Changchai Company, Limited Third Quarter Report 2019 Stock Code: 000570, 200570 Stock Name: Changchai, Changchai-B Announcement No. 2019-031 CHANGCHAI COMPANY, LIMITED THIRD QUARTER REPORT 2019 (SUMMARY) Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of Changchai Company, Limited (together with its consolidated s ubsidiaries, the “Company”, except where the context otherwise requires) hereby guarantee the factuality, accuracy and completeness of the conte nts of this Report and its summary, and shall be jointly and severally liable for any misrepresentations , misleading statements or mate rial omissions therein. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. Shi Xinkun, the Company’s legal representative, Zhang Xin, the Company ’s General Manager, and Jiang He, head of the Company’s financial departme nt (equivalent to financial manage r) hereby guarantee that the financial statements carried in this Report are factual, accurate and complete. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 1 Changchai Company, Limited Third Quarter Report 2019 Part II Key Corporate Information I Key Consolidated Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. □ Yes √ No 30 September 2019 31 December 2018 Change (%) Total assets (RMB) 3,498,167,449.23 3,542,019,195.75 -1.24% Equity attributable to the listed company’s 2,080,307,118.49 2,043,308,026.74 1.81% shareholders (RMB) YoY change YoY change Q3 2019 Q1-Q3 2019 (%) (%) Operating revenue (RMB) 460,579,449.28 6.47% 1,576,409,294.87 -2.65% Net profit attributable to the listed 950,668.62 -79.65% 20,008,693.69 -14.16% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before 197,704.53 -- 14,424,860.12 27.87% exceptional items (RMB) Net cash generated from/used in -- -- -177,873,130.52 -- operating activities (RMB) Basic earnings per share (RMB/share) 0.01 0.00% 0.04 0.00% Diluted earnings per share 0.01 0.00% 0.04 0.00% (RMB/share) Weighted average return on equity (%) 0.05% -0.17% 1.02% -0.03% Exceptional gains and losses: √ Applicable □ Not applicable Unit: RM B Item Q1-Q3 2019 Note Gain/Loss arising from disposal of non-current assets (inclusive of impairment 1,024,006.08 allowance write-offs) Government subsidies recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to 326,259.20 the government’s unified standards Gain/Loss on changes in fair value arising from holding of trading financial assets and liabilities, derivative financial assets and liabilities and investment income from 337,630.60 disposal of trading financial assets and liabilities, derivative financial assets and liabilities and other investments in debt obligation other than effective hedge 2 Changchai Company, Limited Third Quarter Report 2019 business related to the Company’s normal operating businesses Reversed portions of impairment allowances for loan by mandate which are tested 4,000,000.00 individually for impairment Other non-operating income and expense other than the above 732,475.63 Less: Income tax effects 843,914.88 Non-controlling interests effects (after tax) -7,376.94 Total 5,583,833.57 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or 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 II Total Numbe r of Shareholde rs and Holdings of Top 10 Shareholde rs at 30 September 2019 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preferred shareholders with Number of ordinary shareholders 51,028 0 resumed voting rights (if any) Top 10 shareholders Shares in Sharehol pledge or Restri Nature of ding Number of frozen Name of shareholder cted shareholder percenta shares Sh shares Sta ge are tus s CHANGZHOU INVESTMENT GROUP State-owned 30.43% 170,845,236 CO., LTD legal person CHINA CITIC BANK CORPORATION LIMITED-CCB CHINA SECURITIES 500 Other 0.76% 4,254,122 INDEX ENHANCED SECURITIES INVESTMENT FUND Foreign legal KGI ASIA LIMITED 0.57% 3,189,845 person Domestic LEI YANQIN 0.36% 2,019,946 natural person Domestic GAO FENHUAI 0.33% 1,873,800 natural person 3 Changchai Company, Limited Third Quarter Report 2019 Domestic HU WENYONG 0.28% 1,545,266 natural person Domestic HUANG GUOLIANG 0.27% 1,528,891 natural person Domestic LI SUINAN 0.27% 1,507,800 natural person Domestic XUE HONG 0.23% 1,290,900 natural person Domestic ZHOU YONG 0.22% 1,250,000 natural person Top 10 unrestricted shareholders Unrestricted Shares by type Name of shareholder shares Type Shares RMB-denominated CHANGZHOU INVESTMENT GROUP CO., LTD 170,845,236 170,845,236 ordinary stock CHINA CITIC BANK CORPORATION RMB-denominated LIMITED-CCB CHINA SECURITIES 500 INDEX 4,254,122 4,254,122 ordinary stock ENHANCED SECURITIES INVESTMENT FUND Domestically listed KGI ASIA LIMITED 3,189,845 3,189,845 foreign stock RMB-denominated LEI YANQIN 2,019,946 2,019,946 ordinary stock RMB-denominated GAO FENHUAI 1,873,800 1,873,800 ordinary stock Domestically listed HU WENYONG 1,545,266 1,545,266 foreign stock Domestically listed HUANG GUOLIANG 1,528,891 1,528,891 foreign stock Domestically listed LI SUINAN 1,507,800 1,507,800 foreign stock Domestically listed XUE HONG 1,290,900 1,290,900 foreign stock RMB-denominated ZHOU YONG 1,250,000 1,250,000 ordinary stock It is unknown whether there is among the top 10 public shareholders Related or acting-in-concert parties and the top 10 unrestricted public shareholders any related parties or among the shareholders above acting-in-concert parties as defined in the Administrative Measures for Information Regarding Shareholding Alteration. 4 Changchai Company, Limited Third Quarter Report 2019 Top 10 ordinary shareholders involved in securities margin trading N/A (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. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 5 Changchai Company, Limited Third Quarter Report 2019 Part III Significant Events I Changes in Key Consolidated Financial State ment Line Items and Explanation of why √ Applicable □ Not applicable 1. Consolidated Balance Sheet Items as at 30 September 2019 Item 30 September 31 December 2018 Change (%) Explanation of why 2019 (RMB) (RMB) Accounts receivable 813,510,517.41 378,859,159.11 114.73% Accounts receivable as at 30 September 2019 rose 114.73% from the amount as at 31 December 2018, because during Q1~Q3 2019, credit sale was properly carried out to extend market space, and most multi-cylinder engine customers were supporting manufacturers for bigger enterprises, which means relatively long account ages for the Company. Other current assets 15,813,912.76 34,357,608.97 -53.97%Decrease in overpaid VAT Advance payment 64,895,163.52 34,500,232.97 88.10%The increase of the company's advance payment. Payroll payable 12,826,072.56 50,500,592.99 Salaries and bonuses accrued in the nine months ended 30 September -74.60% 2018 were paid in the corresponding period of the current year. Tax payable 3,867,390.55 7,066,085.89 -45.27%Mainly for the changes of sales and profit, as well as the impact of the national tax reduction policy. The non-current 0.00 18,500,000.00 -100.00% The company repaid the due liabilities due within non-current liabilities of RMB one year 18,500,000.00 during the reporting period.. Long-term loan 0.00 2,000,000.00 -100.00% The company repaid the long-term loan of RMB 2,000,000.00 during the reporting period in advance. 2. Consolidated Income Statement Items for Q1~Q3 2019 6 Changchai Company, Limited Third Quarter Report 2019 Q1~Q3 2018 Item Q1~Q3 2019 (RMB) Change (%) Explanation of why (RMB) Research and 49,515,164.09 36,524,504.36 35.57% some r&d projects used more r&d development costs funds. Asset impairment 26,096.43 -2,531,847.48 -- Allowances for doubtful accounts loss receivable recorded based on aging led to an increase in asset impairment loss, while the collection of entrusted loans with full-amount impairment allowances resulted in writedowns in this item. Non-operating 961,235.14 2,830,716.11 -66.04% More government subsidies. income Non-operating expenses 233,654.06 1,698,515.85 -86.24% The large loss of dull materials disposed in the previous period. The income tax -2,232,431.33 5,079,513.44 -- The company received a total of expense 6,700,210.88 yuan of corporate income tax refund in the final settlement of 2018 in June 2019. Other 30,999,075.00 -144,235,225.00 -- Significant increase in gains on fair comprehensive value changes of investments in income, net of tax other equity instruments. 3. Consolidated Cash Flow Statement Items for Q1~Q3 2019 Q1~Q3 2019 Q1~Q3 2018 Item Change (%) Explanation of why (RMB) (RMB) Net cash generated -177,873,130.52 -54,251,797.59 -- Increase in accounts receivable. from/used in operating activities Net cash generated -64,901,304.94 -23,421,616.03 -- The investment of 50 million yuan from/used in to Jiangsu Housheng New Energy investing activities Technology co., LTD. Net cash generated -44,353,925.59 -16,892,465.30 -- Mainly for the company repaid part from/used in of the bank debt. financing activities II Progress, Influence and Solutions with regard to Significant Events □ Applicable √ Not applicable 7 Changchai Company, Limited Third Quarter Report 2019 Progress of any share repurchase: □ Applicable √ Not applicable Progress of any reduction of the repurchased shares through centralized bidding: □ Applicable √ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Pa rties, Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the Reporting Period √ Applicable □ Not applicable Perio Type Date of d of Commitm of commit Fulfill Commitment Contents com ent maker commi ment ment mitm tment making ent Rewards Plan for Shareholders in Next Three Years(2017-2019) Under the premise of positive distributive profit (remaining after-tax profits after making up for the loss and extracting for the common reserves) in this year or half Other year and abundant money flow and no Imple Changcha commitments influence on the following-up going Year ment i 11 May made to Bonus concern after cash bonus, the profits 2017- in a Company, 2017 minority allocated by cash every year shouldn’t be 2019 norma Limited shareholders lower than 10% of the allocable profits l way 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 Yes When the commitment was not completely fulfilled at maturity, the N/A specific reasons and following work plan shall be given IV Securities Investments □ Applicable √ Not applicable No such cases in the Reporting Period. 8 Changchai Company, Limited Third Quarter Report 2019 V Wealth Manage ment Entrustment √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Outstanding Type of wealth Funding source Principal amount before Overdue amount management maturity Wealth management product purchased Self-funded 1000 1000 0 from securities company Total 1000 1000 0 High-risk wealth management entrustments with amounts that are individually s ignificant, or with low security, low liquidity, or no protection of the principal: □ Applicable √ Not applicable Wealth management entrustments with possible impairments including an expectedly unrecoverable principal: □ Applicable √ Not applicable VI Investments in Derivative Financial Instruments □ Applicable √ Not applicable No such cases in the Reporting Period. VII Visits Paid to the Company for Purposes of Research, Communication, Intervie w, etc. during Reporting Pe riod √ Applicable □ Not applicable Date of visit Way of visit Type of visitor About 17 September 2019 Other Individual Tax rebate of the corporate income tax Number of shareholders of the 11 September 2019 Other Individual Company 5 September 2019 Other Individual Agricultural machinery industry policy Development state of the agricultural 5 September 2019 Other Individual machinery industry Transformation and upgrading of the 5 September 2019 Other Individual Company Development program of the 5 September 2019 Other Individual Company 30 August 2019 Other Individual The Company’ investment in the 9 Changchai Company, Limited Third Quarter Report 2019 project of Housheng lithium battery The Company’ investment in the 6 August 2019 Other Individual project of Housheng lithium battery The purchase for relocation of the 29 July 2019 Other Individual Company The relocation schedule of the 28 July 2019 Other Individual Company The relocation schedule of the 28 July 2019 Other Individual Company Transformation and upgrading of the 10 July 2019 Other Individual Company The Company’ investment in the 4 July 2019 Other Individual project of Housheng lithium battery 1 July 2019 Other Individual Product rage of the Company VIII Irregularities in the Provision of Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 10