Changchai Company Limited Interim Report 2022

CHANGCHAI COMPANY LIMITED

INTERIM REPORT 2022

August 2022

1Changchai Company Limited Interim 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 or other forward-looking statements mentioned in this Report and its

summary shall NOT be considered as promises to investors. Investors and other stakeholders

shall be sufficiently aware of the risk and shall differentiate between plans/forecasts and

promises.The Company has no interim dividend plan either in the form of cash or stock.

2Changchai Company Limited Interim Report 2022

Table of Contents

Part I Important Notes Table of Contents and Defin... 2

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

Part III Business Summary............................ 9

Part IV Corporate Governance.........................32

Part V Environmental and Social Responsibility...... 33

Part VI Significant Events.......................... 35

Part VII Share Changes and Shareholder Information...44

Part VIII Preferred Shares...........................52

Part IX Bonds....................................... 53

Part X Financial Statements..........................54

3Changchai Company Limited Interim Report 2022

Documents Available for Reference

(I) The financial statements signed and sealed by the Company’s legal representative

General Manager and head of the financial department (accountant in charge).(II) The originals of all the Company’s documents and announcements which were

disclosed on the website designated by the CSRC during the Reporting Period.(III) The Interim 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 and the Shenzhen Stock Exchange.This Interim 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.

4Changchai Company Limited Interim Report 2022

Definitions

Term Definition

“Changchai” the “Company” or Changchai Company Limited and its consolidated

“we” subsidiaries except where the context otherwise requires

Changchai Benniu Changzhou Changchai Benniu Diesel Engine Fittings Co.Ltd.Changchai Wanzhou Changchai Wanzhou Diesel Engine Co. Ltd.Horizon Investment Changzhou Horizon Investment Co. Ltd.Horizon Agricultural Equipment Changzhou Changchai Horizon Agricultural EquipmentCo. Ltd.Changchai Robin Changzhou Fuji Changchai Robin Gasoline Engine Co.Ltd.Changchai Machinery Jiangsu Changchai Machinery Co. Ltd.Xingsheng Real Estate Management Changzhou Xingsheng Real Estate Management Co. Ltd.Zhenjiang Siyang Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd.RMB RMB’0000 Expressed in the Chinese currency of Renminbi expressedin tens of thousands of Renminbi

The “Reporting Period” or “CurrentPeriod” The period from 1 January 2022 to 30 June 2022

5Changchai Company Limited Interim 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 listing Shenzhen Stock Exchange

Company name in Chinese 常柴股份有限公司

Abbr. (if any) 苏常柴

Company name in English (if any) CHANGCHAI COMPANYLIMITED

Abbr. (if any) CHANGCHAI CO.LTD.Legal representative Shi Xinkun

II Contact Information

Board Secretary Securities Representative

Name He Jianjiang

123 Huaide Middle Road

Office address

Changzhou Jiangsu China

Tel. （86）519-68683155

Fax （86）519-86630954

Email address cchjj@changchai.com

III Other Information

1. Contact Information of the Company

Indicate by tick mark whether any change occurred to the registered address office address and their zip codes

website address and email address of the Company in the Reporting Period.□ Applicable √ Not applicable

No change occurred to the said information in the Reporting Period which can be found in the 2021 Annual

Report.

2. Media for Information Disclosure and Place where this Report is Lodged

Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging

the Company’s periodic reports in the Reporting Period.□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure the website designated by the CSRC for

6Changchai Company Limited Interim Report 2022

disclosing the Company’s periodic reports and the place for lodging such reports did not change in the Reporting

Period. The said information can be found in the 2021 Annual Report.

3. Other Relevant Information

Indicate by tick mark whether any change occurred to other relevant information in the Reporting Period.□ Applicable √ Not applicable

IV Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes √ No

H1 2022 H1 2021 Change (%)

Operating revenue (RMB) 1178222492.04 1497170455.80 -21.30%

Net profit attributable to the listed

-14595269.61129189065.60——

company’s shareholders (RMB)

Net profit attributable to the listed

company’s shareholders before -5809360.07 27160414.58 ——

exceptional gains and losses (RMB)

Net cash generated from/used in

-74300501.12-92554120.06——

operating activities (RMB)

Basic earnings per share (RMB/share) -0.0207 0.2301 ——

Diluted earnings per share

-0.02070.2301——

(RMB/share)

Weighted average return on equity (%) -0.48% 5.51% -5.99%

30 June 2022 31 December 2021 Change (%)

Total assets (RMB) 4956058838.71 4860382961.26 1.97%

Equity attributable to the listed

2994802512.993077550018.33-2.69%

company’s shareholders (RMB)

V 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

No difference for the Reporting Period.

7Changchai Company Limited Interim Report 2022

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

□ Applicable √ Not applicable

No difference for the Reporting Period.VI Exceptional Gains and Losses

√ Applicable □ Not applicable

Unit: RMB

Item Amount Note

Gain or loss on disposal of non-current assets

-361395.36

(inclusive of impairment allowance write-offs)

Government grants through profit or loss (exclusive

of government grants consistently given in the

Company’s ordinary course of business at fixed 1602830.77

quotas or amounts as per governmental policies or

standards)

Gain or loss on fair-value changes on Decrease in the fair value of the

held-for-trading financial assets and liabilities & shares held by wholly-owned

income from disposal of held-for-trading financial subsidiary Horizon Investment in

assets and liabilities and available-for-sale financial -19744106.00 Jiangsu Liance ElectromechanicalTechnology Co. Ltd. Kailong High

assets (exclusive of the effective portion of hedges Technology Co. Ltd. and Guilin

that arise in the Company’s ordinary course of Stars Science and Technology Co.business) Ltd.Non-operating income and expense other than the

1957639.94

above

Less: Income tax effects -7756677.28

Non-controlling interests effects (net of tax) -2443.83

Total -8785909.54

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.

8Changchai Company Limited Interim Report 2022

Part III Business Summary

I 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 "Changchai Robin". Our products are mainly used in agricultural machinery

small construction 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

9Changchai Company Limited Interim Report 2022

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

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. Industry Facts

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

agriculture and engineering represented by tractors plant protection machinery and small construction machinery.

(1) Development pattern and trend of the industry

China's diesel engine and gasoline engine industries present a pattern of multiple competitions. As the state adopts

10Changchai Company Limited Interim Report 2022

increasingly strict environmental protection policy and the emission standards continue to upgrade especially as

China VI emission regulations for gasoline engines and China IV emission regulations for non-road mobile

machinery diesel engines are or will be implemented 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. Currently the agricultural machinery industry is moving towards

slowing down development speed and increasing development quality upgrading and transformation as well as

shoring up weak spots.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. Concentration is increasing in

the industry and top manufacturers are growing stronger. The industry leaders will show the trend of increasing

market share and rising gross profit margin center and have the power to fix the market price of core products.

(2) Industry sales in the first half of 2022

From January to June 2022 the total sales of internal combustion engines were 21452000 units a decline of

14.42% year on year; the accumulative power was 1277057900 kW a decrease of 18.85% year on year. From

January to June 2289500 diesel engines were sold a decrease of 30.05% year on year. Specifically 450400

engines for construction machinery were sold a decrease of 23.84% from the same period last year; 652900

engines for agricultural machinery were sold a decrease of 24.81% from last year; 20600 engines for shipborne

machinery were sold a decrease of 7.69% from last year; 155300 engines for generator sets were sold an

increase of 9.29% from last year. In the first half 19155400 gasoline internal combustion engines were sold

down 10.71% year on year.

11Changchai Company Limited Interim Report 2022

In terms of the segments of the internal combustion engine market from January to June 482900 engines for

construction machinery were sold down 23.79% year on year; 2414700 engines for agricultural machinery were

sold down 8.38% year on year; 20600 engines for shipborne machinery were sold down 8.26% year on year;

640200 engines for generator sets were sold down 4.74% year on year.

(3) 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 "Changchai 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

12Changchai Company Limited Interim Report 2022

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

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.

6. Main Business Operations in the Reporting Period

In the first half of 2022 the international environment was complex and changeable China saw recurrent

outbreaks of the COVID-19 pandemic and supply and logistics disruptions were experienced. In addition prices

of raw materials kept rising with bulk materials remaining at high levels of prices. These factors affected the

Company’s production and operation. Balancing pandemic prevention and control with operation and

development the Company moved forward in a steady manner. According to the operational objectives set for the

year the Company sought progress amid stability by consolidating the core business and making targeted efforts

in improving marketing quality. In the Reporting Period the Company sold a total of 317.5 thousand diesel

engines gasoline engines and related generator sets including 75.2 thousand gasoline engines generating sales

13Changchai Company Limited Interim Report 2022

revenue of RMB1.178 billion a decrease of 21.30% year on year.In terms of product development and application the Company completed the development and certification for

light engines and mechanical pump single-cylinder engines that meet the National Emission Standard IV for

Non-Road Engines as well as the application experiments of a variety of multi-cylinder diesel engines that meet

the National Emission Standard IV for Non-Road Engines on terminal products of customers. In the

non-agricultural field the Company sped up efforts in product development and application made smooth

progress in shipborne products and completed most experiments for the European Union certification and

classification society certification.In terms of market services on the domestic market the Company deepened its expansion in market segments and

non-agricultural fields; on the overseas market the Company paid attention to the cultivation and development of

emerging and core market segments maintained a stable share of traditional application fields and main markets

and achieved growth in sales of key products. In the foreign trade market affected by the pandemic international

situation and financial environment the export volume decreased but the business volume in the emerging core

market segments increased.In terms of quality management the Company passed the supervision and verification by ISO9001 and

IATF16949 quality systems during the Reporting Period. Through the quality improvement project the Company

enhanced the supplier quality level strengthened the process quality control and reduced quality loss. Multiple

measures were taken 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 to

protect the brand market image.In terms of safety environmental protection and pandemic prevention and control the Company repeatedly

carried out special and comprehensive emergency plan drills and field disposal plan drills for key positions to

improve scientific rescue and accident emergency rescue ability strengthen occupational health education for

employees and effectively safeguard the life and property safety of employees and enterprises. The Company

increased its investment in the information construction of the Company as the parent and subsidiaries to

effectively guarantee the security of the network information system. All employees were organized to participate

in nucleic acid testing. Through measures such as transfer by special persons and vehicles a firm freight pandemic

prevention barrier was built to effectively ensure the safety and stability of the Company's supply chain and sales

channels.

14Changchai Company Limited Interim Report 2022

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.II 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 PacesetterEnterprise of Industrial Industry” for several times and was awarded the honorary title of “State-level Enterpriseof Observing Contracts and Keeping Promise” “China's Agricultural Machinery Parts and Components LeadingEnterprises” “China's Agricultural Machinery AAA Credit Enterprise” “Quality Management Excellence Awardof 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. During the Reporting Period the

Company was awarded honorary titles such as the National Model Enterprise for Trustworthy Product and Service

Quality Product with Guaranteed Quality and Reputation in China National Brand Leading in Product and

Service Quality Integrity and Trustworthy and Credit Oriented Enterprise in Jiangsu. 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

15Changchai Company Limited Interim Report 2022

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 a total of 19 patents were applied for and 12 new patents were

granted. Currently the Company has a total of 150 patents granted by authorities at home and abroad including

10 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.III Core Business Analysis

Overview

See contents under the heading “I Principal Activity of the Company in the Reporting Period”.Year-on-year changes in key financial data:

Unit: RMB

Main reason for

H1 2022 H1 2021 Change (%)

change

Operating revenue 1178222492.04 1497170455.80 -21.30%

Cost of sales 1051395232.42 1284114729.46 -18.12%

Selling expense 51759201.38 66174807.84 -21.78%

Administrative

40216534.1148008480.48-16.23%

expense

Increased exchange

gains and interest

Finance costs -13000719.98 2642630.25 ——

income in the

Reporting Period

Decreased fair value

of shares held by

wholly-owned

Income tax expense -6206048.88 28287379.84 —— subsidiary Horizon

Investment in the

Reporting Period

leading to a

16Changchai Company Limited Interim Report 2022

corresponding

decrease in income

tax expense

R&D investments 40159787.47 45136853.96 -11.03%

Net cash generated

from/used in operating -74300501.12 -92554120.06 ——

activities

Net cash generated

from/used in investing -86580833.90 -108221860.27 ——

activities

Arrival of funds

Net cash generated raised in a private

from/used in financing 27896685.26 618110527.29 -95.49% placement in the

activities same period of last

year

Net increase in cash

-132984649.76417334546.96——

and cash equivalents

Significant changes to the profit structure or sources of the Company in the Reporting Period:

√ Applicable □ Not applicable

In the Reporting Period the Company recorded a net loss mainly due to the following reasons:

1. In the Reporting Period during the peak season of the agricultural machinery industry the pandemic had a

negative impact on the Company's production organization raw material supply and logistics transportation.Some orders were delayed in production delivery or even canceled which directly led to the decline of the

Company's production and sales volumes sales revenue and core business profit.

2. In the Reporting Period the fair value of Liance Technology (688113) Kailong High Technology (300912)

Stars Science and Technology (832885) and other stocks held by Changzhou Horizon Investment Co. Ltd. a

wholly-owned subsidiary of the Company decreased compared with the beginning of the period.Breakdown of operating revenue:

Unit: RMB

H1 2022 H1 2021

As % of total As % of total

Operating Change (%)

operating Operating revenue operating

revenue

revenue (%) revenue (%)

Total 1178222492.04 100% 1497170455.80 100% -21.30%

By operating division

Internal

combustion 1161021786.32 98.54% 1475253150.96 98.54% -21.30%

engines

Other 17200705.72 1.46% 21917304.84 1.46% -21.52%

17Changchai Company Limited Interim Report 2022

By product category

Diesel engines 1079645157.01 91.63% 1397255572.40 93.33% -22.73%

Gasoline

73850875.096.27%71788166.814.79%2.87%

engines

Other 24726459.94 2.10% 28126716.59 1.88% -12.09%

By operating segment

Domestic 1019205712.35 86.50% 1273749146.74 85.08% -19.98%

Overseas 159016779.69 13.50% 223421309.06 14.92% -28.83%

Operating division product category or operating segment contributing over 10% of operating revenue or

operating profit:

√ Applicable □ Not applicable

Unit: RMB

YoY

YoY

change in

Gross change in YoY change

gross

Operating revenue Cost of sales profit operating in cost of

profit

margin revenue sales (%)

margin

(%)

(%)

By operating division

Internal

combustion 1161021786.32 1038738676.27 10.53% -21.30% -17.90% -3.70%

engines

By product category

Diesel 1079645157.01 966445549.55 10.48% -22.73% -19.25% -3.87%

engines

Gasoline

73850875.0963190398.1214.44%2.87%2.95%-0.06%

engines

By operating segment

Domestic 1019205712.35 896815020.88 12.01% -19.98% -15.96% -4.21%

Overseas 159016779.69 154580211.54 2.79% -28.83% -28.75% -0.10%

Core business data of the prior period restated according to the changed statistical caliber for the Reporting

Period:

□ Applicable √ Not applicable

Any over 30% YoYmovements in the data above and why:

□ Applicable √ Not applicable

IV Analysis of Non-Core Businesses

□ Applicable √ Not applicable

18Changchai Company Limited Interim Report 2022

V Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

30 June 2022 31 December 2021 Change

As % of As % of in Reason for any

Amount total Amount total percent significant change

assets assets age (%)

Monetary

572221826.4911.55%707966678.7414.57%-3.02%

assets

Longer payment days

for more markets and

for multi-cylinder

Accounts

915456685.20 18.47% 375209126.48 7.72% 10.75% customers mostly

receivable

being supporting

manufacturers for

bigger manufacturers

Inventories 533700662.32 10.77% 651083758.18 13.40% -2.63%

Investment

43379017.430.88%44597255.210.92%-0.04%

property

Completion and

transfer to fixed

assets of Changchai

Fixed assets 710380148.39 14.33% 402915521.65 8.29% 6.04% Machinery’s

construction in

progress in the

Reporting Period

Completion and

transfer to fixed

assets of Changchai

Construction

76620116.30 1.55% 270305690.91 5.56% -4.01% Machinery’s

in progress

construction in

progress in the

Reporting Period

Increased bank

acceptance notes

Short-term held by the Company

134395924.992.71%73971466.651.52%1.19%

borrowings at the period-end that

were discounted but

undue

19Changchai Company Limited Interim Report 2022

Contract

liabilities 39180596.15 0.79% 26864081.97 0.55% 0.24%

2. Major Assets Overseas

□ Applicable √ Not applicable

3. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable

Unit: RMB

Gain/loss Impairme

Cumulati

on nt

ve Purchase Sold in

fair-value allowance

Beginnin fair-value d in the the Other Ending

Item changes made in

g amount changes Reporting Reporting changes amount

in the the

through Period Period

Reporting Reporting

equity

Period Period

Financia

l assets

Held-for

-trading

financial

assets

(exclusi 4040532 -304883 4437082 4132911 4039819

ve of 61.57 88.88 11.00 69.81 13.88

derivati

ve

financial

assets)

Investm

ents in

other 7798776 5460424 7219186

equity 46.53 96.53 46.53

instrume

nts

Subtotal

of 1183930 -304883 5460424 4437082 4132911 1125900

financial 908.10 88.88 96.53 11.00 69.81 560.41

assets

Others 1503982 150398226.39 26.39

1334329-3048835460424443708241329111276298

Total of 134.49 88.88 96.53 11.00 69.81 786.80

20Changchai Company Limited Interim Report 2022

the

above

Financia

l

0.000.00

liabilitie

s

Significant changes to the measurement attributes of the major assets in the Reporting Period:

□ Yes √ No

4. Restricted Asset Rights as at the Period-End

Item Ending carrying amount Reason for restriction

Security deposits associated with bank

Monetary assets 123582947.15

acceptance notes environment etc.Buildings 1634418.39 Collateral for bank loan

Land use right 885605.70 Collateral for bank loan

Plant and equipment 28360996.68 Collateral for bank loan

Payment obligations in relation

to discounted notes that were 134395924.99

undue

Payment obligations in relation

to transferred notes that were 98388074.25

undue

Total 387247967.16

VI Investments Made

1. Total Investment Amount

√ Applicable □ Not applicable

Total investment amount in the Total investment amount in the

Change

Reporting Period (RMB) same period of last year (RMB)

33520800.00189850000.00-82.34%

2. Major Equity Investments Made in the Reporting Period

√ Applicable □ Not applicable

Unit: RMB

Inve Prin Way Amo The Fun Ter Type Inve Anti Inve Any Date IndeCo-i

stee cipal of unt Com ding m of of stme cipat stme legal (if x (ifnves

activ inve of pany sour inve the nt ed nt matt any) any)

21Changchai Company Limited Interim Report 2022

ity stme inve ’s ce tor stme inve prog retur inco er of to

nt stme inter nt stee’ ress n on me/l invo discl discl

nt est s as of inve oss lved osur osed

prod the stme in or e infor

ucts bala nt the not mati

nce Rep on

shee ortin

t g

date Peri

od

Tran

Zhe Man Man

njian ufact ufact

sacti

g urin urin

on

com

Siya g g plete

ng and and

Dies mar mar

d

ketin 335 withel Acq Self- Lon ketin the 179 29

Engi g of uisiti 208 41.5

Non

fund g-ter g of relev 0.00 898 Not Octo 2021

ne dies on 00.0 0% e dies ant 1.78 ber -068el 0 ed mMan el 2021

ufact engi engi

equit

y

urin ne ne

g sets sets

inter

for for estsCo.Ltd. ship ship

trans

s s ferred

335

Tota 179

l -- --

208

00.0------------0.00898------

01.78

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

□ Applicable √ Not applicable

4. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable

Unit: RMB

Acco Begi Gain/ Accu Purc Sold Gain/

Varie Code Nam Initia untin nnin loss mula hase in loss Endig g on ted d in in ng

Acco Fund

ty of of e of l meas thecarry fair fair the the carry

untin ing

Repo

secur secur secur inves urem value value Repo Repo ing g sourc

ity ity ity ent

ing

amou chan chan rting

rting

Perio rting amoutmen meth title ent ges ges Perio d Perio ntod in the recor d d

22Changchai Company Limited Interim Report 2022

t cost Repo ded

rting in

Perio equit

d y

Inves

tmen

Dom t in

Foto Fair

estic/ 367 408 other Self-

6001 n 4178 value 4970

forei 4000 8000 0.00 151000. 0.00 0.00 0.00

935 equit fund

66 Moto .00 meth 0.00 000.gn y ed

r od 00 00

stock instr

umen

ts

Inves

tmen

Dom t in

Bank Fair

estic/ 123 166 other Self-

6009 of 4278 value 1364

forei 6000 2200 0.00 822 0.00 0.00 0.00 608 equit fund

19 Jiang meth 000. 000.

gn .00 0.00

su od 00 00

y ed

stock instr

umen

ts

Othe

r

Kailo

Dom non-

ng Fair

estic/ 178 curre Self-

3009 High 2000 value 2413 -623 -623

forei 1268 6339 7820 0.00 0.00 0.00 782 985 nt fund

12 Tech .00 meth .00 .00 0.00 19.0gn 0 finan ednolo od

stock cial

gy

asset

s

Othe

r

Dom Lian non-

Fair

estic/ ce 7200 -222 655 curre Self-6881 value 8784 -222

forei Tech 000. 0000 4800 0.00 0.00 0.00 480 920 nt fund

13 meth 00.0 00.0

gn nolo 00 .00 0.00 0 0 finan edod

stock gy cial

asset

s

Dom FairLanti Othe Self-

estic/ 6053 an 1607

value 2890 -370 -370 252

44.7600.0000.000.000.000.0000.0000.

r fund

forei 68 methGas 0 00 non- ed

gn od curre

23Changchai Company Limited Interim Report 2022

stock nt

finan

cial

asset

s

Othe

Stars r

Dom Scien non-

Fair

estic/ ce curre Self-

8328 3600 value 9675 -270 -270 696

forei and 000. 000. 9000 0.00 0.00 0.00 900 600 nt fund

85 00 methgn Tech 00 .00 0.00 0.00 finan ed

od

stock nolo cial

gy asset

s

11557554-312490-312666

Total 3201 -- 4233 3182 973 318 251

2.769.000.00000.

0.000.0020.0519.----

00000

(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’0000

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

24Changchai Company Limited Interim Report 2022

Special

account

Non-pu

for

blic

2021 63500 2771.2 28509. 0 0 0.00% 34990. deposit 0

offerin 9 65 35

ing

g

raised

funds

Total -- 63500 2771.2 28509. 0 0 0.00% 34990.9 65 35 -- 0

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 168412297 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 RMB634999996.40. 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 RMB620665733.97.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. At the end of the Reporting

Period RMB285.0965 million of raised funds has been used cumulatively with the unused raised funds being

RMB349.9035million.

(2) Committed Projects of Raised Funds

√ Applicable □ Not applicable

Unit: RMB’0000

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)

25Changchai Company Limited Interim Report 2022

Committed investment projects

Relocation project

of light engines No 5476 5476 2733. 2684 49.01

31

6.71 6.71 53 0.68 % May Nil No No

and casting 2022

Innovation 31 Not

capacity building

No 8733. 7299.29 86 37.76

163.6

92.24%

Dece

mber Nil applic Noproject of the

2023 abletechnical center

Subtotal of

committed 6350 6206 2771. 2700

------------

investment 0.00 6.57 29 4.37

projects

Investment of excessive raised funds

Not applicable

635062062771.2700

Total -- -- -- -- -- --

0.006.57294.37

Reasons for slowing payment progress of light engine and foundrying relocation project:

affected by the epidemic from the second half of 2021 to the first half of 2022 the final

acceptance progress of the project is affected to a certain extent resulting in slow

Cases and reasons payment progress. At present the signed contract amount of the project is about 470

for failing to million yuan and the remaining unpaid amount is mainly the unpaid part according to the

reach the planned payment schedule agreed in the contract and the supporting working capital of the project

progress or is 130 million yuan. The project has reached the intended usable state in May 2022 and

predicted return payment will be made after the final acceptance of the project.(by specific

projects) The reason why the light engine and casting relocation project did not realize benefits in

the reporting period: the project reached the expected serviceable state in May 2022 and

it will take some time for order matching sales. Therefore as of June 30 2022 no

benefits have been realized.Explanations of

the material

Not applicable

changes in the

project feasibility

Amount use and

use progress of

Not applicable

excessive raised

funds

Implementation

of location

changes in the Not applicable

investment

projects with the

26Changchai Company Limited Interim Report 2022

raised funds

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 June 17 2021 the cumulative amount of the Company's self-financing funds

pre-invested in the investment projects with raised funds was RMB181803327.94 the

amount of issuance expenses advanced was RMB2358490.56 totaling

RMB184161818.50 and the proposed replacement amount was RMB184161818.50.Early investment The capitals were verified by the Gongzheng Tianye Accounting Firm (Special General

and placement Partnership) and the Verification Report on the Pre-investment of Self-financing Funds

concerning the into the Investment Project with Raised Funds and the Payment of Issuance Expenses by

investment Self-financing Funds of Changchai Co. Ltd. (S.G.W [2021] E1347) was issued on June

projects with the 25 2021. On June 28 2021 the Third Interim Meeting of the Board of Directors of the

raised funds Company in 2021 deliberated and approved the Proposal on Replacing the 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 RMB184161818.50 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 June 30 2021.

Temporary

replenishment of

working capital Not applicable

with the idle

raised funds

27Changchai Company Limited Interim Report 2022

Surplus raised

funds for project

implementation Not applicable

and reasons for

the surplus

Use and

ownership change

Deposited in the special account for raised funds

of unused raised

funds

On July 13 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 decided to add

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.Note: The Proposal on Adding Implementation Location to the Private Placement Raised Funds Investment

Project of Innovation Capacity Building of the Technical Center 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 the main plant of the Company as the parent has a limited space and certain R&D equipment to be purchased

need to work with the relevant production system the Company decided to 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 implement the R&D project. This change will not re-purpose the raised funds and will help carry

forward the technical innovation project.

(3) Altered Projects of Raised Funds

□ Applicable √ Not applicable

No such cases in the Reporting Period.VII Sale of Major Assets and Equity Investments

1. Sale of Major Assets

□ Applicable √ Not applicable

28Changchai Company Limited Interim Report 2022

No such cases in the Reporting Period.

2. Sale of Major Equity Investments

□ Applicable √ Not applicable

VIII Principal Subsidiaries and Joint Stock Companies

√ Applicable □ Not applicable

Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:

Unit: RMB

Relatio

nship

with Principal

Operati

Registere Total Net Operatin

Name activity ng Net profitthe d capital assets assets g revenue

profit

Compa

ny

Production

Changchai Subsidi of diesel 550630 172490 865344 101298 -2043 -1839208.Benniu ary engine 00.00 381.82 29.51 856.28 106.28 40

accessories

Diesel

Changchai Subsidi 850000 710166 496096 171542 -32433 -306598.1

engine

Wanzhou ary 00.00 20.36 17.74 69.32 7.55 8

assembly

External

Horizon Subsidi investment 400000 106394 881108 -31065 -2325805

0.00

Investment ary and 00.00 105.84 58.94 595.50 1.62

consulting

agricultural

Horizon machinery

Agricultura Subsidi product of 100000 109483 -122726 347357 -1427 -1427524.l ary rice 00.00 45.00 32.64 1.23 524.84 84

Equipment transplanter

etc.Gasoline

Changchai Subsidi 372500 124503 108440 738508 65504 5412817.engines

Robin ary 00.00 924.47 954.08 75.09 55.49 26

assembly

Internal

Changchai Subsidi combustion 300000 504460 293767 -2414 -2376129.0.00

Machinery ary engine and 000.00 914.22 525.35 958.49 73

related

29Changchai Company Limited Interim Report 2022

accessories

Xingsheng

Real estate

Real Estate Subsidi 100000 647457 508763 223991 94096

manageme 870196.02

Manageme ary 0.00 8.39 6.70 7.00 7.61

nt service

nt

Manufactur

ing and

Zhenjiang Subsidi marketing 200000 972217 838796 234352 33527 2594944.Siyang ary of diesel 0.00 53.24 57.40 07.63 58.26 16

engines for

ships

Subsidiaries obtained or disposed of in the Reporting Period:

√ Applicable □ Not applicable

Company name How the subsidiary was obtained or disposed Impact on the Company’sof in the Reporting Period operations and operating results

The Company won the bid of RMB33.5208

Zhenjiang Siyang Diesel million of own funds for the 41.5% equity

This transaction will help the

Engine Manufacturing interests in Zhenjiang Siyang Diesel Engine

Company expand its product

Co. Ltd. Manufacturing Co. Ltd. which was put out for

chain complete its business

sale by Jiangsu Keda Assets Marketing Co. portfolio and promote long-term

Ltd. development.Other information about principal subsidiaries and joint stock companies:

Changzhou Horizon Investment Co. Ltd. (Horizon Investment) a wholly-owned subsidiary of the Company

reported a net profit of RMB-23.2581 million in H1 2022 (H1 2021: RMB62.4119 million). This is mainly a result

of the decreased fair value of shares held in Liance Technology (688113) Kailong High Technology (300912) and

Stars Science and Technology (832885) among others.IX Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

X Risks Facing the Company and Countermeasures

1. Market risk

In recent years the agricultural industry has still been in a period of deep adjustment in which diesel engines face

limited total demand the product delivery ability and delivery environment need to be improved and the lower

user revenue exacerbates the increase in update cycles.Countermeasures: First the Company intensified its efforts in key product development and application and

product development in new fields. Second the Company solidified the traditional application fields and

expanded more possibilities for applications in new fields. Third the Company made active use of the capital

30Changchai Company Limited Interim Report 2022

platform to push ahead capital operation projects in a steady and orderly manner to serve the Company's

development.

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

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: With regard to the layout of new energy industry the Company actively promotes project

construction and development. Meanwhile the Company makes proper efforts in product R&D and expands new

development directions and application areas.

3. The risk of raw material price fluctuations

The Company's raw material purchase price is mainly affected by factors such as macroeconomic cycle industrial

policy adjustment market supply and demand changes. Price fluctuations of raw materials may adversely affect

Company's business performance.Countermeasures: By strengthening inventory and plan management cost control and other measures the

Company further improves our operating efficiency and reduce the upward pressure on costs.

4. Foreign trade risk

The international economic environment is complex and volatile. Multiple factors have created uncertainties to

the global macroeconomic outlook such as severe challenges brought by the normalization of the COVID-19 to

the current foreign trade operation the prevalence of global trade protectionism and the abnormal fluctuations of

the international financial market affecting the export of products.Countermeasures: The Company consolidated the existing customer base strengthened the maintenance and

management of overseas key markets and customers intensified efforts in the development of emerging markets

and new users and endeavored to improve the sales of high-value-added products.

5. Talent risk

31Changchai Company Limited Interim Report 2022

As the Company has been committed to improving operational efficiency and technological innovation to cope

with the increasingly fierce market competition and industry development trend it has a significantly greater

demand for professionals and senior management personnel.Countermeasures: First the Company introduced top talent through various channels and strengthened personnel

training. Second the Company optimized the performance appraisal system and incentive pay system. Third the

Company made efforts to strengthen employee training and actively promote talent cultivation to reduce the loss

of professionals and reinforce talent team building.

32Changchai Company Limited Interim Report 2022

Part IV Corporate Governance

I Annual and Extraordinary General Meeting Convened during the Reporting Period

1. General Meetings Convened during the Reporting Period

Investor Index to

Date of the Date of

Meeting Type participati disclosed

meeting disclosure

on ratio information

All proposals

were approved.Annual See

The 2021 Annual

General 32.33% 6 May 2022 7 May 2022 Announcement

General Meeting No. 2022-027 on

Meeting Resolutions of

the 2021 Annual

General Meeting.

2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with Resumed

Voting Rights

□ Applicable √ Not applicable

II Change of Directors Supervisors and Senior Management

□ Applicable √ Not applicable

No changes occurred to the Company’s directors supervisors and senior management during the Reporting Period.For their information see the 2021 Annual Report.III Interim Dividend Plan

□ Applicable √ Not applicable

The Company has no interim dividend plan either in the form of cash or stock.IV Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures for

Employees

□ Applicable √ Not applicable

No such cases in the Reporting Period.

33Changchai Company Limited Interim 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

Other environmental information with reference to a key polluter:

Neither the Company nor any of its subsidiaries is a key polluter identified by the environment authorities. They

strictly observe applicable laws and regulations associated with environmental protection in production and

operation without receiving any penalty for major violation of such laws or regulations during the Reporting

Period.Actions taken during the Reporting Period to reduce carbon emissions and the impact:

□ Applicable √ Not applicable

Reasons for not disclosing other environment-related information:

N/A

II Social Responsibility

In the Reporting Period the Company always attached equal importance to economic benefits and social benefits

paid attention to its corporate social responsibility and maintained standardized and prudent operation. Also the

Company conscientiously fulfilled its responsibilities and obligations to shareholders employees consumers

suppliers and other parties in an effort to achieve win-win outcomes for all parties and to take an active part in

the construction of a harmonious society.In strict accordance with the requirements of the Company Law the Securities Law the Code of Corporate

Governance for Listed Companies the Listing Rules of Shenzhen Stock Exchange other relevant laws and

regulations and the Articles of Association the Company standardized its operation and formed an internal

management and control policy system in which the Shareholders' General Meeting the Board of Directors and

the Supervisory Committee restrict each other and operate effectively. According to the internal control policy

system the Company defined the responsibilities and authorities for parties in charge of decision-making

execution and supervision effectively divided responsibilities and formed a balance mechanism and continuously

improved the standardized operation level of the Company.Protection of the rights and interests of investors: The Company has exercised its functions and powers in strict

accordance with relevant laws and regulations to effectively protect the rights and interests of all shareholders. In

the Reporting Period the Company conducted an online results presentation of Annual Report 2021 earnestly

organized the management of investors communicated with shareholders effectively accurately and completely

and treated all shareholders fairly. The Company's information disclosure is legal and compliant and the content

34Changchai Company Limited Interim Report 2022

disclosed is true accurate and complete to safeguard shareholders' right to know and provide investors with a

sufficient investment basis. The Company attaches great importance to the management of insider information. In

the Reporting Period there was no insider trading or damage to the interests of shareholders.Protection of creditors' equity: The Company established a systematic internal control system that covers financial

management investment management financing management asset management fund management accounting

management and current account management. Moreover prudent financial management plan was implemented

accounting supervision was conducted in accordance with the law and the Company's assets were effectively

utilized to improve the Company's economic benefits and ensure the security of the Company's assets and funds

effectively.Protection of employees' rights and interests: The Company upholds the people-oriented concept in talent

management. Specifically the Company paid attention to the comprehensive ability improvement and personal

career development of employees and improved and developed employees' abilities by combining theory and

practice. The Company actively improved the working environment of employees and properly monitored

employees' health to effectively guarantee the occupational safety and health of employees. The Company has

strictly observed the Labor Law and the Labor Contract Law protected the legitimate rights and interests of

employees according to law and built harmonious and stable relations between employees and employer.Protection of the rights and interests of customers and suppliers: In the Reporting Period the Company was

awarded honorary titles such as the National Model Enterprise for Trustworthy Product and Service Quality

Product with Guaranteed Quality and Reputation in China and National Brand Leading in Product and Service

Quality Integrity. The Company has established good long-term partnerships with its suppliers and customers is

committed to providing customers with quality efficient and timely services and has been recognized and

honored by many customers and high-quality suppliers. According to the assessment results and actual supply

situation the Company constantly has adjusted and optimized its supply system and supported the technology

growth and progress of suppliers in an effort to create a virtuous cycle of supply relations.The Company actively promoted the R&D of high-quality products accelerated product update and promoted the

application of products to serve the construction of agriculture rural areas and farmers. The Company continued

to implement energy conservation and emission reduction measures to improve energy efficiency reduce

consumption and protect the environment. The Company took solid steps for charity to give back to society.Specifically it actively participated in relevant charity activities in the locality. The Company always remembers

its social responsibilities and has made contributions to social development with practical actions.

35Changchai Company Limited Interim Report 2022

Part VI Significant Events

I 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

Dat

e

of

Typ

co

e of Term Ful

m

co of fill

Commitment Promisor Details of commitment mit

mm comm me

me

itm itment nt

nt

ent

ma

kin

g

1. The company and its controlled

related parties have not reduced their

holdings of shares of Changchai

Company from the six months prior to

Ab the announcement of the decision of the

out Board of Directors of Changchai 29 10

shar Company Limited ("Changchai Se Octob

eho Company") concerning the proposal to pte er Ex

Changzhou Investment Group

ldin consider the non-public offering of mb 2019 pir

Co. Ltd.g shares to the date of issuance of this er -30 ed

Commitments red Letter of Commitment. 20 June

made in IPO or ucti 2. The company and its controlled 20 2022

refinancing on related parties have no plan to reduce

their holdings of shares of Changchai

Company from the date of issuance of

this Letter of Commitment to six months

after the completion of this issuance.Ab It will not transfer the shares it has

5 5 July

out obtained in the private placement of

Jul 2021 On

Changzhou Investment Group shar Changchai within 36 months starting

y -5 goi

Co. Ltd. e from the date when the private

20 July ng

trad placement of A-shares is allowed for

212024

ing public trading.

36Changchai Company Limited Interim Report 2022

rest

ricti

on

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

11

shares if the China Securities

11 April

Regulatory Commission (CSRC) makes

Ap 2020 On

Changzhou Investment Group Oth other new regulatory provisions on the

ril -31 goi

Co. Ltd. er return filling measures and

20 Dece ng

commitments and the aforesaid

20 mber

commitments cannot meet such

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

Ab

Management Co. Ltd.out

Changzhou Traffic Construction I/We undertake that I/we will not 5 July

shar 5

Investment Development transfer the shares I/we have obtained in 2021-

e Jul Ex

General Company Chen the private placement of Changchai 5

trad y pir

Beiwen Guotai Asset within 6 months starting from the date Januar

ing 20 ed

Management Co. Ltd. Jiangxi when the private placement of A-shares y

rest 21

Jintou Industrial Development is allowed for public trading. 2022

ricti

Co. Ltd. Li Xueqin Nanhua

on

Fund Co. Ltd. Enjoy (Ningbo)

37Changchai Company Limited Interim Report 2022

Asset Management L.P. Nuode

Asset Management Co. Ltd.Sun Meichun Minmetals

Securities Co. Ltd. Yao

Jianquan China National Gold

GroupAsset 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 the common reserves) in

this year or half year and abundant

Other Ab

8

money flow and no influence on the

Ma Year On

commitments made out following-up going concern after cash

Changchai Company Limited divi y 2020- goi

to minority den bonus the profits allocated by cash 20 2022 ng

shareholders ds every year shouldn’t be lower than 10% 20

of the allocable profits 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

Yes

not

Specific reasons

for failing to fulfill

commitments on

N/A

time and plans for

next step (if

any)

II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related

Parties for Non-Operating Purposes

□ Applicable √ Not applicable

No such cases in the Reporting Period.

38Changchai Company Limited Interim Report 2022

III Irregularities in the Provision of Guarantees

□ Applicable √ Not applicable

No such cases in the Reporting Period.IV Engagement and Disengagement of Independent Auditor

Are the interim financial statements audited?

□ Yes √ No

The interim financial statements are unaudited.V Explanations Given by the Board of Directors and the Supervisory Committee Regarding

the Independent Auditor's “Modified Opinion” on the Financial Statements of the Reporting

Period

□ Applicable √ Not applicable

VI Explanations Given by the Board of Directors Regarding the Independent Auditor's

“Modified Opinion” on the Financial Statements of Last Year

□ Applicable √ Not applicable

VII Insolvency and Reorganization

□ Applicable √ Not applicable

No such cases in the Reporting Period.VIII Legal Matters

Significant lawsuits and arbitrations:

□ Applicable √ Not applicable

No such cases in the Reporting Period.Other legal matters:

□ Applicable √ Not applicable

IX Punishments and Rectifications

□ Applicable √ Not applicable

No such cases in the Reporting Period.

39Changchai Company Limited Interim Report 2022

X Credit Quality of the Company as well as its Controlling Shareholder and De Facto

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.XI 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.

40Changchai Company Limited Interim Report 2022

7. Other Major Related-Party Transactions

□ Applicable √ Not applicable

No such cases in the Reporting Period.XII 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'0000

Guarantees provided by the Company for external parties (exclusive of those for subsidiaries)

Disclos Guara

ure date Actual Havin ntee

Actual

of the Line of occurrence g for a

Guarantee-receiv date guarante Type of Term ofguarant guarant expire relate

ing entity e guarantee guarantee

ee line ee (agreement d or damount

announc signing date) not party

ement or not

Guarantees provided by the Company as the parent for its subsidiaries

41Changchai Company Limited Interim Report 2022

Disclos Guara

ure date Actual Havin ntee

of the Line of occurrence

Actual

g for a

Guarantee-receiv date guarante Type of Term ofguarant guarant expire relate

ing entity e guarantee guarantee

ee line ee (agreement d or damount

announ signing date) not party

cement or not

Changzhou

Changchai

Horizon 15 April Joint

2000 7 May 2021 2000 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

guarant guarant date

guarante Type of Term of for a

expire

ing entity e guarantee guarantee related

ee line ee (agreement d oramount 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 actual

Total approved guarantee

guarantee balance at

line at the end of the

0 the end of the 0

Reporting Period

Reporting Period

(A3+B3+C3)

(A4+B4+C4)

42Changchai Company Limited Interim Report 2022

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)

3. Cash Entrusted for Wealth Management

√ Applicable □ Not applicable

Unit: RMB’0000

Impairment

Unrecovered allowance for

Type Funding source Amount Undue amount

overdue amount unrecovered

overdue amount

Broker financial

Self-funded 855 855 0 0

products

Bank financial

Self-funded 2500 2500 0 0

products

Broker financial

Raised funds 5000 0 0 0

products

Bank financial

Raised funds 28000 28000 0 0

products

Total 36355 31355 0 0

High-risk wealth management transactions with a significant single amount or with low security low liquidity or

no principal protection:

□ Applicable √ Not applicable

Situation where the principal is expectedly irrecoverable or an impairment may be incurred:

□ Applicable √ Not applicable

43Changchai Company Limited Interim Report 2022

4. Other Major Contracts

□ Applicable √ Not applicable

No such cases in the Reporting Period.XIII Other Significant Events

√ Applicable □ Not applicable

1. Participation in bidding for 41.5% equity interests in Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd.

that was put out for sale

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 RMB830000) 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 RMB33520800.00. 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. Zhenjiang Siyang has been included in the consolidated financial statements of the Company.XIV Significant Events of Subsidiaries

□ Applicable √ Not applicable

44Changchai Company Limited Interim 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

dividend

Percenta New dividend Percenta

Number converte Other Subtotal Number

ge (%) issues converte ge (%)

d from

d from

capital

profit

reserves

1.

Restricte 144318181 20.45%

-87500-87500568181

000.00000.00818.05%

d shares

1.1

Shares

held by 0 0.00% 0.00 0.00 0 0.00%

governm

ent

1.2

Shares

held by

state-ow 720454 10.21% -15227 -15227 56818153 272.00 272.00 81.00 8.05%

ned

legal

persons

1.3

Shares

held by

other 688636

389.76%

-68863-68863

638.00 638.00 0 0.00%domesti

c

investor

s

Among

488181-48818-48818

which: 78 6.92% 178.00 178.00 0 0.00%

Shares

45Changchai Company Limited Interim Report 2022

held by

domesti

c legal

persons

S

hares

held by 200454 2.84% -20045 -20045

domesti 60 460.00 460.00

00.00%

c natural

persons

1.4

Shares

held by 340909 0.48% -34090 -34090

foreign 0 90.00 90.00

00.00%

investor

s

Among

which:

Shares

held by 340909 0.48% -34090 -340900 90.00 90.00 0 0.00%

foreign

legal

persons

S

hares

held by

00.00%0000.00%

foreign

natural

persons

2.

Unrestri 561374 79.55% 875000 875000 648874326 00.00 00.00 326 91.95%cted

shares

2.1

RMB-de

nominat 411374 58.29% 875000 875000 498874326 00.00 00.00 326 70.69%ed

ordinary

shares

2.2

150000

Domesti 000 21.26% 0 0

150000

00021.26%

cally

46Changchai Company Limited Interim Report 2022

listed

foreign

shares

2.3

Oversea

listed 0 0.00% 0 0 0 0.00%

foreign

shares

2.4

00.00%0000.00%

Other

3. Total 705692 100.00 0 0 705692 100.00

shares 507 % 507 %

Reasons for the share changes:

√ Applicable □ Not applicable

The 144318181 new shares issued in a non-public manner were listed on the Shenzhen Stock Exchange on 5 July

2021. During the Reporting Period a total of 87500000 shares jointly held by 15 shareholders were released to

be traded on 5 January 2022.Approval of the share changes:

□ Applicable √ Not applicable

Transfer of share ownership:

□ Applicable √ Not applicable

Progress on any share repurchase:

□ Applicable √ Not applicable

Progress on reducing the repurchased shares by means of centralized bidding:

□ Applicable √ Not applicable

Effects of the 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

Restricted Restricted

Name of the shares shares shares

shares

Restricted shares

shareholders amount at relieved of

increased amount at Restricted reasons

relieved date

the the period of the theperiod

period-begi period-end

47Changchai Company Limited Interim Report 2022

n

Additional issuance

Changzhou

of 56818181

Investment

56818181 0 0 56818181 shares through the 2024-7-5

Group Co.private placement

Ltd.of shares

Additional issuance

of 3409090 shares

UBS AG 3409090 3409090 0 0 2022-1-5

through the private

placement of shares

Additional issuance

Caitong Fund

of 7909090 shares

Management 7909090 7909090 0 0 2022-1-5

through the private

Co. Ltd.placement of shares

Jiangxi

Additional issuance

Jintou

of 4545454 shares

Industrial 4545454 4545454 0 0 2022-1-5

through the private

Development

placement of shares

Co. Ltd.Additional issuance

Guotai Asset

of 8181818 shares

Management 8181818 8181818 0 0 2022-1-5

through the private

Co. Ltd.placement of shares

Enjoy

Additional issuance

(Ningbo)

of 6818181 shares

Asset 6818181 6818181 0 0 2022-1-5

through the private

Management

placement of shares

L.P.Additional issuance

Zhou of 3409090 shares

34090903409090002022-1-5

Zhiheng through the private

placement of shares

China

Additional issuance

National

of 10681818

Gold Group

10681818 10681818 0 0 shares through the 2022-1-5

Asset

private placement

Management

of shares

Co. Ltd.Additional issuance

Sun Meichun 4545454 4545454 0 0 of 4545454 shares 2022-1-5

through the private

48Changchai Company Limited Interim Report 2022

placement of shares

Additional issuance

Nuode Asset of 11363636

Management 11363636 11363636 0 0 shares through the 2022-1-5

Co. Ltd. private placement

of shares

Additional issuance

Minmetals

of 4545454 shares

Securities 4545454 4545454 0 0 2022-1-5

through the private

Co. Ltd.placement of shares

Additional issuance

of 7272727 shares

Chen Beiwen 7272727 7272727 0 0 2022-1-5

through the private

placement of shares

Additional issuance

Nanhua Fund of 5454545 shares

54545455454545002022-1-5

Co. Ltd. through the private

placement of shares

Additional issuance

of 4545454 shares

Yao Jianquan 4545454 4545454 0 0 2022-1-5

through the private

placement of shares

Changzhou

Transportatio

Additional issuance

n

of 4545454 shares

Construction 4545454 4545454 0 0 2022-1-5

through the private

Investment

placement of shares

Development

Co. Ltd.Additional issuance

of 272735 shares

Li Xueqin 272735 272735 0 0 2022-1-5

through the private

placement of shares

Total 144318181 87500000 0 56818181 -- --

II. Issuance and Listing of Securities

□ Applicable √ Not applicable

49Changchai Company Limited Interim Report 2022

III Shareholders and Their Holdings

Unit: share

Number of ordinary Number of preference shareholders

574340

shareholders with resumed voting rights (if any)

5% or greater ordinary shareholders or the top 10 ordinary shareholders

Increa Shares in

se/dec Unrestrict pledge or

Shareh

rease Restricted ed frozen

Name of Nature of olding Ordinary

in the ordinary ordinary

shareholder shareholder percent shares held

Repor shares held shares Sh

age

ting held Status are

Period s

Changzhou

State-owned

Investment Group 32.26% 227663417 56818181

1708452

legal person 36

Co. Ltd

Domestic

Chen Jian natural 0.70% 4952045 4952045

person

China National

Gold Group Asset State-owned

0.45%32000003200000

Management Co. corporation

Ltd.KGI ASIA Foreign

LIMITED 0.44% 3101695 3101695legal person

Domestic

Yao Jianquan natural 0.24% 1699954 1699954

person

China Minsheng

Bank-Goldstate

Yuanqi Dynamic

Asset Allocation Other 0.22% 1579173 1579173

Mixed Type

Securities

Investment Fund

Domestic

Li Suinan natural 0.22% 1569100 1569100

person

Domestic

Huang Guoliang natural 0.22% 1528891 1528891

person

Domestic

Su Zhenxing natural 0.21% 1490393 1490393

person

Lu Zhang Domesticnatural 0.19% 1370112 1370112

50Changchai Company Limited Interim Report 2022

person

Strategic investor or general

legal person becoming a top-10

N/A

ordinary shareholder in a rights

issue (if any)

It is unknown whether there is among the top 10 public shareholders and

Related or acting-in-concert

the top 10 unrestricted public shareholders any related parties or

parties among the shareholders

acting-in-concert parties as defined in the Administrative Measures for

above

Information Regarding Shareholding Alteration.Explain if any of the

shareholders above was involved

in entrusting/being entrusted with N/A

voting rights or waiving voting

rights

Special account for share

repurchases (if any) among the N/A

top 10 shareholders

Top 10 unrestricted shareholders

Shares by class

Name of shareholder Unrestricted ordinary shares held

Class Shares

Changzhou Investment Group RMB-denominated

170845236170845236

Co. Ltd ordinary share

RMB-denominated

Chen Jian 4952045 4952045

ordinary share

China National Gold Group RMB-denominated

32000003200000

Asset Management Co. Ltd. ordinary share

Domestically listed

KGI ASIA LIMITED 3101695 3101695

foreign share

RMB-denominated

Yao Jianquan 1699954 1699954

ordinary share

China Minsheng Bank-Goldstate

Yuanqi Dynamic Asset RMB-denominated

Allocation Mixed Type 1579173 1579173ordinary share

Securities Investment Fund

Li Suinan 1569100 Domestically listedforeign share 1569100

Huang Guoliang 1528891 Domestically listedforeign share 1528891

RMB-denominated

Su Zhenxing 1490393 1490393

ordinary share

Domestically listed

Lu Zhang 1370112 1370112

foreign share

51Changchai Company Limited Interim Report 2022

Related or acting-in-concert

parties among the top 10

It is unknown whether there is among the top 10 public shareholders and

unrestricted ordinary

the top 10 unrestricted public shareholders any related parties or

shareholders as well as between

acting-in-concert parties as defined in the Administrative Measures for

the top 10 unrestricted ordinary

Information Regarding Shareholding Alteration.shareholders and the top 10

ordinary shareholders

Top 10 ordinary shareholders

Shareholders Chen Jian and Yao Jianquan held 3380000 and 1699954

involved in securities margin

shares 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.IV Change in Shareholdings of Directors Supervisors and Senior Management

□ Applicable √ Not applicable

No changes occurred to the shareholdings of the directors supervisors and senior management in the Reporting

Period. See the 2021 Annual Report for more details.V Change of the Controlling Shareholder or the De Facto Controller

Change of the controlling shareholder in the Reporting Period

□ Applicable √ Not applicable

No such cases in the Reporting Period.Change of the de facto controller in the Reporting Period

□ Applicable √ Not applicable

No such cases in the Reporting Period.

52Changchai Company Limited Interim Report 2022

Part VIII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.

53Changchai Company Limited Interim Report 2022

Part IX Bonds

□ Applicable √ Not applicable

54Changchai Company Limited Interim Report 2022

Part X Financial Statements

I Independent Auditor’s Report

Are these interim financial statements audited by an independent auditor?

□ Yes √ No

These interim financial statements have not been audited by an independent auditor.II Financial Statements

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

1. Consolidated Balance Sheet

Prepared by Changchai Company Limited

30 June 2022

Unit: RMB

Item 30 June 2022 1 January 2022

Current assets:

Monetary assets 572221826.49 707966678.74

Settlement reserve

Interbank loans granted

Held-for-trading financial assets 403981913.88 404053261.57

Derivative financial assets

Notes receivable 481963539.81 334311236.78

Accounts receivable 915456685.20 375209126.48

Accounts receivable financing 109896100.86 497388826.02

Prepayments 9181800.63 8197418.39

Premiums receivable

Reinsurance receivables

Receivable reinsurance contract

reserve

Other receivables 17260272.39 19515350.52

Including: Interest receivable

Dividends

receivable

Financial assets purchased under

55Changchai Company Limited Interim Report 2022

resale agreements

Inventories 533700662.32 651083758.18

Contract assets

Assets held for sale

Current portion of non-current

assets

Other current assets 28394257.94 44060822.57

Total current assets 3072057059.52 3041786479.25

Non-current assets:

Loans and advances to

customers

Investments in debt obligations 37898226.39 37898226.39

Investments in other debt

obligations

Long-term receivables

Long-term equity investments

Investments in other equity

721918646.53779877646.53

instruments

Other non-current financial

112500000.00112500000.00

assets

Investment property 43379017.43 44597255.21

Fixed assets 710380148.39 402915521.65

Construction in progress 76620116.30 270305690.91

Productive living assets

Oil and gas assets

Right-of-use assets

Intangible assets 158820832.11 155154745.91

Development costs

Goodwill

Long-term prepaid expense 168183.91 110345.30

Deferred income tax assets 10705583.29 10693809.23

Other non-current assets 11611024.84 4543240.88

Total non-current assets 1884001779.19 1818596482.01

Total assets 4956058838.71 4860382961.26

Current liabilities:

Short-term borrowings 134395924.99 73971466.65

56Changchai Company Limited Interim Report 2022

Borrowings from the central

bank

Interbank loans obtained

Held-for-trading financial

liabilities

Derivative financial liabilities

Notes payable 565529500.00 550774400.00

Accounts payable 716529188.78 666186668.82

Advances from customers 411746.26 660965.62

Contract liabilities 39180596.15 26864081.97

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 13334668.05 45385667.48

Taxes payable 9362552.01 5306378.82

Other payables 153925355.85 148361373.29

Including: Interest payable

Dividends payable 3891433.83 3891433.83

Handling charges and

commissions payable

Reinsurance payables

Liabilities directly associated

with assets held for sale

Current portion of non-current

liabilities

Other current liabilities 117795225.18 88938192.79

Total current liabilities 1750464757.27 1606449195.44

Non-current liabilities:

Insurance contract reserve

Long-term borrowings

Bonds payable

Including: Preferred shares

57Changchai Company Limited Interim Report 2022

Perpetual bonds

Lease liabilities

Long-term payables

Long-term employee benefits

payable

Provisions

Deferred income 39615355.40 39615355.40

Deferred income tax liabilities 101423332.63 117344161.11

Other non-current liabilities

Total non-current liabilities 141038688.03 156959516.51

Total liabilities 1891503445.30 1763408711.95

Owners’ equity:

Share capital 705692507.00 705692507.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserves 640133963.01 640676218.40

Less: Treasury stock

Other comprehensive income 456746349.55 506011499.55

Specific reserve 18812950.04 18812950.04

Surplus reserves 334144488.46 334144488.46

General reserve

Retained earnings 839272254.93 872212354.88

Total equity attributable to owners

2994802512.993077550018.33

of the Company as the parent

Non-controlling interests 69752880.42 19424230.98

Total owners’ equity 3064555393.41 3096974249.31

Total liabilities and owners’ equity 4956058838.71 4860382961.26

Legal representative: Shi Xinkun General Manager: Zhang Xin

Head of the accounting department: Jiang He

58Changchai Company Limited Interim Report 2022

2. Balance Sheet of the Company as the Parent

Unit: RMB

Item 30 June 2022 1 January 2022

Current assets:

Monetary assets 470089580.54 615184387.01

Held-for-trading financial assets 280677397.27 262004030.14

Derivative financial assets

Notes receivable 442389706.25 312118296.88

Accounts receivable 876984511.81 349135255.42

Accounts receivable financing 104609495.00 497388826.02

Prepayments 2008908.66 2727652.23

Other receivables 112148961.53 26497081.34

Including: Interest receivable

Dividends

receivable

Inventories 384892199.17 516588187.24

Contract assets

Assets held for sale

Current portion of non-current

assets

Other current assets 21292211.46

Total current assets 2673800760.23 2602935927.74

Non-current assets:

Investments in debt obligations 37898226.39 37898226.39

Investments in other debt

obligations

Long-term receivables

Long-term equity investments 569273530.03 535752730.03

Investments in other equity

721918646.53779877646.53

instruments

Other non-current financial

112500000.00112500000.00

assets

Investment property 43379017.43 44597255.21

Fixed assets 268405430.86 325034679.67

Construction in progress 14527817.41 15557418.76

59Changchai Company Limited Interim Report 2022

Productive living assets

Oil and gas assets

Right-of-use assets

Intangible assets 64495178.59 66621426.26

Development costs

Goodwill

Long-term prepaid expense

Deferred income tax assets 9613375.32 9613375.32

Other non-current assets

Total non-current assets 1842011222.56 1927452758.17

Total assets 4515811982.79 4530388685.91

Current liabilities:

Short-term borrowings 127395924.99 58971466.65

Held-for-trading financial

liabilities

Derivative financial liabilities

Notes payable 555529500.00 544444400.00

Accounts payable 511502328.13 546689207.59

Advances from customers 361746.26 660965.62

Contract liabilities 33230278.78 24730270.44

Employee benefits payable 6363916.75 37861577.50

Taxes payable 5136642.12 2955053.82

Other payables 131936513.29 135773368.98

Including: Interest payable

Dividends payable 3243179.97 3243179.97

Liabilities directly associated

with assets held for sale

Current portion of non-current

liabilities

Other current liabilities 101680550.03 63535570.11

Total current liabilities 1473137400.35 1415621880.71

Non-current liabilities:

Long-term borrowings

Bonds payable

Including: Preferred shares

60Changchai Company Limited Interim Report 2022

Perpetual bonds

Lease liabilities

Long-term payables

Long-term employee benefits

payable

Provisions

Deferred income 39615355.40 39615355.40

Deferred income tax liabilities 86442011.09 95034251.50

Other non-current liabilities

Total non-current liabilities 126057366.49 134649606.90

Total liabilities 1599194766.84 1550271487.61

Owners’ equity:

Share capital 705692507.00 705692507.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserves 659418700.67 659418700.67

Less: Treasury stock

Other comprehensive income 456746349.55 506011499.55

Specific reserve 18812950.04 18812950.04

Surplus reserves 334144488.46 334144488.46

Retained earnings 741802220.23 756037052.58

Total owners’ equity 2916617215.95 2980117198.30

Total liabilities and owners’ equity 4515811982.79 4530388685.91

Legal representative: Shi Xinkun General Manager: Zhang Xin

Head of the accounting department: Jiang He

61Changchai Company Limited Interim Report 2022

3. Consolidated Income Statement

Unit: RMB

Item H1 2022 H1 2021

1. Revenue 1178222492.04 1497170455.80

Including: Operating revenue 1178222492.04 1497170455.80

Interest income

Insurance premium income

Handling charge and commission income

2. Costs and expenses 1175890460.94 1452332780.19

Including: Cost of sales 1051395232.42 1284114729.46

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 5360425.54 6255278.20

Selling expense 51759201.38 66174807.84

Administrative expense 40216534.11 48008480.48

R&D expense 40159787.47 45136853.96

Finance costs -13000719.98 2642630.25

Including: Interest expense 3276786.93 4437018.11

Interest income 6634812.22 4502088.58

Add: Other income 1602830.77 406454.70

Return on investment (“-” for loss) 11744282.88 8524500.87

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) -30488388.88 122554092.00

Credit impairment loss (“-” for loss) -11932826.66 -12495432.28

Asset impairment loss (“-” for loss) 4342775.64 -5950895.20

Asset disposal income (“-” for loss) -361395.36 -751441.20

3. Operating profit (“-” for loss) -22760690.51 157124954.50

Add: Non-operating income 2349897.18 850183.59

Less: Non-operating expense 392257.24 333307.72

4. Profit before tax (“-” for loss) -20803050.57 157641830.37

62Changchai Company Limited Interim Report 2022

Less: Income tax expense -6206048.88 28287379.84

5. Net profit (“-” for net loss) -14597001.69 129354450.53

5.1 By operating continuity

5.1.1 Net profit from continuing operations (“-” for net

-14597001.69129354450.53

loss)

5.1.2 Net profit from discontinued operations (“-” for net

loss)

5.2 By ownership

5.2.1 Net profit attributable to owners of the Company as

-14595269.61129189065.60

the parent

5.2.1 Net profit attributable to non-controlling interests -1732.08 165384.93

6. Other comprehensive income net of tax -49265150.00 106633979.81

Attributable to owners of the Company as the parent -49265150.00 106633979.81

6.1 Items that will not be reclassified to profit or loss -49265150.00 106633979.81

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

-49265150.00106633979.81

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 -63862151.69 235988430.34

Attributable to owners of the Company as the parent -63860419.61 235823045.41

Attributable to non-controlling interests -1732.08 165384.93

8. Earnings per share

8.1 Basic earnings per share -0.0207 0.2301

63Changchai Company Limited Interim Report 2022

8.2 Diluted earnings per share -0.0207 0.2301

Legal representative: Shi Xinkun General Manager: Zhang Xin

Head of the accounting department: Jiang He

64Changchai Company Limited Interim Report 2022

4. Income Statement of the Company as the Parent

Unit: RMB

Item H1 2022 H1 2021

1. Operating revenue 1078301529.20 1410448746.19

Less: Cost of sales 970973105.63 1208764033.69

Taxes and surcharges 3155384.25 4635318.65

Selling expense 46868501.97 61699594.15

Administrative expense 30805739.43 39946732.13

R&D expense 38111512.10 44159551.96

Finance costs -12522766.90 879974.12

Including: Interest expense 2512056.83 3961226.02

Interest income 6463613.32 4225564.97

Add: Other income 1591699.00 324000.00

Return on investment (“-” for loss) 11181384.11 8191724.76

Including: Share of profit or loss of joint

ventures 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) 677397.27 33750000.00

Credit impairment loss (“-” for loss) -18418259.44 -12089483.86

Asset impairment loss (“-” for loss) 4630554.88 903169.33

Asset disposal income (“-” for loss) 3985814.42 -751441.20

2. Operating profit (“-” for loss) 4558642.96 80691510.52

Add: Non-operating income 106436.47 155765.48

Less: Non-operating expense 551906.60 31065.09

3. Profit before tax (“-” for loss) 4113172.83 80816210.91

Less: Income tax expense 0.00 5162965.63

4. Net profit (“-” for net loss) 4113172.83 75653245.28

4.1 Net profit from continuing operations (“-” for net

4113172.8375653245.28

loss)

4.2 Net profit from discontinued operations (“-” for

net loss)

5. Other comprehensive income net of tax -49265150.00 106633979.81

5.1 Items that will not be reclassified to profit or loss -49265150.00 106633979.81

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

-49265150.00106633979.81

other equity instruments

65Changchai Company Limited Interim Report 2022

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

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 -45151977.17 182287225.09

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

66Changchai Company Limited Interim Report 2022

5. Consolidated Cash Flow Statement

Unit: RMB

Item H1 2022 H1 2021

1. Cash flows from operating activities:

Proceeds from sale of commodities and rendering of services 852422695.04 981576052.47

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 21003040.54 22968063.81

Cash generated from other operating activities 15868307.49 8267240.80

Subtotal of cash generated from operating activities 889294043.07 1012811357.08

Payments for commodities and services 692753586.82 817182988.13

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 171587076.85 182319842.94

Taxes paid 22071086.33 23836429.52

Cash used in other operating activities 77182794.19 82026216.55

Subtotal of cash used in operating activities 963594544.19 1105365477.14

Net cash generated from/used in operating activities -74300501.12 -92554120.06

2. Cash flows from investing activities:

Proceeds from disinvestment 60336793.52 20900000.00

Return on investment 11678930.55 8666039.34

Net proceeds from the disposal of fixed assets intangible assets

176.99544953.88

and other long-lived assets

Net proceeds from the disposal of subsidiaries and other

business units

Cash generated from other investing activities 169856.31 220217.55

Subtotal of cash generated from investing activities 72185757.37 30331210.77

Payments for the acquisition of fixed assets intangible assets

32486960.2789253071.04

and other long-lived assets

67Changchai Company Limited Interim Report 2022

Payments for investments 126279631.00 49250000.00

Net increase in pledged loans granted

Net payments for the acquisition of subsidiaries and other

business units

Cash used in other investing activities 50000.00

Subtotal of cash used in investing activities 158766591.27 138553071.04

Net cash generated from/used in investing activities -86580833.90 -108221860.27

3. Cash flows from financing activities:

Capital contributions received 634999996.40

Including: Capital contributions by non-controlling interests

to subsidiaries

Borrowings raised 7000000.00

Cash generated from other financing activities 49395924.99 1391000.00

Subtotal of cash generated from financing activities 49395924.99 643390996.40

Repayment of borrowings 12000000.00

Interest and dividends paid 18895164.72 585750.44

Including: Dividends paid by subsidiaries to non-controlling

interests

Cash used in other financing activities 2604075.01 12694718.67

Subtotal of cash used in financing activities 21499239.73 25280469.11

Net cash generated from/used in financing activities 27896685.26 618110527.29

4. Effect of foreign exchange rates changes on cash and cash

equivalents

5. Net increase in cash and cash equivalents -132984649.76 417334546.96

Add: Cash and cash equivalents beginning of the period 573623529.10 629939540.50

6. Cash and cash equivalents end of the period 440638879.34 1047274087.46

Legal representative: Shi Xinkun General Manager: Zhang Xin

Head of the accounting department: Jiang He

68Changchai Company Limited Interim Report 2022

6. Cash Flow Statement of the Company as the Parent

Unit: RMB

Item H1 2022 H1 2021

1. Cash flows from operating activities:

Proceeds from sale of commodities and rendering of services 786613668.93 894925360.60

Tax rebates 15030607.99 17264845.63

Cash generated from other operating activities 11394587.24 6892535.60

Subtotal of cash generated from operating activities 813038864.16 919082741.83

Payments for commodities and services 656683755.72 781316544.81

Cash paid to and for employees 142487390.71 155951400.17

Taxes paid 17126241.78 17244260.55

Cash used in other operating activities 65961229.60 70426536.35

Subtotal of cash used in operating activities 882258617.81 1024938741.88

Net cash generated from/used in operating activities -69219753.65 -105856000.05

2. Cash flows from investing activities:

Proceeds from disinvestment

Return on investment 11181384.11 8191724.76

Net proceeds from the disposal of fixed assets intangible assets

43495.14

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 11181384.11 8235219.90

Payments for the acquisition of fixed assets intangible assets and

3984411.734226730.46

other long-lived assets

Payments for investments 53520800.00 186250000.00

Net payments for the acquisition of subsidiaries and other

business units

Cash used in other investing activities

Subtotal of cash used in investing activities 57505211.73 190476730.46

Net cash generated from/used in investing activities -46323827.62 -182241510.56

3. Cash flows from financing activities:

Capital contributions received 634999996.40

Borrowings raised

Cash generated from other financing activities 49395924.99 1391000.00

Subtotal of cash generated from financing activities 49395924.99 636390996.40

Repayment of borrowings 5000000.00

Interest and dividends paid 18348005.18 109958.35

Cash used in other financing activities 47604075.01 12694318.18

Subtotal of cash used in financing activities 65952080.19 17804276.53

Net cash generated from/used in financing activities -16556155.20 618586719.87

4. Effect of foreign exchange rates changes on cash and cash

69Changchai Company Limited Interim Report 2022

equivalents

5. Net increase in cash and cash equivalents -132099736.47 330489209.26

Add: Cash and cash equivalents beginning of the period 476410739.41 559573331.81

6. Cash and cash equivalents end of the period 344311002.94 890062541.07

Legal representative: Shi Xinkun General Manager: Zhang Xin

Head of the accounting department: Jiang He

70Changchai Company Limited Interim Report 2022

7. Consolidated Statements of Changes in Owners’ Equity

H1 2022

Unit: RMB

H1 2022

Equity attributable to owners of the Company as the parent

Other L

equity e

instruments s

s:

T G

P r en

Pr

Item er e Other er Non-cont Total

Share ef pe Capital a compreh Specific Surplus al Retained Ot rolling owners’Subtotal

capital er tu Ot reserves s ensive reserve reserves re earnings her interests equity

re

al he u income se

d

b r r rv

sh

o y e

ar

n st

es

ds o

c

k

1. Balance as at the end of the 7056925 640676 506011 188129 334144 872212 307755 1942423 3096974

period of prior year 07.00 218.40 499.55 50.04 488.46 354.88 0018.33 0.98 249.31

Add: Adjustment for change in

accounting policy

71Changchai Company Limited Interim Report 2022

Adjustment for correction of

previous error

Adjustment for business

combination under common

control

Other adjustments

2. Balance as at the beginning of 7056925 640676 506011 188129 334144 872212 307755 1942423 3096974

the Reporting Period 07.00 218.40 499.55 50.04 488.46 354.88 0018.33 0.98 249.31

3. Increase/ decrease in the period -54225 -49265 -329432 -82750 5033182 -324188

(“-” for decrease) 5.39 150.00 74.79 680.18 4.28 55.90

3.1 Total comprehensive -49265 -145952 -63860

150.0069.61419.61-1732.08

-638621

income 51.69

3.2 Capital increased and -54225 -542255 5033355 4979130

reduced by owners 5.39 .39 6.36 0.97

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

3.2.4 Other -54225 -542255 5033355 49791305.39 .39 6.36 0.97

3.3 Profit distribution -183480 -18348 -18348005.18 005.18 05.18

3.3.1 Appropriation to

surplus reserves

3.3.2 Appropriation to

general reserve

72Changchai Company Limited Interim Report 2022

3.3.3 Appropriation to -183480 -18348 -183480

owners (or shareholders) 05.18 005.18 05.18

3.3.4 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

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in the period

3.5.2 Used in the period

3.6 Other

4. Balance as at the end of the 7056925 640133 456746 188129 334144 839269 299479 6975605 3064555

Reporting Period 07.00 963.01 349.55 50.04 488.46 080.09 9338.15 5.26 393.41

73Changchai Company Limited Interim Report 2022

H1 2021

Unit: RMB

H1 2021

Equity attributable to owners of the Company as the parent

Other L

equity e

instruments s

s:

P T G

er r en

Pr

Item p e Other er Non-cont Total

Share ef et Capital a compreh Specific Surplus al Retained Ot rolling owners’Subtotal

capital er u O reserves s ensive reserve reserves re earnings her interests equity

re

al th u income se

d

b er r rv

sh

o y e

ar

n st

es

d o

s c

k

1. Balance as at the end of the 5613743 164328 425482 188129 325451 777899 227334 1949858 2292847

period of prior year 26.00 665.43 758.24 86.55 531.14 079.66 9347.02 9.15 936.17

Add: Adjustment for change in

accounting policy

Adjustment for correction of

previous error

74Changchai Company Limited Interim Report 2022

Adjustment for business

combination under common

control

Other adjustments

2. Balance as at the beginning of 5613743 164328 425482 188129 325451 777899 227334 1949858 2292847

the Reporting Period 26.00 665.43 758.24 86.55 531.14 079.66 9347.02 9.15 936.17

3. Increase/ decrease in the period 1443181 476347 106633 129189 856488 165384.9 8566541

(“-” for decrease) 81.00 552.97 979.81 065.60 779.38 3 64.31

3.1 Total comprehensive 106633 129189 235823 165384.9 2359884

income 979.81 065.60 045.41 3 30.34

3.2 Capital increased and 1443181 476347 620665 6206657

reduced by owners 81.00 552.97 733.97 33.97

3.2.1 Ordinary shares 1443181 476347 620665 6206657

increased by owners 81.00 552.97 733.97 33.97

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

3.3 Profit distribution

3.3.1 Appropriation to

surplus reserves

3.3.2 Appropriation to

general reserve

3.3.3 Appropriation to

owners (or shareholders)

3.3.4 Other

75Changchai Company Limited Interim Report 2022

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

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in the period

3.5.2 Used in the period

3.6 Other

4. Balance as at the end of the 7056925 640676 532116 188129 325451 907088 312983 1966397 3149502

Reporting Period 07.00 218.40 738.05 86.55 531.14 145.26 8126.40 4.08 100.48

Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He

76Changchai Company Limited Interim Report 2022

8. Statements of Changes in Owners’ Equity of the Company as the Parent

H1 2022

Unit: RMB

H1 2022

Other equity

instruments

Le

Pe ss:

rp Other

Item Pre Tre Ot Totalet Capital comprehen Specific Surplus RetainedShare capital fer Ot asu he owners’

ua reserves sive reserve reserves earnings

red he ry r equity

l income

sha r sto

bo

res ck

nd

s

1. Balance as at the end of the 705692507.0 65941870 50601149 18812950. 334144488. 756037052. 29801171

period of prior year 0 0.67 9.55 04 46 58 98.30

Add: Adjustment for change in

accounting policy

Adjustment for correction of

previous error

Other adjustments

2. Balance as at the beginning of 705692507.0 65941870 50601149 18812950. 334144488. 756037052. 29801171

the Reporting Period 0 0.67 9.55 04 46 58 98.30

3. Increase/ decrease in the period -4926515 -14234832.3 -63499982.

(“-” for decrease) 0.00 5 35

77Changchai Company Limited Interim Report 2022

3.1 Total comprehensive -4926515

0.004113172.83

-45151977.income 17

3.2 Capital increased and

reduced by owners

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

3.2.4 Other

3.3 Profit distribution -18348005.1 -18348005.8 18

3.3.1 Appropriation to

surplus reserves

3.3.2 Appropriation to -18348005.1 -18348005.

owners (or shareholders) 8 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

78Changchai Company Limited Interim Report 2022

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

3.5.1 Increase in the period

3.5.2 Used in the period

3.6 Other

4. Balance as at the end of the 705692507.0 65941870 45674634 18812950. 334144488. 741802220. 29166172

Reporting Period 0 0.67 9.55 04 46 23 15.95

H1 2021

Unit: RMB

H1 2021

Other equity

instruments

Le

Pe ss:

rp Other

Item Pre Tr O Totalet Capital comprehen Specific Surplus RetainedShare capital fer Ot eas th owners’

ua reserves sive reserve reserves earnings

red he ury er equity

l income

sha r sto

bo

res ck

nd

s

79Changchai Company Limited Interim Report 2022

1. Balance as at the end of the 561374326.0 183071147 42548275 18812986. 325451531. 677800436. 21919931

period of prior year 0 .70 8.24 55 14 75 86.38

Add: Adjustment for change in

accounting policy

Adjustment for correction of

previous error

Other adjustments

2. Balance as at the beginning of 561374326.0 183071147 42548275 18812986. 325451531. 677800436. 21919931

the Reporting Period 0 .70 8.24 55 14 75 86.38

3. Increase/ decrease in the period 144318181.0 476347552 10663397 75653245.2 802952959

(“-” for decrease) 0 .97 9.81 8 .06

3.1 Total comprehensive income 10663397 75653245.2 1822872259.81 8 .09

3.2 Capital increased and 144318181.0 476347552 620665733

reduced by owners 0 .97 .97

3.2.1 Ordinary shares 144318181.0 476347552 620665733

increased by owners 0 .97 .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

3.3 Profit distribution

3.3.1 Appropriation to surplus

reserves

3.3.2 Appropriation to owners

(or shareholders)

3.3.3 Other

80Changchai Company Limited Interim Report 2022

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

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in the period

3.5.2 Used in the period

3.6 Other

4. Balance as at the end of the 705692507.0 659418700 53211673 18812986. 325451531. 753453682. 29949461

Reporting Period 0 .67 8.05 55 14 03 45.44

Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He

81Changchai Company Limited Interim 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 374249551 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

RMB187124775.00 as well as registered capital of RMB561374326.00 after change. As at 31 December 2020

the total share capital of the Company is 561374326.00 shares as well as registered capital of

RMB561374326.00 which verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company

Limited with issuing Capital Verification Report SGC [2010] No. B002. And the unified social credit code of the

enterprise business license of the Company is 91320400134792410W.On 9 April 2020 the Company held the 24th Meeting of the 8th Board of Directors where the 2020 Proposal on

Changchai Co. Ltd. Non-public Issuance was deliberated and adopted. The Company intended to make a

non-public issuance of domestic listed RMB ordinary shares to specific targets which was approved by the

controlling shareholder Changzhou Investment Group Co. Ltd. and deliberated and adopted by the 2019 annual

general meeting. On 18 September 2020 the Company's Board of Directors deliberated and adopted the

amendments related to the non-public issuance of shares at an Extraordinary General Meeting. The Company

supplemented and improved the foregoing proposal in accordance with the relevant amendments and compiled

the 2020 Proposal on Changchai Co. Ltd. Non-public Issuance (Amendment) which was deliberated and adopted

by the second Extraordinary General Meeting in 2020. The Company offered 144318181 RMB ordinary shares

(A shares) in a non-public manner. The issuing price was RMB4.40 per share the total amount raised was

RMB634999936.40 and the net amount raised was RMB622499996.40. 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] B062) was issued. The new shares

issued in a non-public manner were listed on the Shenzhen Stock Exchange on 5 July 2021.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

82Changchai Company Limited Interim Report 2022

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

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 22 August 2022.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 andrevised from 15 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for BusinessEnterprises” “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.

83Changchai Company Limited Interim Report 2022

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.

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

84Changchai Company Limited Interim Report 2022

the difference between the initial cost of the long-term equity investment and total face value of the shares issued

shall offset against the capital reserve. If the capital reserve is insufficient to dilute the retained earnings shall be

adjusted.All direct costs for the business combination including expenses for audit evaluating and legal services shall be

recorded into the profits and losses at the current period. The expenses such as the handling charges and

commission etc premium income of deducting the equity securities and as for the premium income was

insufficient to dilute the retained earnings shall be written down.Owning to the reasons such as the additional investment for the equity investment held before acquiring the

control right of the combined parties the confirmed relevant gains and losses other comprehensive income and

the changes of other net assets since the date of the earlier one between the date when acquiring the original equity

right and the date when the combine parties and combined ones were under the same control to the combination

date should be respectively written down and compared with the beginning balance of retained earnings or the

current gains and losses during the statement period.

(2) Business combinations not under the same control

A business combination not under the same control is a business combination in which the combining enterprises

are not ultimately controlled by the same party or the same parties both before and after the business combination.The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business

combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the

combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business

reputation. The direct relevant expenses occurred from the enterprise combination should be included in the

current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets

obtained by it in the combination shall be measured according to their fair values at the acquiring date. The

difference between the fair value of the assets paid out by the Company and its book value should be included in

the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the

acquiree.For the business combinations not under the same control realized through step by step multiple transaction as for

the equity interests that the Group holds in the acquiree before the acquiring date they shall be re-measured

according to their fair values at the acquiring date; the positive difference between their fair values and carrying

amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed

by the acquiree which involved with the other comprehensive income and the 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

85Changchai Company Limited Interim Report 2022

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

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.

86Changchai Company Limited Interim Report 2022

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

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.

87Changchai Company Limited Interim Report 2022

(2) Translation of foreign currency

The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spotexchange rate on the balance sheet date. Among the owner’s equity items except for the items as “undistributedprofits” 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.

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

* 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.* 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.* 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.* 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

88Changchai Company Limited Interim Report 2022

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.* 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

the carrying value and the paid consideration shall be recorded into the current profit or loss.* 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.

89Changchai Company Limited Interim Report 2022

(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.

(6) Impairment of financial instrument

* 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.

90Changchai Company Limited Interim Report 2022

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:

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

Related party within Consulting historical experience in credit losses

Group 2 of other receivables

the consolidation combining current situation and prediction for future

91Changchai Company Limited Interim Report 2022

scope economic situation the expected credit loss shall be

accounted through exposure at default and the expected

credit loss rate within the next 12 months or over the

entire life

11. Accounts Receivable

See “10. Financial Instruments”.

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

92Changchai Company Limited Interim Report 2022

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.

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: * the costs are directly related

to a current or predicted contract; * the costs increase the Company’s resources applied to fulfill performance

obligations in the future; * 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: *

the residual consideration predicted to be acquired by transferring commodities related to the assets; * the costs

predicted to occur due to the transfer of related commodities.If the difference between * and * 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

93Changchai Company Limited Interim Report 2022

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;

(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

94Changchai Company Limited Interim Report 2022

which is actually paid.The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair

value of the equity securities issued.The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment

contract or agreement the unfair value stipulated in the contract or agreement shall be measured at fair value.As for long-term investment obtained by the exchange of non-monetary assets where it is commercial in nature

the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment

received; where it is not commercial in 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.

95Changchai Company Limited Interim Report 2022

The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of

all to write down the book value of the long-term equity investment. Secondly if the book value of the long-term

equity investment is insufficient for written down should be continued to recognized the investment losses limited

to the book value of other long-term equity which forms of the net investment of the investees and to written

down the book value of the long-term accounts receivable etc. Lastly through the above handling for those

should still undertake the additional obligations according to the investment contracts or the agreements it shall

be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into

investment losses at current period. If the invested entity realizes any net profits later the 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

96Changchai Company Limited Interim Report 2022

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

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

97Changchai Company Limited Interim Report 2022

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

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

98Changchai Company Limited Interim Report 2022

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

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

99Changchai Company Limited Interim Report 2022

should be recorded according to the fair value of the swap-out assets; for those not own the commercial nature

should be recorded according to the book value of the swap-out assets.For the intangible assets acquires from the debts reorganization should be recognized by the fair value.

(2) Amortization method and term of intangible assets

As for the intangible assets with limited service life which are amortized by straight-line method when it is

available for use within the service period shall be recorded into the current profits and losses. The Company

shall at least at the end of each year check the service life and the amortization method of intangible assets with

limited service life. When the service life and the amortization method of intangible assets are different from those

before the years and method of the amortization shall be changed.Intangible assets with uncertain service life may not be amortized. However the Company shall check the service

life of intangible assets with uncertain service life during each accounting period. Where there are evidences to

prove the intangible assets have limited service life it shall be estimated of its service life and be amortized

according to the above method mentioned.The rights to use land of the Company shall be amortized according to the rest service life.

(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

100Changchai Company Limited Interim Report 2022

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

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

101Changchai Company Limited Interim Report 2022

contribution plans.Defined contribution plans

During the accounting period that the Company providing the service for the employees the Company should

recognize the liabilities according to the deposited amount calculated by defined contribution plans and should be

included in the current gains and losses or the relevant assets cost.

(3) Accounting Treatment of the Demission Welfare

The Company should recognize the payroll payment liabilities occur from the demission welfare according to the

earlier date between the following two conditions and include which in the current gains and losses when

providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission

welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the

costs or expenses related to the reorganization involves with the demission welfare payments.

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

102Changchai Company Limited Interim Report 2022

The Company shall measure the provisions in accordance with the best estimate of the necessary expenses for the

performance of the current obligation.The Company shall check the book value of the 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

103Changchai Company Limited Interim Report 2022

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.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.Rental Income

The rental income from operating lease shall be recognized during each lease period according to the straight-line

method and the contingent rent shall be included into the current profit and loss without delay.

104Changchai Company Limited Interim Report 2022

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

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.

105Changchai Company Limited Interim Report 2022

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

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.

106Changchai Company Limited Interim Report 2022

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

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

107Changchai Company Limited Interim Report 2022

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.

(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.

108Changchai Company Limited Interim Report 2022

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

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 Ministry of Finance issued the Accounting Standards for Business On 22 August

Enterprises Interpretation No. 15 (Cai Kuai [2021] No. 35) on 30 2022 the 13th

December 2021 which gives a specification of following contents: Meeting of the 9th“Accounting treatment for sales of products or by-products by enterprises Board of Directorsgenerated from fixed assets before reaching the intended state of and the 12thavailability or from the period of R&D” “Judgment on onerous contracts” Meeting of the 9th

and “Presentation of centralized capital management”. Supervisory

In accordance with the Accounting Standards for Business Enterprises Committee were

Interpretation No. 15 the Company has implemented the provisions held by the

regarding the accounting treatment for sales of products or by-products by Company on

enterprises generated from fixed assets before reaching the intended state which the

of availability or from the period of R&D since 1 January 2022 the Proposal on

provisions regarding the presentation of centralized capital management Changes of

109Changchai Company Limited Interim Report 2022

since 30 December 2021 and the provisions regarding judgment on Accounting

onerous contracts since 1 January 2022. Policies was

This change in accounting policies does not involve the retrospective approved.adjustment of the Company in previous years nor does it adjust the data

in the comparative financial statements of the previous 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%

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. Ltd. 25%

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. 25%

110Changchai Company Limited Interim Report 2022

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.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 201776.86 145594.98

Bank deposits 447927242.99 561746767.12

Other monetary assets 124092806.64 146074316.64

Total 572221826.49 707966678.74

Total amount of

restriction in use by mortgage 123582947.15 145564457.15

pledge or freeze

At the period-end the restricted monetary assets of the Company was RMB123582947.15 of

which RMB125778577.60 was the cash deposit for bank acceptance bills RMB2993220.00 was

cash deposit for L/G and RMB797589.55 was cash deposit for environment.

2. Trading Financial Assets

Unit: RMB

Item Ending balance Beginning balance

Financial assets at fair value

403981913.88404053261.57

through profit or loss

Of which:

Stocks 104304516.61 121940343.76

111Changchai Company Limited Interim Report 2022

Financial products 299677397.27 282112917.81

Of which:

Total 403981913.88 404053261.57

3. Notes Receivable

(1) Notes Receivable Listed by Category

Unit: RMB

Item Ending balance Beginning balance

Bank acceptance bill 481963539.81 334311236.78

Total 481963539.81 334311236.78

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) There Were No Notes Receivable Pledged by the Company at the Period-end

(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 247086575.81

Total 247086575.81

(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

Category Carrying Bad debt Carryi Carrying Bad debt Carryin

amount provision ng amount provision g value

112Changchai Company Limited Interim Report 2022

Withd value Withd

Amou Propo Amou rawal Amou Propor Amou rawal

nt rtion nt propo nt tion nt propor

rtion tion

Accounts

receivable for

466543333322

which bad debt 92.88 5043 44054

6944.4.21%4335.608.57453.9.10%367.187.3463830

provision % 63 5 % 86.4803 44 9

separately

accrued

Accounts

receivable for

106014819121

which bad debt 95.79 13.97 5040 90.90 135262905 5648 3407 9272 6680. 26.83 368826

provision % % % % 040.00

61.354.746.610.0808

accrued by

group

Of which:

Accounts

receivable for

which bad debt 1060 1481 9121

95.7913.97504013526

provision 2905 5648 3407 9272 90.90% 6680.

26.83368826

%%%040.00

accrued by 61.35 4.74 6.61 0.08 08

credit risk

features group

110619149154

100.017.30554517932

Total 9475 9082 5668 3017 100.00% 1047.

32.34375209

0%%%126.48

05.380.185.203.7123

Account receivables withdrawn bad debt provision separately with significant amount at the period end:

Unit: RMB

Ending balance

Name Withdrawal

Carrying amount Bad debt provision Reason of withdrawal

proportion

Customer1 1470110.64 1470110.64 100.00% Difficult to recover

Customer2 1902326.58 1902326.58 100.00% Difficult to recover

Customer3 6215662.64 6215662.64 100.00% Difficult to recover

Customer4 2797123.26 2194980.28 78.47% Expected to difficultly recover

Customer5 3633081.23 2122165.73 58.41% Expected to difficultly recover

Customer6 2584805.83 2584805.83 100.00% Difficult to recover

Customer7 1523110.59 1523110.59 100.00% Difficult to recover

113Changchai Company Limited Interim Report 2022

Customer8 1511937.64 302387.53 20.00% Expected to difficultly recover

Customer9 1962873.80 1962873.80 100.00% Difficult to recover

Customer10 2790920.00 2790920.00 100.00% Difficult to recover

Customer11 2025880.18 2025880.18 100.00% Difficult to recover

Customer12 2589892.74 2589892.74 100.00% Difficult to recover

Customer13 2837045.23 2837045.23 100.00% Difficult to recover

Customer14 5972101.90 5972101.90 100.00% Difficult to recover

Customer15 4592679.05 4592679.05 100.00% Difficult to recover

Total 44409551.31 41086942.72 -- --

Accounts receivable for which bad debt provision accrued by credit risk features group:

Unit: RMB

Ending balance

Aging

Carrying amount Bad debt provision Withdrawal proportion

Within 1 year 902418413.99 18048368.28 2.00%

1 to 2 years 21100490.04 1055024.50 5.00%

2 to 3 years 5388349.99 808252.50 15.00%

3 to 4 years 2526740.52 758022.16 30.00%

4 to 5 years 3424373.75 2054624.25 60.00%

Over 5 years 125590924.31 125432193.06 100.00%

Total 1060449292.60 148156484.74 --

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) 902802395.40

1 to 2 years 43871882.94

2 to 3 years 7616504.48

114Changchai Company Limited Interim Report 2022

Over 3 years 152656722.56

3 to 4 years 4476490.08

4 to 5 years 5960663.50

Over 5 years 142219568.98

Total 1106947505.38

(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

Category Ending balance

balance Reversal orWithdrawal Write-off

recovery

Bad debt

provision

44054367.15720031.7143334335.44

withdrawn

separately

Bad debt

provision

135266680.0812889804.66148156484.74

withdrawn by

group

Total 179321047.23 12889804.66 720031.71 191490820.18

Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.

(3) There Were No Accounts Receivable with Actual Verification during the Reporting Period.

(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party

Unit: RMB

Proportion to total

Ending balance of Ending balance of bad

Name of the entity ending balance of

accounts receivable debt provision

accounts receivable

Customer1 567626334.55 51.28% 11352526.69

Customer2 57715364.53 5.21% 1154307.29

Customer3 18252915.05 1.65% 365058.30

Customer4 18121707.37 1.64% 362434.15

Customer5 16876870.97 1.52% 337537.42

Total 678593192.47 61.30%

115Changchai Company Limited Interim Report 2022

5. Accounts Receivable Financing

Unit: RMB

Item Ending balance Beginning balance

Bank acceptance bills 109896100.86 497388826.02

Total 109896100.86 497388826.02

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 30 June 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

Amount of recognition Amount of not terminated

Item

termination at the period-end recognition at the period-end

Bank acceptance bill 54899008.45

Total 54899008.45

6. Prepayments

(1) List by Aging Analysis

Unit: RMB

Ending balance Beginning balance

Aging

Amount Proportion Amount Proportion

Within 1 year 7585000.47 82.61% 6706970.55 81.82%

1 to 2 years 155683.67 1.70% 94583.55 1.15%

2 to 3 years 254994.24 2.78% 362397.67 4.42%

Over 3 years 1 186122.25 12.92% 1033466.62 12.61%

116Changchai Company Limited Interim Report 2022

Total 9181800.63 8197418.39

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 RMB2412325.81 accounting for 26.27% of the total ending balance of prepayments.

7. Other Receivables

Unit: RMB

Item Ending balance Beginning balance

Other receivables 17260272.39 19515350.52

Total 17260272.39 19515350.52

(1) Other Receivables

1) Other Receivables Classified by Accounts Nature

Unit: RMB

Nature Ending carrying value Beginning carrying value

Margin and cash pledge 1299600.00 1299600.00

Intercourse funds 32732932.66 35889738.80

Petty cash and borrowings by

1313447.411184204.41

employees

Other 14165823.36 13630284.64

Total 49511803.43 52003827.85

2) Withdrawal of Bad Debt Provision

Unit: RMB

First stage Second stage Third stage

Expected loss in the Expected loss in the

Bad debt provision Expected credit loss duration (credit duration (credit Total

of the next 12

impairment not impairment

months

occurred) occurred)

Balance of 1

287609.4526486676.975714190.9132488477.33

January 2022

Balance of 1

117Changchai Company Limited Interim Report 2022

January 2022 in the

Current Period

Withdrawal of the

Current Period

Reversal of the

236946.29236946.29

Current Period

Balance of 30 June

202250663.1626486676.975714190.9132251531.04

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) 13682698.23

1 to 2 years 2165331.51

2 to 3 years 766470.37

Over 3 years 32897303.32

3 to 4 years 256820.18

4 to 5 years 1058355.18

Over 5 years 31582127.96

Total 49511803.43

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 Ending

Category

balance Reversal or Write-oWithdrawal Other balance

recovery ff

Bad debt

provision for

5714190.915714190.91

which accrued

separately

Bad debt

provision for

26774286.42236946.2926537340.13

which accrued by

group

Total 32488477.33 236946.29 32251531.04

118Changchai Company Limited Interim Report 2022

4) There Was No Particulars of the Actual Verification of Other Receivables during the Reporting Period

5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party

Unit: RMB

Proportion to

Ending

ending balance

Name of the entity Nature Ending balance Aging balance of bad

of other

debt provision

receivables%

Changzhou Compressor Intercourse

2940000.00 Over 5 years 5.94% 2940000.00

Factory funds

Changchai Group Imp. & Intercourse

2853188.02 Over 5 years 5.76% 2853188.02

Exp. Co. Ltd. funds

Changzhou New District Intercourse

1626483.25 Over 5 years 3.29% 1626483.25

Accounting Center funds

Changchai Group Intercourse 1140722.16

1140722.16 Over 5 years 2.30%

Settlement Center funds

Changzhou Huadi

Engineerin

Engineering Guarantee 1065400.00 1 to 2 years 1.45% 53270.00

g deposit

Co. Ltd.Total 9625793.43 19.44% 8613663.43

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 144804663. 7064048.12 137740614. 148617321. 141356757.materials 02 90 85 7260564.47 38

Goods in 101886302. 13185471.7 88700830.5 119354374. 15534236.3 103820137.process 27 6 1 14 5 79

Finished 303224440. 10710415.1 292514025. 403855588. 13029104.2 390826484.goods 42 9 23 94 6 68

Materials

processed on 13581935.0 0.00 13581935.0 13877280.6 13877280.6

commission 5 5 0 0

119Changchai Company Limited Interim Report 2022

Low priced

and easily 1163256.63 1163256.63 1203097.73 1203097.73

worn articles

Total 564660597. 30959935.0 533700662. 686907663. 35823905.0 651083758.39 7 32 26 8 18

(2) Falling Price Reserves and impairment provision for contract performance costs

Unit: RMB

Increase Decrease

Beginning

Item Reversal or Ending balancebalance Withdrawal Other Other

write-off

Raw materials 7260564.47 65235.32 261751.67 7064048.12

Goods in

process 15534236.35 222543.92 2571308.51 13185471.76

Finished goods 13029104.26 2318689.07 10710415.19

Total 35823905.08 287779.24 5151749.25 30959935.07

(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 27698694.05 37806274.29

Prepaid corporate income tax 582198.15 6143886.15

Prepaid expense 113365.74 110662.13

Total 28394257.94 44060822.57

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

37898226.337898226.3

fixed term 37898226.3 37898226.3

9999

deposit

37898226.337898226.3

Total 37898226.3 37898226.3

9999

120Changchai Company Limited Interim Report 2022

Significant investments in debt obligations

Unit: RMB

Ending balance Beginning balance

Item Actual ActualPar Coupon Maturity Par Coupon Maturity

interest interest

value rate date value rate date

rate rate

Three-year fixed 370000 26 April 370000 26 April

term deposit 00.00

3.80%202400.003.80%2024

Total 370000 37000000.00 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

Endin

Begin Gain Adjust Cash Endin

ning or loss ment Withd

g

bonus g

recogn of rawal balancbalanc

Invest Additi Reduc Chang or

balanc

e ized other of

e of

ees onal ed es in profit

e

deprec

(carryi under compr deprec Otherinvest invest other annou (carryi

ng the ehensi iation

iation

ment ment equity nced ng

value) equity ve reserv

reserv

to value)

metho incom es es

issue

d e

II. Associated enterprises

Beijin

g

Tsingh

ua

Indust

rial 44182

0.000.00

Invest .50

ment

Mana

gemen

t Co.Ltd.Subtot 44182

0.000.00

al .50

121Changchai Company Limited Interim Report 2022

44182

Total 0.00 0.00 .50

12. Other Equity Instrument Investment

Unit: RMB

Item Ending balance Beginning balance

Changzhou Synergetic Innovation Private Equity

146375646.53146375646.53

Fund (Limited Partnership)

Other equity instrument investment measured by

575543000.00633502000.00

fair value

Total 721918646.53 779877646.53

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

367151000.00

Ltd. investment

Non-trading equity

Bank of Jiangsu 9360000.00 123822000.00

investment

Changzhou

Synergetic

Innovation Non-trading equity

46375646.53

Private Equity investment

Fund (Limited

Partnership)

Other notes:

The corporate securities of accommodation business still on lending at the period-end: 4535000 shares of Foton

Motor Co. Ltd.

13. Other Non-current Financial Assets

Unit: RMB

122Changchai Company Limited Interim Report 2022

Item Ending balance Beginning balance

Jiangsu Horizon New Energy Technology Co.

112500000.00112500000.00

Ltd.Total 112500000.00 112500000.00

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 93077479.52 93077479.52

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 93077479.52 93077479.52

II. Accumulative depreciation and

accumulative amortization

1. Beginning balance 48480224.31 48480224.31

2. Increased amount of the period 1218237.78 1218237.78

(1) Withdrawal or amortization 1218237.78 1218237.78

(2) Transferred into

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance 49698462.09 49698462.09

III. Depreciation reserves

1. Beginning balance

2. Increased amount of the period

123Changchai Company Limited Interim Report 2022

(1) Withdrawal

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance

IV. Carrying value

1. Ending carrying value 43379017.43 43379017.43

2. Beginning carrying value 44597255.21 44597255.21

15. Fixed Assets

Unit: RMB

Item Ending balance Beginning balance

Fixed assets 710380148.39 402915521.65

Total 710380148.39 402915521.65

(1) List of Fixed Assets

Unit: RMB

Houses and Machinery Transportation Other

Item Total

buildings equipment equipment equipment

I. Original

carrying value

1. Beginning

457375409.96 1012550535.12 15509653.38 41354836.97 1526790435.43balance

2. Increased

amount of the 203847078.49 136107529.11 3431027.22 5374982.88 348760617.70

period

(1) Purchase 106424.78 28522.13 134946.91

(2) Transfer

from

183680924.37128757743.932808764.694971498.04320218931.03

construction in

progress

(3) Enterprise

combination 20166154.12 7349785.18 515837.75 374962.71 28406739.76

increase

124Changchai Company Limited Interim Report 2022

3. Decreased

amount of the 15246966.71 117705.14 15364671.85

period

(1) Disposal or

15246966.71117705.1415364671.85

scrap

4. Ending

661222488.45 1133411097.52 18940680.60 46612114.71 1860186381.28balance

II.Accumulative

depreciation

1. Beginning

309538003.03765592089.0612399386.8235864760.621123394239.53

balance

2. Increased

amount of the 12356859.77 26941279.63 863834.31 772621.89 40934595.60

period

(1) Withdrawal 8141184.51 24883354.40 416402.05 514726.91 33955667.87

(2) Merge 4215675.26 2057925.23 447432.26 257894.98 6978927.73

3. Decreased

amount of the 0.00 14886037.53 0.00 117238.96 15003276.49

period

(1) Disposal or

14886037.53117238.9615003276.49

scrap

4. Ending

321894862.80777647331.1613263221.1336520143.551149325558.64

balance

III.Depreciation

reserves

1. Beginning

480674.25480674.25

balance

2. Increased

amount of the

period

(1) Withdrawal

3. Decreased

amount of the

period

(1) Disposal or

scrap

4. Ending

480674.25480674.25

balance

125Changchai Company Limited Interim Report 2022

IV. Carrying

value

1. Ending

339327625.65355283092.115677459.4710091971.16710380148.39

carrying value

2. Beginning

147837406.93246477771.813110266.565490076.35402915521.65

carrying value

(2) List of Temporarily Idle Fixed Assets

Original Accumulative Depreciation

Item Carrying value Note

carrying value depreciation reserves

Machinery

561589.5080915.25480674.25

equipment

16. Construction in Progress

Unit: RMB

Item Ending balance Beginning balance

Construction in progress 75687504.60 268417880.66

Engineering materials 932611.70 1887810.25

Total 76620116.30 270305690.91

(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

Expansion

capacity of

multi-cylinde 1097435.90 1097435.90 1097435.90 1097435.90

r (The 2nd

Period)

Innovation

capacity

construction

4092290.164092290.163714601.763714601.76

of

technology

center

126Changchai Company Limited Interim Report 2022

Relocation

project of

61644458.1861644458.18254748122.4254748122.4

light engine 9 9

and casting

Equipment to

be installed

8853320.368853320.368857720.518857720.51

and payment

for projects

Total 75687504.60 75687504.60 268417880.6 268417880.66 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

Expa

nsion

capac

ity of

multi- 7900 1097 1097 Unco

cylin 0000 435. 435. mplet Self-r

90 90 aisedder .00 ed

(The

2nd

Perio

d)

Innov Self-r8733 3714 4092 Uncoation 4.69 aised2900 601. 3776 290. mplet and

capac 88.40.00 76 16

%

ed raised

ity funds

127Changchai Company Limited Interim Report 2022

constr

uctio

n of

techn

ology

center

Reloc

ation

proje

Self-r

ct of 4747 2547 1153 3084 6164 Unco77.97 aised

light 0600 4812 8474 8840 4458 mplet and

%

engin 0.00 2.49 2.86 7.17 .18 ed raised

funds

e and

castin

g

64102595115730846683

Total 3890 6016 6243 8840 4184

0.000.151.267.17.24

(3) Engineering Materials

Unit: RMB

Ending balance Beginning balance

Item DepreciatiCarrying Carrying Carrying Depreciation Carrying

on

amount value amount reserves value

reserves

Engineerin

932611.70932611.701887810.251887810.25

g materials

Total 932611.70 932611.70 1887810.25 1887810.25

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 206783546.68 15736719.66 5488000.00 1650973.47 229659239.81

128Changchai Company Limited Interim Report 2022

2. Increased amount of

7356480.86176723.9850000.007583204.84

the period

(1) Purchase

(2) Internal R&D

(3) Business

7356480.86176723.9850000.007583204.84

combination increase

3. Decreased amount of

the period

(1) Disposal

4. Ending balance 214140027.54 15913443.64 5538000.00 1650973.47 237242444.65

II. Accumulated

amortization

1. Beginning balance 58805643.96 12856960.12 2652533.14 189356.68 74504493.90

2. Increased amount of

2810991.43708541.25316495.6681090.313917118.65

the period

(1) Withdrawal 2129983.97 595634.26 273995.66 81090.31 3080704.20

(2) Combination

681007.46112906.9942500.00836414.45

increase

3. Decreased amount of

the period

(1) Disposal

4. Ending balance 61616635.39 13565501.37 2969028.80 270446.99 78421612.55

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

1. Ending carrying

152523392.152347942.272568971.201380526.49158820832.11

value

2. Beginning carrying

147977902.722879759.542835466.861461616.79155154745.91

value

129Changchai Company Limited Interim Report 2022

18. Long-term Prepaid Expenses

Unit: RMB

Item Beginning Increase Amortized Decrease Ending balance

balance amount

Trademark

110345.3059794.671956.06168183.91

renewal fee

Total 110345.30 59794.67 1956.06 168183.91

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

Item Deductible DeductibleDeferred income Deferred income

temporary temporary

tax assets tax assets

difference difference

Deductible loss 59064221.02 9085419.14 59064221.02 9085419.14

Bad debt provision 7549512.71 1175913.46 7196880.38 1087755.38

Inventory falling

2153192.30372149.552990223.81448533.57

price reserves

Impairment of fixed

480674.2572101.14480674.2572101.14

assets

Total 69247600.28 10705583.29 69731999.46 10693809.23

(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

combination not 5560619.60 1025840.18 3643147.16 546472.07

under the same

control

Changes in fair

value of other

equity instrument 537348646.53 80602296.98 595307646.53 89296146.98

investment

130Changchai Company Limited Interim Report 2022

Changes in fair

value of other

non-current 36250000.00 5437500.00 36250000.00 5437500.00

financial assets

Changes in fair

value of trading 58546907.88 14357695.47 89101335.36 22064042.06

financial assets

Total 637706174.01 101423332.63 724302129.05 117344161.11

(3) List of Unrecognized Deferred Income Tax Assets

Unit: RMB

Item Ending balance Beginning balance

Deductible loss 14716019.78 14716019.78

Bad debt provision 216192838.51 204612644.18

Falling price reserves of

28806742.7732833681.27

inventories

Total 259715601.06 252162345.23

(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years

Unit: RMB

Years Ending amount Beginning amount Note

2022434000.66434000.66

2023940673.56940673.56

20246538363.996538363.99

20252279179.372279179.37

20264523802.204523802.20

Total 14716019.78 14716019.78

20. Other Non-current Assets

Unit: RMB

Ending balance Beginning balance

Item Depreciati DepreciatiCarrying Carrying

on Carrying value on Carrying value

amount amount

reserves reserves

Advances

payment of 11611024.84 11611024.84 4543240.88 4543240.88

equipments

Total 11611024.84 11611024.84 4543240.88 4543240.88

131Changchai Company Limited Interim Report 2022

21. Short-term Borrowings

(1) Category of Short-term Borrowings

Unit: RMB

Item Ending balance Beginning balance

Mortgage loans 7000000.00 7000000.00

Guaranteed loans 5000000.00

Obligation to pay bills discounted

127395924.9961971466.65

before maturity

Total 134395924.99 73971466.65

(2) There Was No Short-term Borrowings Overdue but Unpaid.

22. Notes Payable

Unit: RMB

Category Ending balance Beginning balance

Bank acceptance bill 565529500.00 550774400.00

Total 565529500.00 550774400.00

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 716529188.78 666186668.82

Total 716529188.78 666186668.82

(2) Significant Accounts Payable Aging over One Year

Item Ending balance Unpaid/ Un-carry-over reason

Supplier terminates cooperation

Payment for goods 12974557.92

pending payment

Payment for equipment 1845062.03 Equipment warranty

Total 14819619.95

132Changchai Company Limited Interim Report 2022

24. Advances from Customers

Unit: RMB

Item Ending balance Beginning balance

Payment for goods 411746.26 660965.62

Total 411746.26 660965.62

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 39180596.15 26864081.97

Total 39180596.15 26864081.97

There were no significant contract liabilities aging over one year at the end of the period.

26. Payroll Payable

(1) List of Payroll Payable

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

I. Short-term salary 45385667.48 149376585.46 181427584.89 13334668.05

II.Post-employment

benefit-defined 18443542.01 18443542.01

contribution plans

Total 45385667.48 167820127.47 199871126.90 13334668.05

(2) List of Short-term Salary

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

1. Salary bonus

37375772.77124330031.39156774557.854931246.31

allowance subsidy

2.Employee welfare 1592.74 1154031.03 1154031.03 1592.74

3. Social insurance 10884539.06 10884539.06 0.00

Of which: Medical

insurance 8993646.85 8993646.85 0.00

premiums

133Changchai Company Limited Interim Report 2022

Work-related injury

1013249.351013249.350.00

insurance

Maternity insurance 877642.86 877642.86 0.00

4. Housing fund 10179506.00 10179506.00 0.00

5.Labor union

budget and

8008301.972828477.982434950.958401829.00

employee education

budget

Total 45385667.48 149376585.46 181427584.89 13334668.05

(3) List of Defined Contribution Plans

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

1. Basic pension

17884275.0117884275.01

benefits

2. Unemployment

559267.00559267.00

insurance

Total 18443542.01 18443542.01

27. Taxes Payable

Unit: RMB

Item Ending balance Beginning balance

VAT 5196069.28 372401.11

Corporate income tax 206196.36 470363.07

Personal income tax 66697.40 76559.47

Urban maintenance and

790823.73957520.42

construction tax

Property tax 1041554.72 1160865.33

Land use tax 793050.50 1026217.69

Stamp duty 29478.70 44759.84

Education Surcharge 100157.22 90862.46

Comprehensive fees 1075134.76 1075134.76

Environmental protection tax 63389.34 31694.67

Total 9362552.01 5306378.82

134Changchai Company Limited Interim Report 2022

28. Other Payables

Unit: RMB

Item Ending balance Beginning balance

Dividends payable 3891433.83 3891433.83

Other payables 150033922.02 144469939.46

Total 153925355.85 148361373.29

(1) Dividends Payable

Unit: RMB

Item Ending balance Beginning balance

Ordinary share dividends 3243179.97 3243179.97

Dividends for non-controlling

648253.86648253.86

shareholders

Total 3891433.83 3891433.83

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 5005246.58 5045246.58

Intercourse funds among units 5020885.02 8364769.41

Intercourse funds among

387661.04402661.04

individuals

Sales discount and three

121566325.37114581855.32

guarantees

Other 18053804.01 16075407.11

Total 150033922.02 144469939.46

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.

135Changchai Company Limited Interim Report 2022

29. Other Current Liabilities

Unit: RMB

Item Ending balance Beginning balance

Sale service fee 448414.73 460437.94

Transportation storage fee 766870.71 870397.06

Electric charge 3784957.96 3131920.88

Tax to be transferred 2223378.37 2250515.65

Estimated share value added tax 3267400.13 3989913.45

Obligation to pay bills transferred

101680550.0372391302.15

before maturity

Other withholding expenses 5623653.25 5843705.66

Total 117795225.18 88938192.79

30. Deferred Income

Unit: RMB

Beginning Reason for

Item Increase Decrease Ending balance

balance formation

Government Government

39615355.4039615355.40

grants appropriation

Total 39615355.40 39615355.40 --

Item involving government grants:

Unit: RMB

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 13040 13040 Related

processing production 367.00 367.00 to assetsline for cylinders of

diesel engines

Remove 18513 18513 Related763.9

compensation 763.98 8 to assets

136Changchai Company Limited Interim Report 2022

Research and

development and

industrialization

allocations of national 80612 8061 Related

III/IV standard 24.42 224.42 to assets

high-powered

efficient diesel engine

for agricultural use

31. Share Capital

Unit: RMB

Increase/decrease (+/-)

Beginning Bonus Ending

balance New shares Bonus issue from Other Subtotal balance

issued shares

profit

The sum of 70569250 70569250

shares 7.00 7.00

32. Capital Reserves

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

Capital premium

620338243.21620338243.21

(premium on stock)

Other capital reserves 20337975.19 542255.39 19795719.80

Total 640676218.40 542255.39 640133963.01

33. Other Comprehensive Income

Unit: RMB

Item Beginning Reporting Period Endin

137Changchai Company Limited Interim Report 2022

balance Less: g

Recorde balanc

Less: d in e

Recorded other

in other compreh

Attribut

comprehen ensive

Income able to Attribut

sive income

before Less: owners able to

income in in prior

taxation Income of the non-con

prior period

in the tax Compan trolling

period and and

Current expense y as the interests

transferred transferr

Period parent after tax

in profit or ed in

after tax

loss in the retained

Current earnings

Period in the

Current

Period

I. Other comprehensive

506011 -5795 -8693 -4926 4567income that will not be 499.55 9000.0 850.00 5150.0 4634

reclassified to profit or loss 0 0 9.55

Changes in fair value of

other equity instrument 506011

-5795-49264567

499.559000.0

-8693

850.005150.04634

investment 0 0 9.55

Total of other 506011 -5795 -8693 -4926 4567

499.55 9000.0 850.00 5150.0 4634comprehensive income 0 0 9.55

34. Specific Reserve

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

Safety production

18812986.5518812950.04

cost

Total 18812986.55 18812950.04

35. Surplus Reserves

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

Statutory surplus

320987630.56320987630.56

reserves

138Changchai Company Limited Interim Report 2022

Discretional surplus

13156857.9013156857.90

reserves

Total 334144488.46 334144488.46

36. Retained Earnings

Unit: RMB

Item Reporting Period Same period of last year

Beginning balance of retained

earnings before adjustments 872212354.88 777899079.66

Beginning balance of retained

earnings after adjustments 872212354.88 777899079.66

Add: Net profit attributable to

owners of the Company as the -14592094.77 129189065.60

parent

Dividends of ordinary shares

payable 18348005.18

Ending retained earnings 839272254.93 907088145.26

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

Reporting Period Same period of last year

Item

Operating revenue Cost of sales Operating revenue Cost of sales

Main operations 1161021786.32 1038738676.27 1475253150.96 1265262684.42

Other operations 17200705.72 12656556.15 21917304.84 18852045.04

Total 1178222492.04 1051395232.42 1497170455.80 1284114729.46

Relevant information of revenue:

Unit: RMB

Category of contracts Segment 1

Product Types

Of which:

139Changchai Company Limited Interim Report 2022

Single-cylinder diesel engines 440462569.28

Multi-cylinder diesel engines 612150701.94

Other products 88912608.25

Fittings 36696612.57

Classified by business area

Of which:

Sales in domestic market 1019205712.35

Export sales 159016779.69

Total 1178222492.04

Information related to performance obligations: none

38. Taxes and Surtaxes

Unit: RMB

Item Reporting Period Same period of last year

Urban maintenance and

812411.021026604.02

construction tax

Education surcharge 579085.68 733288.56

Property tax 1817465.17 1887353.62

Land use tax 1586101.00 1817778.95

Vehicle and vessel use tax 201437.50 270741.50

Stamp duty 207601.82 402556.65

Environment tax 102066.70 60179.21

Other 54256.65 56775.69

Total 5360425.54 6255278.20

39. Selling Expense

Unit: RMB

Item Reporting Period Same period of last year

Employee benefits 16943256.62 17526685.96

Office expenses 3724135.21 4736523.65

Sales promotional expense 3274025.90 6212342.60

Three guarantees 20297149.84 28141207.55

Other 7520633.81 9558048.08

Total 51759201.38 66174807.84

140Changchai Company Limited Interim Report 2022

40. Administrative Expense

Unit: RMB

Item Reporting Period Same period of last year

Employee benefits 23311653.61 25708439.30

Office expenses 4566775.20 7630682.21

Depreciation and amortization 4952365.26 5279293.31

Repair charge 428378.02 928742.39

Other 6957362.02 8461323.27

Total 40216534.11 48008480.48

41. Development Costs

Unit: RMB

Item Reporting Period Same period of last year

Direct input expense 24257520.75 25574380.45

Employee benefits 11798332.91 11406908.14

Depreciation and amortization 2981055.64 1944857.24

Entrusted development charges 4716981.13

Other 1122878.17 1493727.00

Total 40159787.47 45136853.96

42. Finance Costs

Unit: RMB

Item Reporting Period Same period of last year

Interest expense 3276786.93 4437018.11

Less: Interest income 6634812.22 4502088.58

Net foreign exchange gains or

-7111099.451608275.04

losses

Other -2531595.24 1099425.68

Total -13000719.98 2642630.25

43. Other Income

Unit: RMB

Sources Reporting Period Same period of last year

141Changchai Company Limited Interim Report 2022

Government grants directly

recorded into the current profit or 1602830.77 406454.70

loss

44. Investment Income

Unit: RMB

Item Reporting Period Same period of last year

Investment income from disposal

of trading financial assets 364131.30 250514.11

Dividend income from holding of

other equity instrument investment 9360000.00 8191724.76

Income from refinancing

operations 60799.49

Investment income from financial

products 4297768.75

Forward income from foreign

0.0082262.00

exchange settlement

Accounts receivable

financing-discount interest of bank -2338416.66

acceptance bills

Total 11744282.88 8524500.87

45. Gain on Changes in Fair Value

Unit: RMB

Sources Reporting Period Same period of last year

Held-for-trading financial assets -30488388.88 122554092.00

Total -30488388.88 122554092.00

46. Credit Impairment Loss

Unit: RMB

Item Reporting Period Same period of last year

Bad debt loss of other receivables 236946.29 64194.87

Bad debt loss of accounts

-12169772.95-12559627.15

receivable

Total -11932826.66 -12495432.28

47. Asset Impairment Loss

Unit: RMB

142Changchai Company Limited Interim Report 2022

Item Reporting Period Same period of last year

Loss on inventory valuation and

contract performance cost 4342775.64 -5950895.20

Total 4342775.64 -5950895.20

48. Asset Disposal Income

Unit: RMB

Sources Reporting Period Same period of last year

Disposal income of fixed assets -361395.36 -751441.20

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 penalty 246187.33

Negative goodwill from

combination of Zhenjiang

Siyang Diesel Engine 1798981.78 1798981.78

Manufacturing Co. Ltd.Other 550915.40 603996.26 550915.40

Total 2349897.18 850183.59 2349897.18

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

non-current assets 41983.82

Other 392257.24 291323.90 392257.24

Total 392257.24 333307.72 392257.24

51. Income Tax Expense

(1) List of Income Tax Expense

Unit: RMB

143Changchai Company Limited Interim Report 2022

Item Reporting Period Same period of last year

Current income tax expense 1599680.00 1023856.84

Add: Deferred income tax expense -7805728.88 27263523.00

Total -6206048.88 28287379.84

(2) Adjustment Process of Accounting Profit and Income Tax Expense

Unit: RMB

Item Reporting Period

Profit before taxation -20803050.57

Influence of applying different tax rates by

subsidiaries -6206048.88

Tax preference from eligible expenditures -9360000.00

Income tax expense -6206048.88

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 1602830.77 406454.70

Other intercourses in cash 6000698.61 2956131.54

Interest income 7872212.72 4502088.58

Other 392565.39 402565.98

Total 15868307.49 8267240.80

(2) Cash Used in Other Operating Activities

Unit: RMB

Item Reporting Period Same period of last year

Selling and administrative expense

75307038.7279257764.77

paid in cash

Handling charges 1058635.32 1776237.12

Other 749863.50 896524.70

Other transactions 67256.65 95689.96

144Changchai Company Limited Interim Report 2022

Total 77182794.19 82026216.55

(3) Cash Generated from Other Investing Activities

Unit: RMB

Item Reporting Period Same period of last year

Deposit of construction unit 169856.31 220217.55

Total 169856.31 220217.55

(4) Cash Used in Other Investing Activities

Unit: RMB

Item Reporting Period Same period of last year

Project margin 50000.00

Total 50000.00

(5) Cash Generated from Other Financial Activities

Unit: RMB

Item Reporting Period Same period of last year

Subsidy for project loans 1391000.00

Discount of undue bank acceptance

49395924.99

bills with low credit rating

Total 49395924.99 1391000.00

(6) Cash Used in Other Financial Activities

Unit: RMB

Item Reporting Period Same period of last year

Intermediary agency fees for

12694718.67

private placement

Discount interest from bank

2604075.01

acceptance bills

Total 2604075.01 12694718.67

54. Supplemental Information for Cash Flow Statement

(1) Supplemental Information for Cash Flow Statement

Unit: RMB

Supplemental information Reporting Period Same period of last

145Changchai Company Limited Interim Report 2022

year

1. Reconciliation of net profit to net cash flows generated from

operating activities

Net profit -14597001.69 129354450.53

Add: Provision for impairment of assets -8871223.50 18446327.48

Depreciation of fixed assets of oil and gas assets of productive

40934595.6039927432.35

living assets

Depreciation of right-of-use assets

Amortization of intangible assets 3076523.63 3142009.67

Amortization of long-term deferred expenses 1956.06 16261.85

Losses on disposal of fixed assets intangible assets and other

361395.36751441.20

long-term assets (gains by “-”)

Losses on the scrapping of fixed assets (gains by “-”) 0.00 41983.82

Losses on the changes in fair value (gains by “-”) 30488388.88 -122554092.00

Financial expenses (gains by “-”) -13000719.98 2642630.25

Investment losses (gains by “-”) -11744282.88 -824500.87

Decrease in deferred income tax assets (increase by “-”) -11774.06

Increase in deferred income tax liabilities (decrease by “-”) -15920828.48 45768261.14

Decrease in inventory (increase by “-”) 117904290.23 46125419.47

Decrease in accounts receivable from operating activities

-241738053.67-382207027.61

(increase by “-”)

Increase in payables from operating activities (decrease by “-”) 55684539.07 145278539.35

Other -16868305.69 -18463256.69

Net cash flows generated from operating activities -74300501.12 -92554120.06

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 440638879.34 1047274087.46

Less: Beginning balance of cash 573623529.10 629939540.50

Add: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase in cash and cash equivalents -132984649.76 417334546.96

146Changchai Company Limited Interim Report 2022

(2) Net Cash Used in Acquisition of Subsidiaries in the Reporting Period

Unit: RMB

Amount

Cash or cash equivalents paid in the Reporting Period for

business combination occurring in the Reporting Period 33520800.00

Net cash used in acquisition of subsidiaries 33520800.00

(3) Cash and Cash Equivalents

Unit: RMB

Item Ending balance Beginning balance

I. Cash 440638879.34 573623529.10

Including: Cash on hand 201776.86 145594.98

Bank deposit on demand 439927242.99 561746767.12

Other monetary assets on demand 509859.49 509859.49

III. Ending balance of cash and cash

equivalents 440638879.34 573623529.10

55. Assets with Restricted Ownership or Right to Use

Unit: RMB

Item Ending carrying value Reason for restriction

As cash deposit for bank acceptance

Monetary assets 123582947.15

bill and for environment

Houses and buildings 1634418.39 Mortgaged for borrowings from banks

Land use right 885605.70 Mortgaged for borrowings from banks

Machinery equipment 28360996.68 Mortgaged for borrowings from banks

Obligation to pay bills discounted

134395924.99

before maturity

Obligation to pay bills transferred

before maturity 98388074.25

Total 387247967.16

56. Foreign Currency Monetary Items

(1) Foreign Currency Monetary Items

Unit: RMB

Ending foreign currency Ending balance converted

Item Exchange rate

balance to RMB

147Changchai Company Limited Interim Report 2022

Monetary assets

Of which: USD 14872369.02 6.7114 99814417.44

HKD 301761.84 0.8552 258066.73

SGD 54427.95 4.817 262179.44

Accounts receivable

Of which: USD 9170863.92 6.7114 61549336.11

GBP -67212.27 8.1365 -546872.63

Accounts payable

Of which: USD 302.60 6.7114 2030.87

Contract liabilities

Of which: USD 784613.15 6.7114 5265852.69

EUR 117145.84 7.0084 821004.91

(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 the

Category Amount Listed items

current profit or loss

Business development

fund 102800.00 Other income 102800.00

Municipal subsidy for

application of R&D 200000.00 Other income 200000.00

projects

Subsidy for stabilizing

521460.00 Other income 521460.00

posts

Export award from

agricultural machinery 250000.00 Other income 250000.00

industry association

Talents subsidies 50000.00 Other income 50000.00

Science and technology

awards 60000.00 Other income 60000.00

Subsidy for stabilizing

posts 347639.00 Other income 347639.00

Vehicle scrapping subsidy 59800.00 Other income 59800.00

148Changchai Company Limited Interim Report 2022

Subsidy for stabilizing

posts 11131.77 Other income 11131.77

(2) 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

On 16

May

2022 the

Board of

Directors

of

Zhenjiang

Siyang

was

reorganiz

ed and its

Zhenjiang Articles

Siyang of

Diesel 23 Associati

Engine February 3352080 Acquisiti 31 May on were 4813008 206678.9

Manufact 2022 0.00

41.50% on in cash 2022 amended .16 6

uring Co. after

Ltd. whichdirectors

appointed

by

Changcha

i

Company

account

for more

than half

of the

total

number

149Changchai Company Limited Interim Report 2022

of

directors.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 33520800.00

--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 33520800.00

Less: fair value of identifiable net assets acquired 35319781.78

The amount of goodwill/combined cost less than the fair value share of

-1798981.78

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 RMB830000) in Zhenjiang Siyang Diesel Engine Manufacturing Co.

Ltd. issued by Jiangsu Property Rights Exchange Co. Ltd. on 12 January 2022 the transaction price is

RMB33520800.00 and Changchai Company Limited paid a one-time payment of RMB33520800.00 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

150Changchai Company Limited Interim Report 2022

(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: 99136050.80 96915442.89

Monetary assets 19400123.61 19400123.61

Accounts receivable 24790090.34 24790090.34

Inventories 25093473.79 25096648.68

Fixed assets 21864448.97 21427812.03

Intangible assets 6746790.39 4959644.53

Liabilities: 14028142.91 13472197.21

Borrowings

Accounts payable 13472197.21 13472197.21

Deferred income tax liabilities 555945.70

Net assets 85107907.89 83443245.68

Less: Non-controlling interests 49788126.12 48814298.72

Net assets acquired 35319781.78 34628946.96

The determination method of the fair value of identifiable assets and liabilities: Continuous measurement based on

assessment value

Contingent liabilities of acquirees undertaken in the business combination: None

(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

(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

Name Main Registrat Natur

Holding percentage Way of

operatin ion e of (%) gaining

151Changchai Company Limited Interim Report 2022

g place place busin Indirectl

ess Directly 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

Zhenjiang Siyang Diesel Engine Zhenjia Zhenjian Indus Combination

Manufacturing Co. Ltd. ng g try 41.50% not under thesame control

(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

Changchai

Wanzhou Diesel 40.00% -122639.26 19843847.11

Engine Co. Ltd.Zhenjiang Siyang

Diesel Engine

Manufacturing Co. 58.50% 49909033.31 49909033.31

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

Name Ending balance Beginning balance

152Changchai Company Limited Interim Report 2022

Non- Non-

Non- Curre Non- Curre

Curre curre Total Curre curre Total

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 4734 2367 7101 2140 2140 4820 2414 7234 2242 2242

Diese 1885 4735 6620 7002 7002 0342 1889 2232 6016 6016

l .15 .21 .36 .62 .62 .77 .90 .67 .75 .75

Engin

e Co.Ltd.Zhenj

iang

Siyan

g

Diese

l 7017 2704 9722 1334 1334 6519 2782 9302 1154 1154

Engin 5371 6382 1753 2095 2095 5270 6516 1787 8769 8769

e .13 .11 .24 .84 .84 .42 .89 .31 .99 .99

Manu

factur

ing

Co.Ltd.Unit: RMB

Reporting Period Same period of last year

Cash Cash

Total Total

Name flows flowsOperating comprehe Operating comprehe

Net profit from Net profit from

revenue nsive revenue nsive

operating operating

income income

activities activities

Changcha

i

Wanzhou 1715426 -306598. -306598. -300598 3043607 487938.4 487938.4 -198190

Diesel 9.32 18 18 1.47 9.88 6 6 1.87

Engine

Co. Ltd.Zhenjian

g Siyang

Diesel

Engine 4813008 206678.9 206678.9 6994726 0.00 0.00 0.00 0.00

Manufact .16 6 6 .52

uring

Co. Ltd.

153Changchai Company Limited Interim Report 2022

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 added. 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 and Anhui

Haiyunzhou Equity Investment Partnership Enterprise (Limited). 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.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.

154Changchai Company Limited Interim Report 2022

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

Ending fair value

Item 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

104304516.61299677397.27403981913.88

assets

1. Financial assets

at fair value through 104304516.61 299677397.27 403981913.88

profit or loss

(1) Debt instrument

investment

(2) Equity

instrument 104304516.61 104304516.61

investment

(3) Derivative

financial assets

(4)Wealth

management 299677397.27 299677397.27

investments

2. Financial assets

designated to be

measured at fair

value and the

changes included

into the current

profit or loss

(1) Debt instrument

155Changchai Company Limited Interim Report 2022

investment

(2) Equity

instrument

investment

(II) Other

investments in debt

obligations

(III)Other equity

instrument 575543000.00 146375646.53 721918646.53

investment

(IV) Investment

property

1. Land use right

for lease

2. Buildings leased

out

3. Land use right

held and planned to

be transferred once

appreciating

(V) Living assets

1. Consumptive

living assets

2. Productive living

assets

Accounts receivable

financing 109896100.86 109896100.86

Other non-current

financial assets 112500000.00 112500000.00

Total assets

consistently

679847516.61299677397.27368771747.391348296661.27

measured by fair

value

(VI) Trading

financial liabilities

Of which: Issued

trading bonds

Derivative financial

liabilities

Other

156Changchai Company Limited Interim Report 2022

(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

inconsistently

measured by fair

value

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

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

157Changchai Company Limited Interim Report 2022

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 2021

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 respectively in June 2021 and December 2021.Therefore the fair value of the equity investment had been adjusted and confirmed accordingly based on the

premium rate of capital increase from new investors.

(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) has invested in Jiangsu Horizon New Energy Technology Co. Ltd. and the change in fair value of

the company's equity held by it had increased the equity of partners at the end of the year. 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

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

158Changchai Company Limited Interim Report 2022

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

management

(excluding

Changzhou financial

Investment Changzhou business) RMB1.2 billion 32.26% 32.26%

Group Co. Ltd. investment

consulting

(excluding

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

159Changchai Company Limited Interim Report 2022

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 VIII for details.

3. 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

XIII. Commitments and Contingency

1. Significant Commitments

Significant commitments on balance sheet date

As of 30 June 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.XIV. Events after Balance Sheet Date

1. Sales Return

None

2. Notes to Other Events after Balance Sheet Date

There was no other event after balance sheet date.

160Changchai Company Limited Interim Report 2022

XV. Other Significant Events

1. 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

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

2. 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

Category CarryiWithd Withd Carryinng

Amou Propo Amou rawal value Amou Propor Amou rawal

g value

nt rtion nt propo nt tion nt propor

rtion tion

Accounts

receivable for

237220403322

which bad debt 86.00 2750 21126

9235.2.38%6627.608.59745.6.00%658.876.8063830

provision % 33 5 % 86.4873 14 9

separately

accrued

Of which:

Accounts

receivable for

973710008736

which bad debt 97.62 10.28 4307 88019

361074196190719194.00743.020.43342752

provision % % % % 168.94

1.528.303.222.039

accrued by

group

Of which:

161Changchai Company Limited Interim Report 2022

Accounts

receivable for

which bad debt 9737 1000 8736

97.6210.28430788019

provision 3610 7419 6190 7191 94.00 20.43 342752

%%2.03%

743.0

accrued by 1.52 8.30 3.22 9

%168.94

credit risk

features group

997412048769

100.012.084582

Total 6533 8082 84511 8165 100.00

1091423.82349135

0%%7.36%

6401.

7.255.44.8194

%255.42

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 amount Bad debt provision Withdrawal proportion Withdrawal reason

Customer1 1470110.64 1470110.64 100.00% Difficult to recover

Customer2 1902326.58 1902326.58 100.00% Difficult to recover

Customer3 6215662.64 6215662.64 100.00% Difficult to recover

Expected to

Customer4 2797123.26 2194980.28 78.47%

difficultly recover

Expected to

Customer5 3633081.23 2122165.73 58.41%

difficultly recover

Customer6 2584805.83 2584805.83 100.00% Difficult to recover

Customer7 1523110.59 1523110.59 100.00% Difficult to recover

Customer8 1511937.64 302387.53 20.00% Difficult to recover

Total 21638158.41 18315549.82

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 854773136.44 17094662.72 2.00%

1 to 2 years 20989671.22 1049483.56 5.00%

2 to 3 years 2019401.20 302910.18 15.00%

3 to 4 years 1068018.76 320405.63 30.00%

4 to 5 years 2113093.71 1267856.23 60.00%

Over 5 years 79778188.13 79778188.13 100.00%

162Changchai Company Limited Interim Report 2022

Total 960701509.46 99813506.45

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) 872090950.76

1 to 2 years 20989671.22

2 to 3 years 4107290.29

Over 3 years 100277424.98

3 to 4 years 3017768.32

4 to 5 years 4636883.46

Over 5 years 92622773.20

Total 997465337.25

(2) Bad Debt Provision Withdrawn Reversed or Recovered in the Reporting Period

Unit: RMB

Changes in the Reporting Period

Beginning

Category Ending balance

balance Reversal orWithdrawal Write-off Other

recovery

Bad debt

provision

21126658.85720031.7120406627.14

withdrawn

separately

Bad debt

provision 12054455.2

88019743.09100074198.30

withdrawn 1

by group

12054455.2

Total 109146401.94 720031.71 120480825.44

1

163Changchai Company Limited Interim Report 2022

Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.

(3) There were no accounts receivable with actual verification during the Reporting Period.

(4) Top 5 of the Ending Balance of Accounts Receivable Collected according to the Arrears Party

Unit: RMB

Name of the Ending balance of Proportion to total ending balance Ending balance of bad

entity accounts receivable of accounts receivable debt provision

Customer1 567626334.55 56.91% 11352526.69

Customer2 57715364.53 5.79% 1154307.29

Customer3 18252915.05 1.83% 365058.30

Customer4 18121707.37 1.82% 362434.15

Customer5 16876870.97 1.69% 337537.42

Total 678593192.47 68.04%

2. Other Receivables

Unit: RMB

Item Ending balance Beginning balance

Other receivables 112148961.53 26497081.34

Total 112148961.53 26497081.34

(1) Other Receivable

1) Other Receivables Classified by Account Nature

Unit: RMB

Nature Ending carrying amount Beginning carrying amount

Cash deposit and Margin 4200.00 4200.00

Intercourse funds among units 147411452.59 55450919.93

Petty cash and borrowings by

742653.65613410.65

employees

Other 14165323.36 13629784.64

Total 162323629.60 69698315.22

2) Withdrawal of Bad Debt Provision

Unit: RMB

164Changchai Company Limited Interim Report 2022

First stage Second stage Third stage

Expected loss in the Expected loss in the

Bad debt provision Expected credit loss duration (credit duration (credit Total

of the next 12

impairment not impairment

months

occurred) occurred)

Balance of 1

209613.5323809010.5819182609.7743201233.88

January 2022

Balance of 1

January 2022 in the

Current Period

Withdrawal of the

6962340.36132636.767094977.12

Current Period

Reversal of the

11141.1811141.18

Current Period

Balance of 30 June

20227160812.7123941647.3419182609.7750285069.82

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) 130104060.37

1 to 2 years 2133744.72

2 to 3 years 58410.29

Over 3 years 30027414.22

3 to 4 years 254561.05

4 to 5 years 902693.83

Over 5 years 28870159.34

Total 162323629.60

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 balancebalance Withdrawal Other

recovery f

165Changchai Company Limited Interim Report 2022

Bad debt

provision

19182609.775231176.2924413786.06

withdrawn

separately

Bad debt

provision

24018624.111863800.8311141.1825871283.76

withdrawn by

group

Total 43201233.88 7094977.12 11141.18 50285069.82

4) Particulars of the Actual Verification of Other Receivables during the Reporting Period: None.

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

Jiangsu Changchai Interco

Machinery Co. Ltd. urse 87416859.70 Within 1 year 53.85% 1748337.19funds

Within 1 year

Changzhou Changchai Interco with

Horizon Agricultural urse 18699595.15 RMB16899595.15 1-2 years with 11.59% 18699595.15

Equipment Co. Ltd. funds RMB1800000.0

0

Changzhou Changchai Interco

Benniu Diesel Engine urse 9000000.00 Within 1 year 5.54% 180000.00

Fittings Co. Ltd. funds

Interco

Changzhou Compressors

urse 2940000.00 Over 5 years 1.81% 2940000.00

Factory

funds

Interco

Changchai Group Imp.urse 2853188.02 Over 5 years 1.76% 2853188.02

& Exp. Co. Ltd.funds

Total 120909642.87 74.55% 26421120.36

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

166Changchai Company Limited Interim Report 2022

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 576273530.

037000000.00

569273530.542752730.

03037000000.00

535752730.

subsidiaries 03

Investment to

joint ventures

and 44182.50 44182.50 44182.50 44182.50

associated

enterprises

Total 576317712.53 7044182.50

569273530.542796912.535752730.

03537044182.5003

(1) Investment to Subsidiaries

Unit: RMB

Increase/decrease

Beginning Ending Ending

balance Withdrawa balance balance of

Investee

(carrying Additional Reduced l of Other (carrying depreciatio

value) investment investment depreciatio value) n reserve

n reserve

Changchai

Wanzhou

Diesel 51000000 51000000.00 .00

Engine Co.Ltd.Changzhou

Changchai

Benniu

Diesel 96466500 96466500.00 .00

Engine

Fittings Co.Ltd.Changzhou

Horizon 40000000 40000000

Investment .00 .00

Co. Ltd.

167Changchai Company Limited Interim Report 2022

Changzhou

Changchai

Horizon 7000000.Agricultural 00

Equipment

Co. Ltd.Changzhou

Fuji

Changchai

Robin 47286230 47286230.03 .03

Gasoline

Engine Co.Ltd.Jiangsu

Changchai 30000000 30000000

Machinery 0.00 0.00

Co. Ltd.Changzhou

Xingsheng

Property 1000000. 1000000.00 00

Managemen

t Co. Ltd.Zhenjiang

Siyang

Diesel 33520800 33520800

Engine .00 .00

Manufacturi

ng Co. Ltd.Total 53575273 33520800 56927353 7000000.0.03 .00 0.03 00

(2) Investment to Joint Ventures and Associated Enterprises

Unit: RMB

Increase/decrease

Endin

Begin Gains Adjust Cash Endin g

ning Withdand ment bonus g

balanc rawal

balanc

Additi Reduc losses of Chang or balancInvest of e ofe

ee onal ed recogn other es of profits

e

(carryi impair Other

deprec

invest invest ized compr other annou (carryiment iationng ment ment under ehensi equity nced ng reserv

value) provisthe ve to value)ion e

equity incom issue

168Changchai Company Limited Interim Report 2022

metho e

d

II. Associated enterprises

Beijin

g

Tsingh

ua

Xingy

e

Indust 44182

0.000.00

rial .50

Invest

ment

Mana

gemen

t Co.Ltd.Subtot 44182

0.000.00

al .50

44182

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

Main operations 1063899643.27 960873534.45 1391941677.73 1195911988.65

Other operations 14401885.93 10099571.18 18507068.46 12852045.04

Total 1078301529.20 970973105.63 1410448746.19 1208764033.69

Information on revenue:

Unit: RMB

Category of contracts Segment 1

Product Types

Of which:

Single-cylinder diesel engines 440462569.28

Multi-cylinder diesel engines 612150701.94

Other products 10248725.00

Fittings 15439532.98

169Changchai Company Limited Interim Report 2022

Classified by business area

Of which:

Sales in domestic market 974096235.13

Export sales 104205294.07

Total 1078301529.20

Information related to performance obligations: none

5. Investment Income

Unit: RMB

Same period of last

Item Reporting Period

year

Investment income from disposal of held-for-trading

financial assets 4099001.28

Dividend income from holding of other equity

instrument investment 9360000.00 7394400.00

Income from refinancing operations 60799.49 797324.76

Accounts receivable financing-discount interest of

-2338416.66

bank acceptance bills

Total 11181384.11 8191724.76

XVII. Supplementary Materials

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

√ Applicable □ Not applicable

Unit: RMB

Item Amount Note

Gain or loss on disposal of non-current assets -361395.36

Government subsidies charged to current profit or loss

(exclusive of government subsidies given in the Company’s

1602830.77

ordinary course of business at fixed quotas or amounts as per

the government’s uniform standards)

Decrease in the fair value of the

Gain/loss from change of fair value of trading financial stocks of Jiangsu Liance

Electromechanical Technology

assets and liabilities and investment gains from disposal of Co. Ltd. Kailong High

trading financial assets and liabilities and derivative

-19744106.00 Technology Co. Ltd. and Guilin

financial assets and liabilities and available-for-sale Stars Science and Technology Co.financial assets other than valid hedging related to the Ltd. held by the Company’s

wholly-owned subsidiary Horizon

Company’s common businesses Investment during the Reporting

Period

Other non-operating income and expenses other than the 1957639.94

170Changchai Company Limited Interim Report 2022

above

Less: Income tax effects -7756677.28

Non-controlling interests effects -2443.83

Total -8785909.54 --

Others that meets the definition of non-recurring gain/loss:

□ Applicable √ Not applicable

No such cases in the Reporting Period.Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory

Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the

Public—Non-recurring Gains and Losses 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

-0.48%-0.0207-0.0207

shareholders of the Company

Net profit attributable to ordinary

shareholders of the Company after

-0.19%-0.0082-0.0082

deduction of non-recurring profit

or loss

The Board of Directors

Changchai Company Limited

24 August 2022

171