met with the regulations of the Articles of Association
and during the decision-making process of the profits distribution proposal, the Independent Directors stated the
independent advices and fully respected the advices from the medium and small shareholders. The profits
distribution preplan and the turning capital reserve into share capital preplan of the Company were both met with
the relevant regulations of the Articles of Association and so on.
                                  Special statement about the cash dividend policy
 In compliance with the Company’s Articles of Association and
                                                                            Yes
 resolution of general meeting
 Specific and clear dividend standard and ratio                             Yes
 Complete decision-making procedure and mechanism                           Yes
 Independent directors faithfully performed their duties and played their
                                                                            Yes
 due role
 Non-controlling interests are able to fully express their opinion and
                                                                            Yes
 desire and their legal rights and interests are fully protected
 In case of adjusting or changing the cash dividend policy, the
 conditions and procedures involved are in compliance with applicable       N/A
 regulations and transparent
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal despite the facts that the
Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to
shareholders are positive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period:
√ Applicable □ Not applicable
 Bonus shares for every 10 shares (share)                                                                      0
 Dividend for every 10 shares (RMB) (tax inclusive)                                                         0.10
 Additional shares to be converted from capital reserve for every
                                                                                                               0
 10 shares (share)
 Total shares as the basis for the profit distribution proposal
                                                                                                    705,692,507
 (share)
 Cash dividends (RMB) (tax inclusive)                                                              7,056,925.07
 Cash dividends in other forms (such as share repurchase) (RMB)                                                0
 Total cash dividends (including those in other forms) (RMB)                                       7,056,925.07
 Distributable profit (RMB)                                                                      915,495,909.35
 Total cash dividends (including those in other forms) as % of
                                                                                                           100%
 total profit distribution

                                                           60
Changchai Company, Limited                                                                       Annual Report 2022


                                               Cash dividend policy
 Other
                                         Particulars about the dividend plan
 The Board has approved a final dividend plan as follows: based on the total share capital of the Company at 31
 December 2022, a cash dividend of RMB0.10 (tax inclusive) per 10 shares is to be distributed to the
 shareholders, with no bonus issue from either profit or capital reserves.


XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XII Formulation and Implementation of Internal Control System during the Reporting
Period

1. Internal Control Formulation and Implementation

During the Reporting Period, the Company strictly complied with national laws and regulations and relevant
regulations such as the Basic Code for Internal Control of Enterprises and the Guidelines for Application of
Enterprise Internal Control, as well as the provisions and requirements of the Company's internal control standards,
and optimized important business processes and improved and perfected the internal control system through
continuous supervision and effective evaluation of the operation of the Company's internal control, so as to adapt
to the changing external environment and internal management requirements and improve the efficiency of the
Company's operation and management. By doing so, the Company effectively prevented risks in operation and
management, and promoted the achievement of internal control objectives. The Company's internal control system
can cover the major aspects of the Company's operation and management, and the internal control design is sound
and reasonable, with no material omissions.

2. Material Internal Control Weaknesses Identified for the Reporting Period

□ Yes √ No


XIII Management of Subsidiaries by the Company during the Reporting Period

                                                                         Problem
                                                                                                Solutio   Subseq
                                                                          s found
                                                                                     Solution      n       uent
 Subsidiary      Integration plan          Progress on integration           in
                                                                                      s taken   progre    solutio
                                                                         integrati
                                                                                                  ss         n
                                                                             on
 Zhenjiang        As the largest       On 16 May 2022, Zhenjiang
  Siyang         shareholder of       Siyang convened a meeting of
   Diesel       Zhenjiang Siyang,       shareholders, the Board of       N/A         N/A        N/A       N/A
  Engine          the Company          Directors, and the Board of
Manufacturi         nominated            Supervisors to elect new
ng Co., Ltd.        directors,           members of the Board of

                                                         61
Changchai Company, Limited                                                                          Annual Report 2022


                 supervisors, and          Directors, the Board of
                   Management                Supervisors and the
                personnel for the        Management. The directors
                   new Board of         designated by the Company
                   Directors and        accounted for more than half
                      Board of           and Zhenjiang Siyang was
                 Supervisors and         included in the Company’s
                     dispatched           consolidated report. The
                   Management,           Company designated three
                   financial, and         Management personnel to
               technical personnel      Zhenjiang Siyang for routine
                    to Zhenjiang         management, financial, and
                     Siyang for                technical posts.
                  production and
                     operations
                   management.


XIV Self-Evaluation Report or Independent Auditor’s Report on Internal Control

1. Internal Control Self-Evaluation Report

 Disclosure date of the internal
                                                                       12 April 2023
 control self-evaluation report
 Index to the disclosed internal
                                                                         2023-011
 control self-evaluation report
 Evaluated entities’ combined assets
                                                                         100.00%
 as % of consolidated total assets
 Evaluated    entities’ combined
 operating revenue as % of                                               100.00%
 consolidated operating revenue
                             Identification standards for internal control weaknesses
                                         Weaknesses in internal control over       Weaknesses in internal control
                Type
                                                  financial reporting             not related to financial reporting
                                        The Company classified the defects       Defects with the following
                                        as serious defect, important defect      random characteristics should be
                                        and general defect according to the      recognized as serious defect:
                                        influence degree from the internal       1) Seriously violated the national
                                        control:                                 laws        and       administrative
                                        (1) Serious defect: refers to one or     regulations and the normative
                                        multiple groups with control defect      documents;
                                        which may lead the enterprise            2) “three significant one great”
                                        seriously deviates the control target;   event had not been through the
 Nature standard
                                        (2) Important defect: refers to one or   collective         decision-making
                                        multiple groups with control defect      process;
                                        with the severity and the economic       3) the significant events involved
                                        results lower than the great defect      with      the    production     and
                                        but may still lead the enterprise        operation of the Company lacked
                                        seriously deviates the control target;   of systematic control or the
                                        (3) General defect: refers to other      institutional system was invalid;
                                        defect except for the great defect       4) the internal control of the
                                        and significant defect.                  information       disclosure    was

                                                         62
Changchai Company, Limited                                                                   Annual Report 2022


                                   Nature standards:                       invalid, which led the Company
                                   defects with the following random       be open condemned by the
                                   characteristics should be recognized    supervision department;
                                   as serious defect:                      5) the serious defect from the
                                   1) the defect involves with the         assessment results of the internal
                                   malpractice of the Directors,           control had not been revised.
                                   Supervisors and Senior Executives;
                                   2) revised the disclosed financial
                                   report;
                                   3) CPAs discovered the great
                                   misstatement among the current
                                   financial statement while which
                                   could not be found during the
                                   operating process of the internal
                                   control;
                                   4) the supervision from the Audit
                                   Committee and the internal audit
                                   institution of the enterprise was
                                   invalid.
                                                                           Refer to the quantitative criteria
                                                                           of the internal control defect of
                                   Quantitative standards:
                                                                           the financial report, to recognize
                                   The quantitative standards of
                                                                           the quantitative criteria of the
                                   recognizing the significant degree of
                                                                           significant degree of the internal
                                   the misstatement (including the false
                                                                           control      defect     of     the
                                   negatives) of the consolidated
                                                                           non-financial report of the
                                   financial report of the Company
                                                                           Company as:
                                   based on the data from the 2022
                                                                           Serious defect: possibly caused
Quantitative standard              consolidated statements was as:
                                                                           directly losses≥0.1% of the net
                                   Serious defect: misstatement≥5% of
                                                                           assets
                                   the annual profits
                                                                           Important defect: 0.05% of the
                                   Important defect: 2.5% of the annual
                                                                           net assets≤ possibly caused
                                   profits≤ misstatement < 5% of the
                                                                           directly losses < 0.1% of the net
                                   annual profits
                                                                           assets
                                   General defect<2.5% of the annual
                                                                           General defect: possibly caused
                                   profits
                                                                           directly losses<0.05% of the net
                                                                           assets
Number of material weaknesses in
internal control over financial                                                                            0
reporting
Number of material weaknesses in
internal control not related to                                                                            0
financial reporting
Number of serious weaknesses in
internal control over financial                                                                            0
reporting
Number of serious weaknesses in
internal control not related to                                                                            0
financial reporting



                                                   63
Changchai Company, Limited                                                                       Annual Report 2022


2. Independent Auditor’s Report on Internal Control

√ Applicable □ Not applicable
                    Opinion paragraph in the independent auditor’s report on internal control
 We believed that Changchai Company, Limited maintained effective internal control of the financial report in
 significant aspects according to the Basic Norms of Internal Control and relevant regulations on 31 December
 2022.
 Independent auditor’s report on
                                          Disclosed
 internal control disclosed or not
 Disclosure date                          10 April 2023
 Index to such report disclosed           S.G. W[2023] E1111
 Type of the auditor’s opinion           Unmodified unqualified opinion
 Material weaknesses in internal
 control not related to financial         None
 reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the
Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent
with the internal control self-evaluation report issued by the Company’s Board.
√ Yes □ No


XV Remediation of Problems Identified by Self-inspection in the Special Action on the
Governance of Listed Companies

N/A




                                                        64
Changchai Company, Limited                                                                       Annual Report 2022




                  Part V Environmental and Social Responsibility

I Major Environmental Issues

Indicate by tick mark whether the Company or any of its subsidiaries was identified as a key polluter by the
environment authorities.
□ Yes √ No
Administrative punishments received in the Reporting Period due to environmental issues:
                                                                                                 Rectification
   Company or         Reason for                                              Impact on the
                                          Violation           Punishment                        measures of the
    subsidiary        punishment                                                Company
                                                                                                  Company
 N/A                N/A                N/A                N/A                N/A                N/A
Actions taken during the Reporting Period to reduce carbon emissions and the impact:
√ Applicable □ Not applicable
See the 2022 Social Responsibility Report of Changchai Company,                          Limited    disclosed     on
http://www.cninfo.com.cn dated 12 April 2023.
Reasons for not disclosing other environment-related information:
N/A

II Social Responsibility

See the 2022 Social Responsibility Report                of    Changchai    Company,     Limited    disclosed     on
http://www.cninfo.com.cn dated 12 April 2023.

III Efforts in Poverty Alleviation and Rural Revitalization

N/A




                                                        65
Changchai Company, Limited                                                                                      Annual Report 2022




                                      Part VI Significant Events

I Fulfillment of Commitments

1. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, as
well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at the
Period-End

√ Applicable □ Not applicable
                                                                                                          Da
                                                 Ty                                                       te
                                                 pe                                                       of
                                                 of                                                       co
                                                                                                                             Ful
                                                 co                                                       m       Term of
                                                                                                                             fill
     Commitment                   Promisor       m                Details of commitment                   mi       commit
                                                                                                                             me
                                                 mi                                                       tm        ment
                                                                                                                             nt
                                                 tm                                                       ent
                                                 en                                                       ma
                                                  t                                                       kin
                                                                                                          g
                                                       1. The company and its controlled related
                                                       parties have not reduced their holdings of
                                                 A
                                                       shares of Changchai Company from the
                                                 bo
                                                       six months prior to the announcement of
                                                 ut
                                                       the decision of the Board of Directors of
                                                 sh                                                       29
                                                       Changchai          Company,              Limited              10
                                                 ar                                                       Se
                                                       ("Changchai Company") concerning the                       October
                                                 eh                                                       pte                Ex
                          Changzhou Investment         proposal    to   consider    the   non-public                2019
                                                 ol                                                       mb                 pir
                             Group Co., Ltd.           offering of shares to the date of issuance                   -30
                                                 di                                                       er                 ed
                                                       of this Letter of Commitment.                                June
                                                 ng                                                       20
                                                       2. The company and its controlled related                    2022
Commitments made in                              re                                                       20
                                                       parties have no plan to reduce their
refinancing                                      du
                                                       holdings of shares of Changchai Company
                                                 cti
                                                       from the date of issuance of this Letter of
                                                 on
                                                       Commitment to six months after the
                                                       completion of this issuance.
                                                 A
                                                 bo    It will not transfer the shares it has             5
                                                                                                                   5 July
                                                 ut    obtained in the private placement of               Jul                On
                          Changzhou Investment                                                                     2021 -5
                                                 sh    Changchai within 36 months starting from           y                  goi
                             Group Co., Ltd.                                                                        July
                                                 ar    the date when the private placement of             20                 ng
                                                                                                                    2024
                                                 e     A-shares is allowed for public trading.            21
                                                 tra


                                                         66
Changchai Company, Limited                                                                                     Annual Report 2022


                                                    di
                                                    ng
                                                    re
                                                    str
                                                    ict
                                                    io
                                                    n
                                                          1. It undertakes not to interfere in the
                                                          Company's operation and management
                                                          activities beyond its authority and not to
                                                          encroach on the Company's interests;
                                                          2. It undertakes not to transfer benefits to
                                                          other entities or individuals free of charge
                                                          or on unfair terms, nor to impair the
                                                          interests of the Company by any other
                                                          means;
                                                          3. After the issuance of this Letter of
                                                          Commitment and before the completion of
                                                          the Company's non-public offering of
                                                          shares, if the China Securities Regulatory     11      11 April
                                                    Ot    Commission (CSRC) makes other new              Ap        2020     On
                         Changzhou Investment
                                                    he    regulatory provisions on the return filling    ril        -31     goi
                              Group Co., Ltd.
                                                     r    measures and commitments, and the              20      Decemb     ng
                                                          aforesaid commitments cannot meet such         20       er 9999
                                                          provisions of the CSRC, it undertakes to
                                                          issue    supplementary   commitments      in
                                                          accordance with the latest provisions of
                                                          the CSRC;
                                                          4. It undertakes to effectively implement
                                                          the Company's measures to fill the return
                                                          and any commitments made thereon. If the
                                                          Company breaches such commitments and
                                                          causes losses to the Company or the
                                                          investors, the Company is willing to
                                                          compensate the Company or the investors
                                                          according to law.
                        UBS AG, Caitong Fund        A
                         Management Co., Ltd.,      bo    I/We undertake that I/we will not transfer
                                                                                                         5
                             Changzhou Traffic      ut    the shares I/we have obtained in the                    5 July
                                                                                                         Jul                Ex
                        Construction Investment     sh    private placement of Changchai within 6                 2021-5
                                                                                                         y                  pir
                         Development General        ar    months starting from the date when the                  January
                                                                                                         20                 ed
                        Company, Chen Beiwen,       e     private placement of A-shares is allowed                 2022
                                                                                                         21
                       Guotai Asset Management      tra   for public trading.
                        Co., Ltd., Jiangxi Jintou   di


                                                            67
Changchai Company, Limited                                                                                         Annual Report 2022


                                Industrial Development     ng
                                 Co., Ltd., Li Xueqin,     re
                                Nanhua Fund Co., Ltd.,     str
                                 Enjoy (Ningbo) Asset      ict
                               Management L.P., Nuode      io
                                Asset Management Co.,      n
                                     Ltd., Sun Meichun,
                               Minmetals Securities Co.,
                               Ltd., Yao Jianquan, China
                                 National Gold Group
                                Asset Management Co.,
                                Ltd., and Zhou Zhiheng
                                                                 Rewards Plan for Shareholders in Next
                                                                 Three Years(2020-2022)
                                                                 Under the premise of positive distributive
                                                                 profit (remaining after-tax profits after
                                                                 making up for the loss and extracting for
                                                           A     the common reserves) in this year or half
                                                           bo    year and abundant money flow and no          8
                                                           ut    influence on the following-up going          M      Year      Ex
Other commitments
                               Changchai Company,          di
made to minority                                                 concern after cash bonus, the profits        ay     2020-20   pir
                               Limited                     vi
shareholders                                                     allocated by cash every year shouldn’t be   20     22        ed
                                                           de
                                                           nd    lower than 10% of the allocable profits      20
                                                           s     from parent company. Meanwhile, the
                                                                 accumulated allocable profits by cash in
                                                                 the arbitrary continuous three accounting
                                                                 years should not be lower than 30% of the
                                                                 annual average allocable profits in those
                                                                 three years.
Fulfilled on time or not       Yes
Specific   reasons      for
failing     to       fulfill
commitments on time            N/A
and plans for next step
(if any)


2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.

□ Applicable √ Not applicable

II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related
Parties for Non-Operating Purposes

□ Applicable √ Not applicable

                                                                   68
Changchai Company, Limited                                                                   Annual Report 2022


No such cases in the Reporting Period.

III Irregularities in the Provision of Guarantees

□ Applicable √ Not applicable
No such cases in the Reporting Period.

IV Explanations Given by the Board of Directors Regarding the Independent Auditor's
“Modified Opinion” on the Financial Statements of the Latest Period

□ Applicable √ Not applicable

V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period

□ Applicable √ Not applicable

VI YoY Changes to Accounting Policies, Estimates and Correction of Material Accounting
Errors

√Applicable □ Not applicable
        Changes to the accounting policies and why                  Approval process               Remark
The Company starts to implement the “Accounting
treatment for sales of products or by-products by
                                                            On 22 August 2022, the 13th Meeting
enterprises generated from fixed assets before reaching the
                                                            of the 9th Board of Directors and the Notes      of
intended state of availability or from the period of R&D” th
                                                            12 Meeting of the 9th Supervisory changes        to
and “Judgment on onerous contracts” and “Presentation of
                                                            Committee were held by the Company accounting
centralized capital management” stipulated in the
                                                            on which the Proposal on Changes of policies-(1)
Accounting      Standards     for    Business   Enterprises
                                                            Accounting Policies was approved.
Interpretation No. 15 issued by the Ministry of Finance in
2021 since 1 January 2022.
The Company starts to implement the “accounting
treatment of the income tax effect of financial instrument
related dividend whose issuer is classified as equity
                                                                                               Notes        of
instrument” and “accounting treatment of share-based
                                                                                               changes      to
payment in cash settlement modified into share-based                        /
                                                                                               accounting
payment in equity settlement by the enterprise” stipulated
                                                                                               policies-(2)
in the Accounting Standards for Business Enterprises
Interpretation No. 16 issued by the Ministry of Finance in
2022 since 13 December 2022.


Description of changes in accounting policies:



                                                       69
Changchai Company, Limited                                                                       Annual Report 2022


(1) The impact of implementing the Interpretation No. 15 of Accounting Standards for Business Enterprises on the
Company
On 31 December 2021, the Ministry of Finance issued the Interpretation No. 15 of Accounting Standards for
Business Enterprises (C.K. [2021] No. 35) (hereinafter referred to as “Interpretation No. 15”). Contents of
“accounting treatment of external sales of products or by-product produced by the enterprise before the fixed
assets reach the intended usable state or during the research and development process (hereinafter referred to as
‘Trial Sales’)” and “judgment on loss-making contracts” came into force on 1 January 2022.
The Company implemented Interpretation No. 15 since the date of issuance, and the implementation has no
material impact on the financial statements during the reporting period.
(2) The impact of implementing the Interpretation No. 16 of Accounting Standards for Business Enterprises on the
Company
On 13 December 2022, the Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for
Business Enterprises (C.K. [2022] No. 31) (hereinafter referred to as “Interpretation No. 16”). The regulations of
“accounting treatment for deferred income tax relating to assets and liabilities arising from a single transaction
that is not subject to the initial recognition exemption” came into force on 1 January 2023, allowing companies to
implement the exemption prior to the year of issuance, which has not been implemented by the Company in
advance this year. In addition, the contents of “accounting treatment of the income tax effect of financial
instrument related dividend whose issuer is classified as equity instrument” and “accounting treatment of
share-based payment in cash settlement modified into share-based payment in equity settlement by the enterprise”
came into force on the issuance date.
The Company implemented Interpretation No. 16 since the date of issuance, and the implementation has no
material impact on the financial statements during the reporting period.

VII YoY Changes to the Scope of the Consolidated Financial Statements

√ Applicable □ Not applicable
The Sixth Extraordinary Meeting of the Board of Directors in 2021 held by the Company on 28 October 2021
deliberated on and approved the Proposal on Participation in Bidding for 41.5% Equity Interests in Zhenjiang
Siyang Diesel Engine Manufacturing Co., Ltd., authorizing the Management of the Company to participate in
bidding for 41.5% equity interest in Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. (hereinafter referred
to as "Zhenjiang Siyang") that had been put out for sale by Jiangsu Keda Assets Marketing Co., Ltd. (hereinafter,
“Keda Assets”). On 12 January 2022, Jiangsu Assets and Equity Exchange Co., Ltd. issued the Confirmation of
Transaction on the Transfer of 41.5% Equity Interests (Corresponding to Capital Contribution of RMB830,000) in
Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. The Company won the bid for the 41.5% equity
interests in Zhenjiang Siyang at a price of RMB33,520,800.00. On 23 February 2022, the Company signed the
Contract on Transfer of State-owned Property Rights with Keda Assets. On 9 March 2022, Zhenjiang Siyang has
completed the relevant registration alteration formalities with the competent industrial and commercial
administration. On 16 May 2022, Zhenjiang Siyang held meetings of shareholders, the Board of Directors and the
Supervisory Committee to elect and appoint new members for the Board of Directors, the Supervisory Committee
and management. The Company holds more than half of the board seats of Zhejiang Siyang and Zhenjiang Siyang
has been included in the consolidated financial statements of the Company. Since then, the number of subsidiaries
within the consolidation scope of the Company increases to eight from seven.




                                                        70
Changchai Company, Limited                                                                      Annual Report 2022


VIII Engagement and Disengagement of Independent Auditor

Current independent auditor:
                                                               Gongzheng Tianye Certified Public Accountants
 Name of the domestic independent auditor
                                                               (Special General Partnership)
 The Company’s payment to the domestic independent
                                                               60
 auditor (RMB’0,000)
 How many consecutive years the domestic independent
                                                               21
 auditor has provided audit service for the Company
 Names of the certified public accountants from the
 domestic independent auditor writing signatures on the        Wang Wenkai, Qin Zhijun
 auditor’s report
 How many consecutive years the certified public
                                                               Two years for Wang Wenkai, two years for Qin
 accountants have provided audit service for the
                                                               Zhijun
 Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√Applicable □ Not applicable
In this year, the Company retained Gongzheng Tianye Certified Public Accountants (Special General Partnership)
as the audit institution for its internal control at the audit fees of RMB120,000.


IX Possibility of Delisting after Disclosure of this Report

□ Applicable √ Not applicable


X Insolvency and Reorganization

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XI Major Legal Matters

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XII Punishments and Rectifications

□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                          71
Changchai Company, Limited                                                                    Annual Report 2022


XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller

√ Applicable □ Not applicable
The de facto controller of the Company is SASAC of Changzhou People’s Government and the controlling
shareholder of it is Changzhou Investment Group Co., Ltd. There is no such case that the controlling shareholder
fails to perform any legally effective judgment of courts or to pay off matured debts with a large amount.


XIV Major Related-Party Transactions

1. Continuing Related-Party Transactions

□ Applicable √ Not applicable
No such cases in the Reporting Period.

2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments

□ Applicable √ Not applicable
No such cases in the Reporting Period.

3. Related-Party Transactions Regarding Joint Investments in Third Parties

□ Applicable √ Not applicable
No such cases in the Reporting Period.

4. Amounts Due to and from Related Parties

□ Applicable √ Not applicable
No such cases in the Reporting Period.

5. Transactions with Related Finance Companies

□ Applicable √ Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance
business with any related finance company or any other related parties.

6. Transactions with Related Parties by Finance Companies Controlled by the Company

□ Applicable √ Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not
involved in any other finance business with any related parties.

7. Other Major Related-Party Transactions

√Applicable □ Not applicable

                                                      72
Changchai Company, Limited                                                                       Annual Report 2022


On 25 August 2022, the Company held the Fourth Interim Meeting of the Board of Directors and the Fourth
Interim Meeting of the Supervisory Committee in 2022 and deliberated and approved the Proposal on Planning to
Participate in Capital Increase and Share Expansion and Related Transactions of Jiangsu Horizon New Energy
Technology Co., Ltd., agreeing to increase RMB75 million capital to Horizon New Energy for the subscription of
its newly registered capital of RMB18,844,200 and authorizing Shi Xinkun, the Company’s Chairman, to sign
capital increase agreements with related parties. In August 2022, Horizon New Energy and its shareholders signed
the Capital Increase Agreement of Jiangsu Horizon New Energy Technology Co., Ltd., agreeing that the registered
capital of Horizon New Energy was increased from RMB1,405,622,491 to RMB1.75 billion. In October 2022,
Horizon New Energy completed the industrial and commercial change registration procedures according to the
aforesaid capital increase agreement and obtained the new business license.
Index to the public announcements about the said related-party transactions disclosed
             Title of public announcement                     Disclosure date            Disclosure website
 Proposal on Planning to Participate in Capital
 Increase and Share Expansion and Related
                                                     27 August 2022                  www.cninfo.com.cn
 Transactions of Jiangsu Horizon New Energy
 Technology Co., Ltd.


XV Major Contracts and Execution thereof

1. Entrustment, Contracting and Leases

(1) Entrustment

□ Applicable √ Not applicable
No such cases in the Reporting Period.

(2) Contracting

□ Applicable √ Not applicable
No such cases in the Reporting Period.

(3) Leases

□ Applicable √ Not applicable
No such cases in the Reporting Period.

2. Major Guarantees

√ Applicable □ Not applicable
                                                                                                 Unit: RMB'0,000
          Guarantees provided by the Company for external parties (exclusive of those for subsidiaries)
                      Disclos     Line of     Actual           Actual                            Havin    Guara
 Guarantee-receiv                                                         Type of     Term of
                      ure date    guarant   occurrence        guarante                             g       ntee
    ing entity                                                           guarantee   guarantee
                       of the       ee         date              e                               expire   for a


                                                         73
Changchai Company, Limited                                                                        Annual Report 2022


                     guarant                  (agreement      amount                               d or    relate
                      ee line                signing date)                                         not       d
                     announc                                                                               party
                      ement                                                                                or not
                     Guarantees provided by the Company as the parent for its subsidiaries
                     Disclos                                                                               Guara
                     ure date                   Actual                                            Havin     ntee
                                                               Actual
                      of the    Line of       occurrence                                            g       for a
 Guarantee-receiv                                             guarante    Type of      Term of
                     guarant    guarant          date                                             expire   relate
    ing entity                                                   e       guarantee    guarantee
                      ee line     ee          (agreement                                           d or       d
                                                              amount
                     announ                  signing date)                                         not     party
                     cement                                                                                or not
Changzhou
Changchai
Horizon              15 April                                            Joint
                                  2,000     7 May 2021           2,000                 1 year     Yes      No
Agricultural         2021                                                liability
Equipment Co.,
Ltd.
                                                              Total actual amount
Total approved line for such
                                                              of such guarantees in
guarantees in the Reporting                              0                                                    500
                                                              the Reporting Period
Period (B1)
                                                              (B2)
                                                              Total actual balance
Total approved line for such                                  of such guarantees at
guarantees at the end of the                             0    the end of the                                     0
Reporting Period (B3)                                         Reporting     Period
                                                              (B4)
                                          Guarantees between subsidiaries
                     Disclos
                                                                                                           Guara
                     ure date                   Actual                                            Havin
                                                               Actual                                        ntee
                      of the    Line of       occurrence                                            g
 Guarantee-receiv                                             guarante    Type of      Term of               for a
                     guarant    guarant          date                                             expire
    ing entity                                                   e       guarantee    guarantee            related
                      ee line     ee          (agreement                                           d or
                                                              amount                                        party
                     announ                  signing date)                                         not
                                                                                                            or not
                     cement
                      Total guarantee amount (total of the three kinds of guarantees above)
                                                              Total         actual
Total    guarantee   line
                                                              guarantee amount in
approved in the Reporting                                0                                                    500
                                                              the Reporting Period
Period (A1+B1+C1)
                                                              (A2+B2+C2)
Total approved guarantee                                      Total         actual
line at the end of the                                        guarantee balance at
                                                         0                                                       0
Reporting         Period                                      the end of the
(A3+B3+C3)                                                    Reporting     Period

                                                         74
Changchai Company, Limited                                                                          Annual Report 2022


                                                                  (A4+B4+C4)




 Total actual guarantee amount (A4+B4+C4) as % of the
                                                                                                             0.00%
 Company’s net assets
 Of which:
 Balance of guarantees provided for shareholders, the de
                                                                                                                     0
 facto controller and their related parties (D)
 Balance of debt guarantees provided directly or
 indirectly for entities with an over 70% debt/asset ratio                                                           0
 (E)
 Amount by which the total guarantee amount exceeds
                                                                                                                     0
 50% of the Company’s net assets (F)
 Total of the three amounts above (D+E+F)                                                                            0
 Possibility of having to execute joint liability on
                                                                                                               N/A
 outstanding guarantees (if any)
 Irregularities in the provision of guarantees to external
                                                                                                               N/A
 parties (if any)

Compound guarantees: N/A

3. Cash Entrusted for Wealth Management

(1) Cash Entrusted for Wealth Management

√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
                                                                                                    Unit: RMB’0,000
                                                                                                     Unrecovered
                                                                                      Unrecovered       overdue
                         Capital
  Specific type                          Amount incurred          Undue balance         overdue      amount with
                        resources
                                                                                        amount       provision for
                                                                                                      impairment
 Broker
 financial          Self-funded                          885                   600              0                    0
 products
 Bank financial
                    Self-funded                        18,200             18,200                0                    0
 products
 Broker
 financial          Raised-funded                       5,000                     0             0                    0
 products
 Bank financial
                    Raised-funded                      28,000             10,000                0                    0
 products
 Total                                                 52,085             28,800                0                    0

                                                             75
Changchai Company, Limited                                                                      Annual Report 2022


High-risk wealth management transactions with a significant single amount, or with low security, low liquidity:
□ Applicable √ Not applicable
Situation where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable √ Not applicable

(2) Entrusted Loans

□ Applicable √ Not applicable
No such cases in the Reporting Period.

4. Other Major Contracts

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XVI Other Significant Events

□ Applicable √ Not applicable


XVII Significant Events of Subsidiaries

□ Applicable √ Not applicable




                                                        76
Changchai Company, Limited                                                                      Annual Report 2022




             Part VII Share Changes and Shareholder Information

I Share Changes

1. Share Changes

                                                                                                       Unit: share
                        Before            Increase/decrease in the Reporting Period (+/-)           After
                                                        Shares
                                               Shares       as
                                                  as     divide
                                         Ne divide         nd
                              Percent    w       nd     conver                                            Percent
                   Number                                            Other       Subtotal     Number
                              age (%)   issu conver        ted                                            age (%)
                                         es      ted      from
                                                from    capital
                                                profit   reserv
                                                            es
1. Restricted      144,318,                                       -87,500,00    -87,500,00    56,818,18
                              20.45%                                                                        8.05%
shares                  181                                             0.00          0.00            1
1.1 Shares held
                         0     0.00%                                    0.00          0.00            0     0.00%
by government
1.2 Shares held
                   72,045,4                                       -15,227,27    -15,227,27    56,818,18
by state-owned                10.21%                                                                        8.05%
                        53                                              2.00          2.00         1.00
legal persons
1.3 Shares held
by        other    68,863,6                                       -68,863,63    -68,863,63
                               9.76%                                                                  0     0.00%
domestic                38                                              8.00          8.00
investors
Among which:
Shares held by     48,818,1                                       -48,818,17    -48,818,17
                               6.92%                                                                  0     0.00%
domestic legal          78                                              8.00          8.00
persons
               S
hares held by 20,045,4                                            -20,045,46    -20,045,46
                               2.84%                                                                  0     0.00%
domestic           60                                                   0.00          0.00
natural persons
1.4 Shares held
                   3,409,09                                       -3,409,090    -3,409,090
by      foreign                0.48%                                                                  0     0.00%
                          0                                               .00           .00
investors
Among which:
Shares held by     3,409,09                                       -3,409,090    -3,409,090
                               0.48%                                                                  0     0.00%
foreign legal             0                                               .00           .00
persons

                                                       77
Changchai Company, Limited                                                                         Annual Report 2022


              S
hares held by
                           0      0.00%                                     0            0               0    0.00%
foreign natural
persons
2. Unrestricted    561,374,                                         87,500,00    87,500,00       648,874,3
                                79.55%                                                                       91.95%
shares                  326                                              0.00         0.00              26
2.1
RMB-denomin         411,374,                                        87,500,00    87,500,00       498,874,3
                                58.29%                                                                       70.69%
ated ordinary            326                                             0.00         0.00              26
shares
2.2
Domestically       150,000,                                                                      150,000,0
                                21.26%                                      0            0                   21.26%
listed foreign          000                                                                             00
shares
2.3    Oversea
listed foreign             0      0.00%                                     0            0               0    0.00%
shares
2.4 Other                  0    0.00%                                       0             0            0     0.00%
                   705,692, 100.00                                                            705,692,5 100.00
3. Total shares                                                             0             0
                        507         %                                                                 07         %
Reasons for the share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the
Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,
respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable

2. Changes in Restricted Shares

√ Applicable □ Not applicable
                                                                                                          Unit: share
                   Restricted
                                                              Restricted
                    shares                      Restricted
                                  Restricted                    shares
Name of the        amount at                      shares                                           Restricted shares
                                    shares
                                                increased     amount at    Restricted reasons
shareholders          the         relieved of                                                       relieved date
                                                  of the          the
                                  the period
                  period-begi                     period
                                                              period-end
                       n
                                                                           Additional issuance
UBS     AG         3,409,090       3,409,090             0             0                           5 January 2022
                                                                           of 3,409,090 shares

                                                         78
Changchai Company, Limited                                               Annual Report 2022


                                                   through the private
                                                   placement of shares
                                                   Additional issuance
Caitong Fund
                                                   of 7,909,090 shares
Management       7,909,090    7,909,090   0    0                         5 January 2022
                                                   through the private
Co., Ltd.
                                                   placement of shares
Jiangxi
                                                   Additional issuance
Jintou
                                                   of 4,545,454 shares
Industrial       4,545,454    4,545,454   0    0                         5 January 2022
                                                   through the private
Development
                                                   placement of shares
Co., Ltd.
                                                   Additional issuance
Guotai Asset
                                                   of 8,181,818 shares
Management       8,181,818    8,181,818   0    0                         5 January 2022
                                                   through the private
Co., Ltd.
                                                   placement of shares
Enjoy
                                                   Additional issuance
(Ningbo)
                                                   of 6,818,181 shares
Asset            6,818,181    6,818,181   0    0                         5 January 2022
                                                   through the private
Management
                                                   placement of shares
L.P.
                                                   Additional issuance
Zhou                                               of 3,409,090 shares
                 3,409,090    3,409,090   0    0                         5 January 2022
Zhiheng                                            through the private
                                                   placement of shares
China
                                                   Additional issuance
National
                                                   of 10,681,818
Gold Group
                10,681,818   10,681,818   0    0   shares through the    5 January 2022
Asset
                                                   private placement
Management
                                                   of shares
Co., Ltd.
                                                   Additional issuance
                                                   of 4,545,454 shares
Sun Meichun      4,545,454    4,545,454   0    0                         5 January 2022
                                                   through the private
                                                   placement of shares
                                                   Additional issuance
Nuode Asset                                        of 11,363,636
Management      11,363,636   11,363,636   0    0   shares through the    5 January 2022
Co., Ltd.                                          private placement
                                                   of shares
                                                   Additional issuance
Minmetals
                                                   of 4,545,454 shares
Securities       4,545,454    4,545,454   0    0                         5 January 2022
                                                   through the private
Co., Ltd.
                                                   placement of shares



                                          79
Changchai Company, Limited                                                                  Annual Report 2022


                                                                      Additional issuance
                                                                      of 7,272,727 shares
Chen Beiwen       7,272,727        7,272,727        0             0                         5 January 2022
                                                                      through the private
                                                                      placement of shares
                                                                      Additional issuance
Nanhua Fund                                                           of 5,454,545 shares
                  5,454,545        5,454,545        0             0                         5 January 2022
Co., Ltd.                                                             through the private
                                                                      placement of shares
                                                                      Additional issuance
                                                                      of 4,545,454 shares
Yao Jianquan      4,545,454        4,545,454        0             0                         5 January 2022
                                                                      through the private
                                                                      placement of shares
Changzhou
Transportatio
                                                                      Additional issuance
n
                                                                      of 4,545,454 shares
Construction      4,545,454        4,545,454        0             0                         5 January 2022
                                                                      through the private
Investment
                                                                      placement of shares
Development
Co., Ltd.
                                                                      Additional issuance
                                                                      of 272,735 shares
Li Xueqin           272,735         272,735         0             0                         5 January 2022
                                                                      through the private
                                                                      placement of shares
Total            87,500,000       87,500,000        0             0            --                   --


II. Issuance and Listing of Securities

1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period

□ Applicable √ Not applicable

2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures

□ Applicable √ Not applicable

3. Existing Staff-Held Shares

□ Applicable √ Not applicable

III Shareholders and Actual Controller

                                                                                                   Unit: share




                                                     80
Changchai Company, Limited                                                                        Annual Report 2022


                                                                                       Number of
                              Number of
                                                                                       preferred
                              ordinary                      Number of
                                                                                       shareholders with
Number of                     shareholders at               preferred
                                                                                       resumed voting
ordinary            50,886    the month-end          49,998 shareholders        0                             0
                                                                                       rights at the
shareholders                  prior to the                  with resumed
                                                                                       month-end prior
                              disclosure of this            voting rights
                                                                                       to the disclosure
                              Report
                                                                                       of this Report
                                  5% or greater shareholders or top 10 shareholders
                                                        Increase/d                          Shares in pledge
                                   Shareho
                                           Total shares ecrease in                             or frozen
     Name of            Nature of   lding                           Restricted Unrestricted
                                            held at the     the
    shareholder        shareholder percent                         shares held shares held
                                           period-end Reporting                              Status Shares
                                     age
                                                          Period
Changzhou
                 State-owned
Investment Group                      32.26% 227,663,417               56,818,181 170,845,236
                 legal person
Co., Ltd
                      Domestic
Chen Jian             natural          0.71%       4,979,900                          4,979,900
                      person
MORGAN
STANLEY & CO.         Foreign legal
                                       0.45%       3,146,392                          3,146,392
INTERNATIONA          person
L PLC.
KGI ASIA              Foreign legal
                                       0.44%       3,101,695                          3,101,695
LIMITED               person
                      Domestic
Yang Xuee             natural          0.37%       2,611,500                          2,611,500
                      person
China Minsheng
Bank-Goldstate
Yuanqi Dynamic
Asset Allocation      Other            0.36%       2,530,800                          2,530,800
Mixed Type
Securities
Investment Fund
CLSA Asset
Management            Foreign legal
                                       0.25%       1,780,068                          1,780,068
Limited-Clients’     person
Capital
                     Domestic
Dai Wenping          natural         0.25%         1,776,200                          1,776,200
                     person
                     Domestic
Li Suinan            natural         0.22%         1,569,100                          1,569,100
                     person
                     Domestic
Huang Guoliang natural               0.22%         1,528,891                          1,528,891
                     person
Strategic investor or general legal N/A


                                                           81
Changchai Company, Limited                                                                          Annual Report 2022


person becoming a top-10
ordinary shareholder due to rights
issue (if any)
                               It is unknown whether there is among the top 10 public shareholders and the
Related or acting-in-concert
                               top 10 unrestricted public shareholders any related parties or acting-in-concert
parties among the shareholders
                               parties as defined in the Administrative Measures for Information Regarding
above
                               Shareholding Alteration.
Above shareholders involved in
entrusting/being entrusted with
                                   N/A
voting rights and giving up voting
rights
Special account for share
repurchases (if any) among the N/A
top 10 shareholders
                                          Top 10 unrestricted shareholders
                                     Unrestricted shares held at the                   Shares by type
      Name of shareholder
                                               period-end                       Type                    Shares
Changzhou Investment Group                                             RMB-denominated
                                                       170,845,236                                       170,845,236
Co., Ltd                                                               ordinary share
                                                                       RMB-denominated
Chen Jian                                                4,979,900                                         4,979,900
                                                                       ordinary share
MORGAN STANLEY & CO.                                                   RMB-denominated
                                                         3,146,392                                         3,146,392
INTERNATIONAL PLC.                                                     ordinary share
                                                                       Domestically listed
KGI ASIA LIMITED                                         3,101,695                                         3,101,695
                                                                       foreign share
                                                                       RMB-denominated
Yang Xuee                                                 2,611,500                                         2,611,500
                                                                       ordinary share
China Minsheng Bank-Goldstate
Yuanqi Dynamic Asset                                                   RMB-denominated
                                                         2,530,800                                         2,530,800
Allocation Mixed Type                                                  ordinary share
Securities Investment Fund
CLSA Asset Management                                                  RMB-denominated
                                                         1,780,068                                         1,780,068
Limited-Clients’ Capital                                              ordinary share
                                                                   RMB-denominated
Dai Wenping                                              1,776,200                                         1,776,200
                                                                   ordinary share
                                                                   Domestically listed
Li Suinan                                                1,569,100                                         1,569,100
                                                                   foreign share
                                                                   Domestically listed
Huang Guoliang                                           1,528,891                                         1,528,891
                                                                   foreign share
Related or acting-in-concert
parties among top 10 unrestricted It is unknown whether there is among the top 10 public shareholders and the
public shareholders, as well as top 10 unrestricted public shareholders any related parties or acting-in-concert
between top 10 unrestricted parties as defined in the Administrative Measures for Information Regarding
public shareholders and top 10 Shareholding Alteration.
shareholders


                                                           82
Changchai Company, Limited                                                                           Annual Report 2022


Top 10 ordinary shareholders
                                    Shareholders Chen Jian and Dai Wenping held 3,320,000 and 1,610,200 shares
involved in securities margin
                                    respectively in the Company through their margin accounts.
trading (if any)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary
shareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.

2. Controlling Shareholder

Nature of the controlling shareholder: Controlled by a local state-owned legal person
Type of the controlling shareholder: Legal person
                                    Legal
    Name of controlling         representative/        Date of            Unified social
                                                                                                 Principal activity
       shareholder                 person in        establishment          credit code
                                    charge
 Changzhou Investment                                                  913204004672839       Property investment
                                 Chen Limin         20 June 2002
 Group Co., Ltd                                                        80X                   and management
 Controlling shareholder’s
 holdings in other listed
 companies at home or           None
 abroad in the Reporting
 Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.

3. Actual Controller and Its Acting-in-Concert Parties

Nature of the actual controller: Local institution for state-owned assets management
Type of the actual controller: Legal person
                                    Legal
                                representativ        Date of
 Name of actual controller                                          Unified social credit code    Principal activity
                                 e/person in      establishment
                                   charge
 State-owned Assets
 Supervision and
 Administration                 Wang
                                                                    11320400014110251M           Not applicable
 Commission of                  Wenzhuo
 Changzhou Municipal
 People’s Government
 Other listed companies at
 home        or    abroad                                              None
 controlled by the actual


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Changchai Company, Limited                                                                  Annual Report 2022


 controller     in      the
 Reporting Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:




Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable

4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the Largest
Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held
by Them

□ Applicable √ Not applicable

5. Other 10% or Greater Corporate Shareholders

□ Applicable √ Not applicable

6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers

√ Applicable □ Not applicable
Changzhou Investment Group Co., Ltd., the controlling shareholder of the Company, participated in the
non-public offering of shares of the Company and was allotted 56,818,181 shares with a subscription amount of
RMB249,999,996.40. The shares were listed on 5 July 2021, with a 36-month lock-up period and a release date of
5 July 2024.




                                                      84
Changchai Company, Limited                                                    Annual Report 2022


IV Specific Implementation of Share Repurchase during the Reporting Period

Progress on any share repurchase
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable




                                                      85
Changchai Company, Limited                                      Annual Report 2022




                                  Part VIII Preference Shares

□ Applicable √ Not applicable
No preference shares in the Reporting Period.




                                                86
Changchai Company, Limited                        Annual Report 2022




                                  Part IX Bonds

□ Applicable √ Not applicable




                                       87
Changchai Company, Limited                                                                          Annual Report 2022




                                   Part X Financial Statements

I Independent Auditor’s Report
 Type of the independent auditor’s opinion                 Unmodified unqualified opinion
 Date of signing this report                                10th April 2023
                                                            Gongzheng Tianye Certified Public Accountants
 Name of the independent auditor
                                                            (Special General Partnership)
 No. of the auditor’s report                               S.G. No.W[2023]A351
 Name of the certified public accountants                   Wang Wenkai, Qin Zhijun
                                        Text of the Independent Auditor’s Report
To the Shareholders of Changchai Company, Limited,
I Opinion
We have audited the accompanying financial statements of Changchai Company, Limited. (together with its
consolidated subsidiaries included in the consolidated financial statements, the “Company”), which comprise the
parent’s and consolidated balance sheets as at 31 December 2022, the parent’s and consolidated income statements,
the parent’s and consolidated cash flow statements, the parent’s and consolidated statements of changes in owners’
equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting
Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated
and parent financial position of Changchai Company, Limited. As at 31 December 2022 and the consolidated and
parent business performance and cash flow for 2022.
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

III Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of revenue
1. Description of the item
For details and analysis of the accounting policies for revenue recognition, please refer to accounting policies
stated in the notes to financial statements “III. 30. Revenue” and “V. 37. Operating income and operating cost”. In
2022, the operating income of Changchai Company amounted to RMB2,182,043,100.
Since the operating revenue is one of key performance indicators of the Company, and there is the inherent risk
that the management may manipulate the timing of revenue recognition for the purpose of achieving certain goals
or expectations, so we identify the revenue recognition as a key audit item.

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Changchai Company, Limited                                                                       Annual Report 2022


2. Response for audit
(1) Know the key internal control related to revenue recognition, evaluate whether its design and execution are
valid or not, and test the operation effectiveness of the related internal control.
(2) Interview the management, know about the recognition policies regarding revenue of the Company, get and
check contracts or agreements of the Company signed with customers, identify contract terms related to the
recognition of sales revenue of products and evaluate whether the revenue recognition of the Company meets the
requirements of accounting standards for business enterprises.
(3) For sales revenue, conducting sampling tests on supporting documents related to revenue recognition, so as to
check supporting documents such as terms associated with control transfer of commodities in sales contracts and
documentation collected and acknowledged by auxiliary manufacturers (including but not limited to sales
contracts, orders, sales invoices, delivery notes, export customs declarations, etc.);
(4) Check the operating revenue recognized before and after the balance sheet date to the supporting documents,
such as shipping order, declaration for exportation, and etc by sampling method to assess whether the operating
revenue is recognized within appropriate period.
(5) Implement the confirmation by drawing sample to recognize the balance of accounts receivable and the
amount of sales revenue according to the features and natures of customer transaction.
(II) Bad debt provision for accounts receivable
1. Description of the item
As accounting policies stated in the notes to financial statements “III. 10. Impairment of financial instruments”
and “V. 4. Accounts receivable”. On 31 December 2022, the book balance of accounts receivable of Changchai
Company stood at RMB522,168,300, the bad debt provision amounted to RMB151,846,100 million, and the book
value was RMB370,322,200, accounting for 7.10% of the total assets at the end of the reporting period. As the
balance of accounts receivable is significant and the judgement of the Management is involved in the withdrawal
of bad debt provision of accounts receivable, we consider this as a key audit matter.
2. Response for audit
(1) Access Changchai’s internal control systems of sales and accounts receivable management to understand and
evaluate the design of internal control, and carry out walk-through test to confirm the implementation of internal
control systems.
(2) Analyze and confirm the reasonableness of Changchai’s accounting estimates of bad debt provision for
accounts receivable, including the basis for determining the combination of accounts receivable, the expected
credit loss rate and the judgment of impairment test of accounts receivable evaluated individually.
(3) Combined bad debt provision policy for accounts receivable, verifying the accuracy of the basis for
determining accounts receivable portfolio and the reasonableness of bad debt provision separately accrued;
(4) Access and check the account receivable details, aging schedule, statement of provisions for bad debts, and
confirm the reasonableness of bad debt provision for accounts receivable by combining with the request of
confirmation of balance and subsequent collection inspection;
(5) For accounts receivable with bad debt provision by single item, referring to corresponding contracts and other
information to obtain an understanding of sales and repayments and determine whether the bad debt provision by
single item is adequately withdrawn.
(6) Send request for confirmation of balance, and confirm the authenticity and accuracy of the amount of accounts
receivable on the balance sheet date by combining with subsequent inspection and other procedures.
IV Other Information
The Company’s management (hereinafter referred to as “management”) is responsible for the other information.
The other information comprises all of the information included in the Company’s 2022 Annual Report other than


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Changchai Company, Limited                                                                         Annual Report 2022


the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information; we are required to report
that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in accordance
with CAS, and for designing, implementing and maintaining such internal control as the management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, matters related to going concern (if applicable) and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the related
disclosures in the financial statements. If such disclosures are inadequate, we need to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial


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Changchai Company, Limited                                                                     Annual Report 2022


statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding the planned scope and timing of the audit and
significant audit findings, including any noteworthy deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.



Gongzheng Tianye Certified Public Accountants                     Chinese CPA: Wang Wenkai
    (Special General Partnership)                                    (Engagement Partner)
                                                                       Chinese CPA: Qin Zhijun
Wuxi  China                                                           10th April 2023

II Financial Statements

Currency unit for the financial statements and the notes thereto: RMB

1. Consolidated Balance Sheet

Prepared by Changchai Company, Limited
                                               31 December 2022
                                                                                                      Unit: RMB
                  Item                        31 December 2022                       1 January 2022
Current assets:
  Monetary assets                                        930,013,350.97                        707,966,678.74
  Settlement reserve
  Interbank loans granted
  Held-for-trading financial assets                      370,103,602.57                        404,053,261.57
  Derivative financial assets
  Notes receivable                                       297,125,872.54                        334,311,236.78
  Accounts receivable                                    370,322,179.77                        375,209,126.48
  Accounts receivable financing                          242,813,392.79                        497,388,826.02
  Prepayments                                               6,330,202.69                         8,197,418.39
  Premiums receivable


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Changchai Company, Limited                                   Annual Report 2022


  Reinsurance receivables
   Receivable reinsurance contract
reserve
  Other receivables                         32,938,305.16     19,515,350.52
     Including: Interest receivable
                 Dividends
receivable
   Financial assets purchased under
resale agreements
  Inventories                           571,996,881.74       651,083,758.18
  Contract assets
  Assets held for sale
  Current portion of non-current
assets
  Other current assets                      49,279,022.49     44,060,822.57
Total current assets                   2,870,922,810.72     3,041,786,479.25
Non-current assets:
  Loans        and     advances   to
customers
  Investments in debt obligations           39,309,587.93     37,898,226.39
  Investments in other debt
obligations
  Long-term receivables
  Long-term equity investments
   Investments in other equity
                                        955,560,240.08       779,877,646.53
instruments
  Other non-current financial
                                        373,500,000.00       112,500,000.00
assets
  Investment property                       42,160,779.65     44,597,255.21
  Fixed assets                          720,061,387.76       402,915,521.65
  Construction in progress                  30,281,547.56    270,305,690.91
  Productive living assets
  Oil and gas assets
  Right-of-use assets
  Intangible assets                     157,392,217.54       155,154,745.91
  Development costs
  Goodwill
  Long-term prepaid expense                  3,279,970.32        110,345.30
  Deferred income tax assets                26,220,575.93     10,693,809.23
  Other non-current assets                    670,735.93       4,543,240.88
Total non-current assets               2,348,437,042.70     1,818,596,482.01
Total assets                           5,219,359,853.42     4,860,382,961.26
Current liabilities:
  Short-term borrowings                 115,437,700.65        73,971,466.65

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Changchai Company, Limited                                     Annual Report 2022


  Borrowings from the central
bank
  Interbank loans obtained
   Held-for-trading financial
liabilities
  Derivative financial liabilities
  Notes payable                           471,876,397.72       550,774,400.00
  Accounts payable                        747,010,098.88       666,186,668.82
  Advances from customers                       837,425.55         660,965.62
  Contract liabilities                        32,843,692.83     26,864,081.97
  Financial assets sold         under
repurchase agreements
  Customer deposits and interbank
deposits
  Payables for acting trading of
securities
  Payables for underwriting of
securities
  Employee benefits payable                   49,351,022.47     45,385,667.48
  Taxes payable                                8,570,175.39      5,306,378.82
  Other payables                          160,046,882.93       148,361,373.29
     Including: Interest payable
                 Dividends payable             3,891,433.83      3,891,433.83
  Handling      charges            and
commissions payable
  Reinsurance payables
  Liabilities directly associated
with assets held for sale
   Current portion of non-current
liabilities
  Other current liabilities                   78,645,741.16     88,938,192.79
Total current liabilities                1,664,619,137.58     1,606,449,195.44
Non-current liabilities:
  Insurance contract reserve
  Long-term borrowings
  Bonds payable
     Including: Preferred shares
                 Perpetual bonds
  Lease liabilities
  Long-term payables
  Long-term employee benefits
payable
  Provisions
  Deferred income                             36,205,625.94     39,615,355.40

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Changchai Company, Limited                                                       Annual Report 2022


  Deferred income tax liabilities              161,360,251.33                    117,344,161.11
  Other non-current liabilities
Total non-current liabilities                  197,565,877.27                    156,959,516.51
Total liabilities                             1,862,185,014.85                 1,763,408,711.95
Owners’ equity:
  Share capital                                705,692,507.00                    705,692,507.00
  Other equity instruments
     Including: Preferred shares
                    Perpetual bonds
  Capital reserves                             640,133,963.01                    640,676,218.40
  Less: Treasury stock
  Other comprehensive income                   655,341,704.07                    506,011,499.55
  Specific reserve                                 18,848,856.75                  18,812,950.04
  Surplus reserves                             349,197,725.72                    334,144,488.46
  General reserve
  Retained earnings                            915,495,909.35                    872,212,354.88
Total equity attributable to owners
                                              3,284,710,665.90                 3,077,550,018.33
of the Company as the parent
Non-controlling interests                          72,464,172.67                  19,424,230.98
Total owners’ equity                         3,357,174,838.57                 3,096,974,249.31
Total liabilities and owners’ equity         5,219,359,853.42                 4,860,382,961.26
Legal representative: Shi Xinkun                                   General Manager: Zhang Xin
Head of the accounting department: Jiang He




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Changchai Company, Limited                                                       Annual Report 2022


2. Balance Sheet of the Company as the Parent
                                                                                         Unit: RMB
                  Item                    31 December 2022              1 January 2022
Current assets:
  Monetary assets                                  792,744,709.77                615,184,387.01
  Held-for-trading financial assets                    280,354,111.11            262,004,030.14
  Derivative financial assets
  Notes receivable                                 282,556,327.54                312,118,296.88
  Accounts receivable                              329,060,940.50                349,135,255.42
  Accounts receivable financing                    291,837,385.00                497,388,826.02
  Prepayments                                            3,097,586.07              2,727,652.23
  Other receivables                                179,596,495.57                 26,497,081.34
     Including: Interest receivable
                  Dividends
receivable
  Inventories                                      397,626,837.43                516,588,187.24
  Contract assets
  Assets held for sale
  Current portion of non-current
assets
  Other current assets                                 15,594,949.05              21,292,211.46
Total current assets                              2,572,469,342.04             2,602,935,927.74
Non-current assets:
  Investments in debt obligations                      39,309,587.93              37,898,226.39
  Investments in other debt
obligations
  Long-term receivables
  Long-term equity investments                     569,273,530.03                535,752,730.03
   Investments in other equity
                                                   955,560,240.08                779,877,646.53
instruments
  Other non-current financial
                                                   373,500,000.00                112,500,000.00
assets
  Investment property                                  42,160,779.65              44,597,255.21
  Fixed assets                                     249,558,305.21                325,034,679.67
  Construction in progress                             18,366,604.84              15,557,418.76
  Productive living assets
  Oil and gas assets
  Right-of-use assets
  Intangible assets                                    64,783,364.89              66,621,426.26
  Development costs
  Goodwill
  Long-term prepaid expense
  Deferred income tax assets                           19,860,262.43               9,613,375.32
  Other non-current assets

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Changchai Company, Limited                                    Annual Report 2022


Total non-current assets                2,332,372,675.06     1,927,452,758.17
Total assets                            4,904,842,017.10     4,530,388,685.91
Current liabilities:
  Short-term borrowings                  108,437,700.65        58,971,466.65
   Held-for-trading financial
liabilities
  Derivative financial liabilities
  Notes payable                          518,918,596.58       544,444,400.00
  Accounts payable                       541,911,517.64       546,689,207.59
  Advances from customers                      837,425.55         660,965.62
  Contract liabilities                       24,129,579.35     24,730,270.44
  Employee benefits payable                  41,558,489.86     37,861,577.50
  Taxes payable                               3,119,171.69      2,955,053.82
  Other payables                         151,206,684.89       135,773,368.98
     Including: Interest payable
                    Dividends payable         3,243,179.97      3,243,179.97
  Liabilities directly associated
with assets held for sale
   Current portion of non-current
liabilities
  Other current liabilities                  67,810,395.33     63,535,570.11
Total current liabilities               1,457,929,561.54     1,415,621,880.71
Non-current liabilities:
  Long-term borrowings
  Bonds payable
     Including: Preferred shares
                    Perpetual bonds
  Lease liabilities
  Long-term payables
  Long-term employee benefits
payable
  Provisions
  Deferred income                            36,205,625.94     39,615,355.40
  Deferred income tax liabilities        149,039,152.68        95,034,251.50
  Other non-current liabilities
Total non-current liabilities            185,244,778.62       134,649,606.90
Total liabilities                       1,643,174,340.16     1,550,271,487.61
Owners’ equity:
  Share capital                          705,692,507.00       705,692,507.00
  Other equity instruments
     Including: Preferred shares
                    Perpetual bonds
  Capital reserves                       659,418,700.67       659,418,700.67
  Less: Treasury stock

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Changchai Company, Limited                                                       Annual Report 2022


  Other comprehensive income                   655,341,704.07                    506,011,499.55
  Specific reserve                                 18,848,856.75                  18,812,950.04
  Surplus reserves                             349,197,725.72                    334,144,488.46
  Retained earnings                            873,168,182.73                    756,037,052.58
Total owners’ equity                         3,261,667,676.94                 2,980,117,198.30
Total liabilities and owners’ equity         4,904,842,017.10                 4,530,388,685.91
Legal representative: Shi Xinkun                                   General Manager: Zhang Xin
Head of the accounting department: Jiang He




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Changchai Company, Limited                                                         Annual Report 2022


3. Consolidated Income Statement
                                                                                         Unit: RMB
                                 Item                             2022               2021
1. Revenue                                                     2,182,043,095.61   2,452,430,515.60
  Including: Operating revenue                                 2,182,043,095.61   2,452,430,515.60
               Interest income
               Insurance premium income
               Handling charge and commission income
2. Costs and expenses                                          2,247,441,538.64   2,399,524,185.52
  Including: Cost of sales                                     1,948,677,036.52   2,084,671,762.08
               Interest expense
               Handling charge and commission expense
               Surrenders
               Net insurance claims paid
               Net amount provided as insurance contract
reserve
               Expenditure on policy dividends
               Reinsurance premium expense
               Taxes and surcharges                              16,973,196.26      15,125,948.96
               Selling expense                                  102,630,223.71     117,242,290.32
               Administrative expense                           119,511,189.72      98,890,284.22
               R&D expense                                       81,239,597.06      82,390,284.14
               Finance costs                                     -21,589,704.63      1,203,615.80
                  Including: Interest expense                     1,993,453.71       5,907,625.42
                               Interest income                   12,804,077.19       7,921,535.62
Add: Other income                                                 7,184,028.05       6,633,332.38
       Return on investment (“-” for loss)                      7,969,467.19       9,327,296.95
        Including: Share of profit or loss of joint ventures
and associates
           Income from the derecognition of financial assets
at amortized cost (“-” for loss)
       Exchange gain (“-” for loss)
       Net gain on exposure hedges (“-” for loss)
       Gain on changes in fair value (“-” for loss)           145,243,457.17     104,570,498.36
       Credit impairment loss (“-” for loss)                    -2,953,740.73     -52,017,151.82
       Asset impairment loss (“-” for loss)                    -14,367,197.27      -8,676,024.20
       Asset disposal income (“-” for loss)                       393,161.73         155,515.49
3. Operating profit (“-” for loss)                             78,070,733.11     112,899,797.24
Add: Non-operating income                                         4,257,942.65       4,037,896.76
Less: Non-operating expense                                         618,463.56       1,637,033.05
4. Profit before tax (“-” for loss)                            81,710,212.20     115,300,660.95
Less: Income tax expense                                          2,464,079.74      12,368,786.58
5. Net profit (“-” for net loss)                               79,246,132.46     102,931,874.37
  5.1 By operating continuity

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Changchai Company, Limited                                                                  Annual Report 2022


        5.1.1 Net profit from continuing operations (“-” for net
                                                                        79,246,132.46       102,931,874.37
loss)
        5.1.2 Net profit from discontinued operations (“-” for net
loss)
  5.2 By ownership
   5.2.1 Net profit attributable to shareholders of the
                                                                        76,684,796.91       103,006,232.54
Company as the parent
        5.2.1 Net profit attributable to non-controlling interests       2,561,335.55           -74,358.17
6. Other comprehensive income, net of tax                              149,330,204.52        80,528,741.31
  Attributable to owners of the Company as the parent                  149,330,204.52        80,528,741.31
        6.1 Items that will not be reclassified to profit or loss      149,330,204.52        80,528,741.31
        6.1.1 Changes caused by remeasurements on defined
benefit schemes
        6.1.2 Other comprehensive income that will not be
reclassified to profit or loss under the equity method
        6.1.3 Changes in the fair value of investments in other
                                                                       149,330,204.52        80,528,741.31
equity instruments
       6.1.4 Changes in the fair value arising from changes in
own credit risk
          6.1.5 Other
        6.2 Items that will be reclassified to profit or loss
        6.2.1 Other comprehensive income that will be
reclassified to profit or loss under the equity method
       6.2.2 Changes in the fair value of investments in other
debt obligations
        6.2.3 Other comprehensive income arising from the
reclassification of financial assets
       6.2.4 Credit impairment allowance for investments in
other debt obligations
          6.2.5 Reserve for cash flow hedges
       6.2.6 Differences arising from the translation of
foreign currency-denominated financial statements
          6.2.7 Other
  Attributable to non-controlling interests
7. Total comprehensive income                                          228,576,336.98       183,460,615.68
  Attributable to owners of the Company as the parent                  226,015,001.43       183,534,973.85
  Attributable to non-controlling interests                              2,561,335.55           -74,358.17
8. Earnings per share
  8.1 Basic earnings per share                                                0.1087                0.1657
  8.2 Diluted earnings per share                                              0.1087                0.1657
Legal representative: Shi Xinkun                                              General Manager: Zhang Xin
Head of the accounting department: Jiang He




                                                                99
Changchai Company, Limited                                                              Annual Report 2022


4. Income Statement of the Company as the Parent
                                                                                              Unit: RMB
                                 Item                                  2022               2021
1. Operating revenue                                                1,988,473,044.55   2,267,232,119.78
Less: Cost of sales                                                 1,784,345,704.10   1,944,820,462.59
     Taxes and surcharges                                             11,846,885.20      11,893,439.38
     Selling expense                                                  97,601,117.35     106,770,873.83
     Administrative expense                                           90,150,661.31      80,635,862.36
     R&D expense                                                      72,372,647.10      75,021,386.36
     Finance costs                                                    -22,274,862.27      -2,350,968.39
        Including: Interest expense                                    1,531,942.32       3,932,469.12
                      Interest income                                 15,122,552.35       8,354,523.54
Add: Other income                                                      6,504,428.46       5,810,480.10
       Return on investment (“-” for loss)                          36,604,658.62       8,352,714.26
        Including: Share of profit or loss of joint ventures
                                                                      28,800,000.00
and associates
           Income from the derecognition of financial assets
at amortized cost (“-” for loss)
       Net gain on exposure hedges (“-” for loss)
       Gain on changes in fair value (“-” for loss)                186,354,111.11      35,754,030.14
       Credit impairment loss (“-” for loss)                         -8,854,137.91     -16,143,004.02
       Asset impairment loss (“-” for loss)                         -11,526,145.82      -3,866,890.01
       Asset disposal income (“-” for loss)                          4,181,548.77           6,642.47
2. Operating profit (“-” for loss)                                 167,695,354.99      80,355,036.59
Add: Non-operating income                                                345,409.40       3,441,588.57
Less: Non-operating expense                                              102,766.76       1,086,173.24
3. Profit before tax (“-” for loss)                                167,937,997.63      82,710,451.92
Less: Income tax expense                                              17,405,625.04       -4,219,121.23
4. Net profit (“-” for net loss)                                   150,532,372.59      86,929,573.15
  4.1 Net profit from continuing operations (“-” for net loss)     150,532,372.59      86,929,573.15
   4.2 Net profit from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax                            149,330,204.52      80,528,741.31
  5.1 Items that will not be reclassified to profit or loss          149,330,204.52      80,528,741.31
    5.1.1 Changes caused by remeasurements on defined
benefit schemes
     5.1.2 Other comprehensive income that will not be
reclassified to profit or loss under the equity method
     5.1.3 Changes in the fair value of investments in other
                                                                     149,330,204.52      80,528,741.31
equity instruments
    5.1.4 Changes in the fair value arising from changes in
own credit risk
     5.1.5 Other
  5.2 Items that will be reclassified to profit or loss

                                                              100
Changchai Company, Limited                                                            Annual Report 2022


     5.2.1 Other comprehensive income that will be
reclassified to profit or loss under the equity method
     5.2.2 Changes in the fair value of investments in other
debt obligations
     5.2.3 Other comprehensive income arising from the
reclassification of financial assets
     5.2.4 Credit impairment allowance for investments in
other debt obligations
    5.2.5 Reserve for cash flow hedges
     5.2.6 Differences arising from the translation of foreign
currency-denominated financial statements
    5.2.7 Other
6. Total comprehensive income                                    299,862,577.11       167,458,314.46
7. Earnings per share
   7.1 Basic earnings per share
   7.2 Diluted earnings per share
Legal representative: Shi Xinkun                                        General Manager: Zhang Xin
Head of the accounting department: Jiang He




                                                       101
Changchai Company, Limited                                                                  Annual Report 2022


5. Consolidated Cash Flow Statement
                                                                                                  Unit: RMB
                                 Item                                       2022                2021
1. Cash flows from operating activities:
  Proceeds from sale of commodities and rendering of services           2,089,127,900.17   1,806,075,487.79
  Net increase in customer deposits and interbank deposits
  Net increase in borrowings from the central bank
  Net increase in loans from other financial institutions
  Premiums received on original insurance contracts
  Net proceeds from reinsurance
  Net increase in deposits and investments of policy holders
  Interest, handling charges and commissions received
  Net increase in interbank loans obtained
  Net increase in proceeds from repurchase transactions
  Net proceeds from acting trading of securities
  Tax rebates                                                             38,479,590.77      50,016,426.49
  Cash generated from other operating activities                          22,990,293.44      22,636,726.19
Subtotal of cash generated from operating activities                    2,150,597,784.38   1,878,728,640.47
  Payments for commodities and services                                 1,312,012,931.69   1,648,743,526.28
  Net increase in loans and advances to customers
  Net increase in deposits in the central bank and in interbank loans
granted
  Payments for claims on original insurance contracts
  Net increase in interbank loans granted
  Interest, handling charges and commissions paid
  Policy dividends paid
  Cash paid to and for employees                                         313,119,839.28     323,020,547.09
  Taxes paid                                                               52,344,111.33     31,276,348.44
  Cash used in other operating activities                                108,190,624.24     142,011,997.96
Subtotal of cash used in operating activities                           1,785,667,506.54   2,145,052,419.77
Net cash generated from/used in operating activities                     364,930,277.84    -266,323,779.30
2. Cash flows from investing activities:
  Proceeds from disinvestment                                            914,060,767.00     373,180,033.58
  Return on investment                                                    17,913,476.59      11,396,891.86
  Net proceeds from the disposal of fixed assets, intangible assets
                                                                             692,980.99         589,226.24
and other long-lived assets
  Net proceeds from the disposal of subsidiaries and other business
units
  Cash generated from other investing activities                          11,400,123.61
Subtotal of cash generated from investing activities                     944,067,348.19     385,166,151.68
  Payments for the acquisition of fixed assets, intangible assets and
                                                                          48,439,287.62     139,772,849.33
other long-lived assets
  Payments for investments                                              1,033,581,567.00    709,038,171.10
  Net increase in pledged loans granted

                                                            102
Changchai Company, Limited                                                                  Annual Report 2022


  Net payments for the acquisition of subsidiaries and other business
units
  Cash used in other investing activities                                                     1,869,322.91
Subtotal of cash used in investing activities                           1,082,020,854.62    850,680,343.34
Net cash generated from/used in investing activities                    -137,953,506.43    -465,514,191.66
3. Cash flows from financing activities:
  Capital contributions received                                                            633,873,281.14
     Including: Capital contributions by non-controlling interests to
subsidiaries
  Borrowings raised                                                        7,000,000.00      19,000,000.00
  Cash generated from other financing activities                         128,437,700.65      58,971,466.65
Subtotal of cash generated from financing activities                     135,437,700.65     711,844,747.79
  Repayment of borrowings                                                 12,000,000.00      29,000,000.00
  Interest and dividends paid                                             18,689,380.47       1,707,729.02
     Including: Dividends paid by subsidiaries to non-controlling
interests
  Cash used in other financing activities                                 83,623,545.07      14,621,163.63
Subtotal of cash used in financing activities                            114,312,925.54      45,328,892.65
Net cash generated from/used in financing activities                      21,124,775.11     666,515,855.14
4. Effect of foreign exchange rates changes on cash and cash
                                                                            -152,802.06      -2,215,203.09
equivalents
5. Net increase in cash and cash equivalents                             247,948,744.46     -67,537,318.91
Add: Cash and cash equivalents, beginning of the period                  562,402,221.59     629,939,540.50
6. Cash and cash equivalents, end of the period                          810,350,966.05     562,402,221.59
Legal representative: Shi Xinkun                                              General Manager: Zhang Xin
Head of the accounting department: Jiang He




                                                       103
Changchai Company, Limited                                                                  Annual Report 2022


6. Cash Flow Statement of the Company as the Parent
                                                                                                  Unit: RMB
                                 Item                                       2022                2021
1. Cash flows from operating activities:
  Proceeds from sale of commodities and rendering of services           2,040,092,339.55   1,721,407,332.48
  Tax rebates                                                             27,588,745.34      39,451,775.67
  Cash generated from other operating activities                          21,378,587.89      16,788,453.39
Subtotal of cash generated from operating activities                    2,089,059,672.78   1,777,647,561.54
  Payments for commodities and services                                 1,330,893,073.67   1,632,770,616.35
  Cash paid to and for employees                                         243,134,907.26     267,953,154.75
  Taxes paid                                                              39,870,320.72      21,295,926.17
  Cash used in other operating activities                                222,082,917.91     129,115,999.33
Subtotal of cash used in operating activities                           1,835,981,219.56   2,051,135,696.60
Net cash generated from/used in operating activities                     253,078,453.22    -273,488,135.06
2. Cash flows from investing activities:
  Proceeds from disinvestment                                            855,000,000.00
  Return on investment                                                    45,708,640.27      10,222,037.17
  Net proceeds from the disposal of fixed assets, intangible assets
                                                                          38,250,224.61         124,954.89
and other long-lived assets
  Net proceeds from the disposal of subsidiaries and other business
units
  Cash generated from other investing activities
Subtotal of cash generated from investing activities                     938,958,864.88      10,346,992.06
  Payments for the acquisition of fixed assets, intangible assets and
                                                                           8,002,707.77       5,665,400.94
other long-lived assets
  Payments for investments                                               983,520,800.00     484,148,226.39
  Net payments for the acquisition of subsidiaries and other
business units
  Cash used in other investing activities                                                     1,869,322.91
Subtotal of cash used in investing activities                            991,523,507.77     491,682,950.24
Net cash generated from/used in investing activities                      -52,564,642.89   -481,335,958.18
3. Cash flows from financing activities:
  Capital contributions received                                                            633,873,281.14
  Borrowings raised                                                                           5,000,000.00
  Cash generated from other financing activities                         128,437,700.65      58,971,466.65
Subtotal of cash generated from financing activities                     128,437,700.65     697,844,747.79
  Repayment of borrowings                                                                    10,000,000.00
  Interest and dividends paid                                             18,348,005.18         160,362.10
  Cash used in other financing activities                                 80,503,408.97      14,621,163.63
Subtotal of cash used in financing activities                             98,851,414.15      24,781,525.73
Net cash generated from/used in financing activities                      29,586,286.50     673,063,222.06
4. Effect of foreign exchange rates changes on cash and cash
                                                                           -1,851,060.10      -1,401,721.22
equivalents
5. Net increase in cash and cash equivalents                             228,249,036.73      -83,162,592.40

                                                        104
Changchai Company, Limited                                                    Annual Report 2022


Add: Cash and cash equivalents, beginning of the period     476,410,739.41    559,573,331.81
6. Cash and cash equivalents, end of the period             704,659,776.14    476,410,739.41
Legal representative: Shi Xinkun                                General Manager: Zhang Xin
Head of the accounting department: Jiang He




                                                      105
                        Changchai Company, Limited                                                                         Annual Report 2022
7. Consolidated Statements of Changes in Owners’ Equity
2022
                                                                                                                                                             Unit: RMB
                                                                                                    2022
                                                           Equity attributable to owners of the Company as the parent
                                                Other                     L
                                                equity                    e
                                             instruments                  s
                                                                          s
                                                                          :
                                                                                                                G
                                             P                            T
                                                     P                                                           e
                                             re                           r
                                                     er                                                         n
                                             fe                           e    Other                                                             Non-cont        Total
             Item                                    p                                                          er              Ot
                                  Share      rr                 Capital   a   compre     Specific    Surplus         Retained                     rolling      owners’
                                                     et                                                         al              he    Subtotal
                                  capital    e            O    reserves   s   hensive    reserve     reserves        earnings                    interests      equity
                                                     u                                                          re               r
                                             d            th              u   income
                                                     al                                                         se
                                              s           er              r
                                                     b                                                          rv
                                             h                            y
                                                     o                                                           e
                                             ar                           s
                                                     n
                                             e                            t
                                                     ds
                                              s                           o
                                                                          c
                                                                          k
1. Balance as at the end of the   705,692,                     640,676        506,011,   18,812,    334,144,         872,212,        3,077,55    19,424,2      3,096,97
prior year                         507.00                       ,218.40        499.55     950.04     488.46           354.88         0,018.33       30.98      4,249.31
Add: Adjustment for change in
accounting policy
  Adjustment for correction of
previous error
  Adjustment    for   business

                                                                                  106
                            Changchai Company, Limited                                                   Annual Report 2022
combination    under       common
control
  Other adjustments
2. Balance as at the beginning        705,692,           640,676    506,011,   18,812,   334,144,   872,212,       3,077,55    19,424,2   3,096,97
of the year                            507.00             ,218.40    499.55     950.04    488.46     354.88        0,018.33       30.98   4,249.31
3. Increase/ decrease in the                             -542,25    149,330    35,906.   15,053,2   43,283,5       207,160,    53,039,9   260,200,
period (“-” for decrease)                                 5.39     ,204.52       71       37.26      54.47        647.57        41.69    589.26
  3.1 Total       comprehensive                                     149,330                         76,684,7       226,015,    2,561,33   228,576,
income                                                               ,204.52                           96.91        001.43         5.55    336.98
  3.2 Capital increased and                              -542,25                                                     -542,25   50,478,6   49,936,3
reduced by owners                                           5.39                                                        5.39      06.14      50.75
     3.2.1 Ordinary shares
increased by owners
     3.2.2 Capital increased by
holders of other equity
instruments
     3.2.3 Share-based
payments included in owners’
equity
                                                         -542,25                                                     -542,25   50,478,6   49,936,3
    3.2.4 Other
                                                            5.39                                                        5.39      06.14      50.75
                                                                                         15,053,2   -33,401,        -18,348,              -18,348,
 3.3 Profit distribution
                                                                                            37.26     242.44          005.18                005.18
     3.3.1 Appropriation        to                                                       15,053,2   -15,053,
surplus reserves                                                                            37.26     237.26
    3.3.2 Appropriation         to
general reserve
    3.3.3 Appropriation         to                                                                  -18,348,        -18,348,              -18,348,
owners (or shareholders)                                                                              005.18          005.18                005.18
    3.3.4 Other
  3.4 Transfers within owners’
                                                                        107
                           Changchai Company, Limited                                                                Annual Report 2022
equity
     3.4.1 Increase in capital (or
share capital) from capital
reserves
     3.4.2 Increase in capital (or
share capital) from surplus
reserves
     3.4.3 Loss offset by surplus
reserves
     3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
     3.4.5 Other comprehensive
income transferred to retained
earnings
     3.4.6 Other
                                                                                     35,906.                                   35,906.7                35,906.7
  3.5 Specific reserve
                                                                                          71                                          1                       1
                                                                                     4,877,2                                   4,877,23                4,877,23
     3.5.1 Increase in the period
                                                                                       32.12                                       2.12                    2.12
                                                                                     4,841,3                                   4,841,32                4,841,32
     3.5.2 Used in the period
                                                                                       25.41                                       5.41                    5.41
  3.6 Other
4. Balance as at the end of the      705,692,              640,133        655,341    18,848,   349,197,        915,495,        3,284,71   72,464,1     3,357,17
period                                507.00                ,963.01        ,704.07    856.75    725.72          909.35         0,665.90      72.67     4,838.57
2021
                                                                                                                                                     Unit: RMB
                                                                                               2021
              Item
                                                        Equity attributable to owners of the Company as the parent                        Non-cont      Total




                                                                              108
                        Changchai Company, Limited                                                                        Annual Report 2022
                                                Other                     L                                                                     rolling    owners’
                                                equity                    e                                                                    interests    equity
                                             instruments                  s
                                                                          s
                                                                          :
                                                                                                               G
                                             P                            T
                                                     P                                                          e
                                             re                           r
                                                     er                                                         n
                                             fe                           e    Other
                                                     p                                                         er              Ot
                                  Share      rr                 Capital   a   compre     Specific   Surplus         Retained
                                                     et                                                        al              he   Subtotal
                                  capital    e            O    reserves   s   hensive    reserve    reserves        earnings
                                                     u                                                         re               r
                                             d            th              u   income
                                                     al                                                        se
                                              s           er              r
                                                     b                                                         rv
                                             h                            y
                                                     o                                                          e
                                             ar                           s
                                                     n
                                             e                            t
                                                     ds
                                              s                           o
                                                                          c
                                                                          k
1. Balance as at the end of the   561,374,                     164,328        425,482    18,812,    325,451,        777,899,        2,273,34   19,498,5    2,292,84
prior year                         326.00                       ,665.43        ,758.24    986.55      531.14          079.66        9,347.02      89.15    7,936.17
Add: Adjustment for change in
accounting policy
  Adjustment for correction of
previous error
  Adjustment for      business
combination under     common
control
  Other adjustments
2. Balance as at the beginning    561,374,                     164,328        425,482    18,812,    325,451,        777,899,        2,273,34   19,498,5    2,292,84
of the year                        326.00                       ,665.43        ,758.24    986.55      531.14          079.66        9,347.02      89.15    7,936.17
                                                                                 109
                           Changchai Company, Limited                                                  Annual Report 2022
3. Increase/ decrease in the         144,318,           476,347    80,528,            8,692,95   94,313,2        804,200,   -74,358.   804,126,
                                                                             -36.51
period (“-” for decrease)           181.00             ,552.97   741.31                 7.32      75.22          671.31        17     313.14
  3.1 Total        comprehensive                                   80,528,                       103,006,        183,534,   -74,358.   183,460,
income                                                             741.31                          232.54          973.85        17     615.68
  3.2 Capital increased and          144,318,           476,347                                                  620,665,              620,665,
reduced by owners                     181.00             ,552.97                                                   733.97               733.97
     3.2.1 Ordinary shares           144,318,           476,347                                                  620,665,              620,665,
increased by owners                   181.00             ,552.97                                                   733.97               733.97
     3.2.2 Capital increased by
holders of other equity
instruments
     3.2.3 Share-based
payments included in owners’
equity
     3.2.4 Other
                                                                                      8,692,95   -8,692,9
 3.3 Profit distribution
                                                                                          7.32      57.32
     3.3.1 Appropriation        to                                                    8,692,95   -8,692,9
surplus reserves                                                                          7.32      57.32
    3.3.2 Appropriation         to
general reserve
    3.3.3 Appropriation         to
owners (or shareholders)
     3.3.4 Other
  3.4 Transfers within owners’
equity
     3.4.1 Increase in capital (or
share capital) from capital
reserves


                                                                      110
                           Changchai Company, Limited                                                     Annual Report 2022
     3.4.2 Increase in capital (or
share capital) from surplus
reserves
     3.4.3 Loss offset by surplus
reserves
     3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
     3.4.5 Other comprehensive
income transferred to retained
earnings
     3.4.6 Other
  3.5 Specific reserve                                                          -36.51                                 -36.51                -36.51
                                                                               4,023,2                              4,023,20               4,023,20
     3.5.1 Increase in the period
                                                                                 00.24                                  0.24                   0.24
                                                                               4,023,2                              4,023,23               4,023,23
     3.5.2 Used in the period
                                                                                 36.75                                  6.75                   6.75
  3.6 Other
4. Balance as at the end of the      705,692,           640,676     506,011,   18,812,   334,144,   872,212,        3,077,55    19,424,2   3,096,97
period                                507.00             ,218.40     499.55     950.04     488.46     354.88        0,018.33       30.98   4,249.31
Legal representative: Shi Xinkun                           General Manager: Zhang Xin                  Head of the accounting department: Jiang He




                                                                         111
                         Changchai Company, Limited                                                                     Annual Report 2022
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2022
                                                                                                                                                       Unit: RMB
                                                                                                 2022
                                                      Other equity
                                                      instruments                   Le
                                                            Pe                      ss:
                                                      Pr
                                                            rp                      Tr      Other
                                                      efe                                                                                         O       Total
              Item                                          et          Capital     eas   comprehe      Specific     Surplus         Retained
                                    Share capital     rre        O                                                                                th    owners’
                                                            ua         reserves     ur      nsive       reserve      reserves        earnings
                                                       d         th                                                                               er     equity
                                                             l                       y     income
                                                      sh         er
                                                            bo                      sto
                                                      are
                                                            nd                      ck
                                                       s
                                                             s
1. Balance as at the end of the     705,692,507.0                     659,418,70          505,663,1   18,812,950.   334,144,488    756,385,421.        2,980,117,1
prior year                                      0                           0.67              30.88            04           .46              25              98.30
Add: Adjustment for change in
accounting policy
  Adjustment for correction of
previous error
  Other adjustments
2. Balance as at the beginning of   705,692,507.0                     659,418,70          505,663,1   18,812,950.   334,144,488    756,385,421.        2,980,117,1
the year                                        0                           0.67              30.88            04           .46              25              98.30
3. Increase/ decrease in the                                                              149,330,2                 15,053,237.    117,131,130.        281,550,47
                                                                                                        35,906.71
period (“-” for decrease)                                                                   04.52                         26               15              8.64
  3.1  Total      comprehensive                                                           149,330,2                                150,532,372.        299,862,57
income                                                                                        04.52                                          59              7.11
  3.2 Capital increased      and
reduced by owners
    3.2.1 Ordinary shares
                                                                                   112
                            Changchai Company, Limited            Annual Report 2022
increased by owners
     3.2.2 Capital increased by
holders of other equity
instruments
     3.2.3 Share-based payments
included in owners’ equity
     3.2.4 Other
                                                               15,053,237.   -33,401,242.   -18,348,00
  3.3 Profit distribution
                                                                       26             44          5.18
     3.3.1 Appropriation          to                           15,053,237.   -15,053,237.
surplus reserves                                                       26             26
    3.3.2 Appropriation           to                                         -18,348,005.   -18,348,00
owners (or shareholders)                                                              18          5.18
     3.3.3 Other
  3.4 Transfers within owners’
equity
     3.4.1 Increase in capital (or
share capital) from capital
reserves
     3.4.2 Increase in capital (or
share capital) from surplus
reserves
     3.4.3 Loss offset by surplus
reserves
     3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
     3.4.5 Other comprehensive
income transferred to retained
earnings

                                                         113
                         Changchai Company, Limited                                                                     Annual Report 2022
    3.4.6 Other
  3.5 Specific reserve                                                                                  35,906.71                                        35,906.71
                                                                                                      4,877,232.1                                      4,877,232.1
    3.5.1 Increase in the period
                                                                                                                2                                                2
                                                                                                      4,841,325.4                                      4,841,325.4
    3.5.2 Used in the period
                                                                                                                1                                                1
  3.6 Other
4. Balance as at the end of the    705,692,507.0                      659,418,70          654,993,3   18,848,856.   349,197,725    873,516,551.        3,261,667,6
period                                         0                            0.67              35.40            75           .72              40              76.94
2021
                                                                                                                                                       Unit: RMB
                                                                                                 2021
                                                      Other equity
                                                      instruments
                                                                                    Le
                                                            P
                                                                                    ss:
                                                      Pr    er
                                                                                    Tr      Other
                                                      efe   pe                                                                                    O       Total
              Item                                                      Capital     eas   comprehe      Specific     Surplus        Retained
                                   Share capital      rre   tu   Ot                                                                               th    owners’
                                                                       reserves     ur      nsive       reserve      reserves       earnings
                                                       d    al   he                                                                               er     equity
                                                                                     y     income
                                                      sh     b    r
                                                                                    sto
                                                      are    o
                                                                                    ck
                                                       s     n
                                                            ds
1. Balance as at the end of the    561,374,326.0                      183,071,14          425,482,7   18,812,986.   325,451,531    677,800,436.        2,191,993,1
prior year                                     0                            7.70              58.24           55            .14              75              86.38
Add: Adjustment for change in
accounting policy
  Adjustment for correction of
previous error
  Other adjustments


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                            Changchai Company, Limited                                                    Annual Report 2022
2. Balance as at the beginning of      561,374,326.0     183,071,14         425,482,7   18,812,986.   325,451,531    677,800,436.   2,191,993,1
the year                                           0           7.70             58.24           55            .14              75         86.38
3. Increase/ decrease in the           144,318,181.0     476,347,55         80,528,74                 8,692,957.3    78,236,615.8   788,124,01
                                                                                             -36.51
period (“-” for decrease)                        0           2.97              1.31                           2               3         1.92
  3.1  Total       comprehensive                                            80,528,74                                86,929,573.1   167,458,31
income                                                                           1.31                                           5         4.46
  3.2 Capital increased        and     144,318,181.0     476,347,55                                                                 620,665,73
reduced by owners                                  0           2.97                                                                       3.97
     3.2.1 Ordinary shares             144,318,181.0     476,347,55                                                                 620,665,73
increased by owners                                0           2.97                                                                       3.97
     3.2.2 Capital increased by
holders of other equity
instruments
     3.2.3 Share-based payments
included in owners’ equity
     3.2.4 Other
                                                                                                      8,692,957.3    -8,692,957.3
  3.3 Profit distribution
                                                                                                                2               2
     3.3.1 Appropriation          to                                                                  8,692,957.3    -8,692,957.3
surplus reserves                                                                                                2               2
    3.3.2 Appropriation           to
owners (or shareholders)
     3.3.3 Other
  3.4 Transfers within owners’
equity
     3.4.1 Increase in capital (or
share capital) from capital
reserves



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                          Changchai Company, Limited                                                       Annual Report 2022
     3.4.2 Increase in capital (or
share capital) from surplus
reserves
     3.4.3 Loss offset by surplus
reserves
     3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
     3.4.5 Other comprehensive
income transferred to retained
earnings
     3.4.6 Other
  3.5 Specific reserve                                                                        -36.51                                          -36.51
                                                                                         4,023,200.2                                     4,023,200.2
     3.5.1 Increase in the period
                                                                                                   4                                               4
                                                                                         4,023,236.7                                     4,023,236.7
     3.5.2 Used in the period
                                                                                                   5                                               5
  3.6 Other
4. Balance as at the end of the      705,692,507.0        659,418,70         506,011,4   18,812,950.   334,144,488    756,037,052.       2,980,117,1
period                                           0              0.67             99.55           04            .46              58             98.30
Legal representative: Shi Xinkun                       General Manager: Zhang Xin                        Head of the accounting department: Jiang He




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Changchai Company, Limited                                                                      Annual Report 2022




III. Company Profile

Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which is a
company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the State
Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 January 1993 by
way of public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF [1993]
No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through
document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 March 1994 to 30
March 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such
tradable shares of the public got listing on 1 July 1994 at Shenzhen Stock Exchange with “Su Changchai A” for
short of stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH [1996]
No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ [1996] No.
24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued 100
million B shares to qualified investors on 27 August 1996 to 30 August 1996, getting listed on 13 September
1996.
On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examine and
approve share merger reform plan, and performed the share merger reform on 19 June 2006.
As examined and approved at the 2nd Extraordinary General Meeting of 2009 in September 2009, based on the
total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profit distribution plan,
i.e. to distribute 5 bonus shares and cash of RMB0.80 for every 10 shares, with registered capital increased by
RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 after change, which verified by Jiangsu
Gongzheng Tianye Certified Public Accountants Company Limited with issuing Capital Verification Report SGC
[2010] No. B002.
A non-public offering of up to 168,412,297 new shares was deliberated on and approved as a resolution of the
2020 Annual General Meeting held on 7 May 2021 and approved by the Approval of the Non-public Offering of
Shares of Changchai Co., Ltd. (CSRC Permit [2020] No. 3374) issued by Changchai Company Limited the China
Securities Regulatory Commission. On 16 June 2021, the capital verification report "S.G. W [2021] B062" was
issued by Gongzheng Tianye Accounting Firm (Special General Partnership), confirming that the Company had
issued 144,318,181 RMB ordinary shares (A shares) in a non-public offering, with an additional paid-in capital
(share capital) of RMB144,318,181. The total amount raised was RMB634,999,996.40; the net amount raised was
RMB620,665,733.97, which increased the capital reserve (share capital premium) by RMB476,347,552.97. As of
31 December 2021, the total share capital of the Company was RMB705,692,507.
Credibility code of the Company’s License of Business Corporation: 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its
head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine,
diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures,
assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production
and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai
Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest
models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets and
shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the Reporting


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Changchai Company, Limited                                                                     Annual Report 2022


Period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Supervisory
Committee, Corporate office, Financial Department, Political Department, Investment and Development
Department, Audit Department, Human Recourses Department, Production Department, Procurement Department,
Sales Company, 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 10 April 2023.
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 8
subsidiaries. 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 Business
Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the various 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 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business
Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of
Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)
by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted
the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an
impairment reserve was withdrawn accordingly pursuant to relevant requirements.

2. Continuation

The Company comprehensively evaluated the information acquired recently that there would be no such factors in
the 12 months from the end of the Reporting Period that would obviously influence the continuation capability of
the Company and predicted that the operating activities would continue in the future 12 months of the Company.
The financial statement compiled base on the continuous operation.

V. Important Accounting Policies and Estimations

Notification of specific accounting policies and accounting 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 policies and accounting
estimations, which mainly reflected in the financial instruments, withdrawal method of the bad debt provision of
the accounts receivable, the measurement of the inventory and the depreciation of the fixed assets etc.


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Changchai Company, Limited                                                                            Annual Report 2022


1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Group are in compliance with in compliance with the Accounting
Standards for Business Enterprises, which factually and completely present the Company’s and the Group’s
financial positions, business results and cash flows and other relevant information.

2. Fiscal Period

The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December 31
and as the metaphase included monthly, quarterly and semi-yearly periods.

3. Operating Cycle

A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or
cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for the
liquidity of its assets and liabilities.

4. Currency Used in Bookkeeping

Renminbi is functional currency of the Company.

5. Accounting Methods for Business Combinations under the Same Control and Business Combinations not
under the Same Control

(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment.
The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash
assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital
reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be
recorded into the profits and losses at the current period. The expenses such as the handling charges and
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

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Changchai Company, Limited                                                                          Annual Report 2022


control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and
the changes of other net assets since the date of the earlier one between the date when acquiring the original equity
right and the date when the combine parties and combined ones were under the same control to the combination
date, should be respectively written down and compared with the beginning balance of retained earnings or the
current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises
are not ultimately controlled by the same party or the same parties both before and after the business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business
reputation. The direct relevant expenses occurred from the enterprise combination should be included in the
current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets
obtained by it in the combination shall be measured according to their fair values at the acquiring date. The
difference between the fair value of the assets paid out by the Company and its book value should be included in
the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the
acquiree.
For the business combinations not under the same control realized through step by step multiple transaction, as for
the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured
according to their fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed
by the acquiree which involved with the other comprehensive income and the other owners’ equities changes
except for the net gains and losses, other comprehensive income and the profits distribution and other related
comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in
the acquiree before the acquiring date should be transferred into the current investment income on the acquiring
date, except for the other comprehensive income occurred from the re-measurement of the net profits of the
defined benefit plans or the changes of the net assets of the investees.

6. Methods for Preparing Consolidated Financial Statements

The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual
control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of
ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant
come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the
consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a
subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net
profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period
that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the
bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’
equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company, which


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Changchai Company, Limited                                                                          Annual Report 2022


shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the Company
when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial
statement, shall adjust individual financial statement based on the fair value of the identifiable net assets on the
acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the financial
statement, shall not adjust the financial statement of the subsidiaries, namely survived by integration as
participating in the consolidation when the final control party starts implementing control and should adjust the
period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the
compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated
income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the
current period, should not be adjusted the period-begin amount of the consolidated balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other
reasons, the residual equity interests are re-measured according to the fair value on the date when such control
ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the
residual equity interests, minus the portion in the original subsidiary’s net assets measured on a continuous basis
from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the
subsidiary, is recorded in investment gains for the period when the Group’s control on the subsidiary ceases. Other
comprehensive incomes in relation to the equity investment and the other owners’ equities changes except for the
net gains and losses, other comprehensive income and profits distribution in the original subsidiary are treated on
the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the
changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And
subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard
for Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business
Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and conduct
accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of
subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the loss of control, when the Group
losing control on its subsidiary.
For the disposal of the equity investment not belongs to a package deal, should be executed accounting treatment
according to the relevant policies of partly disposing the equity investment of the subsidiaries under the situation
not lose the control right before losing the control right; when losing the control right, the former should be
executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.

7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations

The Group classifies joint arrangements into joint operations and joint ventures.
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

                                                         121
Changchai Company, Limited                                                                            Annual Report 2022


according to the Group’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities
according to the Group’s stake in the joint operation;
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according
to the Group’s stake in it.

8. Recognition Standard for Cash and Cash Equivalents

In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for
cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,
which are easily convertible into known amount of cash and whose risks in change of value are minimal.

9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements

(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the
recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of
China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges
shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be
converted into the recoding currency according to the middle price of the market exchange rates disclosed by the
People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount
converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency
amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the
foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of
capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded
into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted
according to the middle price of the market exchange disclosed by the People’s Bank of China on the date of the
transaction, with no changes in the original recording-currency amount; while the foreign-currency non-monetary
items measured by fair value shall be converted according to the middle price of the market exchange disclosed by
the People’s Bank of China on the date when the fair value is recognized, and the exchange gain/loss caused
thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current
period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot
exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed
profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the
revenues and expenses items among the balance sheet of the foreign operation shall be translated at the
approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign
currency statement should be listed in the other comprehensive income among the owners’ equities.



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Changchai Company, Limited                                                                            Annual Report 2022


10. Financial Instruments

(1) Classification of Financial Instruments
The Company classifies the financial assets when initially recognized into the following three categories based on
the business model for financial assets management and characteristics of contractual cash flow of financial assets:
financial assets measured at amortized cost, financial assets at fair value through other comprehensive income
(debt instruments) and financial assets at fair value through profit or loss
Financial liabilities were classifies when initially recognized into financial liabilities at fair value through profit or
loss and financial liabilities measured at amortized cost.
(2) Recognition Basis and Measurement Method for Financial Instruments
① Financial assets measured at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term
receivables, and investment in debt obligations which are initially measured at fair value and related transaction
cost shall be recorded into the initial recognized amount. For accounts receivable excluding significant financing
and accounts receivable that the Company decides not to consider financing components less than one year, the
initial measurement shall be made at the contract transaction price. The interest calculated with actual rates for the
holding period shall be recorded into the current profit or loss. When recovered or disposed, the difference
between the price obtained and the carrying value of the financial assets shall be recorded into the current profit or
loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets at fair value through other comprehensive income (debt instruments) include accounts receivable
financing and investment in other debt obligations which are initially measured at fair value and related
transaction cost shall be recorded into the initial recognized amount. The subsequent measurement of the financial
assets shall be at fair value and changes of fair value except for interest calculated with actual rates, impairment
losses or gains and exchange gains or losses shall be recorded into other comprehensive income. When
derecognized, the accumulated gains or losses originally recorded into other comprehensive income shall be
transferred into the current profit or loss.
③ Financial assets at fair value through other comprehensive income (equity instruments)
Financial assets at fair value through other comprehensive income (equity instruments) include investment in
other equity instruments, etc. which are initially measured at fair value and related transaction cost shall be
recorded into the initial recognized amount. The subsequent measurement of the financial assets shall be at fair
value and changes of fair value shall be recorded into other comprehensive income. The dividends obtained shall
be recorded into the current profit or loss. When derecognized, the accumulated gains or losses originally recorded
into other comprehensive income shall be transferred into retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include held-for-trading financial assets, derivative financial
assets and other non-current financial assets which are initially measured at fair value and the related transaction
cost shall be recorded into the current profit or loss. The subsequent measurement of the financial assets shall be
at fair value and the changes of fair value shall be recorded into the current profit or loss.
⑤ Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities and derivative
financial liabilities which are initially measured at fair value and the related transaction cost shall be recorded into
the current profit or loss. The subsequent measurement of the financial liabilities shall be at fair value and the
changes of fair value shall be recorded into the current profit or loss. When derecognized, the difference between


                                                          123
Changchai Company, Limited                                                                            Annual Report 2022


the carrying value and the paid consideration shall be recorded into the current profit or loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term borrowings, notes payable, accounts payable, other
payables, long-term borrowings, bonds payable and long-term payables which are initially measured at fair value
and the related transaction cost shall be recorded into the initial recognized amount. The interest calculated with
actual rates for the holding period shall be recorded into the current profit or loss. When derecognized, the
difference between the paid consideration and the carrying value of the financial liabilities shall be recorded into
the current profit or loss.
(3) Recognition Basis and Measurement of Transfer of Financial Assets
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial
asset to the transferee, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities. If it retained nearly all of the risks and
rewards related to the ownership of the financial asset, it shall continue to recognize the transferred financial asset.
Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a
financial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up its
control over the financial asset, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities; (2) If it does not give up its control over the
financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset,
recognize the related financial asset and recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The
carrying value of the transferred financial asset on the derecognition date; (2) The sum of consideration received
from the transfer of financial assets, and derecognition amount among the accumulative amount of the changes of
the fair value originally recorded in the other comprehensive income (the financial assets involve transfer are
investments in debt instruments at fair value through other comprehensive income. If the transfer of partial
financial asset satisfies the conditions to stop the recognition, the entire carrying value of the transferred financial
asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not
been stopped, be apportioned according to their respective relative fair value on the transfer date, and the
difference between the amounts of the following two items shall be included into the profits and losses of the
current period: (1)The carrying value of the portion whose recognition has been stopped; (2)The sum of
consideration of the portion whose recognition has been stopped, and derecognition amount among the
accumulative amount of the changes of the fair value originally recorded in the other comprehensive income (the
financial assets involve transfer are investments in debt instruments at fair value through other comprehensive
income.
(4) Derecognition Basis of Financial Liabilities
A financial liability or part of it can be derecognized after its current obligation has been relieved in full or in part.
(5) Recognition of Fair Value of Financial Assets and Financial Liabilities
The fair value of financial instruments with an active market is determined by the quoted price in the active
market. For financial instruments without active market, the fair value is determined by valuation techniques. The
Company adopts the valuation techniques applicable to the current conditions which are supported by sufficient
data and other information for valuation, and selects the input values consistent with the characteristics of assets
or liabilities considered by market participants in asset or liability transactions, with priority to observable input
values. Unobservable input values are used only when relevant observable input values are not available or
practical.


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Changchai Company, Limited                                                                          Annual Report 2022


(6) Impairment of financial instrument
① Impairment measurement and accounting handling of financial instrument
Based on expected credit loss, the Company conducts impairment handling and confirms credit impairment loss
for financial assets which is measured by amortized cost, debt instrument investment which is measured by fair
value and whose change is calculated into other comprehensive profits, financial guarantee contract.
Expected credit loss refers to weighted average of credit loss of financial instrument which takes the risk of
contract breach occurrence as the weight. Credit loss refers to the difference between all contract cash flow which
is converted into cash according to actual interest rate and receivable according to contract and all cash flow
which to be charged as expected, i.e. current value of all cash shortage. Among it, as for financial asset purchased
or original which has had credit impairment, it should be converted into cash according actual interest rate of this
financial asset after credit adjustment.
Lifetime expected credit losses refer to those caused by possible defaults during the entire expected duration of a
financial instrument.
The expected credit losses in the next 12 months refers to those caused by the default events of the financial
instrument that may occur within 12 months (or the expected duration if the expected duration of the financial
instrument is less than 12 months) after the balance sheet date, and is part of the expected credit losses in the
entire duration.
On each balance sheet date, the Company respectively measured the expected credit losses of financial
instruments in different stages. If the credit risk of a financial instrument has had no significant increase since its
initial recognition, the instrument shall fall in the first stage, for which the Company would measure the loss
reserves according to the expected credit losses in the future 12 months. If the credit risk of a financial instrument
has had a significant increase since its initial recognition but no credit impairment has occurred, the instrument
shall fall in the second stage, for which the Company would measure the loss reserves according to the expected
credit losses in the entire duration of the instrument. If the credit impairment has occurred since its initial
recognition, the financial instrument shall fall in the third stage, for which the Company would measure the loss
reserves according to the expected credit losses in the entire duration of the instrument.
As for a financial instrument with low credit risks on the balance sheet date, the Company measured the loss
reserves according to the expected credit losses in the future 12 months, assuming that its credit risk has had no
significant increase since its initial recognition.
For financial instruments with low credit risks in stages 1 and 2, the Company calculated the interest income at the
effective interest rate and on the carrying amount of the instruments without deductions for provisions for asset
impairment. For financial instruments in stage 3, interest income was calculated at the effective interest rates and
on the amortized cost by reducing the provisions for asset impairment from the carrying amount.
For notes receivables, accounts receivables, and financing receivables, whether there was a significant financial
component or not, the Company measured the loss reserves based on the expected credit losses for the entire
duration.
A. Accounts receivable
For notes receivable, accounts receivable, other receivables and accounts receivable financing with objective
evidence indicating impairment and those suitable for individual evaluation, the Company carries out impairment
test separately to confirm expected credit loss and prepare provision for impairment of single items. For notes
receivable, accounts receivable, other receivables, accounts receivable financing, contract assets and long-term
receivables without objective evidence of impairment, or a single financial asset with expected credit loss
impossible to be assessed at a reasonable cost, the Company divides the notes receivable, accounts receivable,
other receivables and accounts receivable financing into groups according to the characteristics of credit risk, and
calculates the expected credit loss based on receivable groups. The basis for recognizing groups is as follows:

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Changchai Company, Limited                                                                           Annual Report 2022


      Item                           Recognition basis               Method of measuring expected credit losses
 Group 1        of    notes                                    Consulting historical experience in credit losses,
                                 All commercial bills
 receivable                                                    combining current situation and prediction for future
                                Bank’s acceptance bills       economic situation, the expected credit loss shall be
 Group 2        of    notes
                                 with low credit rating        accounted through exposure at default and the expected
 receivable
                                                               credit loss rate over the entire life
                                Bank’s acceptance bills       Consulting historical experience in credit losses,
                                with high credit rating        combining current situation and prediction for future
 Accounts        receivable
                                                               economic situation, the expected credit loss shall be
 financing
                                                               accounted through exposure at default and the expected
                                                               credit loss rate over the entire life
                                                               Prepare the comparative list between aging of accounts
                                                               receivable and expected credit loss rate over the entire
                                                               life and calculate the expected credit loss by consulting
 Accounts                        Accounts receivable
                                                               historical experience in credit losses, combining current
 receivable-credit risk          portfolio with credit
                                                               situation and prediction for future economic situation.
 characteristics group                  period
                                                               The Company takes aging as credit risk characteristics
                                                               groups and calculates the expected credit loss for
                                                               accounts receivable.
 Accounts                                                      Consulting historical experience in credit losses,
 receivable-intercourse                                        combining current situation and prediction for future
                                Related party within the
 funds among related                                           economic situation, the expected credit loss shall be
                                 consolidation scope
 party group within the                                        accounted through exposure at default and the expected
 consolidation scope                                           credit loss rate over the entire life

Basis for recognizing groups of other receivables is as follows:
   Item                              Recognition basis         Method of measuring expected credit losses
                                                               Consulting historical experience in credit losses,
                                       Other receivables       combining current situation and prediction for future
                                     excluding those from      economic situation, the expected credit loss shall be
 Group 1 of other receivables
                                     related parties-aging     accounted through exposure at default and the expected
                                             group             credit loss rate within the next 12 months or over the
                                                               entire life
                                                               Consulting historical experience in credit losses,
                                                               combining current situation and prediction for future
                                      Related party within
                                                               economic situation, the expected credit loss shall be
 Group 2 of other receivables          the consolidation
                                                               accounted through exposure at default and the expected
                                             scope
                                                               credit loss rate within the next 12 months or over the
                                                               entire life


11. Accounts Receivable

See “10. Financial Instruments”.



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Changchai Company, Limited                                                                        Annual Report 2022



12. Accounts Receivable Financing

See “10. Financial Instruments”.


13. Other Receivables
See “10. Financial Instruments”.

14. Inventory

(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed in
the production process or the process providing the labor service etc. Inventory is mainly including the raw
materials, low priced and easily worn articles, unfinished products, inventories and work in process–outsourced
etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch
be calculated according to the weighted average method; carried forward the cost of the finished products
according to the actual cost of the current period and the sales cost according to the weighted average method.
(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 costs 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 consumables and packages
One time amortization method is adopted for low-value consumables and packages.




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Changchai Company, Limited                                                                         Annual Report 2022


15. Contract Assets

Contract Assets means that the Company is endowed with the right to charge the consideration through
transferring any commodity or service to the client, and such right depends on other factors except the passing of
time. The Company’s unconditional right (only depending on the passing of time) of charging the consideration
from the client shall be separately presented as receivables.

The recognition method and accounting treatment method of the estimated credit loss of contract assets are
consistent with that specified in Notes V.11.

16. Contract Costs

(1) Costs from Acquiring Contract

If the incremental cost resulting from the Company’s acquiring of contract (namely costs merely resulting from
the acquiring of contract) is predicted to be retrieved, it shall be recognized as an assets, amortized by adopting
the same basis with the recognition of commodities or service revenues related to the assets and included into the
current profit and loss. If the assets’ amortization period does not exceed one year, it shall be immediately
included into the current profit and loss. Other expenses resulting from the Company’s acquiring of contract shall
also be included into the current profit and loss unless it is explicitly borne by the client.

(2) Costs from Executing Contract

The Company’s costs from executing contract is not covered by other ASBE except for Revenue Standards, and
when the following situations are met, such costs can be recognized as an assets: ① the costs are directly related
to a current or predicted contract; ② the costs increase the Company’s resources applied to fulfill performance
obligations in the future; ③ the costs are predicted to be retrieved. The recognized assets shall be amortized by
adopting the same basis with the recognition of commodities or service revenues related to the assets and included
into the current profit and loss.

If the book value of contract costs is higher than the difference of the following two items, corresponding
depreciation reserves shall be counted and withdrawn and it shall be recognized as the assets depreciation loss: ①
the residual consideration predicted to be acquired by transferring commodities related to the assets; ② the costs
predicted to occur due to the transfer of related commodities.

If the difference between ① and ② is higher than the book value of contract costs due to any change in various
factors causing depreciation in previous periods, it shall be restituted to the withdrawn assets depreciation reserves
and included in the current profit and loss. However, the book value of restituted contract costs shall not exceed
the book value of the assets on the day of restitution based on the hypothesis that depreciation reserves are not
counted and withdrawn.

17. 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;

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Changchai Company, Limited                                                                         Annual Report 2022


(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.

18. 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 Company 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 the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The
difference between the initial investment cost and the book value of the paid combination consideration or the
total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant
expense occurred when executing the enterprise merger into the current gains and losses; while the handling
charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger
should be included in the initial measurement amount of the shareholders’ equities or the liabilities.
2) As for long-term equity investment acquired through the merger of enterprises not under the same control, its
initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity
instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the
acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)
undertaken on the combining date shall be measured at the fair value without considering the amount of minority
interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree
into the consolidated income statement directly. The agent expense and other relevant management expenses such
as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the
current gains and losses when occur; while the handling charges and commission occurs from the issuing the
equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of
the shareholders’ equities or the liabilities.
3) Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature,


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Changchai Company, Limited                                                                           Annual Report 2022


the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment
received; where it is not commercial in nature, the book value of the assets surrendered shall be recognized as the
initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at
fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
1) An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the invested
entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%, or, while the
Company holds the shares of an entity below 50%, but has a real control to the said entity, then the said entity
shall be its subsidiary company.
2) An investment in the joint enterprise or associated enterprise shall be measured by employing the equity
method
Where the Company hold, and is able to do equity investment with joint control with other parties over an
invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have
equity investment with significant influences on an invested entity, the invested entity shall be its associated
entity.
After the Company acquired the long-term equity investment, should respectively recognize investment income
and other comprehensive income according to the net gains and losses as well as the portion of other
comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the
long-term equity investment; corresponding reduce the book value of the long-term equity investment according
to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which
should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the
owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term
equity investment as well as include in the owners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when
it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it
adjusts the net profits of the invested entity.
If the accounting policy adopted by the investees is not accord with that of the Company, should be adjusted
according to the accounting policies of the Company 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 Company according to the calculation of the enjoyed proportion, should
recognize the investment gains and losses on the basis. But the losses of the unrealized 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


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Changchai Company, Limited                                                                           Annual Report 2022


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 Company 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 on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be
recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed
equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the
remained equity after disposal could execute joint control or significant influences on the investees, should change
to measure by equity method when compiling the individual financial statement and should adjust the
measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees, should change the
accounting disposal according to the relevant regulations of the recognition and measurement standards of
financial instrument, and its difference between the fair value and book value on the date lose the control right
should be included in the current gains and losses. For the other comprehensive income recognized by adopting
equity method for measurement or the recognition and measurement standards of financial instrument before the
Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the
control of them, while the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current gains and losses
according to the proportion. Of which, for the disposed remained equity which adopted the equity method for
measurement, the other comprehensive income and the other owners’ equity should be carried forward according
to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to


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Changchai Company, Limited                                                                        Annual Report 2022


the recognition and measurement standards of financial instrument, the other comprehensive income and the other
owners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.

19. Investment Real Estate

Measurement mode of investment real estate:
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 estate 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.

20. Fixed Assets

(1) Recognition Conditions
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
  Category of fixed assets             Method                      Useful life             Annual deprecation
 Housing and building         Average     method      of
                                                             20-40 years               2.50%-5%
                              useful life
 Machinery equipment          Average     method      of
                                                             6-15 years                6.67%-16.67%
                              useful life
 Transportation               Average     method      of
                                                             5-10 years                10%-20%
 equipment                    useful life
                              Average     method      of
 Other equipment                                             5-10 years                10%-20%
                              useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease

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Changchai Company, Limited                                                                              Annual Report 2022


The Company recognizes those meet with the following one or certain standards as the fixed assets by finance
lease:
1) The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on
the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred
to the Company;
2) The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price
which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing
right, so the Company could execute the choosing right reasonably on the lease starting date;
3) Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful
life of the lease fixed assets;
4) The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or
above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease
receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets
on the lease starting date;
5) The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the
current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be
regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and
the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and
stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing
expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is
reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires,
the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated
over the shorter one of the lease term or its useful life

21. Construction in Progress

(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct
materials, direct wages and direct construction fees; construction contract shall be measured at project price
payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation,
trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses,
which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward
fixed assets on schedule. The one that has not audited 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.

22. 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


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Changchai Company, Limited                                                                        Annual Report 2022


borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing
costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction
of investment real estates and inventories over one year (including one year) shall be capitalized, and record into
relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount
incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized
unless they simultaneously meet the following three requirements: (1) The asset disbursements have already
incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and
inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs
shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and
construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption
period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded
into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is
ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of
the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing
loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset
disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.

23. Intangible Assets

(1) Pricing Method, Service Life, and Impairment Test

(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the 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

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Changchai Company, Limited                                                                          Annual Report 2022


limited service life. When the service life and the amortization method of intangible assets are different from those
before, the years and method of the amortization shall be changed.
Intangible assets with uncertain service life may not be amortized. However, the Company shall check the service
life of intangible assets with uncertain service life during each accounting period. Where there are evidences to
prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized
according to the above method mentioned.
The rights to use land of the Company shall be amortized according to the rest service life.

(2) Accounting Polices of Internal R & D Costs

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 costs 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 costs for
its internal research and development projects of an enterprise may be capitalized when they satisfy the following
conditions simultaneously: it is feasible technically to finish intangible assets for use or sale; it is intended to
finish and use or sell the intangible assets; the usefulness of methods for intangible assets to generate economic
benefits shall be proved, including being able to prove that there is a potential market for the products
manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the
intangible assets will be used internally; it is able to finish the development of the intangible assets, and able to
use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources;
the development costs of the intangible assets can be reliably measured.

24. 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 Company 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 the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses
include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present
value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service
and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be
determined according to the belonging asset group. Asset group is the minimum asset combination producing cash


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Changchai Company, Limited                                                                         Annual Report 2022


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.

25. 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.

26. Contract Liabilities

Contract liabilities refer to the Company’s obligations in transferring commodities or services to the client for the
received or predicted consideration. Contract assets and contract liabilities under the same contract shall be
presented based on the net amount.

27. Employee Benefits

(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
Company should be recognized as liabilities and is included in the current gains and losses or relevant assets cost.
Of which the non-monetary benefits should be measured according to the fair value.

(2) Accounting Treatment of the Welfare after Demission

The Company classifies the welfare plans after demission into defined contribution plans and defined benefit
plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the
Company and the employees, or the regulations or methods formulated by the Company for providing the welfare
after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission
that the Company no more undertake the further payment obligations after the payment of the fixed expenses for
the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined
contribution plans.
Defined contribution plans
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.




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Changchai Company, Limited                                                                         Annual Report 2022


(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.

28. Lease Liabilities

On the commencement date of the lease term, the Company recognizes the present value of unpaid lease payments
as lease liabilities. Lease payments include: fixed payment and substantial fixed payment, and the relevant amount
after the lease incentive (if any) is deducted; variable lease payments that depend on indexation or ratio, which are
determined according to the indexation or ratio on the commencement date of the lease term in the initial
measurement; exercise price of the purchased option, provided that the lessee reasonably determines that the
option will be exercised; the amount to be paid for the exercise of the lease termination options, provided that the
lease term reflects that the lessee will exercise the options to terminate the lease; and estimated payments due to
the guaranteed residual value provided by the lessee.
The Company uses the interest rate implicit in lease as the rate of discount when calculating the present value of
the lease payments. The incremental lending rate of the lessee will be used as the rate of discount, if the interest
rate implicit in lease cannot be determined. The Company calculates the interest charge of the lease liabilities in
each period of the lease term at a fixed periodic interest rate and includes it in the profit or loss of the current
period, unless such interest charge is stipulated to be included in the underlying asset costs. Variable lease
payments that are not included in the measurement of the lease liabilities should be included in the profit or loss of
the current period when they are actually incurred, unless such payments are stipulated to be included in the
underlying asset costs. The Company will re-calculate the lease liabilities using the present value of the changed
lease payments, if the substantial fixed payment, the estimated payments due to the guaranteed residual value, the
index or rate used to determine the lease payments, or the assessment result of the call option, the renewal option,
or the termination option, or the actual exercise changes, after the commencement date of the lease term.

29. Provisions

(1) Criteria of provisions
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;
3) The amount of the obligation can be measured in a reliable way.
(2) Measurement of provisions
The Company shall measure the provisions in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.




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Changchai Company, Limited                                                                       Annual Report 2022


The Company shall check the book value of the provisions on the Balance Sheet Date. If there is any conclusive
evidence proving that the said book value can’t truly reflect the current best estimate, the Company shall, subject
to change, make adjustment to carrying value to reflect the current best estimate.

30. Revenue

Accounting policies for recognition and measurement of revenue:
When the Company fulfills its due performance obligations (namely when the client obtains the control over
related commodities or services), revenues shall be recognized based on the obligation’s amortized transaction
price. Performance Obligation refers to the Company’s promise of transferring commodities or services that can
be clearly defined to the client. Transaction Price refers to the consideration amount duly charged by the Company
for transferring commodities or services to the client, excluding any amount charged by the third party and any
amount predicted to be returned to the client. Control Over Relevant Commodities means that the use of
commodities can be controlled and almost all economic interests can be obtained.
On the contract commencement day, the Company shall evaluate the contract, recognize individual performance
obligation and confirm that individual performance obligation is fulfilled in a certain period. When one of the
following conditions is met, such performance obligation shall be deemed as fulfilled in a certain period, and the
Company shall recognize it as revenue within a certain period according to the performance schedule: (1) the
client obtains and consumes the economic interests resulting from the Company’s performance of contract while
performing the contract; (2) the client is able to control the commodities under construction during the
performance; (3) commodities produced by the Company during the performance possess the irreplaceable
purpose, and the Company has the right to charge all finished parts during the contract period; otherwise, the
Company shall recognize the revenue when the client obtains the control over relevant commodities or services.
The Company shall adopt the Input Method to determine the Performance Schedule. Namely, the Performance
Schedule shall be determined according to the Company’s input for fulfilling performance obligations. When the
Performance Schedule cannot be reasonably determined and all resulting costs are predicted to be compensated,
the Company shall recognize the revenue based on the resulting cost amount till the Performance Schedule can be
reasonably determined.
When the contract involves two or more than two performance obligations, the transaction price shall be
amortized to each single performance obligation on the contract commencement day according to the relative
proportion of the independent selling price of commodities or services under each single performance obligation.
If any solid evidence proves that the contract discount or variable consideration only relates to one or more than
one (not all) performance obligation under the contract, the Company shall amortize the contract discount or
variable consideration to one or more than one related performance obligations. Independent selling price refers to
the price adopted by the Company to independently sell commodities or services to the client. However,
independent selling price cannot be directly observed. The Company shall estimate the independent selling price
by comprehensively considering all related information that can be reasonably obtained and maximally adopting
the observable input value.
Variable Consideration
If any variable consideration exists in the contract, the Company shall determine the optimal estimation of the
variable consideration based on the expected values or the most possible amount. The variable consideration’s
transaction price shall be included without exceeding the total revenue amount recognized without the risk of
significant restitution when all uncertainties are eliminated. On each balance sheet day, the Company shall
re-estimate the variable consideration amount to be included in the transaction price.

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Changchai Company, Limited                                                                        Annual Report 2022


Consideration Payable to the Client
If any consideration payable to the client exists in the contract, the Company shall use such consideration to offset
the transaction price unless such consideration is paid for acquiring other clearly-defined commodities or services
from the client, and write down the current revenue at the later time between the time of recognizing relevant
revenues and the time of paying (or promising the payment) the consideration to the client.
Sales with the Quality Assurance
For sales with the Quality Assurance, if the Quality Assurance involves another separate service except for the
guarantee of all sold commodities or services meeting all established standards, the Quality Assurance shall
constitute a single Performance Obligation; otherwise, the Company shall make corresponding accounting
treatment to the Quality Assurance according to ASBE No.13--Contingency.
Main Responsibility Person/Agent
According to whether the control over commodities or services is obtained before they are transferred to the client,
the Company can judge whether it is Main Responsibility Person or Agent based on its status during the
transaction. If the Company can control commodities or services before they are transferred to the client, the
Company shall be Main Responsibility Person, and revenues shall be recognized according to the total
consideration amount received or to be received; otherwise, the Company shall be Agent, and revenues shall be
recognized according to the commission or service fees predicted to be duly charged. However, such amount shall
be determined based on the net amount after deducting other amounts payable to other related parties from the
total consideration received or to be duly received or the fixed commission amount or proportion.
Specific methods
The specific methods of the Company's revenue recognition are as follows:
The sale contract between the Company and its customers usually contains only the performance obligation for
the transfer of goods, which is satisfied at a point in time.
The following requirements must be met to confirm the revenue of domestic products: The Company has
delivered the goods to the customer in accordance with the contract and the customer has accepted the goods. The
payment has been recovered or the receipt voucher has been obtained, and the relevant economic benefits are
likely to flow in. The customer has obtained control of the relevant goods. The main risks and rewards of product
ownership have been transferred. The legal ownership of the goods has been transferred.
The following requirements must be met to confirm the revenue of export products: The Company has declared
the products in accordance with the contract, obtained the bills of lading, and received the payment or obtained the
receipt voucher and the related economic benefits are likely to flow in. The main risks and rewards of product
ownership have been transferred. The legal ownership of the goods has been transferred.
Interest Revenue
Interest Revenue shall be determined according to the time of the Company’s use of monetary capital and the
actual interest rate.

31. Government Grants

(1) Type
A government grant means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government grants consist of the government grants pertinent to assets and government grants
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

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Changchai Company, Limited                                                                         Annual Report 2022


Company classifies the government grants 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 Government Subsidies
The government subsidies should be recognized only when meet with the attached conditions of the government
grants as well as could be acquired.
If the government grants are the monetary assets, should be measured according to the received or receivable
amount; and for the government grants are the non-monetary assets, should be measured by fair value.
(3) Accounting Treatment
The government grants pertinent to assets shall be recognized as deferred income, and included in the current
gains and losses or offset the book value of related assets within the useful lives of the relevant assets with a
reasonable and systematic method. Government grants pertinent to income used to compensate the relevant costs,
expenses or losses of the Company in the subsequent period shall be recognized as deferred income, and shall be
included in the current profit and loss during the period of confirming the relevant costs, expenses or losses; those
used to compensate the relevant costs, expenses or losses of the Company already happened shall be included in
the current gains and losses or used to offset relevant costs directly.
For government grants that include both assets-related and income-related parts, they should be distinguished
separately for accounting treatment; for government subsidies that are difficult to be distinguished, they should be
classified as income-related.
Government grants related to the daily activities of the Company shall be included into other income or used to
offset relevant costs by the nature of economic business; those unrelated shall be included into non-operating
income.
The government grants recognized with relevant deferred income balance but need to return shall be used to offset
the book balance of relevant deferred income, the excessive part shall be included in the current gains and losses
or adjusting the book value of assets for the government grants assets-related that offset the book value of relevant
assets when they are initially recognized; those belong to other cases shall be directly included in the current gains
and losses.

32. Deferred Income Tax Assets/Deferred Income Tax Liabilities

(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, a deferred tax
asset shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably
gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence
showing that sufficient taxable profit will be available against which the deductible temporary difference can be
utilized, the deferred tax asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that
sufficient taxable profit will not be available against which the deductible temporary difference can be utilized, the
Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available.
(2) Basis of recognizing the deferred income tax liabilities




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Changchai Company, Limited                                                                           Annual Report 2022


According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax
liability 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.

33. Lease

The term "lease" refers to a contract whereby the lessor transfers the right of use regarding the leased asset(s) to
the lessee within a specified time in exchange for consideration. From the effective date of a contract, the
Company assesses whether the contract is a lease or includes any lease. If a party to the contract transferred the
right allowing the control over the use of one or more assets that have been identified within a certain period, in
exchange for a consideration, such contract is a lease or includes a lease. If a contract contains multiple single
leases at the same time, the Company will split the contract, and conduct accounting treatment of each single lease
respectively. If a contract contains both lease and non-lease parts at the same time, the lessee and lessor will split
the lease and non-lease parts.
(1) The Company as the lessee
See Note 28 (lease liabilities) for the general accounting treatment of the Company as the lessee.
For short-term leases with a lease term not exceeding 12 months and leases of low-value assets when single leased
assets are brand new assets, the Company chooses not to recognize right-of-use assets and lease liabilities, and
records relevant rental expenses into the profit or loss of the current period or the underlying asset costs on a
straight-line basis in each period within the lease term.
If a lease changes and meets the following conditions at the same time, the Company will account for the lease
change as a separate lease: the lease change expands the lease scope by increasing the right to use one or more
leased assets; the increased consideration is equivalent to the separate price of the expanded lease scope adjusted
according to the contract. Where the lease change is not accounted for as a separate lease, on the effective date of
the lease change, the Company will allocate the consideration of the changed contract and re-determine the
changed lease term. The present value determined based on the changed lease payments and the revised rate of
discount are used to remeasure the lease liabilities.
(2) The Company as the lessor
On the commencement date of the lease term, the Company classifies the leases that substantially transfer almost
all risks and rewards related to the ownership of the leased assets as finance leases, and leases other than finance
leases as operating leases.
1) Operating lease
The Company recognizes the lease payments receivable as rentals in each period within the lease term on a
straight-line basis. The Company capitalizes the initial direct costs related to operating leases upon incurrence
thereof and apportions and includes such costs in the profit or loss of the current period on the basis same as the
recognition of rentals. The received variable lease payments related to operating leases that are not included in the
lease payments receivable are included in profit or loss of the current period when they are actually incurred.
2) Financial lease
On the commencement date of the lease term, the Company recognizes the finance lease receivables on the basis
of net investment in the lease (the sum of the unguaranteed residual value and the present value of the lease
payments receivable not yet received on the commencement date of the lease term discounted at the interest rate
implicit in lease) and derecognizes the leased asset of the finance lease. The Company calculates and recognizes
interest income based on the interest rate implicit in lease in each period within the lease term. The received


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Changchai Company, Limited                                                                         Annual Report 2022


variable lease payments that are not covered in the measurement of the net investment in the lease are included in
the profit or loss of the current period when actually incurred.
(3) Sale and leaseback
The Company assesses whether the asset transfer in a sale and leaseback transaction is a sale in accordance with
relevant provisions of the Accounting Standards for Business Enterprises No. 14 - Income.
1) The Company as the lessee
If the asset transfer in a sale and leaseback transaction is a sale, the Company measures the right-of-use assets
formed by the sale and leaseback based on the portion of the original asset's carrying value that is related to the
use right acquired by the leaseback, and recognizes related gains or losses only for the right transferred to the
lessor.
If the asset transfer in a sale and leaseback transaction is not a sale, the Company continues to recognize the
transferred asset and at the same time recognizes a financial liability equivalent to the transfer income, and
conducts corresponding accounting treatment for the financial liability in accordance with the Accounting
Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
2) The Company as the lessor
If the asset transfer in a sale and leaseback transaction is a sale, the Company applies other accounting standards
for business enterprises to the accounting treatment for asset purchase, and conducts corresponding accounting
treatment for asset lease in accordance with the Accounting Standard for Business Enterprises No. 21 - Leases.
If the asset transfer in a sale and leaseback transaction is not a sale, the Company does not recognize the
transferred asset, but recognizes a financial asset equivalent to the transfer income, and conducts corresponding
accounting treatment for the financial asset in accordance with the Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments.

34. Other Significant Accounting Policies and Accounting Estimates

The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis,
based on historical experience and other factors, including reasonable expectations of future events. Important
accounting estimates and critical assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next fiscal year are listed as follows:
(1) Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include
analysis of business models and contractual cash flow characteristics. The Company determines the business
model for managing financial assets at the level of the financial asset portfolio, taking into account factors such as
the approach of evaluating and reporting the performance of financial assets to key management personnel, the
risks affecting the performance of financial assets and the manner in which they are managed, and way in which
the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are
consistent with the basic lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early
repayment or for other reasons; whether the interest includes only the time value of money, credit risk, other basic
lending risks and consideration against costs and profits. For example, whether the amount of early repayment
reflects only the outstanding principal and interest based on the outstanding principal, as well as reasonable
compensation paid for early termination of the contract.

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Changchai Company, Limited                                                                          Annual Report 2022


(2) Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of
accounts receivable and the expected credit loss ratio, and determines the expected credit loss ratio based on the
probability of default and the default loss ratio. When determining the expected credit loss ratio, the Company
uses data such as internal historical credit loss experience and adjusts historical data to take into account current
conditions and forward-looking information. When considering forward-looking information, the Company uses
indicators such as the risk of economic downturn and changes in the external market environment, technological
environment and customer profile. The Company regularly monitors and reviews the assumptions related to the
calculation of expected credit losses.
(3) Inventory falling price reserves
The Company follows the inventory accounting policy and carries out measurement based on which is smaller
between the cost and the net realizable value. If the cost of inventories is higher than its net realizable value, then
the inventory falling prices reserves were implemented. The impairment of inventories to net realizable value is
based on an assessment of the marketability of the inventories and their net realizable value. The management
shall determine the impairment of inventories after obtaining reliable evidence while taking into account the
purpose of holding inventories, the effect of items after the balance sheet date, and other factors. Differences
between actual results and original estimates will affect the carrying value of inventories and the provision or
reversal of reverses for falling prices of inventories in the period in which the estimates are changed.
(4) Determination of fair value of unlisted equity investment
The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount
rate for items with similar terms and risk characteristics. Such valuation requires the Company to estimate
expected future cash flows and discount rates and is therefore subject to uncertainty. Under limited circumstances,
if the information used to determine fair value is insufficient, or if the range of possible estimates of fair value is
wide and the cost represents the best estimate of fair value within that range, the cost may represent its appropriate
estimate of fair value within that range of distribution.
(5) Reserves for long-term assets impairment
The Company determines at the balance sheet date whether there is any indication that a non-current asset, other
than a financial asset, may be impaired. For intangible assets with an uncertain useful life, impairment tests shall
be conducted when there is an indication of impairment besides the annual impairment test. Other non-current
assets other than financial assets shall be tested for impairment when there is an indication that the carrying
amount is irrecoverable.
An impairment is indicated when the carrying amount of an asset or asset group is greater than the recoverable
amount, which is the higher of the fair value minus disposal expenses and the present value of estimated future
cash flows.
The net value of the fair value minus disposal expenses is determined by referring to the negotiable sale price or
observable market price of similar assets in a fair transaction and deducting incremental costs directly attributable
to the disposal of the asset.
Estimating the present value of future cash flows requires significant judgments with respect to the production
volume of the asset (or asset group), the selling price, the related operating costs and the discount rate used in
calculating the present value. The Company uses all available relevant information in estimating recoverable
amounts, including projections of volumes, selling prices and related operating costs based on reasonable and
supportable assumptions.
(6) Depreciation and amortization

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Changchai Company, Limited                                                                       Annual Report 2022


The Company depreciates and amortizes investment properties, fixed assets and intangible assets on a straight-line
basis within their service lives after taking into account their residual values. The Company regularly reviews
service lives to determine the amount of depreciation and amortization expenses to be included in each reporting
period. The service life is determined by the Company based on past experience with similar assets and expected
technological updates. Depreciation and amortization expenses will be adjusted in the future period if there is a
significant change in previous estimates.
(7) Deferred income tax assets
To the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company
recognizes deferred income tax assets for all unused tax losses. This requires the Company's management to use
many judgments to estimate the timing and amount of future taxable profits, taking into account tax planning
strategies, so as to determine the amount of deferred income tax assets to be recognized.
(8) Income tax
In the normal operating activities of the Company, the ultimate tax treatment and calculation of certain
transactions are subject to certain uncertainties. Whether some items can be disbursed before tax requires the
approval of the tax authorities. If the final determination of these tax matters differs from the amounts initially
estimated, the difference will have an impact on current and deferred income taxes in the period in which they are
finally determined.

35. Changes in Main Accounting Policies and Estimates

(1) Change of Accounting Policies

√ Applicable □ Not applicable
        Changes to the accounting policies and why                     Approval process                 Remark
The Company starts to implement the “Accounting
treatment for sales of products or by-products by
                                                            On 22 August 2022, the 13th Meeting
enterprises generated from fixed assets before reaching the
                                                            of the 9th Board of Directors and the Notes      of
intended state of availability or from the period of R&D” th
                                                            12 Meeting of the 9    th Supervisory changes    to
and “Judgment on onerous contracts” and “Presentation of
                                                            Committee were held by the Company accounting
centralized capital management” stipulated in the
                                                            on which the Proposal on Changes of policies-(1)
Accounting      Standards     for    Business   Enterprises
                                                            Accounting Policies was approved.
Interpretation No. 15 issued by the Ministry of Finance in
2021 since 1 January 2022.
The Company starts to implement the “accounting
treatment of the income tax effect of financial instrument
related dividend whose issuer is classified as equity
                                                                                                    Notes        of
instrument” and “accounting treatment of share-based
                                                                                                    changes      to
payment in cash settlement modified into share-based                            /
                                                                                                    accounting
payment in equity settlement by the enterprise” stipulated
                                                                                                    policies-(2)
in the Accounting Standards for Business Enterprises
Interpretation No. 16 issued by the Ministry of Finance in
2022 since 13 December 2022.


Description of changes in accounting policies:

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Changchai Company, Limited                                                                        Annual Report 2022


(1) The impact of implementing the Interpretation No. 15 of Accounting Standards for Business Enterprises on the
Company
On 31 December 2021, the Ministry of Finance issued the Interpretation No. 15 of Accounting Standards for
Business Enterprises (C.K. [2021] No. 35) (hereinafter referred to as “Interpretation No. 15”). Contents of
“accounting treatment of external sales of products or by-product produced by the enterprise before the fixed
assets reach the intended usable state or during the research and development process (hereinafter referred to as
‘Trial Sales’)” and “judgment on loss-making contracts” came into force on 1 January 2022.
The Company implemented Interpretation No. 15 since the date of issuance, and the implementation has no
material impact on the financial statements during the reporting period.
(2) The impact of implementing the Interpretation No. 16 of Accounting Standards for Business Enterprises on the
Company
On 13 December 2022, the Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for
Business Enterprises (C.K. [2022] No. 31) (hereinafter referred to as “Interpretation No. 16”). The regulations of
“accounting treatment for deferred income tax relating to assets and liabilities arising from a single transaction
that is not subject to the initial recognition exemption” came into force on 1 January 2023, allowing companies to
implement the exemption prior to the year of issuance, which has not been implemented by the Company in
advance this year. In addition, the contents of “accounting treatment of the income tax effect of financial
instrument related dividend whose issuer is classified as equity instrument” and “accounting treatment of
share-based payment in cash settlement modified into share-based payment in equity settlement by the enterprise”
came into force on the issuance date.
The Company implemented Interpretation No. 16 since the date of issuance, and the implementation has no
material impact on the financial statements during the reporting period.

(2) Changes in Accounting Estimates

□ Applicable √ Not applicable

VI. Taxation

1. Main Taxes and Tax Rate

          Category of taxes                     Tax basis                              Tax rate
 VAT                                     Payable to sales revenue   13%, 9%, 6%, 5%
 Urban maintenance and                                              Tax paid in accordance with the tax
                                         Taxable turnover amount
 construction tax                                                   regulations of tax units location
 Enterprise income tax                   Taxable income             25%, 15%, 2.5%
 Education surcharge                     Taxable turnover amount    5%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
                                  Name                                              Income tax rate
 Changchai Company, Limited                                          15%
 Changchai Wanzhou Diesel Engine Co., Ltd.                           15%
 Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd.         25%
 Changzhou Horizon Investment Co., Ltd.                              25%
 Changzhou Changchai Horizon Agricultural Equipment Co.,             25%


                                                          145
Changchai Company, Limited                                                                    Annual Report 2022


 Ltd.
 Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.           15%
 Jiangsu Changchai Machinery Co., Ltd.                              25%
 Changzhou Xingsheng Real Estate Management Co., Ltd.               2.5%
 Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.             15%

2. Tax Preference

On 30 November 2021, the Company obtained the Certificates for High-tech Enterprises again, and it still enjoys
15-percent preferential rate for corporate income tax during the Reporting Period; the Company’s controlling
subsidiary-Changchai Wanzhou Diesel Engine Co., Ltd., the controlling subsidiary company, shall pay the
corporate income tax at tax rate 15% from 1 January 2011 to 31 December 2030 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 and Ministry of Finance Announcement
No. 23 [2020] Announcement of the Ministry of Finance, the State Administration of Taxation and the National
Development and Reform Commission on Continuing the Enterprise Income Tax Policy for the Great Western
Development. On 2 December 2020, the wholly-owned subsidiary Changzhou Fuji Changchai Robin Gasoline
Engine Co., Ltd. obtained the "High-tech Enterprise Certificate" and enjoyed a 15% preferential corporate income
tax rate during the Reporting Period; The wholly-owned subsidiary Changzhou Xingsheng Real Estate
Management Co., Ltd. is eligible small enterprise with low profits and shall pay the corporate income tax at tax
rate 2.5% for small enterprises with low profits during the Reporting Period; The subsidiary Zhenjiang Siyang
Diesel Engine Manufacturing Co., Ltd. acquired in the year has obtained the "High-tech Enterprise Certificate"
and enjoyed a 15% preferential corporate income tax rate during the Reporting Period.

VII. Notes to Major Items in the Consolidated Financial Statements of the Company

1. Monetary Assets

                                                                                                    Unit: RMB
                 Item                           Ending balance                     Beginning balance
 Cash on hand                                                  251,965.06                         145,594.98
 Bank deposits                                              830,914,999.19                    561,746,767.12
 Other monetary assets                                       98,846,386.72                    146,074,316.64
 Total                                                      930,013,350.97                    707,966,678.74
 Of which: Total amount deposited
 overseas
            Total amount of
 restriction in use by mortgage,                             95,662,384.92                    145,564,457.15
 pledge or freeze

At the period-end, the restricted monetary assets of the Company was RMB95,662,384.92, of which

RMB91,084,933.63 was the cash deposit for bank acceptance bills, RMB2,993,220.00 was cash deposit for L/G,

RMB871,348.35 was cash deposit for environment and RMB712,882.94 was cash deposit for credit.

                                                      146
Changchai Company, Limited                                                                             Annual Report 2022


2. Trading Financial Assets

                                                                                                       Unit: RMB

                   Item                             Ending balance                          Beginning balance
Financial assets at fair value
                                                                  370,103,602.57                       404,053,261.57
through profit or loss
  Of which: Stocks                                                 78,739,311.00                       121,940,343.76
              Financial products                                  291,364,291.57                       282,112,917.81
Total                                                             370,103,602.57                       404,053,261.57

3. Notes Receivable

(1) Notes Receivable Listed by Category
                                                                                                              Unit: RMB
                   Item                             Ending balance                          Beginning balance
 Bank acceptance bill                                             297,125,872.54                       334,311,236.78
 Total                                                            297,125,872.54                       334,311,236.78
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected
credit losses, information related to bad debt provision shall be disclosed by reference to the disclosure method of
other receivables:
□ Applicable √ Not applicable
(2) Notes Receivable Pledged by the Company at the Period-end: None
(3) Notes Receivable which Had Endorsed by the Company or had Discounted but had not Due on the
Balance Sheet Date at the Period-end
                                                                                      Unit: RMB
                                           Amount of recognition termination             Amount of not terminated
                   Item
                                                  at the period-end                    recognition at the period-end
 Bank acceptance bill                                                                                  176,395,231.83
 Total                                                                                                 176,395,231.83
(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to
Execute the Contract or Agreement at the Period-end

4. Accounts Receivable

(1) Accounts Receivable Classified by Category
                                                                                                              Unit: RMB
                                       Ending balance                                 Beginning balance
                            Carrying         Bad debt                      Carrying            Bad debt
                            amount           provision                     amount              provision
                                                             Carryi
        Category                                   Withd                                             Withd      Carryin
                                                              ng
                          Amou   Propo     Amou    rawal                Amou       Propor   Amou     rawal      g value
                                                             value
                           nt    rtion      nt     propo                 nt         tion     nt      propor
                                                    rtion                                             tion


                                                            147
Changchai Company, Limited                                                                               Annual Report 2022


 Accounts
 receivable for
                      51,75              34,36               17,38       50,43            44,054
 which bad debt                                    66.40                                                87.34    6,383,0
                     7,257.    9.91%    7,361.               9,896.     7,453.   9.10%     ,367.1
 provision                                          %                                                    %         86.48
                         99                 83                   16         63                  5
 separately
 accrued
 Of which:
 Accounts
 receivable for
                     470,4               117,4               352,9      504,0             135,26
 which bad debt                90.09               24.97                         90.90                  26.83   368,826
                     11,04               78,75               32,28      92,72              6,680.
 provision                      %                   %                             %                      %       ,040.00
                      2.15                8.54                3.61       0.08                  08
 accrued by
 group
 Of which:
 Accounts
 receivable for
 which bad debt      470,4               117,4               352,9      504,0             135,26
                               90.09               24.97                         90.90                  26.83   368,826
 provision           11,04               78,75               32,28      92,72              6,680.
                                %                   %                             %                      %       ,040.00
 accrued by           2.15                8.54                3.61       0.08                  08
 credit risk
 features group
                     522,1               151,8               370,3      554,5             179,32
                               100.0               29.08                         100.00                 32.34   375,209
 Total               68,30               46,12               22,17      30,17              1,047.
                                0%                  %                              %                     %       ,126.48
                      0.14                0.37                9.77       3.71                  23


Account receivables withdrawn bad debt provision separately with significant amount at the period end:
                                                                                                     Unit: RMB
                                                            Ending balance
    Name            Carrying           Bad debt            Withdrawal
                                                                                      Reason of withdrawal
                    amount             provision           proportion
 Customer 1        1,470,110.64        1,470,110.64              100.00%    Difficult to recover
 Customer 2        1,902,326.58        1,902,326.58              100.00%    Difficult to recover
 Customer 3        6,215,662.64        6,215,662.64              100.00%    Difficult to recover
 Customer 4        2,797,123.26        2,194,980.28               78.47%    Expected to difficultly recover
 Customer 5        3,633,081.23        2,122,165.73               58.41%    Expected to difficultly recover
 Customer 6        2,584,805.83        2,584,805.83              100.00%    Difficult to recover
 Customer 7        1,731,493.71        1,731,493.71              100.00%    Difficult to recover
 Customer 8        1,511,937.64         604,775.06                40.00%    Expected to difficultly recover
 Customer 9        3,329,074.84         720,031.71                21.63%    Expected to difficultly recover
 Customer 10       2,025,880.18        2,025,880.18              100.00%    Difficult to recover
 Customer 11       5,972,101.90        5,972,101.90              100.00%    Difficult to recover
 Customer 12       4,592,679.05        4,592,679.05              100.00%    Difficult to recover
 Total            37,766,277.50    32,137,013.31                 --                                --
Accounts receivable for which bad debt provision accrued by credit risk features group:

                                                           148
Changchai Company, Limited                                                                            Annual Report 2022


                                                                                                               Unit: RMB
                                                                  Ending balance
           Aging
                                    Carrying amount              Bad debt provision         Withdrawal proportion
 Within 1 year                           327,927,427.98                  6,558,548.57                 2.00 %
 1 to 2 years                             25,360,867.63                  1,268,043.39                 5.00 %
 2 to 3 years                              6,764,456.55                  1,014,668.48                15.00 %
 3 to 4 years                              1,377,872.15                    413,361.64                30.00 %
 4 to 5 years                              1,890,703.46                  1,134,422.08                60.00 %
 Over 5 years                            107,089,714.38                107,089,714.38                100.00 %
 Total                                   470,411,042.15                117,478,758.54                   --
Notes of the basis of determining the group:
The accounts receivable was adopted the aging analysis based on the months when the accounts incurred actually,
among which the accounts incurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt provision
on the Current Period: With reference to the experience of the historical credit loss, combining with the prediction
of the present status and future financial situation, the comparison table was prepared between the aging of the
accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
                                                                                                           Unit: RMB
                         Aging                                                    Carrying amount
 Within 1 year (including 1 year)                                                                     343,017,134.79
 1 to 2 years                                                                                          25,903,580.29
 2 to 3 years                                                                                           6,917,677.75
 Over 3 years                                                                                         146,329,907.31
   3 to 4 years                                                                                         3,465,761.24
   4 to 5 years                                                                                         3,840,453.02
   Over 5 years                                                                                       139,023,693.05
 Total                                                                                                522,168,300.14
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
                                                                                                               Unit: RMB
                                                  Changes in the Reporting Period
                    Beginning                         Reversal                        Transfer of
   Category                                                                                           Ending balance
                     balance         Withdrawal          or           Write-off       consolidate
                                                      recovery                        d subsidiary
 Bad debt
 provision
                   44,054,367.15       493,726.45                  10,180,731.77                       34,367,361.83
 withdrawn
 separately




                                                          149
Changchai Company, Limited                                                                          Annual Report 2022


 Bad debt
 provision
                 135,266,680.08      2,632,425.80                 20,769,169.67     348,822.33      117,478,758.54
 withdrawn
 by group
 Total           179,321,047.23      3,126,152.25                 30,949,901.44     348,822.33      151,846,120.37


Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) Accounts Receivable with Actual Verification during the Reporting Period
                                                                                                          Unit: RMB
                         Item                                                 Verified amount
Accounts receivable with actual verification                                                          30,949,901.44


Of which the verification of significant accounts receivable:

                                                                                                          Unit: RMB
                                                                                                           Arising
                                                                                                            from
                     Nature of the                                                   Verification
  Name of the                            Verified                                                       related-par
                       accounts                         Reason for verification      procedures
    entity                               amount                                                               ty
                      receivable                                                     performed
                                                                                                         transactio
                                                                                                          ns or not
Customer 1                              2,837,045.23
Customer 2                              2,790,920.00          With accounts           Changchai
Customer 3                              2,589,892.74    receivable aging over 5    Wanzhou Diesel
                                                        years, the debtors have    Engine Co., Ltd.
Customer 4                              2,173,984.00                                 held the 1st
Customer 5                              1,962,873.80        no assets for debt
                                                                                    Extraordinary
                                                         extinguishment due to     General Meeting
Customer 6            Accounts          1,635,047.54
                                                             the counterpart       on 20 December
Customer 7          receivable for      1,444,186.14                                                        Not
                                                             company being            2022 and
Customer 8              goods           1,266,654.55
                                                         revoked or cancelled,      approved the
Customer 9                              1,209,883.25                                 Proposal on
                                                         or debt reorganisation,
Customer 10                             1,128,969.12                                Verification of
                                                        bankruptcy clearing, or    Some Accounts
Customer 11                             1,068,019.00
                                                         judicial litigation and     Receivable.
Customer 12                             1,062,062.94
                                                              other reasons.
Customer 13                             1,043,064.00
Total                                 22,212,602.31
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
                                                                                                          Unit: RMB
   Name of the           Ending balance of          Proportion to total ending balance of    Ending balance of
     entity             accounts receivable                 accounts receivable              bad debt provision
 Customer 1                     182,469,247.05                    34.94%                              3,649,384.94
 Customer 2                       40,330,698.62                    7.72%                                806,613.97
 Customer 3                       20,619,430.63                    3.95%                                412,388.61



                                                         150
Changchai Company, Limited                                                                        Annual Report 2022


 Customer 4                       18,538,588.59                     3.55%                              913,245.46
 Customer 5                       15,564,496.00                     2.98%                              311,289.92
       Total                     277,522,460.89                    53.14%



5. Accounts Receivable Financing

                                                                                                        Unit: RMB
                 Item                             Ending balance                        Beginning balance
 Bank acceptance bills                                        242,813,392.79                      497,388,826.02
                 Total                                        242,813,392.79                      497,388,826.02
Changes of accounts receivable financing and fair value thereof in the Reporting Period
√ Applicable □ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable
financing.
□ Applicable √ Not applicable
Other notes:
The Company discounts and endorses a portion of its bank acceptances based on its routine fund management
needs, and the conditions for derecognition are met, so the bank acceptances are classified as financial assets
measured at fair value whose change is included in other comprehensive income.
On 31 December 2022, there was no bank acceptance for which bad debt provision accrued separately in the
Company. The Company measures the provision of bad debt provision on the basis of expected credit losses
throughout the duration. The Company believes that the credit risk characteristics of the bank acceptances it holds
are similar, and there was no bank acceptance for which bad debt provision accrued separately. In addition, there
was no significant credit risk in the bank acceptance, and no significant loss would be caused by bank defaults.
(1) Accounts receivable financing which had endorsed by the Company or had discounted but had not due at the
period-end
                                                                                                        Unit: RMB
                                                      Amount of recognition            Amount of not terminated
                         Item
                                                   termination at the period-end     recognition at the period-end
Bank acceptance bill                                                511,689,991.87
                         Total                                      511,689,991.87


6. Prepayments

(1) List by Aging Analysis
                                                                                                        Unit: RMB
                                       Ending balance                              Beginning balance
        Aging
                                 Amount             Proportion                 Amount             Proportion
 Within 1 year                   5,941,708.21                 93.86%           6,706,970.55                 81.82%
 1 to 2 years                      289,373.60                  4.57%              94,583.55                 1.15%


                                                        151
Changchai Company, Limited                                                                        Annual Report 2022


 2 to 3 years                      71,654.18                   1.13%             362,397.67                   4.42%
 Over 3 years                      27,466.70                   0.44%           1,033,466.62                  12.61%
 Total                          6,330,202.69             --                    8,197,418.39            --
There was no prepayment with significant amount aging over one year as of the period-end.
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
At the period-end, the total top 5 of the ending balance of the prepayments collected according to the prepayment
target was RMB4,798,600 accounting for 75.80% of the total ending balance of prepayments.

7. Other Receivables

                                                                                                            Unit: RMB
                 Item                              Ending balance                       Beginning balance
 Interest receivable
 Dividend receivable
 Other receivables                                             32,938,305.16                        19,515,350.52
 Total                                                         32,938,305.16                        19,515,350.52
(1) Other Receivables
1) Other Receivables Classified by Accounts Nature
                                                                                                            Unit: RMB
                Nature                          Ending carrying value                Beginning carrying value
 Margin and cash pledge                                         2,028,096.87                         1,299,600.00
 Intercourse funds                                             48,701,034.90                        35,889,738.80
 Petty cash and borrowings by
                                                                 742,075.76                          1,184,204.41
 employees
 Other                                                         13,635,867.60                        13,630,284.64
 Total                                                         65,107,075.13                        52,003,827.85
2) Withdrawal of Bad Debt Provision
                                                                                                            Unit: RMB
                                  First stage          Second stage            Third stage
                                                      Expected loss in      Expected loss in
                                Expected credit
    Bad debt provision                              the duration (credit       the duration           Total
                                loss of the next
                                                      impairment not       (credit impairment
                                  12 months
                                                         occurred)              occurred)
 Balance of 1 January
                                     287,609.45          26,486,676.97          5,714,190.91        32,488,477.33
 2022
 Balance of 1 January
 2022 in the Current
 Period
 --Transfer to Second
                                         -871.48                 871.48
 stage
 -- Transfer to Third stage            -4,266.68        -23,342,513.38         23,346,780.06
 -- Reverse to Second
 stage


                                                         152
Changchai Company, Limited                                                                           Annual Report 2022


 -- Reverse to First stage
 Transfer of consolidated
                                           3,810.00                                                         3,810.00
 subsidiary
 Withdrawal of the
                                         150,404.27                                                      150,404.27
 Current Period
 Reversal of the Current
                                                            148,176.99              174,638.80           322,815.79
 Period
 Write-offs of the Current
 Period
 Verification of the
                                          63,002.91            88,102.93                                 151,105.84
 Current Period
 Other changes
 Balance of 31 December
                                         373,682.65       2,908,755.15         28,886,332.17          32,168,769.97
 2022
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
                                                                                                           Unit: RMB
                             Aging                                             Ending balance
 Within 1 year (including 1 year)                                                                     16,050,004.29
 1 to 2 years                                                                                         15,783,825.92
 2 to 3 years                                                                                          1,164,476.00
 Over 3 years                                                                                        32,108,768.92
   3 to 4 years                                                                                          420,716.17
   4 to 5 years                                                                                          338,457.65
   Over 5 years                                                                                       31,349,595.10
 Total                                                                                                65,107,075.13
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of withdrawal of bad debt provision:
                                                                                                           Unit: RMB
                                                      Changes in the Reporting Period
                             Beginning                                                Transfer of        Ending
     Category                                 Withdraw    Reversal or      Write-
                              balance                                                 consolidate        balance
                                                 al        recovery         off
                                                                                      d subsidiary
 Bad debt
 provision for
                             5,714,190.91                  177,905.47                                  5,536,285.44
 which accrued
 separately




                                                         153
Changchai Company, Limited                                                                             Annual Report 2022


 Bad debt
 provision for                                                              151,10
                          26,774,286.42       5,493.95                                     3,810.00    26,632,484.53
 which accrued by                                                              5.84
 group
                                                                            151,10
 Total                    32,488,477.33       5,493.95         177,905.47                   3,810.00    32,168,769.97
                                                                               5.84
4) There Were No Particulars of the Actual Verification of Other Receivables during the Reporting Period
                                                                                               Unit: RMB
                             Item                                              Written-off amount

 Other receivables with actual verification                                                                151,105.84


Of which the verification of significant other receivables:
                                                                                                             Unit: RMB
                                                                                                            Whether
                                                                                                            occurred
 Name of the     Natur       Written-off        Reason for              Verification procedures            because of
   entity         e           amount            verification                   performed                  related-part
                                                                                                                y
                                                                                                          transactions

 Customer 1                    21,472.28        With accounts      Approved by the administrative
                                              receivable aging     office meeting of Changzhou
 Customer 2                    41,530.63      over 5 years, the    Changchai Benniu Diesel Engine
                                                 counterpart       Parts Co., Ltd., a subsidiary.
 Customer 3                     9,020.00       company being
                 Other
 Customer 4                     8,357.60         revoked or
                 interc
 Customer 5                     7,933.63     cancelled, or debt                                               Not
                 ourse                                              The Proposal on the Write-off of
                                               reorganisation,
 Customer 6      funds          7,800.00                             Certain Other Receivables was
                                                 bankruptcy
 Customer 7                     6,700.00                            approved at the Party Committee
                                               clearing or the
 Customer 8                     6,000.00                                  and Office Meeting.
                                              debtors have no
 Customer 9                     6,000.00       assets for debt
 Customer 10                    5,525.00       extinguishment
 Total                        120,339.14             --                               --                       --


5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
                                                                                                             Unit: RMB
                                                                                       Proportion to
                                                                                        total ending        Ending
     Name of the entity             Nature     Ending balance          Aging             balance of     balance of bad
                                                                                            other       debt provision
                                                                                       receivables %




                                                          154
Changchai Company, Limited                                                                               Annual Report 2022


 Changzhou Compressor            Intercourse
                                                     2,940,000.00     Over 5 years         4.52%           2,940,000.00
 Factory                         funds
 Changchai Group Imp. &          Intercourse
                                                     2,853,188.02     Over 5 years         4.38%           2,853,188.02
 Exp. Co., Ltd.                  funds
 Changzhou New District          Intercourse
                                                     1,626,483.25     Over 5 years         2.50%           1,626,483.25
 Accounting Center               funds
 Changchai Group                 Intercourse                                                               1,140,722.16
                                                     1,140,722.16     Over 5 years         1.75%
 Settlement Center               funds
 Changzhou Huadi
                                 Engineerin
 Engineering Guarantee                               1,065,400.00      2-3 years           1.64%             159,810.00
                                 g deposit
 Co., Ltd.
 Total                                               9,625,793.43                         14.78%           8,720,203.43

8. Inventory

Whether the Company needs to comply with the requirements of real estate industry
No
(1) Category of Inventory
                                                                                                               Unit: RMB
                                    Ending balance                                     Beginning balance
     Item             Carrying       Falling price       Carrying         Carrying       Falling price       Carrying
                      amount           reserves           value           amount           reserves           value
 Raw                 163,954,131.                      157,971,844.     148,617,321.                       141,356,757.
                                     5,982,286.51                                        7,260,564.47
 materials                     27                                76               85                                 38
 Materials
                     12,299,968.9                      12,299,968.9     13,877,280.6                       13,877,280.6
 processed on
                                8                                 8                0                                  0
 commission
 Goods          in   110,883,778.    10,725,860.4      100,157,918.     119,354,374.     15,534,236.3      103,820,137.
 process                       58               3                15               14                5                79
 Finished            322,959,181.    22,755,460.8      300,203,720.     403,855,588.     13,029,104.2      390,826,484.
 goods                         08               0                28               94                6                68
 Low priced
 and    easily       1,363,429.57                      1,363,429.57     1,203,097.73                       1,203,097.73
 worn articles
                     611,460,489.    39,463,607.7      571,996,881.     686,907,663.     35,823,905.0      651,083,758.
 Total
                               48               4                74               26                8                18
(2) Falling Price Reserves of Inventory and Impairment Reserves for Contract Performance Costs
                                                                                                               Unit: RMB
         Item            Beginning                   Increase                   Decrease             Ending balance




                                                            155
Changchai Company, Limited                                                                                        Annual Report 2022


                             balance                                 Transf
                                                                      er of
                                                                     consol        Reversal or
                                               Withdrawal                                            Other
                                                                     idated         write-off
                                                                     subsid
                                                                      iary
                                                                         491,7
 Raw materials              7,260,564.47        1,473,329.89                       3,243,314.87                     5,982,286.51
                                                                         07.02
 Goods            in
                           15,534,236.35                                           4,808,375.92                    10,725,860.43
 process
 Finished goods            13,029,104.26       13,441,573.49                       3,715,216.95                    22,755,460.80
                                                                         491,7
 Total                     35,823,905.08       14,914,903.38                      11,766,907.74                    39,463,607.74
                                                                         07.02
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories.

9. Other Current Assets

                                                                                                                         Unit: RMB
                  Item                                   Ending balance                             Beginning balance
 The VAT tax credits                                                     47,682,930.23                             37,806,274.29
 Prepaid corporate income tax                                             1,505,424.80                              6,143,886.15
 Prepaid expense                                                             90,667.46                                  110,662.13
 Total                                                                   49,279,022.49                             44,060,822.57

10. Investments in Debt Obligations

                                                                                                                         Unit: RMB
                                       Ending balance                                           Beginning balance
     Item               Carrying        Falling price        Carrying             Carrying        Falling price         Carrying
                        amount            reserves            value               amount            reserves             value
 Three-year
                       39,309,587.9                        39,309,587.9          37,898,226.3                       37,898,226.3
 fixed term
                                  3                                   3                     9                                  9
 deposit
                       39,309,587.9                        39,309,587.9          37,898,226.3                       37,898,226.3
 Total
                                  3                                   3                     9                                  9
Significant investments in debt obligations
                                                                                                                         Unit: RMB
                                           Ending balance                                        Beginning balance
                                                         Actual                                               Actual
           Item               Par        Coupon                      Maturity        Par         Coupon                   Maturity
                                                        interest                                             interest
                             value        rate                        date          value         rate                     date
                                                          rate                                                 rate
 Three-year fixed           37,000,0                                 26 April      37,000,0                               26 Apri
                                           3.80%         3.72%                                    3.80%
 term deposit                  00.00                                 2024             00.00                                l 2024


                                                                   156
Changchai Company, Limited                                                                           Annual Report 2022


                        37,000,0                                          37,000,0
 Total                                  ——       ——           ——                  ——        ——        ——
                           00.00                                             00.00
Changes of carrying amount with significant amount changed of loss provision in the reporting period
□ Applicable √ Not applicable

11. Long-term Equity Investment

                                                                                                               Unit: RMB
                                                   Increase/decrease
                                          Gain     Adjust                                                       Endin
          Begin                                                           Cash                       Endin
                                         or loss    ment                           Withd                           g
           ning                                                          bonus                          g
                                         recogn      of                            rawal                        balanc
          balanc    Additi     Reduc                          Chang         or                       balanc
 Invest                                    ized     other                            of                          e of
             e       onal        ed                            es in     profit                         e
   ees                                    under    compr                           deprec   Other               deprec
          (carryi   invest     invest                          other     annou                       (carryi
                                            the    ehensi                          iation                       iation
            ng       ment       ment                          equity      nced                         ng
                                         equity      ve                            reserv                       reserv
          value)                                                            to                       value)
                                         metho     incom                             es                           es
                                                                          issue
                                             d        e
 II. Associated enterprises
 Beijin
 g
 Tsingh
 ua
 Indust
 rial                                                                                                           44,182
             0.00                                                                                      0.00
 Invest                                                                                                            .50
 ment
 Mana
 gemen
 t Co.,
 Ltd.
 Subtot                                                                                                         44,182
             0.00                                                                                      0.00
 al                                                                                                                .50
                                                                                                                44,182
 Total       0.00                                                                                      0.00
                                                                                                                   .50

12. Other Equity Instrument Investment

                                                                                                               Unit: RMB
                        Item                                      Ending balance               Beginning balance
 Changzhou Synergetic Innovation Private Equity
                                                                         378,929,240.08               146,375,646.53
 Fund (Limited Partnership)




                                                            157
Changchai Company, Limited                                                                        Annual Report 2022


 Other equity instrument investment measured by
                                                                     576,631,000.00               633,502,000.00
 fair value
 Total                                                               955,560,240.08               779,877,646.53

Non-trading equity instrument investment disclosed by category

                                                                                                    Unit: RMB
                                                                                                       Reason for
                                                                 Amount of Reason for assigning
                                                                                                          other
                                                      Accu          other       to measure by fair
                      Dividend                                                                       comprehensi
                                     Accumulative     mulat    comprehensiv       value of which
         Item          income                                                                          ve income
                                        gains           ive     e transferred changes be included to
                     recognized                                                                      transferred to
                                                      losses     to retained other comprehensive
                                                                                                        retained
                                                                  earnings            income
                                                                                                        earnings
Foton Motor Co.,                                                               Non-trading equity
                                     364,261,000.00
Ltd.                                                                              investment
                                                                               Non-trading equity
Bank of Jiangsu       9,360,000.00   127,800,000.00
                                                                                  investment
Changzhou
Synergetic
Innovation                                                                     Non-trading equity
                                     278,929,240.08
Private Equity                                                                    investment
Fund (Limited
Partnership)

Other notes:
The corporate securities of accommodation business still on lending at the period-end: 350,000 shares of Foton
Motor Co., Ltd.

13. Other Non-current Financial Assets

                                                                                                         Unit: RMB
                      Item                               Ending balance                   Beginning balance
Jiangsu   Horizon       New Energy Technology
                                                                   373,500,000.00                    112,500,000.00
Co., Ltd.
Total                                                              373,500,000.00                    112,500,000.00

14. Investment Property

(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
                                                                                                         Unit: RMB
                    Item                            Houses and buildings                         Total
 I. Original carrying value
 1. Beginning balance                                               93,077,479.52                   93,077,479.52

                                                       158
Changchai Company, Limited                                                                  Annual Report 2022


 2. Increased amount of the period
 (1) Outsourcing
 (2) Transfer from inventories/fixed
 assets/construction in progress
 (3) Enterprise combination increase
 3. Decreased amount of the period
 (1) Disposal
 (2) Other transfer
 4. Ending balance                                                93,077,479.52              93,077,479.52
 II. Accumulative depreciation         and
 accumulative amortization
 1. Beginning balance                                             48,480,224.31              48,480,224.31
 2. Increased amount of the period                                 2,436,475.56               2,436,475.56
 (1) Withdrawal or amortization                                    2,436,475.56               2,436,475.56
 3. Decreased amount of the period
 (1) Disposal
 (2) Other transfer
 4. Ending balance                                                50,916,699.87              50,916,699.87
 III. Depreciation reserves
 1. Beginning balance
 2. Increased amount of the period
 (1) Withdrawal
 3. Decreased amount of the period
 (1) Disposal
 (2) Other transfer
 4. Ending balance
 IV. Carrying value
 1. Ending carrying value                                         42,160,779.65              42,160,779.65
 2. Beginning carrying value                                      44,597,255.21              44,597,255.21

15. Fixed Assets

                                                                                                  Unit: RMB
                  Item                         Ending balance                     Beginning balance
 Fixed assets                                              720,061,387.76                   402,915,521.65
 Disposal of fixed assets
 Total                                                     720,061,387.76                   402,915,521.65

(1) List of Fixed Assets

                                                                                                  Unit: RMB

                         Houses and      Machinery         Transportation       Other
         Item                                                                                     Total
                          buildings      equipment           equipment        equipment
                                                     159
Changchai Company, Limited                                                                       Annual Report 2022


I. Original
carrying value
1. Beginning                             1,012,550,535.1
                    457,375,409.95                               15,509,653.38   41,354,837.04   1,526,790,435.49
balance                                                2
2. Increased
amount of the       253,254,929.43       125,801,337.31           4,237,121.43   18,442,087.47     401,735,475.64
period
(1) Purchase                 39,329.44     1,242,576.10            603,856.90     2,296,172.76       4,181,935.20
(2) Transfer
from
                    232,659,718.43       117,139,454.39           3,010,897.32   15,794,897.09     368,604,967.23
construction in
progress
(3) Enterprise
combination          20,555,881.56         7,419,306.82            622,367.21      351,017.62       28,948,573.21
increase
3. Decreased
amount of the                26,299.50    19,654,185.78            614,584.34     2,771,002.52      23,066,072.14
period
(1) Disposal or
                             26,299.50    19,654,185.78            614,584.34     2,771,002.52      23,066,072.14
scrap
4. Ending                                1,118,697,686.6
                    710,604,039.88                               19,132,190.47   57,025,921.99   1,905,459,838.99
balance                                                5
II.
Accumulative
depreciation
1. Beginning
                    309,538,003.02       765,592,089.06          12,399,386.82   35,864,760.69   1,123,394,239.59
balance
2. Increased
amount of the        21,330,936.61        58,002,318.90           1,645,043.30    3,596,006.84      84,574,305.65
period
(1) Withdrawal       18,617,538.65        54,407,073.34           1,103,512.47    3,362,056.95      77,490,181.41
(2) Transfer
from                   2,713,397.96        3,595,245.56            541,530.83      233,949.89        7,084,124.24
combination
3. Decreased
amount of the                23,799.50    19,648,705.40            598,206.35     2,722,626.79      22,993,338.04
period
(1) Disposal or
                             23,799.50    19,648,705.40            598,206.35     2,722,626.79      22,993,338.04
scrap
4. Ending
                    330,845,140.13       803,945,702.56          13,446,223.77   36,738,140.74   1,184,975,207.20
balance
III.Depreciation
reserves


                                                           160
Changchai Company, Limited                                                                              Annual Report 2022


 1. Beginning
                                                480,674.25                                                    480,674.25
 balance
 2. Increased
 amount of the
 period
 (1) Withdrawal
 3. Decreased
 amount of the                                   57,430.22                                                     57,430.22
 period
 (1) Disposal or
                                                 57,430.22                                                     57,430.22
 scrap
 4. Ending
                                                423,244.03                                                    423,244.03
 balance
 IV. Carrying
 value
 1. Ending
                      379,758,899.75        314,328,740.06          5,685,966.70      20,287,781.25       720,061,387.76
 carrying value
 2. Beginning
                      147,837,406.93        246,477,771.81          3,110,266.56       5,490,076.35       402,915,521.65
 carrying value



(2) List of Temporarily Idle Fixed Assets

                                                                                                              Unit: RMB
                             Original        Accumulative          Depreciation
         Item                                                                      Carrying value            Note
                          carrying value     depreciation            reserves
   Machinery
                           476,507.50         53,263.47            423,244.03
   equipment

16. Construction in Progress

                                                                                                              Unit: RMB
                   Item                               Ending balance                       Beginning balance
 Construction in progress                                          30,259,647.16                        268,417,880.66
 Engineering materials                                                 21,900.40                          1,887,810.25
 Total                                                             30,281,547.56                        270,305,690.91
(1) List of Construction in Progress
                                                                                                              Unit: RMB
                                     Ending balance                                   Beginning balance
     Item             Carrying          Depreciatio     Carrying           Carrying       Depreciati        Carrying
                      amount            n reserves       value             amount         on reserves        value




                                                             161
Changchai Company, Limited                                                                         Annual Report 2022


 Expansion
 capacity of
 multi-cylinde                                                     1,097,435.90                      1,097,435.90
 r (The 2nd
 Period)
 Innovation
 capacity
 construction
                   5,443,764.33                   5,443,764.33     3,714,601.76                      3,714,601.76
 of
 technology
 center
 Relocation
 project     of                                                   254,748,122.4                     254,748,122.4
                  11,155,119.70                  11,155,119.70
 light engine                                                                 9                                 9
 and casting
 Equipment to
 be installed
                  13,660,763.13                  13,660,763.13     8,857,720.51                      8,857,720.51
 and payment
 for projects
                                                                  268,417,880.6                     268,417,880.6
 Total            30,259,647.16                  30,259,647.16
                                                                              6                                 6
(2) Changes in Significant Construction in Progress during the Reporting Period
                                                                                                         Unit: RMB
                                                              Propo                         Of
                                                               rtion                     which     Capit
                                                                 of            Accu          :     alizati
                                                               accu            mulat      Amo        on
                                                              mulat               ed     unt of     rate
                                     Trans    Other
                  Begin      Incre                    Endin      ed            amou      capita       of     Capit
                                     ferred   decre                     Job
          Budg    ning       ased                       g     invest            nt of     lized    intere      al
 Item                                   in     ased                    sched
           et     balan      amou                     balan    ment            intere    intere    sts for   resou
                                      fixed   amou                      ule
                   ce          nt                      ce        in               st     sts for     the      rces
                                     assets     nt
                                                              constr           capita       the    Repor
                                                               uctio            lizati   Repor      ting
                                                               ns to              on       ting    Perio
                                                              budge                      Perio        d
                                                                  t                          d




                                                       162
Changchai Company, Limited                                                                                    Annual Report 2022


 Expa
 nsion
 capac
 ity of
 multi-             1,097                 1,097
                                                                                   Comp                                Self-r
 cylin               ,435.                 ,435.
                                                                                    leted                              aised
 der                   90                     90
 (The
 2nd
 Perio
 d)
 Innov
 ation
 capac
 ity                                                                                                                   Self-r
           96,06    3,714      1,950                            5,443              Unco                                aised
 constr                                   221,7                            5.90
           6,200     ,601.      ,929.                            ,764.             mplet                               and
 uctio                                    66.66                              %                                         raised
              .00      76          23                               33               ed
 n of                                                                                                                  funds
 techn
 ology
 center
 Reloc
 ation
 proje
                                                                                                                       Self-r
 ct of     474,7    254,7      120,7      361,1      3,240      11,15              Unco                                aised
 light     06,00    48,27      75,06      28,21       ,000.    5,119.     79.11    mplet                               and
 engin      0.00     2.15       5.42       7.87         00         70        %       ed                                raised
                                                                                                                       funds
 e and
 castin
 g
           570,7    259,5      122,7      362,4      3,240      16,59
 Total     72,20    60,30      25,99      47,42       ,000.     8,884      --        --                                   --
            0.00     9.81       4.65       0.43         00        .03
(3) Engineering Materials
                                                                                                                    Unit: RMB
                                  Ending balance                                            Beginning balance
                                        Depreciati
    Item            Carrying                             Carrying               Carrying       Depreciation       Carrying
                                            on
                    amount                                value                 amount           reserves          value
                                         reserves
 Engineerin
                     21,900.40                                21,900.40     1,887,810.25                        1,887,810.25
 g materials
 Total               21,900.40                                21,900.40     1,887,810.25                        1,887,810.25




                                                                 163
Changchai Company, Limited                                                                    Annual Report 2022


17. Intangible Assets

(1) List of Intangible Assets
                                                                                                    Unit: RMB
                                                                              Trademark use
          Item               Land use right     Software       License fee                           Total
                                                                                  right
 I. Original carrying
 value
 1. Beginning balance        206,783,546.68    15,736,719.66   5,488,000.00    1,650,973.47     229,659,239.81
 2. Increased amount of
 the period                     7,404,229.03    2,110,482.48     50,000.00                         9,564,711.51
 (1) Purchase                                   1,933,758.50                                       1,933,758.50
 (2) Internal R&D
 (3) Business
 combination increase           7,404,229.03     176,723.98      50,000.00                         7,630,953.01
 3. Decreased amount of
 the period
 (1) Disposal
 4. Ending balance           214,187,775.71    17,847,202.14   5,538,000.00    1,650,973.47     239,223,951.32
 II. Accumulated
 amortization
 1. Beginning balance         58,805,643.96    12,856,960.12   2,652,533.14      189,356.68      74,504,493.90
 2. Increased amount of
 the period                     5,026,881.78    1,539,099.16    594,217.03       167,041.92        7,327,239.89
 (1) Withdrawal                 4,298,126.15    1,426,192.17    551,717.03       167,041.92        6,443,077.27
 (2) Combination
 increase                        728,755.63      112,906.99      42,500.00                           884,162.62
 3. Decreased amount of
 the period
 (1) Disposal
 4. Ending balance            63,832,525.74    14,396,059.28   3,246,750.17      356,398.60      81,831,733.79
 III. Depreciation
 reserves
 1. Beginning balance
 2. Increased amount of
 the period
 (1) Withdrawal
 3. Decreased amount of
 the period
 (1) Disposal
 4. Ending balance
 IV. Carrying value




                                                      164
Changchai Company, Limited                                                                             Annual Report 2022


 1. Ending carrying
 value                        150,355,249.97        3,451,142.87      2,291,249.83      1,294,574.87     157,392,217.54
 2. Beginning carrying
 value                        147,977,902.72        2,879,759.54      2,835,466.86      1,461,616.79     155,154,745.91

18. Long-term Prepaid Expenses

                         Beginning                                Amortized
         Item                                  Increase                               Decrease         Ending balance
                          balance                                  amount
 Trademark
                             110,345.30         105,518.03           13,893.01                              201,970.32
 renewal fee
 External power
 line access                                  3,240,000.00          162,000.00                            3,078,000.00
 project
         Total               110,345.30       3,345,518.03          175,893.01                            3,279,970.32


19. Deferred Income Tax Assets/Deferred Income Tax Liabilities

(1) Deferred Income Tax Assets that Had not Been Off-set
                                                                                                             Unit: RMB
                                          Ending balance                              Beginning balance
                               Deductible                                     Deductible
           Item                                    Deferred income                               Deferred income
                               temporary                                      temporary
                                                      tax assets                                    tax assets
                               difference                                     difference
 Bad debt provision              6,853,948.19              1,048,165.04           7,196,880.38           1,087,755.38
 Deductible loss               149,230,051.55             24,713,867.00          59,064,221.02           9,085,419.14
 Inventory     falling
                                 2,633,715.26                395,057.29           2,990,223.81             448,533.57
 price reserves
 Impairment of fixed
                                   423,244.03                 63,486.60            480,674.25                72,101.14
 assets
 Total                         159,140,959.03             26,220,575.93          69,731,999.46          10,693,809.23
(2) Deferred Income Tax Liabilities Had Not Been Off-set
                                                                                                             Unit: RMB
                                          Ending balance                              Beginning balance
           Item          Taxable temporary         Deferred income        Taxable temporary      Deferred income
                             difference             tax liabilities           difference          tax liabilities
 Assets evaluation
 appreciation for
 business
                                 5,677,718.36                851,657.75           3,643,147.16             546,472.07
 combination not
 under the same
 control



                                                            165
Changchai Company, Limited                                                                            Annual Report 2022


 Changes of fair
                              1,039,472,114.80           160,508,593.58         720,658,981.89        116,797,689.04
 value
 Total                        1,045,149,833.16           161,360,251.33         724,302,129.05        117,344,161.11
(3) List of Unrecognized Deferred Income Tax Assets
                                                                                                               Unit: RMB
                   Item                                Ending balance                       Beginning balance
 Bad debt provision                                                177,160,942.15                     204,612,644.18
 Falling     price        reserves    of
                                                                    36,829,892.48                      32,833,681.27
 inventories
 Deductible loss                                                    22,257,409.96                      14,716,019.78
 Total                                                             236,248,244.59                     252,162,345.23

(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
            Years                      Ending amount                 Beginning amount                 Note
 2022                                                                          434,000.66
 2023                                         1,146,746.13                     940,673.56
 2024                                         3,605,384.25                   6,538,363.99
 2025                                         5,250,820.81                   2,279,179.37
 2026                                         7,372,277.94                   4,523,802.20
 2027                                         4,882,180.83
 Total                                       22,257,409.96                  14,716,019.78                 --

20. Other Non-current Assets

                                                                                                               Unit: RMB
                                     Ending balance                                   Beginning balance
                                      Depreciati                                         Depreciati
     Item            Carrying                                              Carrying
                                          on          Carrying value                         on       Carrying value
                     amount                                                amount
                                       reserves                                           reserves
 Advances
 payment of           670,735.93                         670,735.93       4,543,240.88                    4,543,240.88
 equipments
 Total                670,735.93                         670,735.93       4,543,240.88                    4,543,240.88


21. Short-term Borrowings

(1) Category of Short-term Borrowings
                                                                                                               Unit: RMB
                   Item                                Ending balance                       Beginning balance
 Mortgage loans                                                      7,000,000.00                         7,000,000.00
 Guaranteed loans                                                                                         5,000,000.00
 Obligation to pay bills discounted
                                                                   108,437,700.65                      61,971,466.65
 before maturity


                                                             166
Changchai Company, Limited                                                                         Annual Report 2022


 Total                                                         115,437,700.65                        73,971,466.65
(2) There Was No Short-term Borrowings Overdue but Unpaid.

22. Notes Payable

                                                                                                         Unit: RMB
               Category                           Ending balance                        Beginning balance
 Bank acceptance bill                                          471,876,397.72                      550,774,400.00
 Total                                                         471,876,397.72                      550,774,400.00
At the end of the current period, there were no notes payable due and not paid.

23. Accounts Payable

(1) List of Accounts Payable
                                                                                                         Unit: RMB
                 Item                             Ending balance                        Beginning balance
 Payment for goods                                             747,010,098.88                      666,186,668.82
 Total                                                         747,010,098.88                      666,186,668.82

(2) Significant Accounts Payable Aging over One Year
                 Item                             Ending balance                   Unpaid/ Un-carry-over reason
                                                                                Supplier terminates cooperation,
 Payment for goods                                              53,297,351.52
                                                                                pending payment
 Payment for equipment                                          40,637,976.87   Equipment warranty
 Total                                                          93,935,328.39


24. Advances from Customers
                                                                                                         Unit: RMB
                 Item                             Ending balance                        Beginning balance
 Advance payment of house rent                                    837,425.55                           660,965.62
 Total                                                            837,425.55                           660,965.62
There were no significant advances from customers aging over one year at the end of the period.

25. Contract Liabilities

                                                                                                         Unit: RMB
                 Item                             Ending balance                        Beginning balance
 Contract liabilities                                           32,843,692.83                        26,864,081.97
 Total                                                          32,843,692.83                        26,864,081.97
There were no significant contract liabilities aging over one year at the end of the period.




                                                         167
Changchai Company, Limited                                                         Annual Report 2022


26. Payroll Payable

(1) List of Payroll Payable
                                                                                         Unit: RMB
                                Beginning
           Item                                  Increase         Decrease        Ending balance
                                 balance
 I. Short-term salary           45,385,667.48   279,381,408.55   275,616,053.56     49,151,022.47
 II.Post-employment
 benefit-defined                                 37,243,881.82    37,243,881.82
 contribution plans
 III. Termination
                                                    459,903.90      259,903.90         200,000.00
 benefits
 IV. Current portion of
 other benefits
 Total                          45,385,667.48   317,085,194.27   313,119,839.28     49,351,022.47


(2) List of Short-term Salary
                                                                                         Unit: RMB
                                Beginning
           Item                                  Increase         Decrease        Ending balance
                                 balance
 1.    Salary,    bonus,
                                37,375,772.77   229,118,091.49   225,610,345.49     40,883,518.77
 allowance, subsidy
 2.Employee welfare                  1,592.74     3,138,764.51     3,138,764.51          1,592.74
 3. Social insurance                             21,460,410.40    21,460,410.40
 Of which: Medical
                                                 17,834,836.44    17,834,836.44
 insurance premiums
 Work-related       injury
                                                  2,049,942.68     2,049,942.68
 insurance
 Maternity insurance                              1,575,631.28     1,575,631.28
 4. Housing fund                                 21,244,377.54    21,244,377.54
 5.Labor union budget
 and employee education          8,008,301.97     4,419,764.61     4,162,155.62      8,265,910.96
 budget
 6. Short-term absence
 with salary
 7. Short-term profit
 sharing scheme
 Total                          45,385,667.48   279,381,408.55   275,616,053.56     49,151,022.47


(3) List of Defined Contribution Plans
                                                                                         Unit: RMB
                                Beginning
           Item                                 Increase          Decrease        Ending balance
                                 balance


                                                 168
Changchai Company, Limited                                                          Annual Report 2022


 1. Basic pension
                                            36,127,234.70          36,127,234.70
 benefits
 2. Unemployment
                                             1,116,647.12           1,116,647.12
 insurance
 3. Enterprise annuities
 Total                                      37,243,881.82          37,243,881.82



27. Taxes Payable

                                                                                          Unit: RMB
                  Item                 Ending balance                     Beginning balance
 VAT                                                2,240,512.82                        372,401.11
 Corporate income tax                               1,272,876.86                        470,363.07
 Personal income tax                                   68,629.73                          76,559.47
 Urban maintenance and
                                                    1,151,395.75                        957,520.42
 construction tax
 Property tax                                       1,172,973.71                      1,160,865.33
 Land use tax                                       1,041,594.39                      1,026,217.69
 Stamp duty                                          286,018.61                           44,759.84
 Education Surcharge                                 229,345.14                           90,862.46
 Comprehensive fees                                 1,075,134.76                      1,075,134.76
 Environmental protection tax                          31,693.62                          31,694.67
 Total                                              8,570,175.39                      5,306,378.82

28. Other Payables

                                                                                          Unit: RMB
                  Item                 Ending balance                     Beginning balance
 Interest payable
 Dividends payable                                  3,891,433.83                      3,891,433.83
 Other payables                                   156,155,449.10                    144,469,939.46
 Total                                            160,046,882.93                    148,361,373.29
(1) Dividends Payable
                                                                                          Unit: RMB

                  Item                 Ending balance                     Beginning balance
 Ordinary share dividends                           3,243,179.97                       3,243,179.97
 Interest of preferred shares/
 perpetual bond classified as equity
 instrument
 Dividends for non-controlling
                                                      648,253.86                         648,253.86
 shareholders


                                            169
Changchai Company, Limited                                                                      Annual Report 2022


 Other
 Total                                                        3,891,433.83                         3,891,433.83
The reason for non-payment for over one year: Not gotten by shareholders yet.
(2) Other Payables
1) Other Payables Listed by Nature of Account
                                                                                                      Unit: RMB
                   Item                         Ending balance                       Beginning balance
 Margin & cash pledged                                        4,293,474.88                        5,045,246.58
 Intercourse funds among units                                7,831,477.01                        8,364,769.41
 Intercourse funds among
                                                               397,761.04                           402,661.04
 individuals
 Sales    discount         and    three
                                                            126,787,544.75                      114,581,855.32
 guarantees
 Other                                                       16,845,191.42                       16,075,407.11
 Total                                                      156,155,449.10                      144,469,939.46
2) Significant Other Payables Aging over One Year
The significant other payables aging over one year at the period-end mainly referred to the unsettled temporary
credits and charges owned.

29. Other Current Liabilities

                                                                                                      Unit: RMB
                   Item                         Ending balance                       Beginning balance
 Sale service fee                                              806,555.29                           460,437.94
 Transportation storage fee                                    597,090.12                           870,397.06
 Electric charge                                              1,467,332.18                        3,131,920.88
 Tax to be transferred                                        2,821,340.54                        2,250,515.65
 Estimated share value added tax                              1,909,715.09                        3,989,913.45
 Obligation to pay bills transferred
                                                             66,395,231.83                       72,391,302.15
 before maturity
 Other withholding expenses                                   4,648,476.11                        5,843,705.66
 Total                                                       78,645,741.16                       88,938,192.79

30. Deferred Income

                                                                                                      Unit: RMB
                          Beginning                                                               Reason for
         Item                             Increase            Decrease       Ending balance
                           balance                                                                formation
 Government                                                                                     Government
                          39,615,355.40                       3,409,729.46      36,205,625.94
 grants                                                                                         appropriation
 Total                    39,615,355.40                       3,409,729.46      36,205,625.94         --
Item involving government grants:
                                                                                                      Unit: RMB


                                                      170
Changchai Company, Limited                                                                              Annual Report 2022


                                                  Amount
                                                  recorded       Amount
                                        Amou         into        recorded     Amount                           Related
                             Beginni     nt of    non-oper      into other     offset      Other   Ending          to
          Item                 ng        new        ating       income in    cost in the   chan    balanc      assets/re
                             balance    subsid   income in          the      Reporting      ges      e           lated
                                           y          the       Reporting      Period                          income
                                                 Reporting        Period
                                                   Period
 National        major
 project        special
 allocations- Flexible        13,040,                           1,519,266.                         11,521,      Related
 processing production         367.00                                   00                         101.00      to assets
 line for cylinders of
 diesel engines
                                                                                                   17,847
                              18,513,                           665,973.6                                       Related
 Remove                                                                                             ,790.3
                               763.98                                   2                                      to assets
 compensation                                                                                            6
 Research and
 development and
 industrialization
 allocations of national      8,061,2                           1,224,489.                          6,836,      Related
 III/IV standard                24.42                                   84                         734.58      to assets
 high-powered
 efficient diesel engine
 for agricultural use

31. Share Capital

                                                                                                              Unit: RMB
                                                      Increase/decrease (+/-)
                 Beginning                                      Bonus                                         Ending
                                New shares       Bonus
                  balance                                     issue from        Other        Subtotal         balance
                                  issued         shares
                                                                 profit
 The sum of      705,692,50                                                                                 705,692,50
 shares                7.00                                                                                       7.00

32. Capital Reserves

                                                                                                              Unit: RMB
          Item                Beginning balance           Increase              Decrease           Ending balance
 Capital premium
                                  620,338,243.21                                                        620,338,243.21
 (premium on stock)
 Other capital reserves            20,337,975.19             -542,255.39                                 19,795,719.80
 Total                            640,676,218.40             -542,255.39                                640,133,963.01


                                                          171
Changchai Company, Limited                                                                           Annual Report 2022


Other notes, including changes and reasons thereof:
Increase for the current period: The original shareholding ratio of the parent company to the subsidiary company
Changzhou Changchai Horizon Agricultural Equipment Co., Ltd. (hereinafter referred to as “Horizon Agricultural
Equipment”) is 95%. The original minority shareholders of Horizon Agricultural Equipment transferred their 5%
shares to the parent company for free this year, and was included in long-term equity investment and capital
surplus as 5% of the opening net assets of Horizon Agricultural Equipment.

33. Other Comprehensive Income

                                                                                                            Unit: RMB
                                                                     Reporting Period
                                                                       Less:
                                                                     Record
                                                           Less:       ed in
                                                        Recorded       other
                                                         in other    compre
                                                        comprehe      hensiv              Attribu
                                                           nsive         e                table to   Attribu
                                             Income
                                                        income in    income               owners     table to
                                              before                             Less:                          Endin
                                  Beginni                  prior     in prior              of the    non-co
                                             taxatio                            Income                            g
             Item                   ng                    period      period              Compa      ntrollin
                                             n in the                             tax                           balan
                                  balance                   and         and                ny as         g
                                             Curren                             expens                           ce
                                                        transferre   transfe                 the     interest
                                                 t                                 e
                                                            d in      rred in              parent     s after
                                              Period
                                                         profit or   retaine                after       tax
                                                          loss in        d                   tax
                                                            the      earning
                                                         Current     s in the
                                                          Period     Curren
                                                                         t
                                                                      Period
 I. Other comprehensive                      175,68                                       149,33                655,3
                                  506,011,                                      26,352,
 income that will not be                     2,593.5                                      0,204.5               41,70
                                   499.55                                       389.03
 reclassified to profit or loss                    5                                            2                4.07
 Of which: Changes caused
 by re-measurements on
 defined benefit pension
 schemes
 Share         of        other
 comprehensive income of
 investees that will not be
 reclassified to profit or loss
 under equity method



                                                          172
Changchai Company, Limited                                                                    Annual Report 2022


 Changes in fair value of                     175,68                               149,33               655,3
                                   506,011,                             26,352,
 other equity instrument                      2,593.5                              0,204.5              41,70
                                    499.55                              389.03
 investment                                         5                                    2               4.07
 Changes in fair value of
 corporate credit risk
 II. Other comprehensive
 income         that       may
 subsequently                be
 reclassified to profit or loss
 Of which: Share of other
 comprehensive income of
 investees that will be
 reclassified to profit or loss
 under equity method
 Changes in fair value of
 investment in other debt
 obligations
 Amount of financial assets
 reclassified  to     other
 comprehensive income
 Credit          depreciation
 reserves of investment in
 other debt obligations
 Reserves for cash flow
 hedges
 Differences arising from
 translation    of    foreign
 currency-denominated
 financial statements
                                              175,68                               149,33               655,3
 Total      of       other         506,011,                             26,352,
                                              2,593.5                              0,204.5              41,70
 comprehensive income               499.55                              389.03
                                                    5                                    2               4.07

34. Specific Reserve

                                                                                                    Unit: RMB
          Item            Beginning balance             Increase        Decrease             Ending balance
 Safety    production
                                  18,812,950.04          4,877,232.12    4,841,325.41           18,848,856.75
 cost
 Total                            18,812,950.04          4,877,232.12    4,841,325.41           18,848,856.75




                                                          173
Changchai Company, Limited                                                                           Annual Report 2022


35. Surplus Reserves

                                                                                                               Unit: RMB
          Item             Beginning balance                Increase            Decrease           Ending balance
 Statutory       surplus
                                  320,987,630.56            15,053,237.26                            336,040,867.82
 reserves
 Discretional surplus
                                   13,156,857.90                                                       13,156,857.90
 reserves
 Total                            334,144,488.46            15,053,237.26                            349,197,725.72

36. Retained Earnings

                                                                                                               Unit: RMB
                           Item                                  Reporting Period          Same period of last year
 Beginning balance of retained earnings            before
                                                                       872,212,354.88                777,899,079.66
 adjustments
 Total retained earnings at the beginning of the
 adjustment period (“+” means up, “-” means
 down)
 Beginning balance of retained earnings             after
                                                                       872,212,354.88                777,899,079.66
 adjustments
 Add: Net profit attributable to owners of the
                                                                        76,684,796.91                103,006,232.54
 Company as the parent
 Less: Withdrawal of statutory surplus reserves                         15,053,237.26                   8,692,957.32
       Withdrawal of discretional surplus
 reserves
         Withdrawal of general reserve
         Dividend of ordinary shares payable                            18,348,005.18
       Dividends of ordinary shares transferred as
 share capital
 Ending retained earnings                                              915,495,909.35                872,212,354.88
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the
Accounting Standards for Business Enterprises and relevant new regulations.
(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.
(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same
control.
(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.

37. Operating Revenue and Cost of Sales

                                                                                                               Unit: RMB
          Item                           Reporting Period                           Same period of last year

                                                              174
Changchai Company, Limited                                                                        Annual Report 2022


                              Operating revenue       Cost of sales       Operating revenue      Cost of sales
 Main operations               2,145,567,983.95      1,924,209,350.48      2,404,119,747.06     2,051,932,677.42
 Other operations                 36,475,111.66         24,467,686.04         48,310,768.54        32,739,084.66
 Total                         2,182,043,095.61      1,948,677,036.52      2,452,430,515.60     2,084,671,762.08
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses is
negative
√ Yes □ No
                                                                                                Unit: RMB
            Item                      2022           Specific deduction         2021           Specific deduction
                                                     The main business                         The main business
                                                     of the Company is                         of the Company is
                                                     the production and                        the production and
 Operating revenue               2,182,043,095.61                           2,452,430,515.60
                                                     sales of diesel                           sales of diesel
                                                     engines and                               engines and
                                                     gasoline engines                          gasoline engines
 Total            operating                          Other business                            Other business
 income               with          36,475,111.66    income other than         48,310,768.54   income other than
 deduction                                           main operations                           main operations
 The proportion of
 total operating income
                                             1.67%                                     1.97%
 with deduction in
 operating revenue
 I. Business income not
 related to the main
 business
 1. Other business
 income           outside
 normal business. E.g.,
 income from the lease
 of      fixed     assets,
 intangible        assets,
 packaging materials,
 sales         materials,
                                                     Income from sales                         Income from sales
 non-monetary       asset
                                                     of materials,                             of materials,
 exchange            with           36,475,111.66                              48,310,768.54
                                                     housing rental                            housing rental
 materials            and
                                                     fees, property and                        fees, property and
 operation of entrusted
                                                     utility charges                           utility charges
 management business,
 and income that is
 included      in      the
 income from primary
 business but is outside
 the normal business of
 the listed company.
                                                     Income from sales                         Income from sales
 Subtotal of business                                of materials,                             of materials,
 income not related to              36,475,111.66    housing rental            48,310,768.54   housing rental
 the main business                                   fees, property and                        fees, property and
                                                     utility charges                           utility charges
 II. Income without
 commercial substance
 Subtotal    of    income                     0.00   None                               0.00   None

                                                            175
Changchai Company, Limited                                                                            Annual Report 2022


 without commercial
 substance
 III. Other income not
 related to the main
                                          0.00    None                                0.00      None
 business or without
 commercial substance
                                                  Diesel engines,                               Diesel engines,
 Operating      revenue                           gasoline engines                              gasoline engines
                               2,145,567,983.95                            2,404,119,747.06
 after deduction                                  and fittings                                  and fittings
                                                  business                                      business

Relevant information of revenue:
                                                                                                            Unit: RMB
                          Category of contracts                                               Total
 Product Types
 Of which:
 Single-cylinder diesel engines                                                                       814,545,044.55
 Multi-cylinder diesel engines                                                                    1,055,889,184.19
 Other products                                                                                       212,223,234.20
 Fittings                                                                                              62,910,521.01
 Classified by business area
 Of which:
 Sales in domestic market                                                                         1,821,370,757.82
 Export sales                                                                                         324,197,226.13
 Total                                                                                            2,145,567,983.95
Information related to performance obligations: none

38. Taxes and Surtaxes

                                                                                                            Unit: RMB
                  Item                            Reporting Period                 Same period of last year
 Urban maintenance and
                                                                2,905,289.19                            1,472,605.59
 construction tax
 Education surcharge                                            2,073,990.11                            1,051,826.51
 Property tax                                                   6,312,819.28                            6,157,554.67
 Land use tax                                                   4,474,736.13                            5,226,882.22
 Vehicle and vessel use tax                                          3,092.64                                2,875.00
 Stamp duty                                                      898,751.20                               969,210.59
 Environment tax                                                 293,572.90                               204,133.44
 Other                                                            10,944.81                                 40,860.94
 Total                                                         16,973,196.26                           15,125,948.96




                                                         176
Changchai Company, Limited                                                      Annual Report 2022


39. Selling Expense

                                                                                       Unit: RMB
                 Item                 Reporting Period             Same period of last year
 Employee benefits                                 41,414,480.36                  42,968,060.55
 Office expenses                                    9,191,582.99                  11,247,378.94
 Sales promotional expense                                                         1,435,536.25
 Three guarantees                                  50,709,187.02                  60,722,393.46
 Transport charge                                                                    320,853.84
 Other                                              1,314,973.34                     548,067.28
 Total                                            102,630,223.71                 117,242,290.32

40. Administrative Expense

                                                                                       Unit: RMB
                 Item                 Reporting Period             Same period of last year
 Employee benefits                                 62,242,258.03                  51,646,790.82
 Office expenses                                    9,510,389.69                   9,359,397.93
 Depreciation and amortization                     16,116,539.74                   9,925,872.31
 Safety expenses                                    4,877,232.12                   4,023,200.24
 Repair charge                                      1,736,442.58                   1,985,784.26
 Inventory scrap and inventory loss
                                                     -333,858.14                   5,218,542.74
 (profit)
 Other                                             25,362,185.70                  16,730,695.92
 Total                                            119,511,189.72                  98,890,284.22

41. Development Costs

                                                                                       Unit: RMB
                 Item                 Reporting Period             Same period of last year
 Direct input expense                              43,996,939.37                  49,871,973.96
 Employee benefits                                 24,608,063.95                  21,059,641.45
 Depreciation and amortization                      4,570,577.95                   4,240,194.24
 Design costs                                                                        250,000.00
 Entrusted development charges                      6,509,898.89                   5,521,861.13
 Other                                              1,554,116.90                   1,446,613.36
 Total                                             81,239,597.06                  82,390,284.14


42. Finance Costs

                                                                                       Unit: RMB
                 Item                 Reporting Period             Same period of last year


                                            177
Changchai Company, Limited                                                                       Annual Report 2022


 Interest expense                                               1,993,453.71                        5,907,625.42
 Less: Interest income                                         12,804,077.19                        7,921,535.62
 Net foreign exchange gains or
                                                               -10,929,750.57                       3,969,634.63
 losses
 Other                                                            150,669.42                         -752,108.63
 Total                                                         -21,589,704.63                       1,203,615.80


43. Other Income

                                                                                                        Unit: RMB
              Sources                              Reporting Period                 Same period of last year
 Government      grants     directly
 recorded into the current profit or                            3,749,273.00                        4,234,711.29
 loss
 Government grants       related   to
                                                                3,409,729.46                        2,364,382.20
 deferred income
 Others                                                            25,025.59                           34,238.89



44. Investment Income

                                                                                                        Unit: RMB
                         Item                                   Reporting Period        Same period of last year
 Long-term equity investment income accounted by
 equity method
 Investment income from disposal of long-term
 equity investment
 Investment income from holding of trading
 financial assets
 Investment income from disposal of trading
                                                                            12,262.47                 450,637.63
 financial assets
 Dividend income from holding of other equity
                                                                         9,360,000.00               7,394,400.00
 instrument investment
 Income from re-measurement of residual stock
 rights at fair value after losing control power
 Interest income from holding of investment in debt
                                                                         1,411,361.54
  obligations
 Interest income from holding of investment in
 other debt obligations
 Investment income from disposal of investment in
 other debt obligations
 Income from debt reorganization



                                                         178
Changchai Company, Limited                                                                    Annual Report 2022


 Investment income from disposal of other
                                                                                                  -221,711.92
 non-current financial assets
 Dividend income from holding of held-for-trading
                                                                        296,740.00                 189,085.80
 financial assets
 Income from refinancing operations                                     136,003.96               1,028,964.68
 Investment income from financial products                            5,995,552.35               2,292,008.67
 Forward income from foreign exchange settlement                                                    63,235.00
 Accounts receivable financing-discount interest of
                                                                     -9,242,453.13              -1,869,322.91
 bank acceptance bills
 Total                                                                7,969,467.19               9,327,296.95

45. Gain on Changes in Fair Value

                                                                                                     Unit: RMB
               Sources                          Reporting Period                 Same period of last year
 Held-for-trading financial assets                          -40,756,542.83                      70,820,498.36
 Other non-current financial assets                         186,000,000.00                      33,750,000.00
 Total                                                      145,243,457.17                     104,570,498.36

46. Credit Impairment Loss

                                                                                                     Unit: RMB
                Item                            Reporting Period                 Same period of last year
 Bad debt loss of other receivables                             172,411.52                        -562,856.87
 Bad debt loss of accounts
                                                             -3,126,152.25                     -51,454,294.95
 receivable
 Total                                                       -2,953,740.73                     -52,017,151.82

47. Asset Impairment Loss

                                                                                                     Unit: RMB
                         Item                               Reporting Period         Same period of last year
 I. Bad debt loss
 II. Loss on inventory valuation and contract
                                                                    -14,367,197.27              -8,676,024.20
 performance cost
 III. Impairment loss on long-term equity
 investment
 IV. Impairment loss on investment property
 V. Impairment loss on fixed assets
 VI. Impairment loss on engineering materials
 VII. Impairment loss on construction in progress
 VIII. Impairment loss on productive living assets
 IX. Impairment loss on oil and gas assets


                                                      179
Changchai Company, Limited                                                                          Annual Report 2022


 X. Impairment loss on intangible assets
 XI. Impairment loss on goodwill
 XII. Other
 Total                                                                  -14,367,197.27                -8,676,024.20

48. Asset Disposal Income

                                                                                                           Unit: RMB
                Sources                         Reporting Period                       Same period of last year
 Disposal income of fixed assets                                    393,161.73                           155,515.49

49. Non-operating Income

                                                                                                           Unit: RMB
                                                                                            Amount recorded in the
              Item                 Reporting Period             Same period of last year     current non-recurring
                                                                                                 profit or loss
 Income from scrap of
                                            236,284.29                           5,825.24                236,284.29
 fixed assets
 Income from scrap of
                                                                           2,089,369.81
 construction in progress
 Income from penalty                         93,140.00                       398,143.00                   93,140.00
 Accounts not required to
                                           1,714,502.08                    1,429,558.71                1,714,502.08
 be paid
 Negative goodwill
 generated from
                                           1,904,132.58                                                1,904,132.58
 combination not under
 the same control
 Other                                      309,883.70                       115,000.00                  309,883.70
 Total                                     4,257,942.65                    4,037,896.76                4,257,942.65

50. Non-operating Expense

                                                                                                           Unit: RMB
                                                                                            Amount recorded in the
              Item                 Reporting Period             Same period of last year     current non-recurring
                                                                                                 profit or loss
 Retirement     loss      of
                                            148,926.11                        22,405.72                  148,926.11
 non-current assets
 Compensation for quality                   208,884.78                       507,265.91                  208,884.78
 Donation                                   168,300.00                                                   168,300.00
 Other                                       92,352.67                     1,107,361.42                   92,352.67
 Total                                      618,463.56                     1,637,033.05                  618,463.56



                                                          180
Changchai Company, Limited                                                                  Annual Report 2022


51. Income Tax Expense

(1) List of Income Tax Expense
                                                                                                   Unit: RMB
                 Item                            Reporting Period              Same period of last year
 Current income tax expense                                     1,267,934.70                     443,034.91
 Deferred income tax expense                                    1,930,017.97                  15,999,671.86
 Adjustment of income tax of prior
                                                                 -733,872.93                  -4,073,920.19
 years
 Total                                                          2,464,079.74                  12,368,786.58
(2) Adjustment Process of Accounting Profit and Income Tax Expense
                                                                                                   Unit: RMB
                                      Item                                          Reporting Period
 Profit before taxation                                                                       81,710,212.20
 Current income tax expense accounted at statutory/applicable tax rate                        12,256,531.82
 Influence of applying different tax rates by subsidiaries                                    -7,278,933.33
 Influence of income tax before adjustment                                                      -733,872.93
 Influence of non-taxable income                                                              -1,430,654.07
 Influence of non-deductable costs, expenses and losses                                        3,725,995.40
 Influence of deductable losses of unrecognized deferred income tax at the
                                                                                                 172,794.49
 beginning of the Reporting Period
 Influence of deductable temporary difference or deductable losses of
                                                                                               4,019,365.61
 unrecognized deferred income tax assets in the Reporting Period
 Tax preference from eligible expenditures                                                    -8,267,147.25
 Income tax expense                                                                            2,464,079.74

52. Other Comprehensive Income

See Note 33 for details.

53. Cash Flow Statement

(1) Cash Generated from Other Operating Activities
                                                                                                   Unit: RMB
                 Item                            Reporting Period              Same period of last year
 Subsidy and appropriation                                      3,751,451.59                   4,240,292.03
 Other intercourses in cash                                     4,962,530.66                   6,603,764.28
 Interest income                                               12,804,077.19                   7,921,535.62
 Other                                                          1,472,234.00                   3,871,134.26
 Total                                                         22,990,293.44                  22,636,726.19
(2) Cash Used in Other Operating Activities
                                                                                                   Unit: RMB
                 Item                            Reporting Period              Same period of last year


                                                         181
Changchai Company, Limited                                                                         Annual Report 2022


 Selling and administrative expense
                                                                89,311,871.19                      101,602,750.69
 paid in cash
 Handling charges                                                1,212,912.33                         1,220,112.47
 Other                                                          16,260,652.67                        15,807,386.22
 Other transactions                                              1,405,188.05                        23,381,748.58
 Total                                                         108,190,624.24                      142,011,997.96
(3) Cash Generated from Other Investing Activities
                                                                                                            Unit: RMB
                 Item                            Reporting Period                     Same period of last year
Cash and cash equivalents from
                                                                 11,400,123.61
combination of subsidiary
Total                                                            11,400,123.61
(4) Cash Used in Other Investing Activities
                                                                                                            Unit: RMB
                    Item                            Reporting Period                  Same period of last year
Accounts receivable financing-discount
                                                                                                       1,869,322.91
interest from bank acceptance bills
                  Total                                                                                1,869,322.91

(5) Cash Generated from Other Financial Activities
                                                                                                            Unit: RMB
                    Item                             Reporting Period                  Same period of last year
Discount of bank acceptance bills with
                                                                 128,437,700.65                        58,971,466.65
low credit rating
                    Total                                        128,437,700.65                        58,971,466.65

(6) Cash Used in Other Financial Activities
                                                                                                            Unit: RMB
                 Item                             Reporting Period                     Same period of last year
Intermediary agency fees for private
                                                                                                       10,849,056.61
placement
Discount of bank acceptance bills
                                                                  83,623,545.07                         3,772,107.02
with low credit rating
                Total                                             83,623,545.07                        14,621,163.63


54. Supplemental Information for Cash Flow Statement

(1) Supplemental Information for Cash Flow Statement
                                                                                                            Unit: RMB
                                                                                              Same period of last
                    Supplemental information                           Reporting Period
                                                                                                    year
 1. Reconciliation of net profit to net cash flows generated
                                                                                 --                    --
 from operating activities
 Net profit                                                                 79,246,132.46          102,931,874.37


                                                        182
Changchai Company, Limited                                                                       Annual Report 2022


 Add: Provision for impairment of assets                                      17,320,938.00        60,693,176.02
 Depreciation of fixed assets, of oil and gas assets, of
                                                                              79,926,656.97        76,128,177.44
 productive living assets
 Depreciation of right-of-use assets
 Amortization of intangible assets                                             5,824,591.44         4,711,649.34
 Amortization of long-term deferred expenses                                    175,893.01             17,605.33
 Losses on disposal of fixed assets, intangible assets and other
                                                                                -393,161.73          -155,515.49
 long-term assets (gains by “-”)
 Losses on the scrapping of fixed assets (gains by “-”)                        -87,358.18        -2,072,789.33
 Losses on the changes in fair value (gains by “-”)                     -145,243,457.17        -104,570,498.36
 Financial expenses (gains by “-”)                                           2,146,237.77         8,122,828.51
 Investment losses (gains by “-”)                                          -17,211,920.32        -9,327,296.95
 Decrease in deferred income tax assets (increase by “-”)                  -15,400,115.80        -6,461,936.08
 Increase in deferred income tax liabilities (decrease by “-”)              17,330,133.77        22,461,607.94
 Decrease in inventory (increase by “-”)                                    89,813,152.96       -53,079,441.83
 Decrease in accounts receivable from operating activities
                                                                             -33,140,187.50      -286,670,314.47
 (increase by “-”)
 Increase in payables from operating activities (decrease by
                                                                             286,526,874.74       -79,052,905.74
 “-”)
 Other                                                                        -1,904,132.58
 Net cash flows generated from operating activities                          364,930,277.84      -266,323,779.30
 2. Investing and financing activities that do not involving cash
 receipts and payment:
 Debt transferred as capital
 Convertible corporate bond due within one year
 Fixed assets from financing lease
 3. Net increase in cash and cash equivalents
 Ending balance of cash                                                      810,350,966.05       562,402,221.59
 Less: Beginning balance of cash                                             562,402,221.59       629,939,540.50
 Add: Ending balance of cash equivalents
 Less: Beginning balance of cash equivalents
 Net increase in cash and cash equivalents                                   247,948,744.46       -67,537,318.91
(2) Cash and Cash Equivalents
                                                                                                       Unit: RMB
                      Item                                  Ending balance                Beginning balance
 I. Cash                                                            810,350,966.05                562,402,221.59
 Including: Cash on hand                                               251,965.06                     145,594.98
 Bank deposit on demand                                             806,914,999.19                561,746,767.12
 Other monetary assets on demand                                      3,184,001.80                    509,859.49
 Accounts deposited in the central bank
 available for payment
 Deposits in other banks


                                                            183
Changchai Company, Limited                                                                         Annual Report 2022


 Accounts of interbank
 II. Cash equivalents
 Of which: Bond investment expired within
 three months
 III. Ending balance of cash and cash
                                                                  810,350,966.05                    562,402,221.59
 equivalents
 Of which: Cash and cash equivalents with
 restriction in use for the Company as the
 parent or subsidiaries of the Group

55. Assets with Restricted Ownership or Right to Use

                                                                                                             Unit: RMB
                    Item                   Ending carrying value                    Reason for restriction
                                                                           As cash deposit for bank acceptance bill
 Monetary assets                                       95,662,384.92
                                                                           and for environment
 Houses and buildings                                      1,530,890.90    Mortgaged for borrowings from banks
 Land use right                                              879,275.35    Mortgaged for borrowings from banks
 Machinery equipment                                   31,222,420.22       Mortgaged for borrowings from banks
 Obligation to pay bills discounted
                                                      110,000,000.00
 before maturity
 Obligation to pay bills transferred
                                                       66,395,231.83
 before maturity
 Total                                                305,690,203.22


56. Foreign Currency Monetary Items

(1) Foreign Currency Monetary Items
                                                                                                             Unit: RMB
                               Ending foreign currency                                        Ending balance
             Item                                                 Exchange rate
                                       balance                                               converted to RMB
 Monetary assets                         --                               --
 Of which: USD                          13,543,608.99                           6.9646               94,325,820.43
           HKD                                320,344.50                        0.8933                  286,163.74
 Accounts receivable
 Of which: USD                           8,596,374.27                           6.9646               59,870,308.38
           GBP                                -67,212.27                        8.3941                 -564,186.52
 Accounts payable
 Of which: USD                                   302.60                         6.9646                       2,107.49
 Contract liabilities
 Of which: USD                                635,740.16                        6.9646                4,427,675.94
           EUR                                117,145.84                        7.4229                  869,561.86



                                                           184
Changchai Company, Limited                                                                Annual Report 2022


(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant
Reasons Shall Be Disclosed.
□ Applicable √ Not applicable

57. Government Grants

(1) Basic Information on Government Grants
                                                                                                 Unit: RMB
                                                                                    Amount recorded in
                    Category                       Amount         Listed items      the current profit or
                                                                                            loss

 Subsidies for stabilizing and increasing job
                                                  2,396,713.00    Other income               2,396,713.00
 positions and retaining workers

 Special funds for business development            102,800.00     Other income                 102,800.00

 Membership dues return                               4,760.00    Other income                   4,760.00

 Municipal special funds for environmental
                                                     10,000.00    Other income                  10,000.00
 protection

 2021 Enterprise Technical Innovation Award          50,000.00    Other income                  50,000.00

 Financial Assistance to the 19th Batch of
                                                   200,000.00     Other income                 200,000.00
 Technology Plans in Changzhou in 2021

 The 9th Batch of Special Funds for Talents in
                                                     50,000.00    Other income                  50,000.00
 2022

 Support Funds for Agricultural Machinery
 Guild in Zhonglou Distrcit of Changzhou in        250,000.00     Other income                 250,000.00
 2022

 Incentives and subsidies for earlier phase-out
 and scrapping of high-emission old cars in          59,800.00    Other income                  59,800.00
 Changzhou

 Financial Assistance to the 2rd Batch of
                                                   110,000.00     Other income                 110,000.00
 Technology Plans in Chanzhou

 The 25th Batch of Special Funds for Talents in
                                                   120,000.00     Other income                 120,000.00
 2022

 Industrial development funds                         1,500.00    Other income                   1,500.00

 Incentives for R&D spending on No. 208              47,000.00    Other income                  47,000.00




                                                    185
Changchai Company, Limited                                                                   Annual Report 2022



 Incentives for provincial technology transfer
                                                        27,700.00     Other income                   27,700.00
 acceptor

 Employment and apprenticeship subsidies                11,000.00     Other income                   11,000.00

 Subsidies for high-quality invention                     2,000.00    Other income                    2,000.00

 Tax Contribution Award                                 30,000.00     Other income                   30,000.00

 Subsidies for work-based training                      45,000.00     Other income                   45,000.00

 Innovation-driven incentives                           31,000.00     Other income                   31,000.00

 Re-affirm and declare incentives for high and
                                                       200,000.00     Other income                  200,000.00
 new tech enterprises

 Demolition compensation        (replacing   Zou
                                                    13,344,397.90    Deferred income                267,333.48
 Village with Hehai Road)

 Demolition compensation - main workshops
                                                    11,864,289.02    Deferred income                398,640.14
 in the base in Hehai Road

 The national major special project - the
 flexible processing production line for diesel     13,800,000.00    Deferred income               1,519,266.00
 engine cylinder blocks

 National III/IV Appropriation for the research
 and development and industrialization of
                                                    10,000,000.00    Deferred income               1,224,489.84
 standard high-horsepower high-efficiency
 agricultural diesel engine

Return of Government Grants
□ Applicable √ Not applicable


VIII. Changes of Consolidation Scope

1. Business Combination Not under the Same Control

(1) Business Combination Not under the Same Control in the Reporting Period

                                                                                                      Unit: RMB
                                                                                        Income          Net
                                                                                           of        profits of
                                                                           Recogniti
            Time and                                                                   acquiree      acquiree
                            Cost of     Proportio   Way to                 on basis
Name of      place of                                          Purchase                from the      from the
                           gaining        n of      gain the                  of
acquiree     gaining                                             date                  purchase      purchase
                          the equity     equity      equity                purchase
            the equity                                                                  date to       date to
                                                                             date
                                                                                       period-en     period-en
                                                                                           d             d

                                                       186
Changchai Company, Limited                                                                       Annual Report 2022


                                                                              On 16
                                                                              May
                                                                              2022, the
                                                                              Board of
                                                                              Directors
                                                                              of
                                                                              Zhenjiang
                                                                              Siyang
                                                                              was
                                                                              reorganiz
                                                                              ed and its
                                                                              Articles
                                                                              of
                                                                              Associati
                                                                              on were
                                                                              amended,
                                                                              after
                                                                              which
Zhenjiang
                                                                              directors
Siyang
                                                                              appointed    35,440,98   4,824,237
Diesel       23
                          33,520,80                Acquisiti    31 May        by
Engine       February                    41.50%                                                 3.37         .05
                               0.00                on in cash   2022          Changcha
Manufact     2022
                                                                              i
uring Co.,
                                                                              Company
Ltd.
                                                                              are in the
                                                                              majority.
                                                                              In May
                                                                              2022,
                                                                              Changcha
                                                                              i
                                                                              appointed
                                                                              managers
                                                                              to
                                                                              participat
                                                                              e in the
                                                                              productio
                                                                              n and
                                                                              operation
                                                                              managem
                                                                              ent of
                                                                              Zhenjiang
                                                                              Siyang.

(2) Combination Cost and Goodwill

                                                                                                        Unit: RMB
                               Combination cost
--Cash                                                                                            33,520,800.00
--Fair value of non-cash assets
--Fair value of debts issued or undertaken
--Fair value of equity securities issued
--Fair value of contingent consideration
--Fair value of equities held before the purchase date on the purchase date
--Other
Total combination cost                                                                            33,520,800.00
Less: fair value of identifiable net assets acquired                                              35,424,932.58

                                                        187
Changchai Company, Limited                                                                     Annual Report 2022


The amount of goodwill/combined cost less than the fair value share of
                                                                                                 -1,904,132.58
identifiable net assets obtained
Note to determination method of the fair value of the combination cost, consideration and changes:
Combination cost: According to the Confirmation of Transaction on the Transfer of 41.5% Equity Interest
(Corresponding to Capital Contribution of RMB830,000) in Zhenjiang Siyang Diesel Engine Manufacturing Co.,
Ltd. issued by Jiangsu Property Rights Exchange Co., Ltd. on 12 January 2022, the transaction price is
RMB33,520,800.00, and Changchai Company, Limited paid a one-time payment of RMB33,520,800.00 on 23
February 2022.
Determination method of fair value: Zhenjiang Siyang's base date of assets evaluation is 31 March 2021. The
evaluated value of assets of Zhenjiang Siyang on 31 March 2021 is used as the fair value. The fair value of
Zhenjiang Siyang continuously measured from 31 May 2022 is calculated, which is multiplied by the
shareholding ratio of Changchai Company, Limited to obtain the fair value share of the identifiable net assets
obtained by Changchai Company, Limited.
The main reasons for the formation of large-value goodwill: Not applicable

(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date

                                                                                                        Unit: RMB
                                              Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.
                                         Fair value on purchase date         Carrying value on purchase date
Assets:                                                      99,167,047.96                      96,946,440.05
Monetary assets                                              19,400,123.61                      19,400,123.61
Accounts receivable                                          24,790,090.34                      24,790,090.34
Inventories                                                  25,093,473.79                      25,096,648.68
Fixed assets                                                 21,864,448.97                      21,427,812.03
Intangible assets                                             6,746,790.39                           4,959,644.53
Other current assets                                           697,629.25                             697,629.25
Construction in progress                                       447,840.71                             447,840.71
Deferred income tax assets                                     126,650.90                             126,650.90
Liabilities:                                                 13,805,764.63                      13,472,197.21
Borrowings
Accounts payable                                             13,472,197.21                      13,472,197.21
Deferred income tax liabilities                                333,567.42
Net assets                                                   85,361,283.33                      83,474,242.84
Less: Non-controlling interests                              49,936,350.75                      48,832,432.06
Net assets acquired                                          35,424,932.58                      34,641,810.78


(4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair Value

Whether there is a transaction that through multiple transaction step by step to realize business combination and
gaining the control during the Reporting Period
□ Yes √ No




                                                       188
Changchai Company, Limited                                                                               Annual Report 2022


(5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquiree
that Cannot Be Determined on the Acquisition Date or during the Period-end of the Merger

Not applicable

IX. Equity in Other Entities

1. Equity in Subsidiary

(1) Subsidiaries
                                                                      Natur     Holding percentage
                                                Main      Registrat
                                                                       e of            (%)                   Way of
                   Name                        operatin     ion
                                                                      busin                Indirectl         gaining
                                               g place     place                Directly
                                                                       ess                    y
 Changchai Wanzhou Diesel Engine               Chongq     Chongqi     Indus
                                                                                 60.00%                   Set-up
 Co., Ltd.                                     ing        ng          try
 Changzhou Changchai Benniu Diesel             Changz     Changzh     Indus
                                                                                 99.00%         1.00%     Set-up
 Engine Fittings Co., Ltd.                     hou        ou          try
 Changzhou Horizon Investment Co.,             Changz     Changzh     Servi
                                                                                100.00%                   Set-up
 Ltd.                                          hou        ou          ce
 Changzhou Changchai Horizon                   Changz     Changzh     Indus
                                                                                 75.00%         25.00%    Set-up
 Agricultural Equipment Co., Ltd.              hou        ou          try
                                                                                                          Combination
 Changzhou Fuji Changchai Robin                Changz     Changzh     Indus
                                                                                100.00%                   not under the
 Gasoline Engine Co., Ltd.                     hou        ou          try
                                                                                                          same control
 Jiangsu Changchai Machinery Co.,              Changz     Changzh     Indus
                                                                                100.00%                   Set-up
 Ltd.                                          hou        ou          try
 Changzhou Xingsheng Property                  Changz     Changzh     Servi
                                                                                100.00%                   Set-up
 Management Co., Ltd.                          hou        ou          ce
                                                                                           Combination
 Zhenjiang Siyang Diesel Engine                Zhenjia    Zhenjian    Indus
                                                                                 41.50%    not under the
 Manufacturing Co., Ltd.                       ng         g           try
                                                                                           same control
Explanation: the company holds 41.5% of the shares in Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.
Our company is the largest shareholder, and the other shareholders are employee and non employee shares, which
are relatively scattered. There are no other shareholders with a high shareholding ratio that is close to the actual
controller's shareholding ratio; Among the 7 members of the board of directors of Zhenjiang Siyang, 5 are
dispatched by our company. The chairman of Zhenjiang Siyang is dispatched by our company, and our company
is the substantive controller of Zhenjiang Siyang, which constitutes the conditions for merger.
(2) Significant Non-wholly-owned Subsidiary
                                                                                                               Unit: RMB
                                                                                 Declaring
                              Shareholding          The profit or loss                                   Balance of
                                                                                 dividends
                              proportion of         attributable to the                                non-controlling
        Name                                                                   distributed to
                             non-controlling         non-controlling                                   interests at the
                                                                              non-controlling
                                interests                 interests                                      period-end
                                                                                  interests

                                                            189
Changchai Company, Limited                                                                                Annual Report 2022


 Changchai
 Wanzhou Diesel                     40.00%             -260,843.12                                19,705,643.25
 Engine Co., Ltd.
 Zhenjiang Siyang
 Diesel Engine
                                    58.50%            2,822,178.67                                52,758,529.42
 Manufacturing Co.,
 Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion: Not applicable
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
                                                                                                                 Unit: RMB
                             Ending balance                                           Beginning balance
                                                 Non-                                                       Non-
                   Non-               Curre                                  Non-               Curre
          Curre                                  curre     Total    Curre                                   curre     Total
 Name              curre     Total       nt                                  curre     Total       nt
            nt                                     nt     liabili     nt                                      nt     liabili
                     nt      assets   liabili                                  nt      assets   liabili
          assets                                liabili     ties    assets                                 liabili     ties
                   assets               ties                                 assets               ties
                                                   ty                                                         ty
 Chan
 gchai
 Wanz
 hou      47,13    23,22     70,36    21,09               21,09     48,20    24,14      72,34   22,42                22,42
 Diese    3,617    8,110.    1,727    7,619               7,619     0,342    1,889      2,232   6,016                6,016
 l          .16       09        .25     .13                  .13       .77     .90        .67      .75                 .75
 Engin
 e Co.,
 Ltd.
 Zhenj
 iang
 Siyan
 g
 Diese
 l        82,69    28,04     110,7    20,23               20,55
                                                322,7
 Engin    7,983    5,494     43,47    5,256               7,957      ——     ——      ——     ——       ——      ——
 e                                              01.42
            .58      .39      7.97      .17                  .59
 Manu
 factur
 ing
 Co.,
 Ltd.
 Chan
 gzho
 u
 Chan
 gchai
 Hori                                                               14,50               14,83   25,67                25,67
                                                                             324,3
 zon       ——     ——      ——     ——      ——      ——     5,888               0,191   5,299                5,299
 Agri                                                                        02.84
                                                                       .53                .37      .17                 .17
 cultu
 ral
 Equi
 pme
 nt

                                                            190
Changchai Company, Limited                                                                          Annual Report 2022


 Co.,
 Ltd.
                                                                                                           Unit: RMB
                               Reporting Period                                 Same period of last year
                                                         Cash                                                Cash
                                            Total                                              Total
                                                         flows                                               flows
   Name      Operating                    comprehe                  Operating                comprehe
                             Net profit                  from                   Net profit                   from
              revenue                       nsive                    revenue                   nsive
                                                       operating                                           operating
                                           income                                             income
                                                       activities                                          activities
 Changcha
 i
 Wanzhou     34,281,25       -652,107.    -652,107.    650,437.0    42,629,37   386,567.2    386,567.2     2,563,679
 Diesel            2.72             80            80            3        9.24            7            7           .17
 Engine
 Co., Ltd.
 Zhenjian
 g Siyang
 Diesel      35,440,98       4,824,237    4,824,237    -9,291,53
 Engine                                                                 ——         ——         ——          ——
 Manufact          3.37            .05          .05         7.82
 uring
 Co., Ltd.
 Changz
 hou
 Changc
 hai
 Horizon                                                            14,362,87    -4,579,70   -4,579,70     6,216,842
                  ——            ——        ——          ——
 Agricult                                                                2.77         1.60        1.60            .70
 ural
 Equipm
 ent Co.,
 Ltd.

2. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements

Notes to the structured entity excluded in the scope of consolidated financial statements:
In 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together with
Synergetic Innovation Fund Management Co., Ltd. through joint investment. On 18 October 2018 and 3
December 2020, new partners were respectively added. Partnership Shares transfer was made on 29 December
2022. In line with the revised Partnership Agreement, the general partner is Synergetic Innovation Fund
Management Co., Ltd., and the limited partners are Changchai Company, Limited, Changzhou Zhongyou
Petroleum Sales Co., Ltd., Changzhou Fuel Co., Ltd., Tong Yinzhu, Tong Yinxin, Anhui Haiyunzhou Equity
Investment Partnership Enterprise (Limited), Shenzhen Jiaxin One Venture Capital Partnership (limited
partnership)and Zhong Wende. In accordance with the Partnership Agreement, the limited partner does not
execute the partnership affairs. Thus, the Company does not control Changzhou Xietong Private Equity Fund
(Limited Partnership) and did not include it into the scope of consolidated financial statements.




                                                          191
Changchai Company, Limited                                                                            Annual Report 2022


X. The Risk Related to Financial Instruments

The goal of the Company’s risk management was gaining the balance between the risk and income, and reduced
the negative impact to the operation performance of the Company in the lowest level and maximized the interests
of shareholders and other equity investors. Base on the risk management goal, the basis strategy of the Company’s
risk management was to recognized and analyze all kinds of risk that the Company faced, set up suitable risk
bottom line and conduct risk management, and supervised the risks timely and reliably and control the risk within
the limited scope.
The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. The
management level had reviewed and approved the policies to manage the risks, which summarized as follows:
(I) Credit Risk
Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the
other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the
Company conduct the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the policy of
the Company, the Company need to conduct credit-check for the clients adopting way of credit to conduct
transaction. In addition, the Company continuously monitors the balance of account receivable to ensure the
Company would not face the significant bad debt risk.
(II) Liquidity Risk
Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in the way
of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash
to pay the due liabilities.
The liquidity risk was centralized controlled by the financial department of the Company. The financial
departments through supervising the balance of the cash and securities can be convert to cash at any time and the
rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash to pay the liabilities
under the case of all reasonable prediction.
(III) Market Risk
Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the change
of market price, including foreign exchange rate risk, interest rate risk.
1. Interest Rate Risk
Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due
to the change of market price.
2. Foreign Exchange Risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. As for the Company’s
export business, customers will be given 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 Fair Value

1. Ending Fair Value of Assets and Liabilities at Fair Value

                                                                                                             Unit: RMB
         Item                                                   Ending fair value


                                                          192
Changchai Company, Limited                                                            Annual Report 2022


                            Fair value            Fair value          Fair value
                        measurement items     measurement items   measurement items       Total
                            at level 1            at level 2          at level 3
I. Consistent fair
                                 --                  --                  --                --
value measurement
(I) Trading financial
                              78,739,311.00      291,364,291.57                        370,103,602.57
assets
1. Financial assets
at fair value through         78,739,311.00      291,364,291.57                        370,103,602.57
profit or loss
(1) Debt instrument
investment
(2) Equity
instrument                    78,739,311.00                                             78,739,311.00
investment
(3) Derivative
financial assets
Wealth
management                                       291,364,291.57                        291,364,291.57
investments
2. Financial assets
designated to be
measured at fair
value and the
changes included
into the current
profit or loss
(1) Debt instrument
investment
(2) Equity
instrument
investment
(II) Other
investments in debt
obligations
(III)Other equity
instrument                   576,631,000.00                          378,929,240.08    955,560,240.08
investment
(IV) Investment
property
1. Land use right
for lease
2. Buildings leased
out
3. Land use right

                                                     193
Changchai Company, Limited                                                      Annual Report 2022


held and planned to
be transferred once
appreciating
(V) Living assets
1. Consumptive
living assets
2. Productive living
assets
Accounts receivable
                                                               242,813,392.79    242,813,392.79
financing
Other non-current
                                                               373,500,000.00    373,500,000.00
financial assets
Total assets
consistently
                             655,370,311.00   291,364,291.57   995,242,632.87   1,941,977,235.44
measured by fair
value
(VI) Trading
financial liabilities
Of which: Issued
trading bonds


Derivative financial
liabilities
Other
(VII) Financial
liabilities
designated to be
measured at fair
value and the
changes recorded
into the current
profit or loss
Total liabilities
consistently
measured by fair
value
II. Inconsistent fair
                                 --               --               --                --
value measurement
(1) Assets held for
sale
Total assets
inconsistently
measured by fair
value
Total liabilities

                                                 194
Changchai Company, Limited                                                                         Annual Report 2022


 inconsistently
 measured by fair
 value

2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1

For the listed company stocks held by the company in the held-for-trading financial assets measured at fair value,
the closing market price on the balance sheet date was the basis for the measurement of fair value.


3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for

Consistent and Inconsistent Fair Value Measurement Items at Level 2

Wealth management and investment: The underlying assets of investment in wealth management products include
bond assets, deposit assets, fund assets, etc. The portfolio of investment assets should be dynamically managed.
The fair value of wealth management products should be adjusted according to the yield of similar products
provided by the counterparty.

4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3

(1) Accounts receivable financing: Accounts receivable financing is a bank acceptance with high credit rating,
short maturity and low risk. The par amount is close to the fair value and is used as the fair value.
(2) Among the other non-current financial assets: for the investments in equity instrument of Jiangsu Horizon New
Energy Technology Co., Ltd., Jiangsu Horizon New Energy Technology Co., Ltd. entrusted an appraisal agency to
evaluate the value of all its shareholders’ equity due to the need for capital increase and share expansion in 2022,
and confirmed the premium rate of capital increase based on the appreciation rate of the equity value. The
company’s new investors signed the investment agreements on 29 August 2022. Therefore, the fair value of the
equity investment had been adjusted and confirmed accordingly based on the premium rate of the new round of
financing.
(3) Among other equity investment instruments, the total investment in Chengdu Changwan Diesel Engine
Distribution Co., Ltd., Chongqing Wanzhou Changwan Diesel Engine Parts Co., Ltd., Changzhou Economic and
Technological Development Company, Changzhou Tractor Company, Changzhou Economic Commission
Industrial Capital Mutual Aid Association, Beijing Engineering Machinery Agricultural Machinery Company was
RMB 1.21 million, and the fair value was RMB 0.00 due to the difficulty in recovering the investment.
Since its establishment in October 2017, Changzhou Synergetic Innovation Private Equity Fund (Limited
Partnership) had increased the equity of partners at the end of the year due to the change in fair value of the equity
held by it. In addition, the company's business environment, operating conditions, and financial status had not
undergone major changes. Therefore, the company determined its fair value on the basis of the net book assets of
the partnership at the end of the period.


5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning and

Ending Carrying Value of Consistent Fair Value Measurement Items at Level 3


                                                         195
Changchai Company, Limited                                                                        Annual Report 2022


Not applicable


6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if

Conversion Happens among Consistent Fair Value Measurement Items at Different Levels


Not applicable


7. Changes in the Valuation Technique in the Current Period and the Reason for Such Changes


Not applicable


8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value

The financial assets and liabilities measured at amortization cost mainly include notes receivable, accounts
receivable, other receivables, short-term borrowings, accounts payable, other payables, etc. The difference
between the carrying value and fair value for financial assets and liabilities not measured at fair value is small.


9. Other


During the year, there was no conversion between Level 1 and Level 2, nor was there any transfer to or from
Level 3 for the fair value measurement of the Company's financial assets and financial liabilities.

XII. Related Party and Related-party Transactions

1. Information Related to the Company as the Parent of the Company

                                                                                Proportion of      Proportion of
                                                                                share held by       voting rights
                      Registration         Nature of            Registered    the Company as       owned by the
      Name
                         place             business              capital          the parent      Company as the
                                                                                 against the       parent against
                                                                                  Company          the Company
                                        Investment and
                                         operations of
                                          state-owned
                                         assets, assets
 Changzhou                               management
 Investment         Changzhou              (excluding       RMB1.2 billion             32.26%             32.26%
 Group Co., Ltd.                            financial
                                            business),
                                           investment
                                           consulting
                                           (excluding

                                                          196
Changchai Company, Limited                                                                          Annual Report 2022


                                       consulting on
                                       investment in
                                       securities and
                                       options), etc.
Notes: Information on the Company as the parent
The parent company of the Company is Changzhou Investment Group Co., Ltd. According to the guiding
principle of the Notice of Provincial Government on Issuing the Implementation Plan for Transferring Part of
State-owned Capital to Boost Social Security Fund in Jiangsu Province (SZF [2020] No. 27), the Notice on
Transferring Part of State-owned Capital to Cities and Counties to Boost Social Security Fund (SCGM [2020] No.
139) from the Department of Finance of Jiangsu Province and other five departments and the Notice on
Transferring Part of State-owned Capital at Urban (District) Level to Boost Social Security Fund (CCGM [2020]
No. 4) from Changzhou Finance Bureau and other four departments, the 10% state-owned equity of the
Investment Group held by Changzhou Municipal People's Government is transferred to the Department of
Finance of Jiangsu Province free of charge. After the share transfer, Changzhou People’s Government holds 90%
state-owned equity of the Investment Group and the Department of Finance of Jiangsu Province holds 10%
state-owned equity of the Investment Group. In accordance with Changzhou People’s Government Document
(CZF [2006] No. 62), Changzhou Investment Group Co., Ltd. is an enterprise which Changzhou People’s
Government authorizes Changzhou Government State-owned Assets Supervision and Administration Commission
to perform duties of investors. Thus, Changzhou Investment Group Co., Ltd. is the controlling shareholder of the
Company and Changzhou Government State-owned Assets Supervision and Administration Commission is still
the actual controller of the Company. The final controller of the Company is Changzhou Government State-owned
Assets Supervision and Administration Commission.

2. Subsidiaries of the Company

Refer to Note IX for details.

3、Situation of joint ventures and associated enterprises of the company

None

4. Information on Other Related Parties

                          Name                                          Relationship with the Company
 Changzhou Synergetic Innovation Private Equity               Participated in establishing the industrial investment
 Fund (Limited Partnership)                                                            fund
 Jiangsu Horizon New Energy Technology Co., Ltd.                    Shareholding enterprise of the Company
 Donghai Securities Co., Ltd.                                   Controlled by the same Company as the parent

5.Related Party Transactions

(1)Compensation for key management personnel

                                                                                                           Unit: RMB


                                                        197
Changchai Company, Limited                                                                    Annual Report 2022


                                                                             Amount incurred in the previous
              Item                        Current amount incurred
                                                                                        period
     Compensation for key
                                                             7,110,100.00                         7,667,300.00
     management personnel

(2) Other Related-party Transaction

1) On 25 August 2022, the Company held the Fourth Interim Meeting of the Board of Directors and the Fourth
Interim Meeting of the Supervisory Committee in 2022 and deliberated and approved the Proposal on Planning to
Participate in Capital Increase and Share Expansion and Related Transactions of Jiangsu Horizon New Energy
Technology Co., Ltd., agreeing to increase RMB75 million capital to Horizon New Energy for the subscription of
its newly registered capital of RMB18,844,200 and authorizing Shi Xinkun, the Company’s Chairman, to sign
capital increase agreements with related parties. In August 2022, Horizon New Energy and its shareholders signed
the Capital Increase Agreement of Jiangsu Horizon New Energy Technology Co., Ltd., agreeing that the registered
capital of Horizon New Energy was increased from RMB1,405,622,491 to RMB1.75 billion. In October 2022,
Horizon New Energy completed the industrial and commercial change registration procedures according to the
aforesaid capital increase agreement and obtained the new business license.
2) The Proposal on Using Idle Funds to Purchase Wealth Management Products was deliberated and approved at
the Fourth Interim Meeting of the Board of Directors in 2021 and the Second Interim Meeting of the Board of
Supervisors in 2021 held by the Company on 13 July 2021, allowing the Company and its wholly-owned
subsidiaries to use no more than RMB350 million of idle raised funds to purchase wealth management products
for cash management on the premise that the investment projects with raised funds are carried out normally and
the use of raised funds is not affected.
On 27 July 2021, the Company entered into a subscription agreement with Donghai Securities Co., Ltd. for the
product "Donghai Securities Long Gain Return Certificate June Type Customized Issue No. 13". The subscription
amount is RMB50 million, and the source of funds is idle raised funds. The return certificate matured on 25
January 2022, with a total of RMB50,949,315.07 in principal and return actually received, which is recognized as
gains on changes of fair value of RMB817,465.75 in 2021 and as investment income of RMB131,849.32 in 2022.

XIII. Commitments and Contingency

1. Significant Commitments

Significant commitments on balance sheet date
As of 31 December 2022, there was no significant commitment for the Company to disclose.

2. Contingency

(1) Significant Contingency on Balance Sheet Date

None

(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant Statements

There was no significant contingency in the Company.


                                                       198
Changchai Company, Limited                                                          Annual Report 2022


XIV. Events after Balance Sheet Date

1. Profit Distribution
                                                                                          Unit: RMB
 Profits or dividends to be distributed                                               7,056,925.07

2. Sales Return

None

3. Notes to Other Events after Balance Sheet Date

There was no other event after balance sheet date.

XV. Other Significant Events

1. The Accounting Errors Correction in Previous Period

(1) Retrospective Restatement

None

(2) Prospective Application

None

2. Debt Restructuring

Not applicable

3. Assets Replacement

Not applicable

4. Pension Plans

Not applicable

5. Discontinued Operations

Not applicable

6. Segment Information

(1) Determination Basis and Accounting Policies of Reportable Segment
Due to the operation scope of the Company and subsidiaries were similar, the Company conducts common


                                                     199
Changchai Company, Limited                                                                     Annual Report 2022


management, and did not divide business unit, so the Company only made single branch report.

7. Other Significant Transactions and Events with Influence on Investors’ Decision-making

None

XVI. Notes of Main Items in the Financial Statements of the Company as the Parent

1. Accounts Receivable

(1) Accounts Receivable Classified by Category
                                                                                                       Unit: RMB
                                  Ending balance                                Beginning balance
                       Carrying         Bad debt                     Carrying          Bad debt
                       amount           provision                    amount            provision
                                                         Carryi
    Category                                   Withd                                          Withd    Carryin
                                                          ng
                    Amou     Propo    Amou     rawal              Amou     Propor   Amou      rawal    g value
                                                         value
                     nt      rtion     nt      propo               nt       tion     nt       propor
                                                rtion                                          tion
 Accounts
 receivable for
                     27,36             21,60             5,756,    27,50            21,126
 which bad debt                                78.96                                          76.80     6,383,0
                    4,067.   6.22%    7,429.             637.8    9,745.   6.00%     ,658.8
 provision                                      %                                              %          86.48
                        34                50                  4       33                  5
 separately
 accrued
 Of which:
 Accounts
 receivable for
                     412,7             89,46              323,3   430,7             88,019
 which bad debt              93.78             21.67                       94.00              20.43    342,752
                     69,15            4,855.              04,30   71,91              ,743.0
 provision                    %                 %                           %                  %        ,168.94
                      8.39                73               2.66    2.03                   9
 accrued by
 group
 Of which:
 Accounts
 receivable for
 which bad debt      412,7             89,46              323,3   430,7             88,019
                             93.78             21.67                       94.00              20.43    342,752
 provision           69,15            4,855.              04,30   71,91              ,743.0
                              %                 %                           %                  %        ,168.94
 accrued by           8.39                73               2.66    2.03                   9
 credit risk
 features group
                     440,1            111,0               329,0   458,2             109,14
                             100.0             25.24                       100.00             23.82    349,135
 Total               33,22            72,28               60,94   81,65              6,401.
                              0%                %                            %                 %        ,255.42
                      5.73             5.23                0.50    7.36                  94



                                                        200
Changchai Company, Limited                                                                                  Annual Report 2022


Accounts receivable with significant single amount for which bad debt provision separately accrued at the end of
the period:
                                                                                                    Unit: RMB
                                                                   Ending balance
         Name                Carrying            Bad debt            Withdrawal
                                                                                              Withdrawal reason
                             amount              provision           proportion
 Customer 1                  1,470,110.64        1,470,110.64            100.00%       Difficult to recover
 Customer 2                  1,902,326.58        1,902,326.58            100.00%       Difficult to recover
 Customer 3                  6,215,662.64        6,215,662.64            100.00%       Difficult to recover
 Customer 4                  2,797,123.26        2,194,980.28             78.47%       Expected to difficultly recover
 Customer 5                  3,633,081.23        2,122,165.73             58.41%       Expected to difficultly recover
 Customer 6                  2,584,805.83        2,584,805.83            100.00%       Difficult to recover
 Customer 7                  1,731,493.71        1,731,493.71            100.00%       Difficult to recover
 Customer 8                  1,511,937.64          604,775.06             40.00%       Expected to difficultly recover
 Customer 9                  3,329,074.84          720,031.71             21.63%       Expected to difficultly recover
 Total                   25,175,616.37          19,546,352.18             --                           --
Accounts receivable for which bad debt provision accrued by credit risk features group
                                                                                                                  Unit: RMB
                                                                      Ending balance
                                    Carrying amount                 Bad debt provision          Withdrawal proportion
 Within 1 year                              300,792,980.52                     6,015,859.61             2.00 %
 1 to 2 years                                25,189,130.52                     1,259,456.53             5.00 %
 2 to 3 years                                 4,391,594.73                      658,739.21              15.00%
 3 to 4 years                                  829,958.37                       248,987.51              30.00%
 4 to 5 years                                  709,203.46                       425,522.08              60.00%
 Over 5 years                                80,856,290.79                 80,856,290.79               100.00%
 Total                                      412,769,158.39                 89,464,855.73
Notes to the basis for the determination of the groups:
The accounts receivable was adopted the aging analysis based on the months when the accounts occurred actually,
among which the accounts occurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt provision
on the Current Period: With reference to the experience of the historical credit loss, combining with the prediction
of the present status and future financial situation, the comparison table was prepared between the aging of the
accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
                                                                                                           Unit: RMB
                         Aging                                                      Carrying amount
 Within 1 year (including 1 year)                                                                           304,249,429.01
 1 to 2 years                                                                                                25,731,843.18
 2 to 3 years                                                                                                 4,391,594.73


                                                             201
Changchai Company, Limited                                                                        Annual Report 2022


 Over 3 years                                                                                     105,760,358.81
 3 to 4 years                                                                                           2,917,847.46
 4 to 5 years                                                                                           2,658,953.02
 Over 5 years                                                                                     100,183,558.33
 Total                                                                                            440,133,225.73
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
                                                                                                           Unit: RMB
                                                    Changes in the Reporting Period
                    Beginning
   Category                                              Reversal or                              Ending balance
                     balance             Withdrawal                       Write-off      Other
                                                          recovery
 Bad debt
 provision
                   21,126,658.85          480,770.65                                                21,607,429.50
 withdrawn
 separately
 Bad debt
 provision
                   88,019,743.09         2,150,511.77                      705,399.13               89,464,855.73
 withdrawn
 by group
 Total            109,146,401.94         2,631,282.42                      705,399.13              111,072,285.23
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) Accounts Receivable with Actual Verification during the Reporting Period
                                                                                                           Unit: RMB
                             Item                                              Amount verified
 Accounts receivable with actual verification                                                            705,399.13
Of which the verification of significant accounts receivable:
                                                                                                           Unit: RMB
                                                                                                           Whether
                                                                                                          generated
                                                                                                             from
 Name of the                    Amount                                   Performance of verification
                  Nature                                Reason                                            related-pa
   entity                       verified                                         procedures
                                                                                                              rty
                                                                                                          transactio
                                                                                                               n
 Customer 1                     256,244.04           With accounts
 Customer 2                         69,529.81   receivable aging over    The Party Committee and the
 Customer 3                         72,967.54         5 years, the       office meeting reviewed and
                 Account
 Customer 4                         59,625.69    counterpart company     approved the Proposal on the
                 s
 Customer 5                         44,647.49      being revoked or        Verification of Accounts
                 receivab                                                                                     Not
 Customer 6                         71,769.00      cancelled, or debt     Receivable of the Overseas
                 le of
                                                    reorganisation,      Business Department Due to
                 goods
                                                bankruptcy clearing or     Pending Prototypes and
 Customer 7                         40,120.00
                                                  the debtors have no       Pending Quality Issues
                                                     assets for debt

                                                           202
Changchai Company, Limited                                                                               Annual Report 2022


                                                   extinguishment
 Total                            614,903.57              --                              --                        --
(4) Top 5 of the Ending Balance of Accounts Receivable Collected according to the Arrears Party
                                                                                                               Unit: RMB
                                                                                                        Ending balance
                                          Ending balance of          Proportion to total ending
         Name of the entity                                                                               of bad debt
                                         accounts receivable       balance of accounts receivable
                                                                                                           provision
 Customer 1                                    182,469,247.05                                41.46%        3,649,384.94
 Customer 2                                     40,330,698.62                                  9.16%         806,613.97
 Customer 3                                     20,619,430.63                                  4.68%         412,388.61
 Customer 4                                     18,538,588.59                                  4.21%         913,245.46
 Customer 5                                     15,564,496.00                                  3.54%         311,289.92
 Total                                         277,522,460.89                                63.05%

2. Other Receivables

                                                                                                               Unit: RMB
                  Item                               Ending balance                            Beginning balance
 Other receivables                                               179,596,495.57                           26,497,081.34
 Total                                                           179,596,495.57                           26,497,081.34
(1) Other Receivable
1) Other Receivables Classified by Account Nature
                                                                                                               Unit: RMB
                                                                                                  Beginning carrying
                         Nature                                Ending carrying amount
                                                                                                       amount
 Cash deposit and Margin                                                          1,300.00                      4,200.00
 Intercourse funds among units                                            214,624,107.53                  55,450,919.93
 Petty cash and borrowings by employees                                       671,817.84                     613,410.65
 Other                                                                     13,635,256.64                  13,629,784.64
 Total                                                                    228,932,482.01                  69,698,315.22
2) Withdrawal of Bad Debt Provision
                                                                                                               Unit: RMB
                              First stage           Second stage               Third stage
                                                 Expected loss in the
                           Expected credit                                 Expected loss in the
 Bad debt provision                                duration (credit                                         Total
                           loss of the next                                  duration (credit
                                                   impairment not
                             12 months                                    impairment occurred)
                                                      occurred)
 Balance of 1
                                  209,613.53           23,809,010.58               19,182,609.77          43,201,233.88
 January 2022
 Balance of 1
 January 2022 in the              ——                  ——                       ——                     ——
 Current Period




                                                           203
Changchai Company, Limited                                                                    Annual Report 2022


 --Transfer to
 Second stage
 -- Transfer to Third
                                                 -23,342,513.38           23,342,513.38
 stage
 -- Reverse to
 Second stage
 -- Reverse to First
 stage
 Withdrawal of the
                                                                           6,574,799.60         6,574,799.60
 Current Period
 Reversal of the
                              183,426.54             168,517.57                                      351,944.11
 Current Period
 Write-offs of the
 Current Period
 Verification of the
                                                      88,102.93                                       88,102.93
 Current Period
 Other changes
 Balance of 31
                               26,186.99             209,876.70           49,099,922.75        49,335,986.44
 December 2022
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
                                                                                                      Unit: RMB
                          Aging                                           Carrying amount
 Within 1 year (including 1 year)                                                             182,815,353.08
 1 to 2 years                                                                                  16,778,473.11
 2 to 3 years                                                                                         99,076.00
 Over 3 years                                                                                  29,239,579.82
 3 to 4 years                                                                                        420,716.17
 4 to 5 years                                                                                        333,939.40
 Over 5 years                                                                                  28,484,924.25
 Total                                                                                        228,932,482.01
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
                                                                                                      Unit: RMB
                                                Changes in the Reporting Period
                        Beginning
    Category                                            Reversal or    Write-of               Ending balance
                         balance      Withdrawal                                    Other
                                                         recovery         f




                                                      204
Changchai Company, Limited                                                                           Annual Report 2022


 Bad debt
 provision
                     19,182,609.77       6,574,799.60                                                  25,757,409.37
 withdrawn
 separately
 Bad debt
 provision                                                                    88,102.9
                     24,018,624.11                              351,944.11                             23,578,577.07
 withdrawn by                                                                        3
 group
                                                                              88,102.9
 Total               43,201,233.88       6,574,799.60           351,944.11                             49,335,986.44
                                                                                     3

4) Particulars of the Actual Verification of Other Receivables during the Reporting Period

                                                                                                           Unit: RMB
                             Item                                               Written-off amount

 Other receivables with actual verification                                                               88,102.93


Of which the verification of significant other receivables:
                                                                                                           Unit: RMB
                                                                                                          Whether
                                                                                                          occurred
                                                                                    Verification
 Name of the     Natur    Written-of                                                                     because of
                                              Reason for verification               procedures
   entity         e       f amount                                                                      related-part
                                                                                    performed
                                                                                                              y
                                                                                                        transactions

 Customer 1                   9,020.00    With accounts receivable aging
                                                                                The Proposal on the
 Customer 2                   8,357.60     over 5 years, the counterpart
                 Other                                                          Write-off of Certain
 Customer 3                   7,933.63      company being revoked or
                 interc                                                         Other    Receivables
 Customer 4                   7,800.00   cancelled, or debt reorganisation,                                 Not
                 ourse                                                          was approved at the
 Customer 5                   6,700.00      bankruptcy clearing or the
                 funds                                                          Party Committee and
                                          debtors have no assets for debt
 Customer 6                   6,000.00                                          Office Meeting.
                                                  extinguishment
 Customer 7                   6,000.00
 Total                       51,811.23                   --                              --                  --
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
                                                                                                           Unit: RMB



                                                                                    Proportion to
                                                                                     total ending    Ending balance
    Name of the entity          Nature   Ending balance             Aging             balance of      of bad debt
                                                                                         other         provision
                                                                                     receivables


                                                          205
Changchai Company, Limited                                                                                Annual Report 2022


 Jiangsu      Changchai        Interco
 Machinery                     urse         135,735,255.26         Within 1 year           59.29%
 Manufacturing Co., Ltd.       funds
                                                                 Within 1 year
                                                                      with
 Changzhou Changchai           Interco
                                                               RMB18,996,476.
 Horizon    Agricultural       urse          20,221,123.93                                  8.83%          20,221,123.93
                                                               74, 1-2 years with
 Equipment Co., Ltd.           funds
                                                               RMB1,224,647.1
                                                                        9
                               Interco
 Changzhou     Changniu
                               urse           9,000,000.00           1-2 years              3.93%
 Machinery Co., Ltd.
                               funds
                               Interco
 Changzhou Compressors
                               urse           2,940,000.00         Over 5 years             1.28%            2,940,000.00
 Factory
                               funds
                               Interco
 Changchai Group Imp.
                               urse           2,853,188.02         Over 5 years             1.25%            2,853,188.02
 & Exp. Co., Ltd.
                               funds
 Total                            --        170,749,567.21                                 74.58%          26,014,311.95

6) Derecognition of Other Receivables due to the Transfer of Financial Assets: none

7) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of
Other Receivables: none

3. Long-term Equity Investment

                                                                                                                Unit: RMB
                                  Ending balance                                         Beginning balance
     Item           Carrying           Depreciation       Carrying         Carrying        Depreciation       Carrying
                    amount               reserves          value           amount           reserves           value
 Investment to     576,273,530.                         569,273,530.      542,752,730.                       535,752,730.
                                       7,000,000.00                                        7,000,000.00
 subsidiaries                03                                   03                03                                 03
 Investment to
 joint ventures
 and                 44,182.50            44,182.50                         44,182.50         44,182.50
 associated
 enterprises
                   576,317,712.                         569,273,530.      542,796,912.                       535,752,730.
 Total                                 7,044,182.50                                        7,044,182.50
                             53                                   03                53                                 03
(1) Investment to Subsidiaries
                                                                                                                Unit: RMB
                  Beginning                           Increase/decrease                         Ending          Ending
   Investee        balance                                                                      balance       balance of
                                Additional       Reduced       Withdrawa           Other
                  (carrying                                                                    (carrying      depreciatio

                                                             206
Changchai Company, Limited                                                        Annual Report 2022


                  value)      investment   investment         l of       value)        n reserve
                                                          depreciatio
                                                           n reserve
Changchai
Wanzhou
                51,000,000                                              51,000,000
Diesel
                        .00                                                    .00
Engine Co.,
Ltd.
Changzhou
Changchai
Benniu
                96,466,500                                              96,466,500
Diesel
                        .00                                                    .00
Engine
Fittings Co.,
Ltd.
Changzhou
Horizon         40,000,000                                              40,000,000
Investment              .00                                                    .00
Co., Ltd.
Changzhou
Changchai
Horizon                                                                                7,000,000.
                       0.00                                                   0.00
Agricultural                                                                                  00
Equipment
Co., Ltd.
Changzhou
Fuji
Changchai
                47,286,230                                              47,286,230
Robin
                        .03                                                    .03
Gasoline
Engine Co.,
Ltd.
Jiangsu
Changchai       300,000,00                                              300,000,00
Machinery             0.00                                                    0.00
Co., Ltd.
Changzhou
Xingsheng
                1,000,000.                                              1,000,000.
Property
                        00                                                      00
Managemen
t Co., Ltd.
Zhenjiang
                              33,520,800                                33,520,800
Siyang
                                     .00                                       .00
Diesel


                                                        207
Changchai Company, Limited                                                                       Annual Report 2022


 Engine
 Manufacturi
 ng Co., Ltd.
                 535,752,73   33,520,800                                                569,273,53     7,000,000.
 Total
                       0.03          .00                                                      0.03            00

(2) Investment to Joint Ventures and Associated Enterprises
                                                                                                            Unit: RMB
                                                 Increase/decrease
                                         Gains
                                                 Adjust                                                      Endin
           Begin                          and                         Cash                       Endin
                                                  ment                         Withd                            g
            ning                        losses                       bonus                          g
                                                   of                           rawal                        balanc
           balanc    Additi   Reduc     recogn              Chang       or                       balanc
 Invest                                           other                           of                          e of
              e       onal      ed        ized               es of   profits                        e
   ee                                            compr                         impair   Other                deprec
           (carryi   invest   invest     under               other   annou                       (carryi
                                                 ehensi                         ment                         iation
             ng       ment     ment        the              equity    nced                         ng
                                                   ve                          provis                        reserv
           value)                       equity                          to                       value)
                                                 incom                           ion                            e
                                        metho                         issue
                                                    e
                                            d
 II. Associated enterprises
 Beijin
 g
 Tsingh
 ua
 Xingy
 e
 Indust                                                                                                      44,182
             0.00                                                                                    0.00
 rial                                                                                                           .50
 Invest
 ment
 Mana
 gemen
 t Co.,
 Ltd.
 Subtot                                                                                                      44,182
             0.00                                                                                    0.00
 al                                                                                                             .50
                                                                                                             44,182
 Total       0.00                                                                                    0.00
                                                                                                                .50

4. Operating Revenue and Cost of Sales

                                                                                                            Unit: RMB
                                       Reporting Period                         Same period of last year
          Item
                         Operating revenue         Cost of sales       Operating revenue        Cost of sales


                                                          208
Changchai Company, Limited                                                                       Annual Report 2022


 Main operations             1,937,402,949.98   1,743,767,173.55        2,221,914,222.25       1,913,817,106.36
 Other operations              51,070,094.57          40,578,530.55        45,317,897.53          31,003,356.23
 Total                       1,988,473,044.55   1,784,345,704.10        2,267,232,119.78       1,944,820,462.59

Information on revenue:

                                                                                                        Unit: RMB
                  Category of contracts                                          Total
 Product Types
 Of which:
 Single-cylinder diesel engines                                                                  810,033,457.43
 Multi-cylinder diesel engines                                                                 1,068,550,094.42
 Other products                                                                                   31,841,402.73
 Fittings                                                                                         26,977,995.40
 Classified by business area
 Of which:
 Sales in domestic market                                                                      1,717,395,940.92
 Export sales                                                                                    220,007,009.06
 Total                                                                                         1,937,402,949.98
Information related to performance obligations: none

5. Investment Income

                                                                                                        Unit: RMB
                       Item                                   Reporting Period           Same period of last year
 Dividend income from holding of other equity
                                                                        9,360,000.00                7,394,400.00
 instrument investment
 Income from refinancing operations                                      136,003.96                 1,028,964.68
 Dividends under cost accounting                                      28,800,000.00
 Interest income from holding of debt obligation
                                                                        1,411,361.54
 investments
 Investment      income      from   disposal     of
                                                                        5,408,606.17                1,798,672.49
 held-for-trading financial assets
 Accounts receivable financing-discount interest of
                                                                       -8,511,313.05               -1,869,322.91
 bank acceptance bills
 Total                                                                36,604,658.62                 8,352,714.26


XVII. Supplementary Materials

1. Items and Amounts of Non-recurring Profit or Loss

√ Applicable □ Not applicable
                                                                                                        Unit: RMB


                                                        209
Changchai Company, Limited                                                                        Annual Report 2022


                             Item                                 Amount                       Note

 Gain or loss on disposal of non-current assets                     393,161.73

 Government subsidies charged to current profit or loss
 (exclusive of government subsidies given in the
 Company’s ordinary course of business at fixed quotas            3,774,298.59
 or amounts as per the government’s uniform
 standards)
                                                                                  Increase in the fair value of the
                                                                                  equity of Jiangsu Horizon
                                                                                  New Energy Technology Co.,
 Gain/loss from change of fair value of trading                                   Ltd. held by the Company and
 financial assets and liabilities, and investment gains                           price falling of stocks of
 from disposal of trading financial assets and liabilities,                       Jiangsu Liance
                                                                 162,319,373.53
 and derivative financial assets and liabilities, and                             Electromechanical Technology
 available-for-sale financial assets, other than valid                            Co., Ltd. and Kailong High
 hedging related to the Company’s common businesses                              Technology Co., Ltd. held by
                                                                                  the wholly-owned subsidiary
                                                                                  Horizon Investment during the
                                                                                  Reporting Period.
 Reverse of provision for impairment of accounts
                                                                      30,000.00
 receivable individually conducting impairment test
 Other non-operating income and expenses other than
                                                                   1,735,346.51
 the above
 Negative goodwill due to business combination not
                                                                   1,904,132.58
 under common control
 Less: Income tax effects                                         19,859,063.58
 Non-controlling interests effects (after tax)                       -24,058.57

                            Total                                150,321,307.93                  --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-recurring Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item.
□ Applicable √ Not applicable

2. Return on Equity and Earnings Per Share


                                          Weighted average ROE                    EPS (Yuan/share)
    Profit as of Reporting Period
                                                   (%)                     EPS-basic              EPS-diluted
 Net profit attributable to ordinary
                                                   2.51%                    0.1087                    0.1087
 shareholders of the Company



                                                           210
Changchai Company, Limited                                           Annual Report 2022


Net profit attributable to ordinary
shareholders of the Company after
                                      -2.41 %     -0.1043             -0.1043
deduction of non-recurring profit
or loss




                                                    The Board of Directors

                                                  Changchai Company, Limited

                                                            10 April 2023




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