Changchai Company Limited Interim Report 2023

CHANGCHAI COMPANY LIMITED

INTERIM REPORT 2023

August 2023

1Changchai Company Limited Interim Report 2023

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.Xie Guozhong the Company’s legal representative and 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 described in detail the risks it might face in “X Risks Facing the Companyand Countermeasures” in “Part III Management Discussion and Analysis” herein.The Company has no interim dividend plan either in the form of cash or stock.

2Changchai Company Limited Interim Report 2023

Table of Contents

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

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

Part III Management Discussion and Analysis ......... 9

Part IV Corporate Governance ....................... 36

Part V Environmental and Social Responsibility ......38

Part VI Significant Events ..........................41

Part VII Share Changes and Shareholder Information.. 47

Part VIII Preference Shares .........................53

Part IX Bonds .......................................54

Part X Financial Statements ........................ 55

3Changchai Company Limited Interim Report 2023

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.This Report has been prepared in both Chinese and English. Should there be any discrepancies or

misunderstandings between the two versions the Chinese version shall prevail.

4Changchai Company Limited Interim Report 2023

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 2023 to 30 June 2023

5Changchai Company Limited Interim Report 2023

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

CHANGCHAI COMPANYLIMITED

any)

Abbr. (if any) CHANGCHAI CO.LTD.Legal representative Xie Guozhong

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 2022 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

6Changchai Company Limited Interim Report 2023

The website and media name and website of the stock exchange where the company disclosed its semi-annual

report. The location of the company's semi-annual report remains unchanged during the reporting period as

detailed in the 2022 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 2023 H1 2022 Change (%)

Operating revenue (RMB) 1350517639.85 1178222492.04 14.62%

Net profit attributable to the listed

131937324.66-14595269.61——

company’s shareholders (RMB)

Net profit attributable to the listed

company’s shareholders before 5825543.98 -5809360.07 ——

exceptional gains and losses (RMB)

Net cash generated from/used in

-104796816.75-74300501.12——

operating activities (RMB)

Basic earnings per share (RMB/share) 0.1870 -0.0207 ——

Diluted earnings per share

0.1870-0.0207——

(RMB/share)

Weighted average return on equity (%) 3.93% -0.48% 4.41%

30 June 2023 31 December 2022 Change (%)

Total assets (RMB) 5559083368.07 5219359853.42 6.51%

Equity attributable to the listed

3485429025.823284710665.906.11%

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

7Changchai Company Limited Interim Report 2023

No difference for the Reporting Period.

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

□ Applicable √ Not applicable

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

√ Applicable □ Not applicable

Unit: RMB

Item Amount Note

Expropriation of the constructions

Gain or loss on disposal of non-current assets

105395693.25 on the state-owned land of the

(inclusive of impairment allowance write-offs) Changzhou Wuxing branch

company in the Reporting Period

Government grants through profit or loss (exclusive

of government grants consistently given in the

Company’s ordinary course of business at fixed 3299056.52

quotas or amounts as per governmental policies or

standards)

Gain or loss on fair-value changes on Increase 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 22587377.56 Jiangsu Liance ElectromechanicalTechnology Co. Ltd. Kailong High

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

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

-801809.16

above

Less: Income tax effects 4621569.20

Non-controlling interests effects (net of tax) -253031.71

Total 126111780.68

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 2023

Part III Management Discussion and Analysis

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 "Robin". Our products are mainly used in agricultural machinery small

engineering machinery light commercial vehicles generator sets and shipborne machinery and other fields closely

related to people's livelihood.In the Reporting Period there were no major changes in the Company's core business and main products.

2. Main Products of the Company

Our main products are divided into two categories: diesel engines and gasoline engines. The details are as follows:

Main Product Application

Graphic display Product description

products features fields

Our diesel engine products include

single-cylinder diesel engines and

High power low Agricultural

multi-cylinder engines covering

oil consumption machinery

power range from 1.62kW to

low noise construction

Diesel 117.6kW and cylinder diameters from

compact machinery

engine 65mm to 135mm with one or more

structure low generator sets

cylinders. Besides sale in domestic

emission good shipborne

market our diesel engines are sold to

reliability machinery

Southeast Asia South America the

Middle East and Africa.Our gasoline engines are mainly

general-purpose small gasoline

engines covering the power range Simple structure Agricultural

Gasoline from 1.5kW to 7.0kW. Besides sale in good reliability machinery small

engine domestic market our gasoline engines easy construction

are sold to Southeast Asia the Middle maintenance machinery

East Europe and America Africa

Japan and other countries and regions.

3. Major Business Models

(1) R&D model

We have established an innovative technology management system for internal combustion engine based on

9Changchai Company Limited Interim Report 2023

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. The Company in the Industry

We are a manufacturer of internal combustion engines and fittings in general equipment manufacturing. According

to the classification of fuel used internal combustion engines are mainly divided into diesel engines and gasoline

engines. Our diesel engines and gasoline engines are mainly used in non-road mobile machinery fields such as

harvesters tractors plant protection machinery small engineering machinery and shipborne machinery.

(1) Development pattern and trend of the industry

In terms of policies at the beginning of 2023 the 20th No. 1 Document guiding the work on agriculture rural

10Changchai Company Limited Interim Report 2023

areas and farmers issued by the central government demonstrated the government’s intention to attach greater

importance to agriculture and strengthen agricultural development. In a bid to do so the government will step up

efforts to enhance agricultural science and technology and provide more equipment drive to tackle key problems

of key and core technologies in agriculture and make agricultural machinery more intelligent and automated. In

terms of industry concerns the upgrade and conversion to products that meet the National Emission Standard IV

raise challenges to enterprises. At the end of 2022 the central government appropriated RMB211.5 billion of

agriculture-related transfer payment funds for 2023 in advance including RMB14.5 billion for subsidies of

agricultural machinery procurement and application. The central government allocated substantive funds for

subsidies and implemented policies to strengthen agriculture and benefit farmers indicating that the state will

continue to attach great importance to agricultural mechanization.In terms of industrial development after a ten-year golden period of development since 2016 the entire

agricultural machinery industry has entered a period of deep adjustment that has lasted for years. Although

short-term explosive growth was seen in 2020 it went down again entering a phase of updating existing

machinery from the growth of new machine procurement. The switch to the National Emission Standard IV for

Non-road Vehicles has posed challenges for enterprises in addition to multiple pressures from the shrinking of the

demand side premature market overdraft participation of tycoons from other industries and the impact of new

energy market on the traditional market. Currently multiple segmented scenarios still require all-weather and

continuous input and output which is an advantage of diesel engines that cannot be substituted in a short time.Furthermore new development opportunities have been brought about in the process of national strategic

deployment and acceleration of transformation and upgrade. Therefore the traditional market of agricultural

machinery still has a brilliant future.China's diesel engine and gasoline engine industries present a pattern of multiple competitions. As the state adopts

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

technology and key parts of internal combustion engines will be rapidly developed and applied and the research

development promoting and application of environmentally friendly and efficient diesel engines and gasoline

engines will become the mainstream trend which promotes the wide use of the fuel injection system

high-efficiency supercharger and high-efficiency after-treatment. In the new normal the internal combustion

engine industry and agricultural machinery industry will improve the industry's capability of independent

innovation support the whole machine development and organize and implement green manufacturing and

11Changchai Company Limited Interim Report 2023

intelligent manufacturing so as to improve the overall strength of the industry. The market share of diesel and

gasoline engines is gradually concentrated in a few large-scale enterprises with technical and capital strength.The present development trend of internal combustion engine industry is as follows: (1) energy saving and

emission reduction; (2) intelligent manufacturing; (3) lightweight. Medium- and low-end internal combustion

engines with low technical content and low added value will be gradually squeezed out of the market. The

upgrade of emission standards and the market's demand for high-end products will eliminate those small

enterprises with low level of research and development or less technology reserves.

(2) Industry sales in the first half of 2023

Amid a market recovery facilitated by multiple national policies the upstream and downstream markets in the

internal combustion engine industry were somewhat improved. Despite slightly insufficient market demands the

sales were gradually growing. On the terminal side the agricultural machinery and project markets were still

severe in sales.From January to June 2023 the total sales of internal combustion engines were 21592400 units a decline of

0.20% year on year; the accumulative power was 1359215700 kW an increase of 6.08% year on year. From

January to June 2678700 diesel engines were sold an increase of 8.85% year on year. Specifically 476900

engines for construction machinery were sold an increase of 5.88% from the same period last year; 862100

engines for agricultural machinery were sold an increase of 32.04% from last year; 33500 engines for shipborne

machinery were sold an increase of 62.62% from last year; 190700 engines for generator sets were sold an

increase of 22.79% from last year. In the first half 18902100 gasoline internal combustion engines were sold

down 1.39% year on year.In terms of the segments of the internal combustion engine market by purpose from January to June the sales of

engines for agricultural machinery witnessed a year-on-year decline. To be more specific 507800 engines for

construction machinery were sold up 5.16% year on year; 2073600 engines for agricultural machinery were sold

down 14.13% year on year; 33500 engines for shipborne machinery were sold up 62.62% year on year; 767300

engines for generator sets were sold up 19.85% 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 "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

12Changchai Company Limited Interim Report 2023

China Internal Combustion Engine Industry Association (CICEIA) as the largest small- and medium-sized

single-cylinder diesel engine manufacturer in the agricultural machinery industry of China we have maintained a

high market share of single-cylinder engines and our market share of single-cylinder diesel engines of some

power ranges has ranked first in China. For many years in the process of achieving steady economic development

of the enterprise we developed in a sound manner and cultivated the "Changchai" brand a famous small diesel

engine brand of China with independent intellectual property rights.

5. Key Performance Drivers

(1) National policy driver

In recent years various departments of the state have introduced a series of preferential policies to encourage the

development of internal combustion engine industry. In terms of agricultural machinery the central government

has taken solving the problems relating to "agriculture rural areas and farmers" as the top priority of the work of

the Party and the government and issued a series of policies to benefit farmers creating a good atmosphere for

promoting the development of agriculture and economy and society in rural areas; in terms of construction

machinery the strategy of "western development" the "eight vertical and eight horizontal" high-speed railway

network plan and the policy of "new rural construction" have all created a good policy environment for the

application of internal combustion engine in downstream construction machinery.

(2) Industrial chain synergy empowers the sustainable development of the Company

We have built our own casting manufacturing and processing plants to meet the use requirements of some diesel

engine parts. In terms of production and quality we have formed a significant synergy with its own internal

combustion engine assembly team. Our casting manufacturing team and internal combustion engine assembly

team work together to form a mutually reinforcing positive feedback loop to assist the Company in integrating the

internal combustion engine industry chain and building differentiated industry barriers. In terms of collaborative

production the reduction of external purchase is of great significance for the Company to reduce process flow

reduce intermediate loss improve production efficiency shorten delivery time and increase purchasing bargaining

power. In terms of quality coordination the self-built foundry can improve our quality control of parts to improve

the yield and reliability of internal combustion engines.

(3) Stable and efficient R&D team

We have experienced technical management team and perfect technical support team. Our key technical personnel

and R&D management personnel have been engaged in internal combustion engine R&D design production and

13Changchai Company Limited Interim Report 2023

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. Performance of the Company’s Principal Operations in the Reporting Period

In the first half of 2023 the macro economy was still recovering stably. Affected by factors such as the switch to

the National Emission Standard IV market overextension and conservative purchase intentions of users the

agricultural machinery industry was confronted with a severe challenge and thus entered a downturn for in-depth

adjustments. This tested the Company’s business. In this context the Company adhered to its annual policy and

goals and seized market opportunities. Additionally it enhanced internal management and comprehensively

pushed ahead with all tasks. As a result it surmounted difficulties and achieved excellent operating results. During

the Reporting Period the Company sold 365.3 thousand diesel engines gasoline engines and generator sets

including 78.2 thousand gasoline engines generating total sales revenue of RMB1.351 billion an increase of

14.62% year-on-year.

In terms of product development and application the Company enhanced the batch application and market testing

and tracking of products that met the National Emission Standard IV for Non-Road Engines and optimized the

product performance on an ongoing basis in combination with the users’ feedback and demands. At the same time

the Company advanced the development of products designed for its expansion into new fields diversified

products in different power ranges and carried out orderly experiments for product application in the market.These efforts earned two of the Company’s products namely 3M78 and L24 a title of High-tech Products of

Changzhou. Additionally two new products 4G29 and 4G36V16 passed the acceptance inspection for the

14Changchai Company Limited Interim Report 2023

appraisal of Jiangsu Province for new products and technologies.In terms of market services the Company further optimized the sales network and product mix of single-cylinder

engines in the circulation market and consolidated its market application share in the industrial cluster. Moreover

all products in the required power ranges of the main engine plant customers were adjusted to fully meet the

National Emission Standard IV thus helping the Company consolidate the market share of its advantageous

products and expand the application of new models. Meanwhile efforts were redoubled to improve the services

that met the National Emission Standard IV and optimize the service resources. Training on the products in

compliance with the National Emission Standard IV was conducted on an ongoing basis and policies on services

during the busy season were adjusted. Doing so further consolidated the service resources. Furthermore thanks to

the increasingly stable foreign trade environment foreign trade witnessed a significant increment in the traditional

market.In terms of quality management the Company strictly controlled the quality of products in compliance with the

National Emission Standard IV in order to continuously improve their quality stability and reliability. To this end

the Company carried out targeted quality improvement and enhanced the control of the whole process hoping to

produce increasingly stable and satisfactory products.In terms of internal management safety risk control and hazard inspection and remediation were organized to

prevent and mitigate miscellaneous safety risks facilitate the completion of the safe production activity plan and

more importantly boost the Company’s capability of safe production. Additionally a range of publicity activities

in production and operation corporate culture and brand image publicity was organized to celebrate the 110th

anniversary of the Company and enhance the development of corporate culture. This delivered excellent results.During the Reporting Period the Changzhou Wuxing branch company together with other houses within the

scope of expropriation of the passenger train factory area (phases I and II) project was expropriated by the

government. Hence the Company signed the Agreement on the Expropriation of the Properties of the Wuxing

Branch Company on State-owned Land in Changzhou City and the Compensation with Changzhou Zhonglou

District Housing and Urban-Rural Development Bureau and received the first compensation payment of RMB70

million on 28 June 2023.II Core Competitiveness Analysis

1. Advantages in Brand

15Changchai Company Limited Interim Report 2023

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 Top 500 Machinery Industry In China and National Demonstration

Enterprise of Product and Service Quality Integrity. For many years in the process of achieving steady economic

development of the enterprise we developed in a sound manner and cultivated the “Changchai” brand a famous

small diesel engine brand of China with independent intellectual property rights.

2. Advantages in Technology

The Company has a state-level technology center and post-doctoral research station and a research center of small

and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently it is

mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel engine. It has

a complete product range a wide power level coverage a high reputation and intellectual property rights for its

main products. During the Reporting Period the Company passed the performance re-appraisal by Jiangsu

Provincial Engineering Centre; and two multi-cylinder diesel engines 4G36V16 and 4G29 passed the new

product appraisal. In the period the Company filed a total of six patent applications all of which have been

accepted by the China National Intellectual Property Administration and were granted 13 patents. So far the

Company has 163 patents including 15 invention patents.

3. Advantages in Marketing

Changchai has built up a sales service network covering the whole country with 24 sales service centers and 693

designated maintenance stations. In addition in order to meet the National Emission Standard IV for Non-Road

16Changchai Company Limited Interim Report 2023

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 2023 H1 2022 Change (%)

change

Operating revenue 1350517639.85 1178222492.04 14.62%

Cost of sales 1168898203.83 1051395232.42 11.18%

Selling expense 62131032.17 51759201.38 20.04%

During the Reporting

Period the

wholly-owned

subsidiary Jiangsu

Changchai

Administrative Machinery Co. Ltd.

52877371.06 40216534.11 31.48% has entered the

expense production and

operation stage

while it was still in

the construction

stage in the same

period of last year.Decreased exchange

gains and interest

Finance costs -4976652.95 -13000719.98 ——

income in the

Reporting Period

During the Reporting

Periodincrease in the

stock prices of

Jiangsu Liance

Electromechanical

Technology Co.Ltd. Kailong High

Income tax expense 7189328.33 -6206048.88 —— tech Co. Ltd. Guilin

Xingchen

Technology Co.Ltd. and Henan

Lantian Gas Co.Ltd. held by

wholly-owned

subsidiary Housheng

17Changchai Company Limited Interim Report 2023

Investment

corresponding to the

increase in deferred

income tax expenses

provisioned.R&D investments 35839071.42 40159787.47 -10.76%

During the Reporting

Period most of the

Company’s

multi-cylinder diesel

engine customers

were supporting

companies of main

engine which are

usually given longer

Net cash generated payment days and

from/used in operating -104796816.75 -74300501.12 —— the Company

activities properly allowed

customers’ buying on

credit for more

markets to step up

efforts to expand the

market due to the

product emission

upgrading resulting

in relatively lower

cash inflow.The Company

acquired a 41.5%

Net cash generated interest in Zhenjiang

from/used in investing -45360077.56 -86580833.90 —— Siyang in the sameperiod of last year

activities with no comparable

investment in the

current period.Some bank

acceptance notes

with low credit

Net cash generated ratings were

from/used in financing -8886489.92 27896685.26 —— discounted in thesame period of last

activities year with no

comparable

investment in the

current period.Net increase in cash

-159043384.23-132984649.76——

and cash equivalents

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

□ Applicable √ Not applicable

Breakdown of operating revenue:

H1 2023 H1 2022 Change (%)

18Changchai Company Limited Interim Report 2023

As % of total As % of total

Operating

operating Operating revenue operating

revenue

revenue (%) revenue (%)

Total 1350517639.85 100% 1178222492.04 100% 14.62%

By operating division

Internal

combustion 1333099509.22 98.71% 1161021786.32 98.54% 14.82%

engines

Other 17418130.63 1.29% 17200705.72 1.46% 1.26%

By product category

Diesel engines 1246906709.16 92.33% 1079645157.01 91.63% 15.49%

Gasoline

82791314.556.13%73850875.096.27%12.11%

engines

Other 20819616.14 1.54% 24726459.94 2.10% -15.80%

By operating segment

Domestic 1114906055.18 82.55% 1019205712.35 86.50% 9.39%

Overseas 235611584.67 17.45% 159016779.69 13.50% 48.17%

Unit: RMB

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 1333099509.22 1156456220.22 13.25% 14.82% 11.33% 2.72%

engines

By product category

Diesel engines 1246906709.16 1085807867.36 12.92% 15.49% 12.35% 2.44%

Gasoline

82791314.5567045804.5119.02%12.11%6.10%4.58%

engines

By operating segment

Domestic 1114906055.18 939907304.69 15.70% 9.39% 4.81% 3.69%

19Changchai Company Limited Interim Report 2023

Overseas 235611584.67 228990899.14 2.81% 48.17% 48.14% 0.02%

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

Period:

□ Applicable √ Not applicable

IV Analysis of Non-Core Businesses

√ Applicable □ Not applicable

Unit: RMB

Amount As % of grossprofit Main reason/source

Recurrent

or not

Return on 3226921.70 2.25% Stock dividends and income frominvestment cash management Yes

Increased prices of the shares held

by wholly-owned subsidiary

Horizon Investment in Jiangsu

Gains/losses on Liance Electromechanical

changes in fair 19360455.86 13.51% Technology Co. Ltd. Kailong

value High Technology Co. Ltd.No

Guilin Stars Science and

Technology Co. Ltd. and Henan

Lantian Gas Co. Ltd. during the

Reporting Period

Asset impairment

loss -565273.49 -0.39% Inventory valuation loss No

Non-operating 495538.97 0.35% Trademark infringement damageincome income No

Non-operating Mainly caused by compensation

expense 1297348.13 0.91% matters No

Expropriation of the constructions

Asset disposal 105395693.25 73.55% on the state-owned land of theincome Changzhou Wuxing branch No

company in the Reporting Period

V Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

30 June 2023 31 December 2022 Change

As % of As % of in Reason for any

Amount total Amount total percent significant change

assets assets age (%)

Monetary

851514113.9215.32%930013350.9717.82%-2.50%

assets

Accounts 934790431.84 16.82% 370322179.77 7.10% 9.72% Most of the

20Changchai Company Limited Interim Report 2023

receivable Company’s

multi-cylinder diesel

engine customers are

supporting

companies of main

engine which are

usually given longer

payment days and the

Company properly

allowed customers’

buying on credit for

more markets to step

up efforts to expand

the market due to the

product emission

upgrading

Inventories 557524141.36 10.03% 571996881.74 10.96% -0.93%

Investment

40942541.870.74%42160779.650.81%-0.07%

property

Fixed assets 683448533.29 12.29% 720061387.76 13.80% -1.51%

Construction

30905577.100.56%30281547.560.58%-0.02%

in progress

Short-term

110447699.491.99%115437700.652.21%-0.22%

borrowings

Contract

liabilities 33094812.97 0.60% 32843692.83 0.63% -0.03%

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

21Changchai Company Limited Interim Report 2023

Financia

l assets

Held-for

-trading

financial

assets

(exclusi 3701036 1936045 6051277 6331209 3614708

ve of 02.57 5.86 34.16 83.27 09.32

derivati

ve

financial

assets)

Investm

ents in

other 9555602 8446503 1042219

equity 40.08 90.08 240.08

instrume

nts

Subtotal

of 1325663 1936045 8446503 6051277 6331209 1403690

financial 842.65 5.86 90.08 34.16 83.27 049.40

assets

Others 4128095 705680.7 413515287.93 7 68.70

Total of

the 1738473 2006613 8446503 6051277 6331209 1817205430.58 6.63 90.08 34.16 83.27 318.10

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 173206532.10

acceptance notes environment etc.Buildings 1422559.69 Collateral for bank loan

Land use right 863218.81 Collateral for bank loan

22Changchai Company Limited Interim Report 2023

Plant and equipment 25771609.33 Collateral for bank loan

Payment obligations in relation

to discounted notes that were 110000000.00

undue

Payment obligations in relation

to transferred notes that were 103721703.95

undue

Total 414985623.88

VI Investments Made

1. Total Investment Amount

□ Applicable √ Not applicable

2. Major Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

4. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable

Unit: RMB

Gain/ Accu

loss mula

Initia Acco on ted Purc Gain/

Varie Code Nam untin

Begi fair fair hase Soldnnin in loss Endil g value value d in in ng Acco Fund

ty of of e of inves meas

g chan chan the the the carry untin ing

secur secur secur urem

carry

ing ges ges Repo

Repo

tmen ent in the recor rting rting

Repo ing g sourc

ity ity ity rting amou

t cost meth

amou Perio

nt Repo ded Perio d Perio nt

title e

od rting in d d

Perio equit

d y

Dom Foto Fair 449 491 Inves Self-

estic/ 6001 n 4178 value 4060

66400045000.00

516 300 tmen

forei Moto .00 meth 0.00 000.

0.00 0.00 0.00 000. fundt in

gn r od 00 00

ed

other

23Changchai Company Limited Interim Report 2023

stock equit

y

instr

umen

ts

Inves

tmen

Dom t in

Bank Fair

estic/

6009 of 4278

129 171 other Self-

value 1705

forei 19 6000 8600 0.00

204

000.0.000.000.00

990

000. equit fundJiang

gn .00

meth 0.00

su od 00 00

y ed

stock instr

umen

ts

Kailo Held

Dom

ng Fair -for-t

estic/

High 2000 value 1359 9417 941

230 radin Self-

forei 300912 1268 2411 096. 0.00 0.00 0.00 709

095 g

07.0 finan fundTech .00 methgn .00 00 6.00 0 cial ednolo od

stock asset

gy s

Held

Dom Lian

Fair -for-t

estic/ ce 7200 689 radin Self-6881 value 6006 8884 888forei 13 Tech 000. 2400 800. 0.00 0.00 0.00 480

472 g fund

meth 00.0 finan

gn nolo 00 .00 00 0.00

od 0 cial

ed

stock gy asset

s

Held

Dom

Fair -for-t

estic/ Lanti radin Self-

value

forei 6053 an 1607 2470 2096

209267

6844.7600.000.000.000.000.0060.0960.

g

meth 0 00 finan

fund

gn Gas cial edod

stock asset

s

Stars Held

Dom Scien

Fair -for-t

estic/ ce radin Self-

forei 8328

3600 value 4837 594 543

85 and 000. 500.

5940

00.000.000.000.00000.150

g fund

meth finan

gn Tech 00 00 00 0.00

od cial

ed

stock nolo asset

gy s

115565531891578189760

Total 3201 -- 7031 6856 720 168 946

2.761.00.00000.

0.000.0056.0167.----

00000

24Changchai Company Limited Interim Report 2023

(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

Deposit

ed in

the

special

Non-pu account

blic

20216350021178.54355.000.00%8985.9

for

raised 8985.9

offerin 19 72 8 funds 8

g and put

into

cash

manage

ment

Total -- 63500 21178. 54355. 0 0 0.00% 8985.9 -- 8985.919 72 8 8

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

deducting various issuance fees the actual net amount raised this time is 620665733.97 yuan including an

additional registered capital of 144318181.00 yuan and an additional capital reserve of 476347552.97 yuan.

25Changchai Company Limited Interim Report 2023

On June 16 2021 Notary Tianye Certified Public Accountants (Special General Partnership) conducted a

capital verification of the above-mentioned raised funds and issued the "Capital Verification Report on the Non

Public Development of Stocks of Changchai Co. Ltd." (Su Gong W [2021] B062). After deducting the

recommendation and underwriting fees the underwriter of the recommendation actually received

622499996.40 yuan of raised funds which were deposited in three special accounts for raised funds opened by

the company and Changchai Machinery and signed a tripartite supervision agreement for raised funds with the

recommendation institution and the account opening bank. There is no significant difference between the

tripartite regulatory agreement and the model tripartite regulatory agreement of the Shenzhen Stock Exchange

and our company strictly follows and fulfills it when using the raised funds.As of 30 June 2023 RMB543.5572

million of raised funds has been used cumulatively with the unused raised funds being RMB89.8598 million.

(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)

Committed investment projects

Relocation project

of light engines No 5476 5476 2091 5333 97.39 May -19376.71 6.71 9.43 7.75 % 2022 .34 No No

and casting

Innovation

Not

capacity building Dece

No 8733. 7299. 258.7 1017. 13.95 mber 0 applic No

project of the 29 86 6 97 % 2023 able

technical center

Subtotal of

committed 6350 6206 2117 5435 -1937

----------

investment 0.00 6.57 8.19 5.72 .34

projects

Investment of excessive raised funds

Not applicable

Total -- 6350 6206 2117 5435 -- -- -1937 -- --

26Changchai Company Limited Interim Report 2023

0.006.578.195.72.34

Light engine and casting relocation project: 1) Reasons for payment not meeting the

planned schedule: As of June 30 2023 the investment progress of the project's raised

funds was 97.39% and the remaining funds not invested were mainly the final payment

for some equipment that had not been finally accepted. 2) The reason for the failure to

achieve benefits during this reporting period is that the project consists of multiple

production lines such as casting and single cylinder machine assembly. Currently casting

Cases and reasons has been officially put into operation and the main customer is the parent company.for failing to However due to the market situation internal and external orders have decreased to a

reach the planned certain extent leading to a slowdown in production capacity release; Moreover all single

progress or cylinder machine assembly employees have not yet relocated to the project address and

predicted return are still in the process of gradual relocation so the expected benefits have not been

(by specific achieved in this period.projects) Technical Center Innovation Capacity Building Project: Reasons for not achieving the

planned progress: The company adhered to the principle of saving funds and improving

asset utilization at the beginning of the independent project borrowed some original

equipment and used technological innovation methods to complete some of the research

and development process saving some capital expenses; There is still some unpaid

balance in the signed contract. The project is expected to be completed before the

scheduled availability date.Explanations of

the material

Not applicable

changes in the

project feasibility

Amount use and

use progress of

Not applicable

excessive raised

funds

Applicable

Occurred in the prior year

Implementation The Proposal on Adding Implementation Location to the Private Placement Raised Funds

of location Investment Project of Innovation Capacity Building of the Technical Centre was approved

changes in the at the 13th Meeting of the 9th Board of Directors and the 12th Meeting of the 9th

investment Supervisory Committee of the Company on 22 August 2022. The Company decided to

projects with the add the sites of certain branches of the Company as the parent and wholly-owned

raised funds 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.Implementation

of method Not applicable

adjustments to the

investment

27Changchai Company Limited Interim Report 2023

projects with the

raised funds

Applicable

Prior to the availability of the raised funds in order to ensure the smooth implementation

of the investment projects with raised funds the Company used its own funds to invest in

part of the investment projects with raised funds and paid part of the issuance expenses.As of 17 June 2021 the cumulative amount of the Company's self-financing funds

pre-invested in the investment projects with raised funds was 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 25

projects with the June 2021. On 28 June 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 30 June 2021.

Temporary

replenishment of

working capital Not applicable

with the idle

raised funds

Surplus raised

funds for project

implementation Not applicable

and reasons for

the surplus

Use and

ownership change Some are deposited in the special account for raised funds and some temporarily idle

of unused raised raised funds are used to purchase wealth management products

funds

Problems in the On 13 July 2021 the Fourth Interim Meeting of the Board of Directors of the Company in

use of raised 2021 deliberated and approved the Proposal on Changing the Implementation Entity of

28Changchai Company Limited Interim Report 2023

funds and Some Investment Projects with Raised Funds agreeing to change the implementation

disclosure or entity of the Company's investment projects with funds raised through non-public

other cases offering of shares the "relocation project of light engines and casting" from Changchai

Machinery a wholly-owned subsidiary of the Company to the parent company of

Changchai Co. Ltd. The matter did not change the use and implementation of the funds

raised and was not a significant change in the investment projects with raised funds.The Proposal on Adding Implementation Entity to the Private Placement Raised Funds

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 intended to add

Changchai Machinery as another operating entity with the Company as the parent to

jointly operate the relocation project for better operational flexibility and stronger market

competitiveness.

(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

Relati O C

onshi w re

Net

Ratio R p ne di

profit

of the el betwe rs to

contri Execu In

net at en hi r’

buted ted as de

Tra profit ed the p s

to the sched x

nsa contri -p transa of ri D

Comp uled to

Tra ctio buted ar ction th g is

Dat any or dis

nsa n by the ty party e ht cl

e from not; if cl

ctio Asset pric Effect on the sale Pricing tr and as s os

of the not os

n sold e Company of the principle an the set an ur

sal period give ed

par (R asset sa Com in d e

e -begin reason inf

ty MB to the ct pany vo li da

to the s and or

’00 Comp io (appli lv ab te

date measu m

00) any’s n cable ed ili

of sale res ati

total or for ha ti

(RMB taken on

profit n relate s es

’0000

(%) ot d-part be in

)

y en v

transa all ol

29Changchai Company Limited Interim Report 2023

ctions tra ve

) ns d

fer ha

re ve

d be

or en

no al

t l

tr

an

sf

er

re

d

or

n

ot

The Wuxing branch The

Ch company is one of the demolitio

ang Company's light n and

The

zho engine production relocatio

Comp

u bases which has n

any's

Zh ceased production as compens

prope

ong of the date of sale and ation

rties

lou part of the equipment amount

and

Dis and production lines was

its

tric have been relocated to determin

annex

t Jiangsu Changchai ed by

es Yes

Ho 14 Machinery Co. Ltd. 77.44 taking

locate imple

usi Jun which is the % the N

d in 11 N N/ mente See

ng e 0 implementation body evaluatio N/A /

Xinxi 700 o A d as note 1

and 20 of the light engine and n result A

n plann

Ur 23 casting relocation as

Villag ed

ban project of the reference

e

-Ru non-public offering

Com

ral project. The combinin

mitte

De expropriation will not g with

e

vel have a significant the local

Wuxi

op impact on the demolitio

ng

me Company's production n and

Town

nt and operation. relocatio

ship

Bur The Company will n

eau account for the compens

expropriation in ation

30Changchai Company Limited Interim Report 2023

accordance with the policy

Accounting Standards and

for Business mutual

Enterprises and other consultati

relevant regulations. on on

adding

relevant

relocatio

n

compens

ation

incentive

s etc.Note 1: See the following announcements disclosed on http://www.cninfo.com.cn:

1) Reminder on the Intention of the People's Government of Zhonglou District Changzhou City to Expropriate

Properties of the Wuxing Branch Company (Announcement No. 2023-016) disclosed on 19 April 2023;

2) Announcement on the Resolutions of the 17th Meeting of the Ninth Board of Directors (Announcement No.

2023-021) and Announcement on the Intention to Sign the Agreement on the Expropriation of the Properties of

the Wuxing Branch Company on State-owned Land in Changzhou City and the Compensation (Announcement No.

2023-022) both disclosed on 26 May 2023;

3) Announcement on the Resolutions of the First Extraordinary General Meeting of Shareholders in 2023

(Announcement No. 2023-035) disclosed on 13 June 2023; and

4) Announcement on Progress on the Expropriation of Properties on State-owned Land of the Wuxing Branch

Company and the Compensation (Announcement No. 2023-042) disclosed on 29 June 2023.

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 Registere Total Net Operatin Operating Net

Name

the activity d capital assets assets g revenue profit profit

Compa

ny

Changchai Subsidi Production 550630 153669 787778 122681 -125637 -127254

31Changchai Company Limited Interim Report 2023

Benniu ary of diesel 00.00 633.65 41.60 208.07 7.50 0.30

engine

accessories

Diesel

Changchai Subsidi 850000 710039 494770 261900 976591.5 212968.engine

Wanzhou ary 00.00 81.46 76.95 43.15 2 83

assembly

External

Horizon Subsidi investment 400000 113700 955813 1938328 146502

0.00

Investment ary and 00.00 314.85 84.34 4.61 82.95

consulting

agricultural

Horizon machinery

Agricultura Subsidi product of 100000 682492 -156476 301016 -593158. -593158.l ary rice 00.00 8.69 24.60 6.17 00 00

Equipment transplanter

etc.Gasoline

Changchai Subsidi 372500 117886 975620 827913 9401412 818080

engines

Robin ary 00.00 692.47 37.80 14.55 .58 9.75

assembly

Internal

combustion

Changchai Subsidi 300000 592685 258078 438185 -193802 -193733

engine and

Machinery ary 000.00 799.88 854.01 22.52 29.04 66.46

related

accessories

Xingsheng

Real estate

Real Estate Subsidi 100000 337431 522108. 120746 -132801. -37109.3

manageme

Manageme ary 0.00 5.88 72 7.09 40 2

nt service

nt

Manufactur

ing and

Zhenjiang Subsidi marketing 200000 115324 971551 380983 8214000 696959

Siyang ary of diesel 0.00 977.87 13.08 12.48 .25 2.70

engines for

ships

Subsidiaries obtained or disposed of in the Reporting Period:

□ Applicable √ Not applicable

IX Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

32Changchai Company Limited Interim Report 2023

X Risks Facing the Company and Countermeasures

(1) Market risk

Due to factors such as subsidy policy change tight supply chain upgrading of the National Emission Standard IV

for Non-road Vehicles and intensified existing competition the agricultural machinery industry has still been in a

period of deep adjustment. The diesel engine market faces limited total demand the delivery capacity and

environment of products need to be improved and the lower user revenue compromises the increase in the

demand side.Countermeasures: First the Company solidifies the traditional supporting fields further expands the Company’s

advantages in the field of agricultural machinery and continues to promote the mass production of the full range

of models that meet the National Emission Standard IV for Non-road Vehicles to ensure the continuous supply

level of supply chains and meet market demands.Second the Company expands applications in shipborne generator sets high-speed rice transplanters cold chain

vehicles excavators and other small construction machinery conducts in-depth research and development in new

areas and development and supporting of key products. The Company further optimises the performance of

outboard engines which have been put into production and introduced to the market in the first half of the year.These engines are for yachts lifeboats fishing boats salvage boats etc. which are well received.Third the Company creates the “internal combustion engine+” mode actively promotes the application of

advanced technologies such as the Internet big data artificial intelligence and new materials to product

development further improves the diesel engines’ functions of intelligent control real-time monitoring and big

data collection and analysis accelerates the R&D of intelligent terminals and hybrid power promotes the products

to develop towards the high end and builds new competitive edges.

(2) Industrial risk

In recent years the state advocates energy conservation and emission reduction. New energy power represented

by pure electric hybrid power and hydrogen fuel power has grabbed the market share of diesel engine to a certain

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.

33Changchai Company Limited Interim Report 2023

Countermeasures: First the Company strengthens exploration in the new energy sector and actively promotes

project construction and development.Second the Company makes proper efforts in product R&D develops efficient and eco-friendly products and

expands new development directions and application areas. At present the Company is pushing forward in an

orderly manner the research and development of the hybrid-electric engine project installing debugging and

further optimising the project equipment and prototype.Finally the Company actively looks for high-quality investment targets in the upstream and downstream of the

industry effectively integrates resources and enhances the quality of development. After the acquisition of

Zhenjiang Siyang by the Company the two sides have been steadily integrating and sharing resources in various

areas such as production organisation procurement system and emission upgrade declaration which is beneficial

to the Company's expansion of its product chain improvement of its business structure and promotion of its

long-term development.

(3) Foreign trade risk

In the context of the complex and changeable global economic environment and the turmoil in the breadbasket of

Europe caused by the Russia-Ukraine conflict the prices of imported agricultural products fertilizer feed oil and

gas increase which directly compromise the planting costs and purchasing power of farmers. The unstable factors

have brought about certain impacts on product export.Countermeasures: First the Company will pay close attention to the relevant dynamics actively deal with the

foreign trade market changes as well as strengthen the maintenance and management of overseas key markets and

customers so as to increase the market share.Second it will intensify efforts in the development of emerging markets and new users enhance market research

look for new marketing points and endeavor to improve the sales of high-value-added products.Third it pays attention to the risk control of customer payments improves internal process control and focuses on

timely prevention to solve any possible problems.

(4) Foreign exchange risk

Some of the Company’s exports are settled in USD. In the future due to the significant exchange rate fluctuation

of RMB against USD the Company may face the risk of adverse impact on product sales due to exchange rate

fluctuation.

34Changchai Company Limited Interim Report 2023

Countermeasures: First the Company will enhance risk control to ensure its capital security constantly pay

attention to the depreciation of currencies and shortage of USD in the market and lower risk by changing

payment methods change and insuring export credit insurance.Second the Company will promptly adjust product prices and payment terms to cope with fluctuations in

exchange rates and material prices.

(5) Talent risk

The Company needs high-level talents highly skilled talents and lacks talents to help the Company improve its

operational efficiency and strengthen technological innovation to cope with the increasingly fierce market

competition and industry development trend. Therefore the demand for professional talents and senior

management talents has increased significantly.Countermeasures: First the Company has stepped up efforts to cultivate and appoint young leaders and recruited

more professional talents.Second the Company has recruited advanced talents through multiple approaches and constantly enhanced the

development of skill experts technical and management personnel and workers and technicians so as to raise the

contribution rate of human resources in all respects.Third the Company promotes the appraisal and incentive reform programme improves the appraisal and

incentive mechanism for executives effectively mobilises their enthusiasm and enhances the efficiency and

quality at work.

35Changchai Company Limited Interim Report 2023

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.See

The 2022 Annual Annual general 32.52% 18 May 2023 19 May 2023 Announcement

General Meeting meeting No. 2023-020 on

Resolutions of

the 2022 Annual

General Meeting.All proposals

were approved.The First See

Extraordinary Extraordinary

Announcement

general 32.33% 12 June 2023 13 June 2023 No. 2023-035 on

General Meeting in meeting Resolutions of

2023 the FirstExtraordinary

General Meeting

in 2023.

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

Name Title of office Type of change Date Reason

Li Desen Chairman of theBoard Elected 12 June 2023 Re-election

Zhang Xin Vice Chairman ofthe Board Elected 12 June 2023 Re-election

Xie Guozhong Director Elected 12 June 2023 Re-election

Tan Jie Director Elected 12 June 2023 Re-election

Jia Bin IndependentDirector Elected 12 June 2023 Re-election

Ni Mingliang Chairman of theSupervisory Elected 12 June 2023 Re-election

36Changchai Company Limited Interim Report 2023

Committee

Shi Xingyu Supervisor Elected 12 June 2023 Re-election

Lin Wei Supervisor Elected 12 June 2023 Re-election

Xie Guozhong General Manager Appointed 12 June 2023 Appointed by theBoard of Directors

Wang Jing Deputy GeneralManager Appointed 12 June 2023

Appointed by the

Board of Directors

Wang Weifeng Chief Engineer Appointed 12 June 2023 Appointed by theBoard of Directors

Chairman of the Left office upon the Left office upon theShi Xinkun Board expiry of the term 12 June 2023 expiry of the termof office of office

Left office upon the Left office upon the

Lin Tian Director expiry of the term 12 June 2023 expiry of the term

of office of office

Director and Left office upon the Left office upon the

Xu Yi Deputy General expiry of the term 12 June 2023 expiry of the term

Manager of office of office

Xing Min Independent

Left office upon the Left office upon the

Director expiry of the term 12 June 2023 expiry of the termof office of office

Left office upon the Left office upon the

Zhang Xin General Manager expiry of the term 12 June 2023 expiry of the term

of office of office

Yin Lihou Deputy General

Left office upon the Left office upon the

Manager expiry of the term 12 June 2023 expiry of the termof office of office

Xie Guozhong Deputy General

Left office upon the Left office upon the

Manager expiry of the term 12 June 2023 expiry of the termof office of office

Chairman of the Left office upon the Left office upon the

He Jianguang Supervisory expiry of the term 12 June 2023 expiry of the term

Committee of office of office

Left office upon the Left office upon the

Chen Lijia Supervisor expiry of the term 12 June 2023 expiry of the term

of office of office

Left office upon the Left office upon the

Ge Jiangli Supervisor expiry of the term 12 June 2023 expiry of the term

of office of office

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.

37Changchai Company Limited Interim Report 2023

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: N/A

Other environmental information with reference to a key polluter:

The company and its subsidiaries are not listed as key pollutant discharge units by the environmental protection

department. The company and its subsidiaries conscientiously implement environmental protection laws and

regulations such as the Environmental Protection Law of the People's Republic of China the Water Pollution

Prevention and Control Law of the People's Republic of China the Air Pollution Prevention and Control Law of

the People's Republic of China the Environmental Noise Pollution Prevention and Control Law of the People's

Republic of China and the Solid Waste Pollution Prevention and Control Law of the People's Republic of China

in their daily production and operation and pay environmental protection taxes in accordance with the law There

were no penalties for environmental violations during the Reporting Period.Actions taken during the Reporting Period to reduce carbon emissions and the impact:

√ Applicable □Not applicable

The company adheres to a healthy green and harmonious development model continuously promoting recyclable

products and environmentally friendly materials to achieve the goal of reducing pollution and carbon emissions.During the reporting period the comprehensive energy consumption of the company's output value was 0.014

tons of standard coal compared to 0.02 tons of standard coal in the same period last year a year-on-year decrease

of 30%.Reasons for not disclosing other environment-related information:

N/A

II Social Responsibility

In the Reporting Period the Company adhered to the core values of "Customer First Employee Oriented

Enhancing Shareholder Returns and Creating Value for Society" and took "Providing Green Power for a Better

Life" as its mission and operated steadily around its operational policy. 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

38Changchai Company Limited Interim Report 2023

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 2022 earnestly

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

and treated all shareholders fairly. The Company complied with the dividend commitment and completed the

payment of the 2022 final dividend of RMB7.0569 million during the Reporting Period. The Company's

information disclosure is legal and compliant and the content 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 has made considerate arrangements for employees including festive perks health

check-ups medical recuperation benefits provided through the labor union service cards assistance to employees

in need and other philanthropic initiatives. 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 properly addressed reasonable needs of employees

and built harmonious and stable relations between employees and employer.Protection of the rights and interests of customers and consumers: The Company has established good long-term

partnerships with its customers is committed to providing customers with quality efficient and timely services

and has been recognized and honored as a high-quality supplier by many customers. Additionally the Company

has been awarded the honorable titles of Excellent Supplier of World Agriculture Machinery and Excellent

Supplier of Dongfeng Agricultural Machinery for several consecutive years. During the Reporting Period the

Company won the prestigious title of the National Model Enterprise for Trustworthy Product and Service Quality.Additionally it conducted multiple training sessions on products compliant with the National Emission Standard

IV in the market and continuously enhanced the skills of its market service personnel and integrated social service

resources to deliver services in line with the National Emission Standard IV.Protection of suppliers’ rights and interests: The Company enhanced supplier management while observing the

Contract on the Application and Procurement of Parts and the Quality Assurance Agreement for Suppliers

optimized the capacity and supply allocation for parts intensified inventory and plan management and paid

suppliers for the goods promptly pursuant to the contracts. 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.

39Changchai Company Limited Interim Report 2023

In terms of safe production to build a safe Changchai the Company fully implemented policies and emergencyresponse mechanisms for security protection and fire safety. Additionally it launched the “Life above AllEliminate All Hazards” special action on fire safety and pushed ahead with remediation measures by the timeline

of the special action. In the process four fire drills were organized.In terms of cultural development on its 110th anniversary the Company fully showcased its new image in

innovation product R&D equipment enhancement quality improvement and corporate culture development.Additionally it launched multiple themed activities such as the “Celebrate the 110th Anniversary Display OurPresence” orienteering hiking for employees to display the Company’s presence on all fronts from multiple

perspectives enhance the Company’s cohesion and motivation for growth and boost the employees’ sense of

belonging and obtainment. Moreover during the period the Company cooperated with the Economy 30 Minutes

program of China Central Television (“CCTV”) to shoot a special report on strengthening the weak spots in

domestic agricultural machinery. It also enhanced the publicity of Changchai’s brand image and new flagship

products. Doing so continuously boosted Changchai’s “Centennial Changchai Timeless Classic” positive image.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. The

Company always remembers its social responsibilities and has made contributions to social development with

practical actions.

40Changchai Company Limited Interim Report 2023

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

Ab

out

It will not transfer the shares it has

shar 5 5 July

obtained in the private placement of

e Jul 2021 On

Changzhou Investment Group Changchai within 36 months starting

trad y -5 goi

Co. Ltd. from the date when the private

ing 20 July ng

placement of A-shares is allowed for

rest 21 2024

public trading.ricti

on

1. It undertakes not to interfere in the

Commitments Company's operation and management

made in IPO or activities beyond its authority and not to

refinancing encroach on the Company's interests;

11

2. It undertakes not to transfer benefits

11 April

to other entities or individuals free of

Ap 2020 On

Changzhou Investment Group Oth charge or on unfair terms nor to impair

ril -31 goi

Co. Ltd. er the interests of the Company by any

20 Dece ng

other means;

20 mber

3. After the issuance of this Letter of 9999

Commitment and before the completion

of the Company's non-public offering of

shares if the China Securities

Regulatory Commission (CSRC) makes

41Changchai Company Limited Interim Report 2023

other new regulatory provisions on the

return filling measures and

commitments and the aforesaid

commitments cannot meet such

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.Rewards Plan for Shareholders in Next

Three Years (2023-2025)

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

Ab 18

Other money flow and no influence on theout Ma Year On

commitments made following-up going concern after cash y 2023- goi

to minority Changchai Company Limited divi

den bonus the profits allocated by cashshareholders 20 2025 ng

ds every year shouldn’t be lower than 10% 23

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)

42Changchai Company Limited Interim Report 2023

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.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

43Changchai Company Limited Interim Report 2023

IX Punishments and Rectifications

□ Applicable √ Not applicable

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

44Changchai Company Limited Interim Report 2023

involved in any other finance business with any related parties.

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

No such cases in the Reporting Period.

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

Bank financial

Raised funds 10000.00 5000.00 0.00 0.00

products

Broker financial

Self-funded 1565.39 1266.09 0.00 0.00

products

45Changchai Company Limited Interim Report 2023

Bank financial

Self-funded 33500.00 20070.00 0.00 0.00

products

Total 45065.39 26336.09 0.00 0.00

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

4. Other Major Contracts

□ Applicable √ Not applicable

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

√ Applicable □ Not applicable

1. Expropriation of the Wuxing branch company’s properties on state-owned land and compensation

On 25 May 2023 the Proposal on the Intention to Sign the Agreement on the Expropriation of the Properties of

the Wuxing Branch Company on State-owned Land in Changzhou City and the Compensation was approved at

the 17th Meeting of the Ninth Board of Directors. Later the said matter was approved at the First Extraordinary

General Meeting of Shareholders in 2023 dated 12 June 2023. As such the Company was agreed to sign a

contract with Changzhou Zhonglou District Housing and Urban-Rural Development Bureau on the expropriation

of the Wuxing branch company’s properties on state-owned land and the compensation with the contractual total

compensation amount being RMB117 million. On 14 June 2023 the Company signed the Agreement on the

Expropriation of the Properties of the Wuxing Branch Company on State-owned Land in Changzhou City and the

Compensation with Changzhou Zhonglou District Housing and Urban-Rural Development Bureau and received

the first compensation payment of RMB70 million on 28 June 2023.XIV Significant Events of Subsidiaries

□ Applicable √ Not applicable

46Changchai Company Limited Interim Report 2023

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 568181 8.05% 0 56818181 81 8.05%

d shares

1.1

Shares

held by 0 0.00% 0 0 0.00%

governm

ent

1.2

Shares

held by

state-ow 568181 8.05% 0 56818181.00 81.00 8.05%

ned

legal

persons

1.3

Shares

held by

other

00.00%000.00%

domesti

c

investor

s

Among

which: 0 0.00% 0 0 0.00%

Shares

47Changchai Company Limited Interim Report 2023

held by

domesti

c legal

persons

S

hares

held by

00.00%000.00%

domesti

c natural

persons

1.4

Shares

held by

00.00%000.00%

foreign

investor

s

Among

which:

Shares

held by 0 0.00% 0 0 0.00%

foreign

legal

persons

S

hares

held by

00.00%000.00%

foreign

natural

persons

2.

Unrestri 648874

32691.95%0

648874

cted 326

91.95%

shares

2.1

RMB-de

nominat 498874 70.69% 0 498874326 326 70.69%ed

ordinary

shares

2.2

150000150000

Domesti 000 21.26% 0 000 21.26%

cally

48Changchai Company Limited Interim Report 2023

listed

foreign

shares

2.3

Oversea

listed 0 0.00% 0 0 0.00%

foreign

shares

2.4

00.00%000.00%

Other

3. Total 705692 100.00

507%0

705692100.00

shares 507 %

Reasons for the share changes:

□ Applicable √ Not applicable

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

II. Issuance and Listing of Securities

□ Applicable √ Not applicable

III Shareholders and Their Holdings

Unit: share

Number of ordinary 51091 Number of preference shareholders 0

49Changchai Company Limited Interim Report 2023

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% 22766341 56818181 1708452

legal person 7 36

Co. Ltd

Domestic

Chen Jian natural 0.65% 4580300 4580300

person

KGI ASIA Foreign

LIMITED legal person 0.44% 3101695 3101695

Huatai Securities State-owned

Co. Ltd. legal person 0.38% 2667721 2667721

China Minsheng

Bank-Goldstate

Yuanqi Dynamic

Asset Allocation Other 0.27% 1880000 1880000

Mixed Type

Securities

Investment Fund

Domestic

Li Suinan natural 0.23% 1591300 1591300

person

Domestic

Huang Guoliang natural 0.22% 1528891 1528891

person

Domestic

Xue Hong natural 0.21% 1516900 1516900

person

Domestic

Xu Qingguo natural 0.21% 1500300 1500300

person

Bank of China

Co. Ltd.-GFund

Quantified

Multifactor Other 0.21% 1456200 1456200

Equity Securities

Investment Fund

Strategic investor or general

legal person becoming a top-10

N/A

ordinary shareholder in a rights

issue (if any)

50Changchai Company Limited Interim Report 2023

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 4580300 4580300

ordinary share

KGI ASIA LIMITED 3101695 Domestically listedforeign share 3101695

RMB-denominated

Huatai Securities Co. Ltd. 2667721 2667721

ordinary share

China Minsheng Bank-Goldstate

Yuanqi Dynamic Asset RMB-denominated

Allocation Mixed Type 1880000 1880000ordinary share

Securities Investment Fund

Li Suinan 1591300 Domestically listedforeign share 1591300

Huang Guoliang 1528891 Domestically listedforeign share 1528891

Xue Hong 1516900 Domestically listedforeign share 1516900

RMB-denominated

Xu Qingguo 1500300 1500300

ordinary share

Bank of China Co. Ltd.-GFund RMB-denominated

Quantified Multifactor Equity 1456200 1456200

Securities Investment Fund ordinary share

Related or acting-in-concert It is unknown whether there is among the top 10 public shareholders and

parties among the top 10 the top 10 unrestricted public shareholders any related parties or

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

shareholders as well as between Information Regarding Shareholding Alteration.the top 10 unrestricted ordinary

51Changchai Company Limited Interim Report 2023

shareholders and the top 10

ordinary shareholders

Top 10 ordinary shareholders

Shareholder Chen Jian held 2917800 shares in the Company through his

involved in securities margin

margin account.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 2022 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 2023

Part VIII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.

53Changchai Company Limited Interim Report 2023

Part IX Bonds

□ Applicable √ Not applicable

54Changchai Company Limited Interim Report 2023

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 2023

Unit: RMB

Item 30 June 2023 1 January 2023

Current assets:

Monetary assets 851514113.92 930013350.97

Settlement reserve

Interbank loans granted

Held-for-trading financial assets 361470809.32 370103602.57

Derivative financial assets

Notes receivable 303323811.21 297125872.54

Accounts receivable 934790431.84 370322179.77

Accounts receivable financing 73649132.14 242813392.79

Prepayments 13987786.33 6330202.69

Premiums receivable

Reinsurance receivables

Receivable reinsurance contract

reserve

Other receivables 86055608.38 32938305.16

Including: Interest receivable

Dividends

323730.00

receivable

Financial assets purchased under

55Changchai Company Limited Interim Report 2023

resale agreements

Inventories 557524141.36 571996881.74

Contract assets

Assets held for sale

Current portion of non-current

assets

Other current assets 6821658.96 49279022.49

Total current assets 3189137493.46 2870922810.72

Non-current assets:

Loans and advances to

customers

Investments in debt obligations 40015268.70 39309587.93

Investments in other debt

obligations

Long-term receivables

Long-term equity investments

Investments in other equity

1042219240.08955560240.08

instruments

Other non-current financial

373500000.00373500000.00

assets

Investment property 40942541.87 42160779.65

Fixed assets 683448533.29 720061387.76

Construction in progress 30905577.10 30281547.56

Productive living assets

Oil and gas assets

Right-of-use assets

Intangible assets 149758450.45 157392217.54

Development costs

Goodwill

Long-term prepaid expense 3145658.61 3279970.32

Deferred income tax assets 4617363.32 26220575.93

Other non-current assets 1393241.19 670735.93

Total non-current assets 2369945874.61 2348437042.70

Total assets 5559083368.07 5219359853.42

Current liabilities:

Short-term borrowings 110447699.49 115437700.65

56Changchai Company Limited Interim Report 2023

Borrowings from the central

bank

Interbank loans obtained

Held-for-trading financial

liabilities

Derivative financial liabilities

Notes payable 702452311.45 471876397.72

Accounts payable 647261475.07 747010098.88

Advances from customers 815054.54 837425.55

Contract liabilities 33094812.97 32843692.83

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 13799549.93 49351022.47

Taxes payable 5326332.75 8570175.39

Other payables 162180812.51 160046882.93

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 108306935.42 78645741.16

Total current liabilities 1783684984.13 1664619137.58

Non-current liabilities:

Insurance contract reserve

Long-term borrowings

Bonds payable

Including: Preferred shares

57Changchai Company Limited Interim Report 2023

Perpetual bonds

Lease liabilities

Long-term payables

Long-term employee benefits

payable

Provisions

Deferred income 34500761.21 36205625.94

Deferred income tax liabilities 178842024.98 161360251.33

Other non-current liabilities

Total non-current liabilities 213342786.19 197565877.27

Total liabilities 1997027770.32 1862185014.85

Owners’ equity:

Share capital 705692507.00 705692507.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserves 640133963.01 640133963.01

Less: Treasury stock

Other comprehensive income 729001854.07 655341704.07

Specific reserve 21026667.08 18848856.75

Surplus reserves 349197725.72 349197725.72

General reserve

Retained earnings 1040376308.94 915495909.35

Total equity attributable to owners

3485429025.823284710665.90

of the Company as the parent

Non-controlling interests 76626571.93 72464172.67

Total owners’ equity 3562055597.75 3357174838.57

Total liabilities and owners’ equity 5559083368.07 5219359853.42

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

58Changchai Company Limited Interim Report 2023

2. Balance Sheet of the Company as the Parent

Unit: RMB

Item 30 June 2023 1 January 2023

Current assets:

Monetary assets 691752491.28 792744709.77

Held-for-trading financial assets 250354111.11 280354111.11

Derivative financial assets

Notes receivable 271518313.78 282556327.54

Accounts receivable 881319079.38 329060940.50

Accounts receivable financing 127421331.00 291837385.00

Prepayments 11595756.22 3097586.07

Other receivables 360599343.16 179596495.57

Including: Interest receivable

Dividends

receivable

Inventories 365868555.83 397626837.43

Contract assets

Assets held for sale

Current portion of non-current

assets

Other current assets 3899274.38 15594949.05

Total current assets 2964328256.14 2572469342.04

Non-current assets:

Investments in debt obligations 40015268.70 39309587.93

Investments in other debt

obligations

Long-term receivables

Long-term equity investments 569273530.03 569273530.03

Investments in other equity

1042219240.08955560240.08

instruments

Other non-current financial

373500000.00373500000.00

assets

Investment property 40942541.87 42160779.65

Fixed assets 227448700.45 249558305.21

Construction in progress 19479659.35 18366604.84

59Changchai Company Limited Interim Report 2023

Productive living assets

Oil and gas assets

Right-of-use assets

Intangible assets 58585924.15 64783364.89

Development costs

Goodwill

Long-term prepaid expense

Deferred income tax assets 182217.62 19860262.43

Other non-current assets

Total non-current assets 2371647082.25 2332372675.06

Total assets 5335975338.39 4904842017.10

Current liabilities:

Short-term borrowings 107447699.49 108437700.65

Held-for-trading financial

liabilities

Derivative financial liabilities

Notes payable 749494510.31 518918596.58

Accounts payable 529683922.85 541911517.64

Advances from customers 837425.55

Contract liabilities 25822486.68 24129579.35

Employee benefits payable 4814304.67 41558489.86

Taxes payable 2131290.34 3119171.69

Other payables 150757906.83 151206684.89

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 107037385.15 67810395.33

Total current liabilities 1677189506.32 1457929561.54

Non-current liabilities:

Long-term borrowings

Bonds payable

Including: Preferred shares

60Changchai Company Limited Interim Report 2023

Perpetual bonds

Lease liabilities

Long-term payables

Long-term employee benefits

payable

Provisions

Deferred income 34500761.21 36205625.94

Deferred income tax liabilities 161790514.83 149039152.68

Other non-current liabilities

Total non-current liabilities 196291276.04 185244778.62

Total liabilities 1873480782.36 1643174340.16

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 729001854.07 655341704.07

Specific reserve 21026667.08 18848856.75

Surplus reserves 349197725.72 349197725.72

Retained earnings 998157101.49 873168182.73

Total owners’ equity 3462494556.03 3261667676.94

Total liabilities and owners’ equity 5335975338.39 4904842017.10

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

61Changchai Company Limited Interim Report 2023

3. Consolidated Income Statement

Unit: RMB

Item H1 2023 H1 2022

1. Revenue 1350517639.85 1178222492.04

Including: Operating revenue 1350517639.85 1178222492.04

Interest income

Insurance premium income

Handling charge and commission income

2. Costs and expenses 1322596281.11 1175890460.94

Including: Cost of sales 1168898203.83 1051395232.42

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 7827255.58 5360425.54

Selling expense 62131032.17 51759201.38

Administrative expense 52877371.06 40216534.11

R&D expense 35839071.42 40159787.47

Finance costs -4976652.95 -13000719.98

Including: Interest expense 3343884.90 3276786.93

Interest income 4264102.18 6634812.22

Add: Other income 3299056.52 1602830.77

Return on investment (“-” for loss) 3226921.70 11744282.88

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) 19360455.86 -30488388.88

Credit impairment loss (“-” for loss) -14547351.17 -11932826.66

Asset impairment loss (“-” for loss) -565273.49 4342775.64

Asset disposal income (“-” for loss) 105395693.25 -361395.36

3. Operating profit (“-” for loss) 144090861.41 -22760690.51

Add: Non-operating income 495538.97 2349897.18

Less: Non-operating expense 1297348.13 392257.24

4. Profit before tax (“-” for loss) 143289052.25 -20803050.57

62Changchai Company Limited Interim Report 2023

Less: Income tax expense 7189328.33 -6206048.88

5. Net profit (“-” for net loss) 136099723.92 -14597001.69

5.1 By operating continuity

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

136099723.92-14597001.69

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

131937324.66-14595269.61

the parent

5.2.1 Net profit attributable to non-controlling interests 4162399.26 -1732.08

6. Other comprehensive income net of tax 73660150.00 -49265150.00

Attributable to owners of the Company as the parent 73660150.00 -49265150.00

6.1 Items that will not be reclassified to profit or loss 73660150.00 -49265150.00

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

73660150.00-49265150.00

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 209759873.92 -63862151.69

Attributable to owners of the Company as the parent 205597474.66 -63860419.61

Attributable to non-controlling interests 4162399.26 -1732.08

8. Earnings per share

8.1 Basic earnings per share 0.1870 -0.0207

63Changchai Company Limited Interim Report 2023

8.2 Diluted earnings per share 0.1870 -0.0207

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

64Changchai Company Limited Interim Report 2023

4. Income Statement of the Company as the Parent

Unit: RMB

Item H1 2023 H1 2022

1. Operating revenue 1245166233.55 1078301529.20

Less: Cost of sales 1092404343.46 970973105.63

Taxes and surcharges 4338250.54 3155384.25

Selling expense 55517272.45 46868501.97

Administrative expense 37544625.71 30805739.43

R&D expense 31151256.18 38111512.10

Finance costs -8436313.24 -12522766.90

Including: Interest expense 1562299.35 2512056.83

Interest income 7952110.19 6463613.32

Add: Other income 3200820.43 1591699.00

Return on investment (“-” for loss) 2732242.23 11181384.11

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) 354111.11 677397.27

Credit impairment loss (“-” for loss) -11755063.73 -18418259.44

Asset impairment loss (“-” for loss) -410653.17 4630554.88

Asset disposal income (“-” for loss) 105393483.13 3985814.42

2. Operating profit (“-” for loss) 132161738.45 4558642.96

Add: Non-operating income 106436.47

Less: Non-operating expense 363382.47 551906.60

3. Profit before tax (“-” for loss) 131798355.98 4113172.83

Less: Income tax expense -247487.85 0.00

4. Net profit (“-” for net loss) 132045843.83 4113172.83

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

132045843.834113172.83

loss)

4.2 Net profit from discontinued operations (“-” for

net loss)

5. Other comprehensive income net of tax 73660150.00 -49265150.00

5.1 Items that will not be reclassified to profit or loss 73660150.00 -49265150.00

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

73660150.00-49265150.00

other equity instruments

65Changchai Company Limited Interim Report 2023

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 205705993.83 -45151977.17

7. Earnings per share

7.1 Basic earnings per share

7.2 Diluted earnings per share

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

66Changchai Company Limited Interim Report 2023

5. Consolidated Cash Flow Statement

Unit: RMB

Item H1 2023 H1 2022

1. Cash flows from operating activities:

Proceeds from sale of commodities and rendering of services 1010313942.34 852422695.04

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 69957787.95 21003040.54

Cash generated from other operating activities 11524017.72 15868307.49

Subtotal of cash generated from operating activities 1091795748.01 889294043.07

Payments for commodities and services 918215681.86 692753586.82

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 174060228.57 171587076.85

Taxes paid 23195064.69 22071086.33

Cash used in other operating activities 81121589.64 77182794.19

Subtotal of cash used in operating activities 1196592564.76 963594544.19

Net cash generated from/used in operating activities -104796816.75 -74300501.12

2. Cash flows from investing activities:

Proceeds from disinvestment 623016751.99 60336793.52

Return on investment 4508124.22 11678930.55

Net proceeds from the disposal of fixed assets intangible assets

57844735.80176.99

and other long-lived assets

Net proceeds from the disposal of subsidiaries and other

business units

Cash generated from other investing activities 169856.31

Subtotal of cash generated from investing activities 685369612.01 72185757.37

Payments for the acquisition of fixed assets intangible assets

135352075.5732486960.27

and other long-lived assets

67Changchai Company Limited Interim Report 2023

Payments for investments 595377614.00 126279631.00

Net increase in pledged loans granted

Net payments for the acquisition of subsidiaries and other

business units

Cash used in other investing activities

Subtotal of cash used in investing activities 730729689.57 158766591.27

Net cash generated from/used in investing activities -45360077.56 -86580833.90

3. Cash flows from financing activities:

Capital contributions received

Including: Capital contributions by non-controlling interests

to subsidiaries

Borrowings raised

Cash generated from other financing activities 49395924.99

Subtotal of cash generated from financing activities 49395924.99

Repayment of borrowings

Interest and dividends paid 8886489.92 18895164.72

Including: Dividends paid by subsidiaries to non-controlling

interests

Cash used in other financing activities 2604075.01

Subtotal of cash used in financing activities 8886489.92 21499239.73

Net cash generated from/used in financing activities -8886489.92 27896685.26

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

equivalents

5. Net increase in cash and cash equivalents -159043384.23 -132984649.76

Add: Cash and cash equivalents beginning of the period 810350966.05 573623529.10

6. Cash and cash equivalents end of the period 651307581.82 440638879.34

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

68Changchai Company Limited Interim Report 2023

6. Cash Flow Statement of the Company as the Parent

Unit: RMB

Item H1 2023 H1 2022

1. Cash flows from operating activities:

Proceeds from sale of commodities and rendering of services 882438846.47 786613668.93

Tax rebates 20491423.94 15030607.99

Cash generated from other operating activities 9587042.20 11394587.24

Subtotal of cash generated from operating activities 912517312.61 813038864.16

Payments for commodities and services 774101281.20 656683755.72

Cash paid to and for employees 139789044.66 142487390.71

Taxes paid 7394673.54 17126241.78

Cash used in other operating activities 247440184.71 65961229.60

Subtotal of cash used in operating activities 1168725184.11 882258617.81

Net cash generated from/used in operating activities -256207871.50 -69219753.65

2. Cash flows from investing activities:

Proceeds from disinvestment 610000000.00

Return on investment 4337174.74 11181384.11

Net proceeds from the disposal of fixed assets intangible assets

57813485.80

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 672150660.54 11181384.11

Payments for the acquisition of fixed assets intangible assets and

8705239.803984411.73

other long-lived assets

Payments for investments 580000000.00 53520800.00

Net payments for the acquisition of subsidiaries and other

business units

Cash used in other investing activities

Subtotal of cash used in investing activities 588705239.80 57505211.73

Net cash generated from/used in investing activities 83445420.74 -46323827.62

3. Cash flows from financing activities:

Capital contributions received

Borrowings raised

Cash generated from other financing activities 49395924.99

Subtotal of cash generated from financing activities 49395924.99

Repayment of borrowings

Interest and dividends paid 8773914.91 18348005.18

Cash used in other financing activities 47604075.01

Subtotal of cash used in financing activities 8773914.91 65952080.19

Net cash generated from/used in financing activities -8773914.91 -16556155.20

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

69Changchai Company Limited Interim Report 2023

equivalents

5. Net increase in cash and cash equivalents -181536365.67 -132099736.47

Add: Cash and cash equivalents beginning of the period 704659776.14 476410739.41

6. Cash and cash equivalents end of the period 523123410.47 344311002.94

Legal representative: Xie Guozhong General Manager: Xie Guozhong

Head of the accounting department: Jiang He

70Changchai Company Limited Interim Report 2023

7. Consolidated Statements of Changes in Owners’ Equity

H1 2023

Unit: RMB

H1 2023

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 640133 655341 188488 349197 915495 328471 7246417 3357174

period of prior year 07.00 963.01 704.07 56.75 725.72 909.35 0665.90 2.67 838.57

Add: Adjustment for change in

accounting policy

71Changchai Company Limited Interim Report 2023

Adjustment for correction of

previous error

Adjustment for business

combination under common

control

Other adjustments

2. Balance as at the beginning of 7056925 640133 655341 188488 349197 915495 328471 7246417 3357174

the Reporting Period 07.00 963.01 704.07 56.75 725.72 909.35 0665.90 2.67 838.57

3. Increase/ decrease in the period 736601 217781 124880 200718 4162399 2048807

(“-” for decrease) 50.00 0.33 399.59 359.92 .26 59.18

3.1 Total comprehensive 736601 131937 205597 4162399 2097598

income 50.00 324.66 474.66 .26 73.92

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 -705692 -70569 -7056925.07 25.07 5.07

3.3.1 Appropriation to

surplus reserves

3.3.2 Appropriation to

general reserve

72Changchai Company Limited Interim Report 2023

3.3.3 Appropriation to -705692 -70569 -705692

owners (or shareholders) 5.07 25.07 5.07

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 217781 217781 21778100.33 0.33 .33

3.5.1 Increase in the period 459847 459847 45984733.04 3.04 .04

3.5.2 Used in the period 242066 242066 24206622.71 2.71 .71

3.6 Other

4. Balance as at the end of the 7056925 640133 729001 210266 349197 104037 348542 7662657 3562055

Reporting Period 07.00 963.01 854.07 67.08 725.72 6308.94 9025.82 1.93 597.75

73Changchai Company Limited Interim Report 2023

H1 2022

Unit: RMB

H1 2022

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 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

Adjustment for correction of

previous error

74Changchai Company Limited Interim Report 2023

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 -638621

income 150.00 69.61 419.61

-1732.0851.69

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

3.3.3 Appropriation to -183480 -18348 -183480

owners (or shareholders) 05.18 005.18 05.18

75Changchai Company Limited Interim Report 2023

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

Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He

76Changchai Company Limited Interim Report 2023

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

H1 2023

Unit: RMB

H1 2023

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 65534170 18848856. 349197725. 873168182. 32616676

period of prior year 0 0.67 4.07 75 72 73 76.94

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 65534170 18848856. 349197725. 873168182. 32616676

the Reporting Period 0 0.67 4.07 75 72 73 76.94

3. Increase/ decrease in the period 73660150 2177810.3 124988918. 200826879

(“-” for decrease) .00 3 76 .09

77Changchai Company Limited Interim Report 2023

3.1 Total comprehensive 73660150 132045843. 205705993

income .00 83 .83

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 -7056925.07 -7056925.07

3.3.1 Appropriation to

surplus reserves

3.3.2 Appropriation to

-7056925.07-7056925.0

owners (or shareholders) 7

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 2023

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 2177810.3 2177810.33 3

3.5.1 Increase in the period 4598473.0 4598473.04 4

3.5.2 Used in the period 2420662.7 2420662.71 1

3.6 Other

4. Balance as at the end of the 705692507.0 65941870 72900185 21026667. 349197725. 998157101. 34624945

Reporting Period 0 0.67 4.07 08 72 49 56.03

H1 2022

Unit: RMB

H1 2022

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 2023

1. Balance as at the end of the 705692507.0 659418700 50601149 18812950. 334144488. 756037052. 298011719

period of prior year 0 .67 9.55 04 46 58 8.30

Add: Adjustment for change in

accounting policy

Adjustment for correction of

previous error

Other adjustments

2. Balance as at the beginning of 705692507.0 659418700 50601149 18812950. 334144488. 756037052. 298011719

the Reporting Period 0 .67 9.55 04 46 58 8.30

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

(“-” for decrease) 0.00 5 35

3.1 Total comprehensive income -4926515 4113172.83 -45151977.0.00 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 owners -18348005.1 -18348005.

(or shareholders) 8 18

80Changchai Company Limited Interim Report 2023

3.3.3 Other

3.4 Transfers within owners’

equity

3.4.1 Increase in capital (or

share capital) from capital reserves

3.4.2 Increase in capital (or

share capital) from surplus

reserves

3.4.3 Loss offset by surplus

reserves

3.4.4 Changes in defined

benefit schemes transferred to

retained earnings

3.4.5 Other comprehensive

income transferred to retained

earnings

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 45674634 18812950. 334144488. 741802220. 29166172

Reporting Period 0 .67 9.55 04 46 23 15.95

Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He

81Changchai Company Limited Interim Report 2023

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 which verified by Jiangsu

Gongzheng Tianye Certified Public Accountants Company Limited with issuing Capital Verification Report SGC

[2010] No. B002.A non-public offering of up to 168412297 new shares was deliberated on and approved as a resolution of the

2020 Annual General Meeting held on 7 May 2021 and approved by the Approval of the Non-public Offering of

Shares of Changchai Co. Ltd. (CSRC Permit [2020] No. 3374) issued by Changchai Company Limited the China

Securities Regulatory Commission. On 16 June 2021 the capital verification report "S.G. W [2021] B062" was

issued by Gongzheng Tianye Accounting Firm (Special General Partnership) confirming that the Company had

issued 144318181 RMB ordinary shares (A shares) in a non-public offering with an additional paid-in capital

(share capital) of RMB144318181. The total amount raised was RMB634999996.40; the net amount raised was

RMB620665733.97 which increased the capital reserve (share capital premium) by RMB476347552.97. As of

31 December 2021 the total share capital of the Company was RMB705692507.

The unified social credit code of the enterprise business license of the Company is 91320400134792410W.The Company’s registered address is situated at No. 123 Huaide Middle Road Changzhou Jiangsu as well as its

head office located at No. 123 Huaide Middle Road Changzhou Jiangsu.The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine

diesel engines part and casting grain harvesting machine rotary cultivators walking tractor mould and fixtures

assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production

and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai

Brand. The diesel engine produced and sold by the Company were mainly used in tractors combine harvest

models light commercial vehicle farm equipment small-sized construction machinery generating sets and

shipborne machinery and equipment etc. The Company’s main business remained unchanged in the Reporting

82Changchai Company Limited Interim Report 2023

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 2023.The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 8

subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation please

refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities

among other entities.IV. Basis for Preparation of the Financial Report

1. Basis for Preparation

With the going-concern assumption as the basis and based on transactions and other events that actually occurred

the Group prepared financial statements in accordance with The Accounting Standards for Business

Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.

76 the various specific accounting standards the Application Guidance of Accounting Standards for Business

Enterprises the Interpretation of Accounting Standards for Business Enterprises and other regulations issued 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.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.

83Changchai Company Limited Interim Report 2023

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

The financial statements prepared by the Group are in compliance with in compliance with the Accounting

Standards for Business Enterprises which factually and completely present the Company’s and the Group’s

financial positions business results and cash flows and other relevant information.

2. Fiscal Period

The fiscal periods are divided into fiscal year and metaphase the fiscal year is from January 1 to December 31

and as the metaphase included monthly quarterly and semi-yearly periods.

3. Operating Cycle

A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or

cash equivalents. An operating cycle for the Group is 12 months which is also the classification criterion for the

liquidity of its assets and liabilities.

4. Currency Used in Bookkeeping

Renminbi is functional currency of the Company.

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

under the Same Control

(1) Business combinations under the same control:

A business combination under the same control is a business combination in which all of the combining

enterprises are ultimately controlled by the same party or the same parties both before and after the business

combination and on which the control is not temporary.For the merger of enterprises under the same control if the consideration of the merging enterprise is that it makes

payment in cash transfers non-cash assets or bear its debts it shall on the date of merger regard the share of the

book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment.The difference between the initial cost of the long-term equity investment and the payment in cash non-cash

assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital

reserve. If the capital reserve is insufficient to dilute the retained earnings shall be adjusted.If the consideration of the merging enterprise is that it issues equity securities it shall on the date of merger

regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the

long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock while

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

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

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

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

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

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

84Changchai Company Limited Interim Report 2023

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

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

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

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

current gains and losses during the statement period.

(2) Business combinations not under the same control

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

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

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

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

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

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

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

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

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

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

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

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

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

by the acquiree which involved with the other comprehensive income and the other owners’ equities changes

except for the net gains and losses other comprehensive income and the profits distribution and other related

comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in

the acquiree before the acquiring date should be transferred into the current investment income on the acquiring

date except for the other comprehensive income occurred from the re-measurement of the net profits of the

defined benefit plans or the changes of the net assets of the investees.

6. Methods for Preparing Consolidated Financial Statements

The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual

control right into the consolidated financial statement.The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of

ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant

come-and-go balance investment transaction and the unrealized profits should be written off when compiling the

consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a

subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and

minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net

profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period

that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the

bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by

minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’

equity minority interests are offset.The accounting policy or accounting period of each subsidiary is different from which of the Company which

85Changchai Company Limited Interim Report 2023

shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the Company

when preparing the consolidated financial statements.As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial

statement shall adjust individual financial statement based on the fair value of the identifiable net assets on the

acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the financial

statement shall not adjust the financial statement of the subsidiaries namely survived by integration as

participating in the consolidation when the final control party starts implementing control and should adjust the

period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the

compared statement.As for the disposed subsidiaries the operation result and the cash flow should be included in the consolidated

income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the

current period should not be adjusted the period-begin amount of the consolidated balance sheet.Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other

reasons the residual equity interests are re-measured according to the fair value on the date when such control

ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the

residual equity interests minus the portion in the original subsidiary’s net assets measured on a continuous basis

from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the

subsidiary is recorded in investment gains for the period when the Group’s control on the subsidiary ceases. Other

comprehensive incomes in relation to the equity investment and the other owners’ equities changes except for the

net gains and losses other comprehensive income and profits distribution in the original subsidiary are treated on

the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is except for the

changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original

subsidiary the rest shall all be transferred into current investment gains) when such control ceases. And

subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard

for Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business

Enterprises-Recognition and Measurement of Financial Instruments.For the disposal of equity investment belongs to a package deal should be considered as a transaction and conduct

accounting treatment. However Before losing control every disposal cost and corresponding net assets balance of

subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial

statements which together transferred into the current profits and losses in the loss of control when the Group

losing control on its subsidiary.For the disposal of the equity investment not belongs to a package deal should be executed accounting treatment

according to the relevant policies of partly disposing the equity investment of the subsidiaries under the situation

not lose the control right before losing the control right; when losing the control right the former should be

executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.

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

The Group classifies joint arrangements into joint operations and joint ventures.A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint

arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the

following items related to the interests share among the joint operations and executes accounting treatment

according to the regulations of the relevant ASBE:

(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets

86Changchai Company Limited Interim Report 2023

according to the Group’s stake in the joint operation;

(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities

according to the Group’s stake in the joint operation;

(3) Recognizes the income from sale of the Group’s share in the output of the joint operation

(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it

(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according

to the Group’s stake in it.

8. Recognition Standard for Cash and Cash Equivalents

In the Group’s understanding cash and cash equivalents include cash on hand any deposit that can be used for

cover and short-term (usually due within 3 months since the day of purchase) and high circulating investments

which are easily convertible into known amount of cash and whose risks in change of value are minimal.

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

(1) Foreign currency business

Concerning the foreign-currency transactions that occurred the foreign currency shall be converted into the

recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of

China on the date of the transaction. Among the said transactions that occurred those involving foreign exchanges

shall be converted according to the exchange rates adopted in the actual transactions.On the balance sheet date the foreign-currency monetary assets and the balance of the liability account shall be

converted into the recoding currency according to the middle price of the market exchange rates disclosed by the

People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount

converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency

amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the

foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of

capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded

into the establishment expense; others shall be recorded into the financial expenses for the current period.On the balance sheet date the foreign-currency non-monetary items measured by historical cost shall be converted

according to the middle price of the market exchange disclosed by the People’s Bank of China on the date of the

transaction with no changes in the original recording-currency amount; while the foreign-currency non-monetary

items measured by fair value shall be converted according to the middle price of the market exchange disclosed by

the People’s Bank of China on the date when the fair value is recognized and the exchange gain/loss caused

thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current

period.

(2) Translation of foreign currency

The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a 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.

87Changchai Company Limited Interim Report 2023

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

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

88Changchai Company Limited Interim Report 2023

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.

(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.

89Changchai Company Limited Interim Report 2023

(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.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:

90Changchai Company Limited Interim Report 2023

Item Recognition basis Method of measuring expected credit losses

Group 1 of notes Consulting historical experience in credit losses

All commercial bills

receivable combining current situation and prediction for future

Bank’s acceptance bills economic situation the expected credit loss shall be

Group 2 of notes

with low credit rating accounted through exposure at default and the expected

receivable

credit loss rate over the entire life

Bank’s acceptance bills Consulting historical experience in credit losses

with high credit rating combining current situation and prediction for future

Accounts receivable

economic situation the expected credit loss shall be

financing

accounted through exposure at default and the expected

credit loss rate over the entire life

Prepare the comparative list between aging of accounts

receivable and expected credit loss rate over the entire

life and calculate the expected credit loss by consulting

Accounts Accounts receivable

historical experience in credit losses combining current

receivable-credit risk portfolio with credit

situation and prediction for future economic situation.characteristics group period

The Company takes aging as credit risk characteristics

groups and calculates the expected credit loss for

accounts receivable.Accounts Consulting historical experience in credit losses

receivable-intercourse combining current situation and prediction for future

Related party within the

funds among related economic situation the expected credit loss shall be

consolidation scope

party group within the accounted through exposure at default and the expected

consolidation scope credit loss rate over the entire life

Basis for recognizing groups of other receivables is as follows:

Item Recognition basis Method of measuring expected credit losses

Consulting historical experience in credit losses

Other receivables combining current situation and prediction for future

excluding those from economic situation the expected credit loss shall be

Group 1 of other receivables

related parties-aging accounted through exposure at default and the expected

group credit loss rate within the next 12 months or over the

entire life

Consulting historical experience in credit losses

combining current situation and prediction for future

Related party within

economic situation the expected credit loss shall be

Group 2 of other receivables the consolidation

accounted through exposure at default and the expected

scope

credit loss rate within the next 12 months or over the

entire life

11. Accounts Receivable

See “10. Financial Instruments”.

91Changchai Company Limited Interim Report 2023

12. Accounts Receivable Financing

See “10. Financial Instruments”.

13. Other Receivables

See “10. Financial Instruments”.

14. Inventory

(1) Category of Inventory

Inventory refers to the held-for-sale finished products or commodities goods in process materials consumed in

the production process or the process providing the labor service etc. Inventory is mainly including the raw

materials low priced and easily worn articles unfinished products inventories and work in process–outsourced

etc.

(2) Pricing method

Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch

be calculated according to the weighted average method; carried forward the cost of the finished products

according to the actual cost of the current period and the sales cost according to the weighted average method.

(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for falling

price of inventory

At the balance sheet date inventories are measured at the lower of the costs and net realizable value. When all the

inventories are checked roundly for those which were destroyed outdated in all or in part sold at a loss etc the

Company shall estimate the irrecoverable part of its cost and withdrawal the inventory falling price reserve at the

year-end. Where the cost of the single inventory item is higher than the net realizable value the inventory falling

price reserve shall be withdrawn and recorded into profits and losses of the current period. Of which: in the

normal production and operating process as for the commodities inventory directly for sales such as the finished

products commodities and the materials for sales should recognize the net realizable value according to the

amount of the estimated selling price of the inventory minuses the estimated selling expenses and the relevant

taxes; as for the materials inventory needs to be processed in the normal production and operating process should

recognize its net realizable value according to the amount of the estimated selling price of the finished products

minuses the cost predicts to be occur when the production completes and the estimated selling expenses as well as

the relevant taxes; on the balance sheet date for the same inventory with one part agreed by the contract price

and other parts not by the contract price should be respectively recognized the net realizable value. For items of

inventories relating to a product line that are produced and marketed in the same geographical area have the same

or similar end users or purposes and cannot be practicably evaluated separately from other items in that product

line provision for decline in value is determined on an aggregate basis; for large quantity and low value items of

inventories provision for decline in value is made based on categories of inventories.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method of low-value consumables and packages

One time amortization method is adopted for low-value consumables and packages.

92Changchai Company Limited Interim Report 2023

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

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;

93Changchai Company Limited Interim Report 2023

(3) The Company had signed the irrevocable transformation agreement with the transferee;

(4) The transformation should be completed within 1 year.

18. Long-term Equity Investments

(1) Judgment standard of joint control and significant influences

Joint control refers to the control jointly owned according to the relevant agreement on an arrangement by the

Company and the relevant activities of the arrangement should be decided only after the participants which share

the control right make consensus. Significant influence refers to the power of the Company which could anticipate

in the finance and the operation polices of the investees but could not control or jointly control the formulation of

the policies with the other parties.

(2) Recognition for initial investment cost

The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways

in accordance with different methods of acquisition:

1) As for those forms under the same control of the enterprise combine if the combine party takes the cash

payment non-cash assets transformation liabilities assumption or equity securities issuance as the combination

consideration should take the shares of the book value by the ultimate control party in the consolidate financial

statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The

difference between the initial investment cost and the book value of the paid combination consideration or the

total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the

capital reserve is insufficient to dilute the retained earnings shall be adjusted. To include each direct relevant

expense occurred when executing the enterprise merger into the current gains and losses; while the handling

charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger

should be included in the initial measurement amount of the shareholders’ equities or the liabilities.

2) As for long-term equity investment acquired through the merger of enterprises not under the same control its

initial investment cost shall regard as the combination cost calculated by the fair value of the assets equity

instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the

acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)

undertaken on the combining date shall be measured at the fair value without considering the amount of minority

interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the

identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative

balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree

into the consolidated income statement directly. The agent expense and other relevant management expenses such

as the audit legal service and evaluation consultation occurs from the enterprise merger should be included in the

current gains and losses when occur; while the handling charges and commission occurs from the issuing the

equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of

the shareholders’ equities or the liabilities.

3) Long-term equity investment obtained by other means

The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost

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

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

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

94Changchai Company Limited Interim Report 2023

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

received; where it is not commercial in nature the book value of the assets surrendered shall be recognized as the

initial cost of the long-term equity investment received.The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at

fair value of long-term equity investment.

(3) Subsequent measurement and recognition of profits and losses

1) An investment in the subsidiary company shall be measured by employing the cost method

Where the Company hold and is able to do equity investment with control over an invested entity the invested

entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50% or while the

Company holds the shares of an entity below 50% but has a real control to the said entity then the said entity

shall be its subsidiary company.

2) An investment in the joint enterprise or associated enterprise shall be measured by employing the equity

method

Where the Company hold and is able to do equity investment with joint control with other parties over an

invested entity the invested entity shall be its joint enterprise. Where the Company hold and is able to have

equity investment with significant influences on an invested entity the invested entity shall be its associated

entity.After the Company acquired the long-term equity investment should respectively recognize investment income

and other comprehensive income according to the net gains and losses as well as the portion of other

comprehensive income which should be enjoyed or be shared and at the same time adjust the book value of the

long-term equity investment; corresponding reduce the book value of the long-term equity investment according

to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which

should be enjoyed; for the other changes except for the net gains and losses other comprehensive income and the

owners’ equity except for the profits distribution of the investees should adjust the book value of the long-term

equity investment as well as include in the owners’ equity .The investing enterprise shall on the ground of the fair value of all identifiable assets of the invested entity when

it obtains the investment recognize the attributable share of the net profits and losses of the invested entity after it

adjusts the net profits of the invested entity.If the accounting policy adopted by the investees is not accord with that of the Company should be adjusted

according to the accounting policies of the Company and the financial statement of the investees during the

accounting period and according which to recognize the investment income as well as other comprehensive

income.For the transaction happened between the Company and associated enterprises as well as joint ventures if the

assets launched or sold not form into business the portion of the unrealized gains and losses of the internal

transaction which belongs to the Company according to the calculation of the enjoyed proportion should

recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction

happened between the Company and the investees which belongs to the impairment losses of the transferred assets

should not be neutralized.The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of

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

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

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

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

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

95Changchai Company Limited Interim Report 2023

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

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

amount of its attributable share of profits offsets against its attributable share of the un-recognized losses resume

recognizing its attributable share of profits.In the preparation for the financial statements the balance existed between the long-term equity investment

increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by

the increased shares held since the purchase date (or combination date) the capital reserves shall be adjusted if

the capital reserves are not sufficient to offset the retained profits shall be adjusted; the Company disposed part of

the long-term equity investment on subsidiaries without losing its controlling right on them the balance between

the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be

recorded into owners’ equity.For other ways on disposal of long-term equity investment the balance between the book value of the disposed

equity and its actual payment gained shall be recorded into current profits and losses.For the long-term equity investment measured by adopting equity method if the remained equity after disposal

still adopts the equity method for measurement the other comprehensive income originally recorded into owners’

equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed

by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes

of the other owners’ equity except for the net gains and losses other comprehensive income and the profits

distribution of the investees should be transferred into the current gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement if the remained equity still

adopt the cost method the other comprehensive income recognized owning to adopting the equity method for

measurement or the recognition and measurement standards of financial instrument before acquiring the control of

the investees should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly

disposed by the investees and should be carried forward into the current gains and losses according to the

proportion; the changes of the other owners’ equity except for the net gains and losses other comprehensive

income and the profits distribution among the net assets of the investees which recognized by adopting the equity

method for measurement should be carried forward into the current gains and losses according to the proportion.For those the Company lost the control of the investees by disposing part of the equity investment as well as the

remained equity after disposal could execute joint control or significant influences on the investees should change

to measure by equity method when compiling the individual financial statement and should adjust the

measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity

after disposal could not execute joint control or significant influences on the investees should change the

accounting disposal according to the relevant regulations of the recognition and measurement standards of

financial instrument and its difference between the fair value and book value on the date lose the control right

should be included in the current gains and losses. For the other comprehensive income recognized by adopting

equity method for measurement or the recognition and measurement standards of financial instrument before the

Company acquired the control of the investees should execute the accounting disposal by adopting the same basis

of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the

control of them while the changes of the other owners’ equity except for the net gains and losses other

comprehensive income and the profits distribution among the net assets of the investees which recognized by

adopting the equity method for measurement should be carried forward into the current gains and losses

according to the proportion. Of which for the disposed remained equity which adopted the equity method for

measurement the other comprehensive income and the other owners’ equity should be carried forward according

to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to

96Changchai Company Limited Interim Report 2023

the recognition and measurement standards of financial instrument the other comprehensive income and the other

owners’ equity should be carried forward in full amount.For those the Company lost the control of the investees by disposing part of the equity investment the disposed

remained equity should change to calculate according to the recognition and measurement standards of financial

instrument and difference between the fair value and book value on the date lose the control right should be

included in the current gains and losses. For the other comprehensive income recognized from the original equity

investment by adopting the equity method should execute the accounting disposal by adopting the same basis of

the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the

equity method for measurement while for the owners’ equity recognized owning to the changes of the other

owner’s equity except for the net gains and losses other comprehensive income and the profits distribution of the

investees should be transferred into the current investment income with full amount when terminate adopting the

equity method.

19. Investment Real Estate

Measurement mode of investment real estate:

Measurement of cost method

Depreciation or amortization method

The investment real estate shall be measured at its cost. Of which the cost of an investment real estate by

acquisition consists of the acquisition price relevant taxes and other expense directly relegated to the asset; the

cost of a self-built investment real estate composes of the necessary expenses for building the asset to the hoped

condition for use. The investment real estate invested by investors shall be recorded at the value stipulated in the

investment contracts or agreements but the unfair value appointed in the contract or agreement shall be entered

into the account book at the fair value.As for withdrawal basis of provision for impairment of investment real estates please refer to withdrawal method

for provision for impairment of fixed assets.

20. Fixed Assets

(1) Recognition Conditions

Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for

the sake of producing commodities rendering labor service renting or business management; and (b) their useful

life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits

probably flow in the Company and its cost could be reliable measured.

(2) Depreciation Method

Category of fixed assets Method Useful life Annual deprecation

Housing and building Average method of

20-40 years 2.50%-5%

useful life

Machinery equipment Average method of

6-15 years 6.67%-16.67%

useful life

Transportation Average method of

5-10 years 10%-20%

equipment useful life

Average method of

Other equipment 5-10 years 10%-20%

useful life

(3) Recognition Basis Pricing and Depreciation Method of Fixed Assets by Finance Lease

97Changchai Company Limited Interim Report 2023

The Company recognizes those meet with the following one or certain standards as the fixed assets by finance

lease:

1) The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on

the lease starting date) when the lease term expires the ownership of leasing the fixed assets could be transferred

to the Company;

2) The Company owns the choosing right for purchasing and leasing the fixed assets with the set purchase price

which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing

right so the Company could execute the choosing right reasonably on the lease starting date;

3) Even if the ownership of the fixed assets not be transferred the lease period is of 75% or above of the useful

life of the lease fixed assets;

4) The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or

above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease

receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets

on the lease starting date;

5) The nature of the lease assets is special that only the Company could use it if not execute large transformation.

The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the

current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum

lease payment which be regarded as the entry value of the long-term accounts payable its difference should be

regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and

the signing process of the lease contracts that attribute to the handling expenses counsel fees travel expenses and

stamp taxes of the lease items should be included in the charter-in assets value. The unrecognized financing

expenses should be amortized by adopting the actual interest rate during the period of the lease term.The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is

reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires

the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will

obtain the ownership of the leased asset at the expiry of the lease term the leased asset shall be fully depreciated

over the shorter one of the lease term or its useful life

21. Construction in Progress

(1) Valuation of the progress in construction

Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct

materials direct wages and direct construction fees; construction contract shall be measured at project price

payable; project cost for plant engineering shall be recognized at value of equipments installed cost of installation

trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses

which should be capitalized.

(2) Standardization on construction in process transferred into fixed assets and time point

The construction in process of which the fixed assets reach to the predicted condition for use shall carry forward

fixed assets on schedule. The one that has not audited the final accounting shall recognize the cost and make

depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its

historical cost but not adjust the depreciation that has been made after auditing the final accounting.

22. Borrowing Costs

(1) Recognition principle of capitalization of borrowing costs

The borrowing costs shall include the interest on borrowings amortization of discounts or premiums on

98Changchai Company Limited Interim Report 2023

borrowings ancillary expenses and exchange balance on foreign currency borrowings. Where the borrowing

costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction

of investment real estates and inventories over one year (including one year) shall be capitalized and record into

relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount

incurred and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized

unless they simultaneously meet the following three requirements: (1) The asset disbursements have already

incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production

activities which are necessary to prepare the asset for its intended use or sale have already started.

(2) The period of capitalization of borrowing costs

The borrowing costs arising from acquisition and construction of fixed assets investment real estates and

inventories if they meet the above-mentioned capitalization conditions the capitalization of the borrowing costs

shall be measured into asset cost before such assets reach to the intended use or sale Where acquisition and

construction of fixed assets investment real estates and inventories is interrupted abnormally and the interruption

period lasts for more than 3 months the capitalization of the borrowing costs shall be suspended and recorded

into the current expense till the acquisition and construction of the assets restarts. When the qualified asset is

ready for the intended use or sale the capitalization of the borrowing costs shall be ceased the borrowing costs

occurred later shall be included into the financial expense directly at the current period.

(3) Measurement method of capitalization amount of borrowing costs

As for specifically borrowed loans for the acquisition and construction or production of assets eligible for

capitalization the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of

the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing

loans as a deposit in the bank or as a temporary investment.Where a general borrowing is used for the acquisition and construction or production of assets eligible for

capitalization the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general

borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset

disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The

capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general

borrowing.

23. Intangible Assets

(1) Pricing Method Service Life and Impairment Test

(1) Pricing method of intangible assets

Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.For the intangible assets invested by the investors should be recognized the actual cost according to the value of

the investment contracts or agreements however for the value of the contracts or agreements is not fair the actual

cost should be recognized according to the fair value.For the intangible assets acquires from the exchange of the non-currency assets if own the commercial nature

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

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

(2) Amortization method and term of intangible assets

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

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

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

99Changchai Company Limited Interim Report 2023

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

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

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

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

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

(2) Accounting Polices of Internal R & D Costs

The internal research and development projects of an enterprise shall be classified into research phase and

development phase: the term “research” refers to the creative and planned investigation to acquire and understand

new scientific or technological knowledge; the term “development” refers to the application of research

achievements and other knowledge to a certain plan or design prior to the commercial production or use so as to

produce any new material device or product or substantially improved material device and product.The Company collects the costs of the corresponding phases according to the above standard of classifying the

research phase and the development phase. The research expenditures for its internal research and development

projects of an enterprise shall be recorded into the profit or loss for the current period. The development costs for

its internal research and development projects of an enterprise may be capitalized when they satisfy the following

conditions simultaneously: it is feasible technically to finish intangible assets for use or sale; it is intended to

finish and use or sell the intangible assets; the usefulness of methods for intangible assets to generate economic

benefits shall be proved including being able to prove that there is a potential market for the products

manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the

intangible assets will be used internally; it is able to finish the development of the intangible assets and able to

use or sell the intangible assets with the support of sufficient technologies financial resources and other resources;

the development costs of the intangible assets can be reliably measured.

24. Impairment of Long-term Assets

For non-current financial Assets of fixed Assets projects under construction intangible Assets with limited

service life investing real estate with cost model long-term equity investment of subsidiaries cooperative

enterprises and joint ventures the Company should judge whether decrease in value exists on the date of balance

sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation

and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no

matter whether it exists.If the recoverable amount is less than book value in impairment test results the provision for impairment of

differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair

value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined

according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market fair

value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active

market exists asset fair value could be acquired on the basis of best information available. Disposal expenses

include legal fees taxes cartage or other direct expenses of merchantable Assets related to asset disposal. Present

value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service

and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single

Assets. If it is difficult to predict the recoverable amounts for single Assets recoverable amounts should be

determined according to the belonging asset group. Asset group is the minimum asset combination producing cash

100Changchai Company Limited Interim Report 2023

flow independently.In impairment test book value of the business reputation in financial report should be shared to beneficial asset

group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable

amounts of shared business reputation asset group or asset group combination are lower than book value it should

determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of

business reputation of asset group or asset group combination then deduct book value of all assets according to

proportions of other book value of above assets in asset group or asset group combination except business

reputation.After the asset impairment loss is determined recoverable value amounts would not be returned in future.

25. Long-term Deferred Expenses

Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure and amortized

averagely within benefit period. In case of no benefit in the future accounting period the amortized value of such

project that fails to be amortized shall be transferred into the profits and losses of the current period.

26. Contract Liabilities

Contract liabilities refer to the Company’s obligations in transferring commodities or services to the client for the

received or predicted consideration. Contract assets and contract liabilities under the same contract shall be

presented based on the net amount.

27. Employee Benefits

(1) Accounting Treatment of Short-term Compensation

Short-term compensation mainly including salary bonus allowances and subsidies employee services and

benefits medical insurance premiums birth insurance premium industrial injury insurance premium housing

fund labor union expenditure and personnel education fund non-monetary benefits etc. The short-term

compensation actually happened during the accounting period when the active staff offering the service for the

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

(2) Accounting Treatment of the Welfare after Demission

The Company classifies the welfare plans after demission into defined contribution plans and defined benefit

plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the

Company and the employees or the regulations or methods formulated by the Company for providing the welfare

after demission for the employees. Of which defined contribution plans refers to the welfare plans after demission

that the Company no more undertake the further payment obligations after the payment of the fixed expenses for

the independent funds; defined benefit plans refers to the welfare plans after demission except for the defined

contribution plans.Defined contribution plans

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

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

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

101Changchai Company Limited Interim Report 2023

(3) Accounting Treatment of the Demission Welfare

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

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

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

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

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

28. Lease Liabilities

On the commencement date of the lease term the Company recognizes the present value of unpaid lease payments

as lease liabilities. Lease payments include: fixed payment and substantial fixed payment and the relevant amount

after the lease incentive (if any) is deducted; variable lease payments that depend on indexation or ratio which are

determined according to the indexation or ratio on the commencement date of the lease term in the initial

measurement; exercise price of the purchased option provided that the lessee reasonably determines that the

option will be exercised; the amount to be paid for the exercise of the lease termination options provided that the

lease term reflects that the lessee will exercise the options to terminate the lease; and estimated payments due to

the guaranteed residual value provided by the lessee.The Company uses the interest rate implicit in lease as the rate of discount when calculating the present value of

the lease payments. The incremental lending rate of the lessee will be used as the rate of discount if the interest

rate implicit in lease cannot be determined. The Company calculates the interest charge of the lease liabilities in

each period of the lease term at a fixed periodic interest rate and includes it in the profit or loss of the current

period unless such interest charge is stipulated to be included in the underlying asset costs. Variable lease

payments that are not included in the measurement of the lease liabilities should be included in the profit or loss of

the current period when they are actually incurred unless such payments are stipulated to be included in the

underlying asset costs. The Company will re-calculate the lease liabilities using the present value of the changed

lease payments if the substantial fixed payment the estimated payments due to the guaranteed residual value the

index or rate used to determine the lease payments or the assessment result of the call option the renewal option

or the termination option or the actual exercise changes after the commencement date of the lease term.

29. Provisions

(1) Criteria of provisions

Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when the following

conditions are satisfied simultaneously:

1) That obligation is a current obligation of the Company;

2) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the

obligation;

3) The amount of the obligation can be measured in a reliable way.

(2) Measurement of provisions

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

performance of the current obligation.

102Changchai Company Limited Interim Report 2023

The Company shall check the book value of the provisions on the Balance Sheet Date. If there is any conclusive

evidence proving that the said book value can’t truly reflect the current best estimate the Company shall subject

to change make adjustment to carrying value to reflect the current best estimate.

30. Revenue

Accounting policies for recognition and measurement of revenue:

When the Company fulfills its due performance obligations (namely when the client obtains the control over

related commodities or services) revenues shall be recognized based on the obligation’s amortized transaction

price. Performance Obligation refers to the Company’s promise of transferring commodities or services that can

be clearly defined to the client. Transaction Price refers to the consideration amount duly charged by the Company

for transferring commodities or services to the client excluding any amount charged by the third party and any

amount predicted to be returned to the client. Control Over Relevant Commodities means that the use of

commodities can be controlled and almost all economic interests can be obtained.On the contract commencement day the Company shall evaluate the contract recognize individual performance

obligation and confirm that individual performance obligation is fulfilled in a certain period. When one of the

following conditions is met such performance obligation shall be deemed as fulfilled in a certain period and the

Company shall recognize it as revenue within a certain period according to the performance schedule: (1) the

client obtains and consumes the economic interests resulting from the Company’s performance of contract while

performing the contract; (2) the client is able to control the commodities under construction during the

performance; (3) commodities produced by the Company during the performance possess the irreplaceable

purpose and the Company has the right to charge all finished parts during the contract period; otherwise the

Company shall recognize the revenue when the client obtains the control over relevant commodities or services.The Company shall adopt the Input Method to determine the Performance Schedule. Namely the Performance

Schedule shall be determined according to the Company’s input for fulfilling performance obligations. When the

Performance Schedule cannot be reasonably determined and all resulting costs are predicted to be compensated

the Company shall recognize the revenue based on the resulting cost amount till the Performance Schedule can be

reasonably determined.When the contract involves two or more than two performance obligations the transaction price shall be

amortized to each single performance obligation on the contract commencement day according to the relative

proportion of the independent selling price of commodities or services under each single performance obligation.If any solid evidence proves that the contract discount or variable consideration only relates to one or more than

one (not all) performance obligation under the contract the Company shall amortize the contract discount or

variable consideration to one or more than one related performance obligations. Independent selling price refers to

the price adopted by the Company to independently sell commodities or services to the client. However

independent selling price cannot be directly observed. The Company shall estimate the independent selling price

by comprehensively considering all related information that can be reasonably obtained and maximally adopting

the observable input value.Variable Consideration

If any variable consideration exists in the contract the Company shall determine the optimal estimation of the

variable consideration based on the expected values or the most possible amount. The variable consideration’s

transaction price shall be included without exceeding the total revenue amount recognized without the risk of

significant restitution when all uncertainties are eliminated. On each balance sheet day the Company shall

re-estimate the variable consideration amount to be included in the transaction price.

103Changchai Company Limited Interim Report 2023

Consideration Payable to the Client

If any consideration payable to the client exists in the contract the Company shall use such consideration to offset

the transaction price unless such consideration is paid for acquiring other clearly-defined commodities or services

from the client and write down the current revenue at the later time between the time of recognizing relevant

revenues and the time of paying (or promising the payment) the consideration to the client.Sales with the Quality Assurance

For sales with the Quality Assurance if the Quality Assurance involves another separate service except for the

guarantee of all sold commodities or services meeting all established standards the Quality Assurance shall

constitute a single Performance Obligation; otherwise the Company shall make corresponding accounting

treatment to the Quality Assurance according to ASBE No.13--Contingency.Main Responsibility Person/Agent

According to whether the control over commodities or services is obtained before they are transferred to the client

the Company can judge whether it is Main Responsibility Person or Agent based on its status during the

transaction. If the Company can control commodities or services before they are transferred to the client the

Company shall be Main Responsibility Person and revenues shall be recognized according to the total

consideration amount received or to be received; otherwise the Company shall be Agent and revenues shall be

recognized according to the commission or service fees predicted to be duly charged. However such amount shall

be determined based on the net amount after deducting other amounts payable to other related parties from the

total consideration received or to be duly received or the fixed commission amount or proportion.Specific methods

The specific methods of the Company's revenue recognition are as follows:

The sale contract between the Company and its customers usually contains only the performance obligation for

the transfer of goods which is satisfied at a point in time.The following requirements must be met to confirm the revenue of domestic products: The Company has

delivered the goods to the customer in accordance with the contract and the customer has accepted the goods. The

payment has been recovered or the receipt voucher has been obtained and the relevant economic benefits are

likely to flow in. The customer has obtained control of the relevant goods. The main risks and rewards of product

ownership have been transferred. The legal ownership of the goods has been transferred.The following requirements must be met to confirm the revenue of export products: The Company has declared

the products in accordance with the contract obtained the bills of lading and received the payment or obtained the

receipt voucher and the related economic benefits are likely to flow in. The main risks and rewards of product

ownership have been transferred. The legal ownership of the goods has been transferred.Interest Revenue

Interest Revenue shall be determined according to the time of the Company’s use of monetary capital and the

actual interest rate.

31. Government Grants

(1) Type

A government grant means the monetary or non-monetary assets obtained free by an enterprise from the

government. Government grants consist of the government grants pertinent to assets and government grants

pertinent to income according to the relevant government documents.For those the government documents not definite stipulate the assistance object the judgment basis of the

104Changchai Company Limited Interim Report 2023

Company classifies the government grants pertinent to assets and government subsidies pertinent to income is:

whether are used for purchasing or constructing or for forming the long-term assets by other methods.

(2) Recognition of Government Subsidies

The government subsidies should be recognized only when meet with the attached conditions of the government

grants as well as could be acquired.If the government grants are the monetary assets should be measured according to the received or receivable

amount; and for the government grants are the non-monetary assets should be measured by fair value.

(3) Accounting Treatment

The government grants pertinent to assets shall be recognized as deferred income and included in the current

gains and losses or offset the book value of related assets within the useful lives of the relevant assets with a

reasonable and systematic method. Government grants pertinent to income used to compensate the relevant costs

expenses or losses of the Company in the subsequent period shall be recognized as deferred income and shall be

included in the current profit and loss during the period of confirming the relevant costs expenses or losses; those

used to compensate the relevant costs expenses or losses of the Company already happened shall be included in

the current gains and losses or used to offset relevant costs directly.For government grants that include both assets-related and income-related parts they should be distinguished

separately for accounting treatment; for government subsidies that are difficult to be distinguished they should be

classified as income-related.Government grants related to the daily activities of the Company shall be included into other income or used to

offset relevant costs by the nature of economic business; those unrelated shall be included into non-operating

income.The government grants recognized with relevant deferred income balance but need to return shall be used to offset

the book balance of relevant deferred income the excessive part shall be included in the current gains and losses

or adjusting the book value of assets for the government grants assets-related that offset the book value of relevant

assets when they are initially recognized; those belong to other cases shall be directly included in the current gains

and losses.

32. Deferred Income Tax Assets/Deferred Income Tax Liabilities

(1) Basis of recognizing the deferred income tax assets

According to the difference between the book value of the assets and liabilities and their tax basis a deferred tax

asset shall be measured in accord with the tax rates that are expected to apply to the period when the asset is

realized or the liability is settled.The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably

gains for deducting the deductible temporary differences. At the balance sheet date where there is strong evidence

showing that sufficient taxable profit will be available against which the deductible temporary difference can be

utilized the deferred tax asset unrecognized in prior period shall be recognized.The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that

sufficient taxable profit will not be available against which the deductible temporary difference can be utilized the

Company shall write down the carrying amount of deferred tax asset or reverse the amount written down later

when it’s probable that sufficient taxable profit will be available.

(2) Basis of recognizing the deferred income tax liabilities

105Changchai Company Limited Interim Report 2023

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

liability shall be measured in accord with the tax rates that are expected to apply to the period when the asset is

realized or the liability is settled.

33. Lease

The term "lease" refers to a contract whereby the lessor transfers the right of use regarding the leased asset(s) to

the lessee within a specified time in exchange for consideration. From the effective date of a contract the

Company assesses whether the contract is a lease or includes any lease. If a party to the contract transferred the

right allowing the control over the use of one or more assets that have been identified within a certain period in

exchange for a consideration such contract is a lease or includes a lease. If a contract contains multiple single

leases at the same time the Company will split the contract and conduct accounting treatment of each single lease

respectively. If a contract contains both lease and non-lease parts at the same time the lessee and lessor will split

the lease and non-lease parts.

(1) The Company as the lessee

See Note 28 (lease liabilities) for the general accounting treatment of the Company as the lessee.For short-term leases with a lease term not exceeding 12 months and leases of low-value assets when single leased

assets are brand new assets the Company chooses not to recognize right-of-use assets and lease liabilities and

records relevant rental expenses into the profit or loss of the current period or the underlying asset costs on a

straight-line basis in each period within the lease term.If a lease changes and meets the following conditions at the same time the Company will account for the lease

change as a separate lease: the lease change expands the lease scope by increasing the right to use one or more

leased assets; the increased consideration is equivalent to the separate price of the expanded lease scope adjusted

according to the contract. Where the lease change is not accounted for as a separate lease on the effective date of

the lease change the Company will allocate the consideration of the changed contract and re-determine the

changed lease term. The present value determined based on the changed lease payments and the revised rate of

discount are used to remeasure the lease liabilities.

(2) The Company as the lessor

On the commencement date of the lease term the Company classifies the leases that substantially transfer almost

all risks and rewards related to the ownership of the leased assets as finance leases and leases other than finance

leases as operating leases.

1) Operating lease

The Company recognizes the lease payments receivable as rentals in each period within the lease term on a

straight-line basis. The Company capitalizes the initial direct costs related to operating leases upon incurrence

thereof and apportions and includes such costs in the profit or loss of the current period on the basis same as the

recognition of rentals. The received variable lease payments related to operating leases that are not included in the

lease payments receivable are included in profit or loss of the current period when they are actually incurred.

2) Financial lease

On the commencement date of the lease term the Company recognizes the finance lease receivables on the basis

of net investment in the lease (the sum of the unguaranteed residual value and the present value of the lease

payments receivable not yet received on the commencement date of the lease term discounted at the interest rate

implicit in lease) and derecognizes the leased asset of the finance lease. The Company calculates and recognizes

interest income based on the interest rate implicit in lease in each period within the lease term. The received

106Changchai Company Limited Interim Report 2023

variable lease payments that are not covered in the measurement of the net investment in the lease are included in

the profit or loss of the current period when actually incurred.

(3) Sale and leaseback

The Company assesses whether the asset transfer in a sale and leaseback transaction is a sale in accordance with

relevant provisions of the Accounting Standards for Business Enterprises No. 14 - Income.

1) The Company as the lessee

If the asset transfer in a sale and leaseback transaction is a sale the Company measures the right-of-use assets

formed by the sale and leaseback based on the portion of the original asset's carrying value that is related to the

use right acquired by the leaseback and recognizes related gains or losses only for the right transferred to the

lessor.If the asset transfer in a sale and leaseback transaction is not a sale the Company continues to recognize the

transferred asset and at the same time recognizes a financial liability equivalent to the transfer income and

conducts corresponding accounting treatment for the financial liability in accordance with the Accounting

Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.

2) The Company as the lessor

If the asset transfer in a sale and leaseback transaction is a sale the Company applies other accounting standards

for business enterprises to the accounting treatment for asset purchase and conducts corresponding accounting

treatment for asset lease in accordance with the Accounting Standard for Business Enterprises No. 21 - Leases.If the asset transfer in a sale and leaseback transaction is not a sale the Company does not recognize the

transferred asset but recognizes a financial asset equivalent to the transfer income and conducts corresponding

accounting treatment for the financial asset in accordance with the Accounting Standards for Business Enterprises

No. 22 - Recognition and Measurement of Financial Instruments.

34. Other Significant Accounting Policies and Accounting Estimates

The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis

based on historical experience and other factors including reasonable expectations of future events. Important

accounting estimates and critical assumptions that have a significant risk of causing a material adjustment to the

carrying amounts of assets and liabilities within the next fiscal year are listed as follows:

(1) Classification of financial assets

The significant judgments involved when the Company determines the classification of financial assets include

analysis of business models and contractual cash flow characteristics. The Company determines the business

model for managing financial assets at the level of the financial asset portfolio taking into account factors such as

the approach of evaluating and reporting the performance of financial assets to key management personnel the

risks affecting the performance of financial assets and the manner in which they are managed and way in which

the relevant business management personnel are compensated.The following main judgments exist in assessing whether the contractual cash flows of financial assets are

consistent with the basic lending arrangements:

Whether the time distribution or amount of the principal amount during the duration may change due to early

repayment or for other reasons; whether the interest includes only the time value of money credit risk other basic

lending risks and consideration against costs and profits. For example whether the amount of early repayment

reflects only the outstanding principal and interest based on the outstanding principal as well as reasonable

compensation paid for early termination of the contract.

107Changchai Company Limited Interim Report 2023

(2) Measurement of expected credit losses of accounts receivable

The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of

accounts receivable and the expected credit loss ratio and determines the expected credit loss ratio based on the

probability of default and the default loss ratio. When determining the expected credit loss ratio the Company

uses data such as internal historical credit loss experience and adjusts historical data to take into account current

conditions and forward-looking information. When considering forward-looking information the Company uses

indicators such as the risk of economic downturn and changes in the external market environment technological

environment and customer profile. The Company regularly monitors and reviews the assumptions related to the

calculation of expected credit losses.

(3) Inventory falling price reserves

The Company follows the inventory accounting policy and carries out measurement based on which is smaller

between the cost and the net realizable value. If the cost of inventories is higher than its net realizable value then

the inventory falling prices reserves were implemented. The impairment of inventories to net realizable value is

based on an assessment of the marketability of the inventories and their net realizable value. The management

shall determine the impairment of inventories after obtaining reliable evidence while taking into account the

purpose of holding inventories the effect of items after the balance sheet date and other factors. Differences

between actual results and original estimates will affect the carrying value of inventories and the provision or

reversal of reverses for falling prices of inventories in the period in which the estimates are changed.

(4) Determination of fair value of unlisted equity investment

The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount

rate for items with similar terms and risk characteristics. Such valuation requires the Company to estimate

expected future cash flows and discount rates and is therefore subject to uncertainty. Under limited circumstances

if the information used to determine fair value is insufficient or if the range of possible estimates of fair value is

wide and the cost represents the best estimate of fair value within that range the cost may represent its appropriate

estimate of fair value within that range of distribution.

(5) Reserves for long-term assets impairment

The Company determines at the balance sheet date whether there is any indication that a non-current asset other

than a financial asset may be impaired. For intangible assets with an uncertain useful life impairment tests shall

be conducted when there is an indication of impairment besides the annual impairment test. Other non-current

assets other than financial assets shall be tested for impairment when there is an indication that the carrying

amount is irrecoverable.An impairment is indicated when the carrying amount of an asset or asset group is greater than the recoverable

amount which is the higher of the fair value minus disposal expenses and the present value of estimated future

cash flows.The net value of the fair value minus disposal expenses is determined by referring to the negotiable sale price or

observable market price of similar assets in a fair transaction and deducting incremental costs directly attributable

to the disposal of the asset.Estimating the present value of future cash flows requires significant judgments with respect to the production

volume of the asset (or asset group) the selling price the related operating costs and the discount rate used in

calculating the present value. The Company uses all available relevant information in estimating recoverable

amounts including projections of volumes selling prices and related operating costs based on reasonable and

supportable assumptions.

(6) Depreciation and amortization

108Changchai Company Limited Interim Report 2023

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

(2) Changes in Accounting Estimates

□ Applicable √ Not applicable

(3) Adjustments to Financial Statement Items at the Beginning of the Year of the First Implementation of

the NewAccounting Standards Implemented since 2023

□ Applicable √ Not applicable

VI. Taxation

1. Main Taxes and Tax Rate

Category of taxes Tax basis Tax rate

VAT Payable to sales revenue 13% 9% 6% 5%

Urban maintenance and Tax paid in accordance with the tax

Taxable turnover amount

construction tax regulations of tax units location

Enterprise income tax Taxable income 25%、15%、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

109Changchai Company Limited Interim Report 2023

Changchai Company Limited 15%

Changchai Wanzhou Diesel Engine Co. Ltd. 15%

Changzhou Changchai Benniu Diesel Engine Fittings

25%

Co. Ltd.Changzhou Horizon Investment Co. Ltd. 25%

Changzhou Changchai Horizon Agricultural

25%

Equipment Co. Ltd.Changzhou Fuji Changchai Robin Gasoline Engine

15%

Co. Ltd.Jiangsu Changchai Machinery Co. Ltd. 25%

Changzhou Xingsheng Real Estate Management Co.

5%

Ltd.Zhenjiang Siyang Diesel Engine Manufacturing Co.

15%

Ltd.

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 5% for small enterprises with low profits during the Reporting Period; the subsidiary Zhenjiang Siyang Diesel

Engine Manufacturing Co. Ltd. obtained the "High-tech Enterprise Certificate" and enjoyed a 15% preferential

corporate income tax rate during the Reporting Period.VII. Notes to Major Items in the Consolidated Financial Statements of the Company

1. Monetary Assets

Unit: RMB

Item Ending balance Beginning balance

Cash on hand 230083.56 251965.06

Bank deposits 675401119.95 830914999.19

Other monetary assets 175882910.41 98846386.72

110Changchai Company Limited Interim Report 2023

Total 851514113.92 930013350.97

Total amount of

restriction in use by mortgage 173206532.10 95662384.92

pledge or freeze

At the period-end the restricted monetary assets of the Company was RMB173206532.10 of which

RMB168629080.81 was the cash deposit for bank acceptance bills RMB2993220.00 was cash deposit for L/G

RMB871348.35 was cash deposit for environment and RMB712882.94 was cash deposit for L/C.

2. Trading Financial Assets

Unit: RMB

Item Ending balance Beginning balance

Financial assets at fair value

361470809.32370103602.57

through profit or loss

Of which:

Stocks 111116698.21 78739311.00

Financial products 250354111.11 291364291.57

Of which:

Total 361470809.32 370103602.57

3. Notes Receivable

(1) Notes Receivable Listed by Category

Unit: RMB

Item Ending balance Beginning balance

Bank acceptance bill 303323811.21 297125872.54

Total 303323811.21 297125872.54

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

111Changchai Company Limited Interim Report 2023

Bank acceptance bill 213721703.95

Total 213721703.95

(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to

Execute the Contract or Agreement at the Period-end

4. Accounts Receivable

(1) Accounts Receivable Classified by Category

Unit: RMB

Ending balance Beginning balance

Carrying Bad debt Carrying Bad debt

amount provision amount provision

Category CarryiWithd Withd Carryinng

Amou Propo Amou rawal Amou Propor Amou rawal g valuevalue

nt rtion nt propo nt tion nt propor

rtion tion

Accounts

receivable for

which bad debt 5175 3451 66.69 1723 5175 343677257. 4.71% 8555. % 8702. 7257. 9.91% 361.8

66.4017389

provision 99 59 40 99 3 % 896.16

separately

accrued

Accounts

receivable for

which bad debt 1047 95.29 1301 12.42 9175 47046759 2417 5172 1104 90.09

11747

%%%8758.

24.97352932

provision 00.30 0.86 9.44 2.15 54 % 283.61

accrued by

group

Of which:

Accounts

receivable for

which bad debt 1047

provision 6759 95.29

130112.429175470490.091174724.97352932

00.30%

2417517211048758.

accrued by 0.86

%9.442.15%54%283.61

credit risk

features group

109916469347522115184

Total 4331 100.0 14.98 100.000% 4272 % 9043 6830 % 6120.

29.08370322

58.296.451.840.1437%179.77

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

112Changchai Company Limited Interim Report 2023

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 1731493.71 1731493.71 100.00% Difficult to recover

Customer8 1511937.64 755968.82 50.00% Expected to difficultly recover

Customer9 3329074.84 720031.71 21.63% Expected to difficultly recover

Customer10 2025880.18 2025880.18 100.00% Difficult to recover

Customer11 5972101.90 5972101.90 100.00% Difficult to recover

Customer12 4592679.05 4592679.05 100.00% Difficult to recover

Total 37766277.50 32288207.07 -- --

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 898214835.94 17964296.72 2.00%

1 to 2 years 28644358.99 1432217.95 5.00%

2 to 3 years 9017979.76 1352696.96 15.00%

3 to 4 years 2403195.36 720958.61 30.00%

4 to 5 years 1853824.07 1112294.44 60.00%

Over 5 years 107541706.18 107541706.18 100.00%

Total 1047675900.30 130124170.86 --

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

113Changchai Company Limited Interim Report 2023

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) 913387657.93

1 to 2 years 29153815.65

2 to 3 years 9171200.96

Over 3 years 147720483.75

3 to 4 years 4491084.45

4 to 5 years 3803573.63

Over 5 years 139425825.67

Total 1099433158.29

(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

balance Reversal or

Ending balance

Withdrawal Write-off

recovery

Bad debt

provision

34367361.83151193.7634518555.59

withdrawn

separately

Bad debt

provision

117478758.5412645412.32130124170.86

withdrawn by

group

Total 151846120.37 12796606.08 164642726.45

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

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

entity accounts receivable of accounts receivable debt provision

114Changchai Company Limited Interim Report 2023

Customer1 552639182.57 50.27% 12458137.94

Customer2 84694433.47 7.70% 1693888.67

Customer3 41213013.00 3.75% 824260.26

Customer4 40039625.72 3.64% 800792.51

Customer5 33964600.00 3.09% 679292.00

Total 752550854.76 68.45%

5. Accounts Receivable Financing

Unit: RMB

Item Ending balance Beginning balance

Bank acceptance bills 73649132.14 242813392.79

Total 73649132.14 242813392.79

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 2023 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 263573165.89

Total 263573165.89

115Changchai Company Limited Interim Report 2023

6. Prepayments

(1) List by Aging Analysis

Unit: RMB

Ending balance Beginning balance

Aging

Amount Proportion Amount Proportion

Within 1 year 13483398.14 96.39% 5941708.21 93.86%

1 to 2 years 379608.96 2.71% 289373.60 4.57%

2 to 3 years 87058.21 0.62% 71654.18 1.13%

Over 3 years 37721.02 0.27% 27466.70 0.43%

Total 13987786.33 6330202.69

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 RMB10960900 accounting for 78.36% of the total ending balance of prepayments.

7. Other Receivables

Unit: RMB

Item Ending balance Beginning balance

Dividends receivable 323730.00

Other receivables 85731878.38 32938305.16

Total 86055608.38 32938305.16

(1) Dividends Receivable

1) Classification of Dividends Receivable

Unit: RMB

Item (investee) Ending balance Beginning balance

Jiangsu Liance Electromechanical

Technology Co. Ltd. 276480.00

Guilin Stars Science and

Technology Co. Ltd. 47250.00

Total 323730.00

116Changchai Company Limited Interim Report 2023

(2) Other Receivables

1) Other Receivables Classified by Accounts Nature

Unit: RMB

Nature Ending carrying value Beginning carrying value

Collections on behalf of land

47000000.00

acquisition

Margin and cash pledge 1761816.87 2028096.87

Intercourse funds 56724157.74 48701034.90

Petty cash and borrowings by

734875.76742075.76

employees

Other 13754273.07 13635867.60

Total 119975123.44 65107075.13

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

373682.652908755.1528886332.1732168769.97

January 2023

Balance of 1

January 2023 in the

Current Period

Withdrawal of the

1750745.091750745.09

Current Period

Balance of 30 June

20232124427.742908755.1528886332.1733919515.06

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) 70413701.12

1 to 2 years 15987431.24

117Changchai Company Limited Interim Report 2023

2 to 3 years 1267129.65

Over 3 years 32306861.43

3 to 4 years 501252.53

4 to 5 years 403661.17

Over 5 years 31401947.73

Total 119975123.44

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

5536285.445536285.44

which accrued

separately

Bad debt

provision for

26632484.531750745.0928383229.62

which accrued by

group

Total 32168769.97 1750745.09 33919515.06

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 Zhonglou

District Housing and Intercourse

Urban Rural 47000000.00 Within 1 year 41.19% 940000.00funds

Development Bureau

Changzhou Compressor Intercourse

2940000.00 Over 5 years 2.58% 2940000.00

Factory funds

Changchai Group Imp. & Intercourse

2853188.02 Over 5 years 2.50% 2853188.02

Exp. Co. Ltd. funds

118Changchai Company Limited Interim Report 2023

Changzhou New District Intercourse

1626483.25 Over 5 years 1.43% 1626483.25

Accounting Center funds

Changchai Group Intercourse

1140722.16 Over 5 years 1.00% 1140722.16

Settlement Center funds

Total 55560393.43 48.70% 9500393.43

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 148767935. 6026733.56 142741201. 163954131. 5982286.51 157971844.materials 41 85 27 76

Goods in 104634477. 10497724.7 94136752.9 110883778. 10725860.4 100157918.process 66 4 2 58 3 15

Finished 330258089. 22773098.7 307484990. 322959181. 22755460.8 300203720.goods 18 2 46 08 0 28

Materials

processed on 11824951.2 11824951.2 12299968.9 12299968.9

commission 5 5 8 8

Low priced

and easily 1336244.88 1336244.88 1363429.57 1363429.57

worn articles

Total 596821698. 39297557.0 557524141. 611460489. 39463607.7 571996881.38 2 36 48 4 74

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

Unit: RMB

Increase Decrease

Beginning

Item

balance Reversal or

Ending balance

Withdrawal Other Other

write-off

Raw materials 5982286.51 95068.40 50621.35 6026733.56

Goods in

process 10725860.43 228135.69 10497724.74

Finished goods 22755460.80 470205.09 452567.17 22773098.72

119Changchai Company Limited Interim Report 2023

Total 39463607.74 565273.49 731324.21 39297557.02

(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories

9. Other Current Assets

Unit: RMB

Item Ending balance Beginning balance

The VAT tax credits 6734450.62 47682930.23

Prepaid corporate income tax 1505424.80

Prepaid expense 87208.34 90667.46

Total 6821658.96 49279022.49

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

fixed term 40015268.7 40015268.7 39309587.9 39309587.90 0 3 3

deposit

Total 40015268.7 40015268.7 39309587.9 39309587.90 0 3 3

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 3.80% 3.72% 26April 370000 3.80% 3.72% 26April

term deposit 00.00 2024 00.00 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

Invest Begin Increase/decrease Endin Endin

120Changchai Company Limited Interim Report 2023

ees ning Gain Adjust g g

balanc Cashor loss ment Withd balanc balanc

e bonusrecogn of rawal e e of

(carryi Additi Reduc Chang orized other of (carryi deprec

ng onal ed es in profitunder compr deprec Other ng iation

value) invest invest other annouthe ehensi iation value) reserv

ment ment equity nced

equity ve reserv es

to

metho incom 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

44182

Total 0.00 0.00 .50

12. Other Equity Instrument Investment

Unit: RMB

Item Ending balance Beginning balance

Changzhou Synergetic Innovation Private Equity Fund

378929240.08378929240.08

(Limited Partnership)

Other equity instrument investment measured by fair value 663290000.00 576631000.00

Total 1042219240.08 955560240.08

Non-trading equity instrument investment disclosed by category

Unit: RMB

121Changchai Company Limited Interim Report 2023

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

449516000.00

Ltd. investment

Non-trading equity

Bank of Jiangsu 129204000.00

investment

Changzhou

Synergetic

Innovation Non-trading equity

278929240.08

Private Equity investment

Fund (Limited

Partnership)

Other notes:

The corporate securities of accommodation business still on lending at the period-end: 350000 shares of Foton

Motor Co. Ltd.

13. Other Non-current Financial Assets

Unit: RMB

Item Ending balance Beginning balance

Jiangsu Horizon New Energy

373500000.00373500000.00

Technology Co. Ltd.Total 373500000.00 373500000.00

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

122Changchai Company Limited Interim Report 2023

(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 50916699.87 50916699.87

2. Increased amount of the period 1218237.78 1218237.78

(1) Withdrawal or amortization 1218237.78 1218237.78

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance 52134937.65 52134937.65

III. Depreciation reserves

1. Beginning balance

2. Increased amount of the period

(1) Withdrawal

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance

IV. Carrying value

1. Ending carrying value 40942541.87 40942541.87

2. Beginning carrying value 42160779.65 42160779.65

15. Fixed Assets

Unit: RMB

Item Ending balance Beginning balance

Fixed assets 683448533.29 720061387.76

Total 683448533.29 720061387.76

123Changchai Company Limited Interim Report 2023

(1) List of Fixed Assets

Unit: RMB

Houses and Machinery Transportation Other

Item Total

buildings equipment equipment equipment

I. Original carrying

value

1. Beginning

710604039.881118697686.6519132190.4757025921.991905459838.99

balance

2. Increased amount

12197407.653875068.1316072475.78

of the period

(1) Purchase 7896305.10 125548.65 8021853.75

(2) Transfer from

construction in 4301102.55 3749519.48 8050622.03

progress

(3) Enterprise

combination

increase

3. Decreased

amount of the 28447991.38 18974531.40 47422522.78

period

(1) Disposal or

28447991.3818974531.4047422522.78

scrap

4. Ending balance 682156048.50 1111920562.90 19132190.47 60900990.12 1874109791.99

II. Accumulative

depreciation

1. Beginning

330845140.13803945702.5613446223.7736738140.741184975207.20

balance

2. Increased amount

9520203.7832324865.35564507.282514239.6444923816.05

of the period

(1) Withdrawal 9520203.78 32324865.35 564507.28 2514239.64 44923816.05

3. Decreased

amount of the 21071383.95 18589624.63 39661008.58

period

(1) Disposal or

21071383.9518589624.6339661008.58

scrap

4. Ending balance 319293959.96 817680943.28 14010731.05 39252380.38 1190238014.67

III.Depreciation

reserves

124Changchai Company Limited Interim Report 2023

1. Beginning

423244.03423244.03

balance

2. Increased amount

of the period

(1) Withdrawal

3. Decreased

amount of the

period

(1) Disposal or

scrap

4. Ending balance 423244.03 423244.03

IV. Carrying value

1. Ending carrying

362862088.54293816375.595121459.4221648609.74683448533.29

value

2. Beginning

379758899.75314328740.065685966.7020287781.25720061387.76

carrying value

(2) List of Temporarily Idle Fixed Assets

Unit: RMB

Original Accumulative Depreciation

Item Carrying value Note

carrying value depreciation reserves

Machinery

equipment 476507.50 53263.47 423244.03

16. Construction in Progress

Unit: RMB

Item Ending balance Beginning balance

Construction in progress 30883676.70 30259647.16

Engineering materials 21900.40 21900.40

Total 30905577.10 30281547.56

(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

125Changchai Company Limited Interim Report 2023

Innovation

capacity

construction

6573635.346573635.345443764.335443764.33

of

technology

center

Relocation

project of

10666094.7310666094.7311155119.7011155119.70

light engine

and casting

Equipment to

be installed

13643946.6313643946.6313660763.1313660763.13

and payment

for projects

Total 30883676.70 30883676.70 30259647.16 30259647.16

(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

Innov

ation

capac Self-r

ity 9606 5443 1458 6573 Unco3281 7.42 aised

constr 6200 764. 004. 33.05 635. % mplet and

uctio .00 33 06 34 ed raised

funds

n of

techn

ology

126Changchai Company Limited Interim Report 2023

center

Reloc

ation

proje

Self-r

ct of 4747 1115 5879 6596 1043 Unco80.35 aisedlight 0600 5119. 876. 305. 8690 mplet and

engin 0.00 70

%

03 10 .63 ed raised

funds

e and

castin

g

57071659733769241701

Total 7220 8884 880. 438. 2325

0.00.030915.97

(3) Engineering Materials

Unit: RMB

Ending balance Beginning balance

Item DepreciatiCarrying Carrying Carrying Depreciation Carrying

on

amount value amount reserves value

reserves

Engineerin

21900.4021900.4021900.4021900.40

g materials

Total 21900.40 21900.40 21900.40 21900.40

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 214187775.71 17847202.14 5538000.00 1650973.47 239223951.32

2. Increased amount of

the period

(1) Purchase

(2) Internal R&D

127Changchai Company Limited Interim Report 2023

(3) Business

combination increase

3. Decreased amount of

9000000.009000000.00

the period

(1) Disposal 9000000.00 9000000.00

4. Ending balance 205187775.71 17847202.14 5538000.00 1650973.47 230223951.32

II. Accumulated

amortization

1. Beginning balance 63832525.74 14396059.28 3246750.17 356398.60 81831733.79

2. Increased amount of

2149063.08700324.52275858.5283520.963208767.08

the period

(1) Withdrawal 2149063.08 700324.52 275858.52 83520.96 3208767.08

3. Decreased amount of

4575000.004575000.00

the period

(1) Disposal 4575000.00 4575000.00

4. Ending balance 61406588.82 15096383.80 3522608.69 439919.56 80465500.87

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

143781186.892750818.342015391.311211053.91149758450.45

value

2. Beginning carrying

150355249.973451142.872291249.831294574.87157392217.54

value

18. Long-term Prepaid Expenses

Unit: RMB

Beginning Amortized

Item Increase Decrease Ending balance

balance amount

Trademark 201970.32 38985.00 11296.71 229658.61

128Changchai Company Limited Interim Report 2023

renewal fee

Electricity

Outside Line 3078000.00 162000.00 2916000.00

Access Project

Total 3279970.32 38985.00 173296.71 3145658.61

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 18390162.07 3045579.73 149230051.55 24713867.00

Bad debt provision 7005141.95 1070844.10 6853948.19 1048165.04

Inventory falling

2916352.63437452.892633715.26395057.29

price reserves

Impairment of fixed

423244.0363486.60423244.0363486.60

assets

Total 28734900.68 4617363.32 159140959.03 26220575.93

(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 5677718.36 851657.75 5677718.36 851657.75

under the same

control

Changes in fair

value 1156017272.47 177990367.23 1039472114.80 160508593.58

Total 1161694990.83 178842024.98 1045149833.16 161360251.33

(3) List of Unrecognized Deferred Income Tax Assets

Unit: RMB

Item Ending balance Beginning balance

129Changchai Company Limited Interim Report 2023

Deductible loss 22257409.96 22257409.96

Bad debt provision 191557099.56 177160942.15

Falling price reserves of

37395165.9736829892.48

inventories

Total 251209675.49 236248244.59

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

Unit: RMB

Years Ending amount Beginning amount Note

20231146746.131146746.13

20243605384.253605384.25

20255250820.815250820.81

20267372277.947372277.94

20274882180.834882180.83

Total 22257409.96 22257409.96

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 1393241.19 1393241.19 670735.93 670735.93

equipments

Total 1393241.19 1393241.19 670735.93 670735.93

21. Short-term Borrowings

(1) Category of Short-term Borrowings

Unit: RMB

Item Ending balance Beginning balance

Mortgage loans 3000000.00 7000000.00

Obligation to pay bills discounted

107447699.49108437700.65

before maturity

Total 110447699.49 115437700.65

130Changchai Company Limited Interim Report 2023

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

22. Notes Payable

Unit: RMB

Category Ending balance Beginning balance

Bank acceptance bill 702452311.45 471876397.72

Total 702452311.45 471876397.72

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 647261475.07 747010098.88

Total 647261475.07 747010098.88

(2) Significant Accounts Payable Aging over One Year

Unit: RMB

Item Ending balance Unpaid/ Un-carry-over reason

Supplier terminates cooperation

Payment for goods 52642097.90

pending payment

Payment for equipment 6202576.90 Equipment warranty

Total 58844674.80

24. Advances from Customers

Unit: RMB

Item Ending balance Beginning balance

House rent collected in advance 815054.54 837425.55

Total 815054.54 837425.55

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

131Changchai Company Limited Interim Report 2023

Contract liabilities 33094812.97 32843692.83

Total 33094812.97 32843692.83

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 49151022.47 152421301.25 187972773.79 13599549.93

II.Post-employment

benefit-defined 17540182.64 17540182.64

contribution plans

III. Termination

200000.00200000.00

benefits

Total 49351022.47 169961483.89 205512956.43 13799549.93

(2) List of Short-term Salary

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

1. Salary bonus

40883518.77128018061.42162906190.955995389.24

allowance subsidy

2.Employee welfare 1592.74 1188689.39 1188689.39 1592.74

3. Social insurance 9284245.62 9284245.62

Of which: Medical

insurance 7545525.15 7545525.15

premiums

Work-related injury

968016.73968016.73

insurance

Maternity insurance 770703.74 770703.74

4. Housing fund 10716609.27 10716609.27

5.Labor union

budget and

8265910.963213695.553877038.567602567.95

employee education

budget

Total 49151022.47 152421301.25 187972773.79 13599549.93

132Changchai Company Limited Interim Report 2023

(3) List of Defined Contribution Plans

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

1. Basic pension

17019510.1117019510.11

benefits

2. Unemployment

520672.53520672.53

insurance

Total 17540182.64 17540182.64

27. Taxes Payable

Unit: RMB

Item Ending balance Beginning balance

VAT 1651730.27 2240512.82

Corporate income tax 490046.14 1272876.86

Personal income tax 109664.93 68629.73

Urban maintenance and

115621.121151395.75

construction tax

Property tax 1593082.93 1172973.71

Land use tax 926082.50 1041594.39

Stamp duty 280664.27 286018.61

Education Surcharge 49551.90 229345.14

Comprehensive fees 109664.93 1075134.76

Environmental protection tax 223.76 31693.62

Total 5326332.75 8570175.39

28. Other Payables

Unit: RMB

Item Ending balance Beginning balance

Dividends payable 3891433.83 3891433.83

Other payables 158289378.68 156155449.10

Total 162180812.51 160046882.93

(1) Dividends Payable

Unit: RMB

133Changchai Company Limited Interim Report 2023

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 4678536.54 4293474.88

Intercourse funds among units 8163215.36 7831477.01

Intercourse funds among

385683.04397761.04

individuals

Sales discount and three

128905093.55126787544.75

guarantees

Other 16156850.19 16845191.42

Total 158289378.68 156155449.10

2) Significant Other Payables Aging over One Year

The significant other payables aging over one year at the period-end mainly referred to the unsettled temporary

credits and charges owned.

29. Other Current Liabilities

Unit: RMB

Item Ending balance Beginning balance

Sale service fee 412356.65 806555.29

Transportation storage fee 698545.06 597090.12

Electric charge 1372210.26 1467332.18

Tax to be transferred 2513659.65 2821340.54

Estimated share value added tax 1910806.37 1909715.09

Obligation to pay bills transferred

96724142.8166395231.83

before maturity

134Changchai Company Limited Interim Report 2023

Other withholding expenses 4675214.62 4648476.11

Total 108306935.42 78645741.16

30. Deferred Income

Unit: RMB

Beginning Reason for

Item Increase Decrease Ending balance

balance formation

Government Government

36205625.941704864.7334500761.21

grants appropriation

Total 36205625.94 1704864.73 34500761.21 --

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 115211 759633.0 10761 Related

processing production 01.00 0 468.0 to assets

line for cylinders of 0

diesel engines

Remove 17847 332986.8 17514 Related

compensation 790.36 1

803.5

5 to assets

Research and

development and

industrialization

allocations of national 68367 612244.9 6224 Related

III/IV standard 34.58 2 489.66 to assets

high-powered

efficient diesel engine

for agricultural use

31. Share Capital

Unit: RMB

135Changchai Company Limited Interim Report 2023

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 19795719.80 19795719.80

Total 640133963.01 640133963.01

33. Other Comprehensive Income

Unit: RMB

Reporting Period

Less:

Record

Less: ed in

Recorded other

in other compre

comprehe hensiv Attribu

nsive e table to Attribu

Income

income in income owners table to

Beginni before Less:

Endin

prior in prior of the non-co g

Item ng taxatio Incomeperiod period Compa ntrollin

balance n in the tax

balan

and and ny as g

Curren expens ce

transferre transfe the interest

t e

d in rred in parent s after

Period

profit or retaine after tax

loss in d tax

the earning

Current s in the

Period Curren

t

Period

6553418665912998736607290

I. Other comprehensive 704.07 000.00 850.00 150.00 0185

136Changchai Company Limited Interim Report 2023

income that will not be 4.07

reclassified to profit or loss

Changes in fair value of

other equity instrument 655341 86659 12998 73660

7290

704.07000.00850.00150.000185

investment 4.07

Total of other 655341 86659 12998 73660 7290

comprehensive income 704.07 000.00 850.00 150.00

0185

4.07

34. Specific Reserve

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

Safety production

18848856.754598473.042420662.7121026667.08

cost

Total 18848856.75 4598473.04 2420662.71 21026667.08

35. Surplus Reserves

Unit: RMB

Item Beginning balance Increase Decrease Ending balance

Statutory surplus

336040867.82336040867.82

reserves

Discretional surplus

13156857.9013156857.90

reserves

Total 349197725.72 349197725.72

36. Retained Earnings

Unit: RMB

Item Reporting Period Same period of last year

Beginning balance of retained

earnings before adjustments 915495909.35 872212354.88

Beginning balance of retained

earnings after adjustments 915495909.35 872212354.88

Add: Net profit attributable to

owners of the Company as the 131937324.66 -14592094.77

parent

Dividends of ordinary shares

payable 7056925.07 18348005.18

Ending retained earnings 1040376308.94 839272254.93

List of adjustment of beginning retained earnings:

137Changchai Company Limited Interim Report 2023

(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 1333099509.22 1156456220.22 1161021786.32 1038738676.27

Other operations 17418130.63 12441983.61 17200705.72 12656556.15

Total 1350517639.85 1168898203.83 1178222492.04 1051395232.42

Relevant information of revenue:

Unit: RMB

Category of contracts Segment 1

Product Types

Of which:

Single-cylinder diesel engines 607361121.44

Multi-cylinder diesel engines 584029144.61

Other products 82791314.55

Fittings 20819616.14

Classified by business area

Of which:

Sales in domestic market 1097487924.55

Export sales 235611584.67

Total 1333099509.22

Information related to performance obligations: none

38. Taxes and Surtaxes

Unit: RMB

Item Reporting Period Same period of last year

Urban maintenance and

1006348.45812411.02

construction tax

138Changchai Company Limited Interim Report 2023

Education surcharge 718820.35 579085.68

Property tax 3169527.35 1817465.17

Land use tax 2197586.41 1586101.00

Vehicle and vessel use tax 403.52 201437.50

Stamp duty 628716.88 207601.82

Environment tax 100381.82 102066.70

Other 5470.80 54256.65

Total 7827255.58 5360425.54

39. Selling Expense

Unit: RMB

Item Reporting Period Same period of last year

Employee benefits 17034869.46 16943256.62

Office expenses 3936262.82 3724135.21

Sales promotional expense 3274025.90

Three guarantees 35094246.66 20297149.84

Other 6065653.23 7520633.81

Total 62131032.17 51759201.38

40. Administrative Expense

Unit: RMB

Item Reporting Period Same period of last year

Employee benefits 28128076.17 23311653.61

Office expenses 5597629.95 4566775.20

Depreciation and amortization 9181948.43 4952365.26

Safety expenses 1768064.08

Repair charge 589852.63 428378.02

Inventory obsolescence and

inventory shortage (overage) -651231.55

Other 8263031.35 6957362.02

Total 52877371.06 40216534.11

41. Development Costs

Unit: RMB

139Changchai Company Limited Interim Report 2023

Item Reporting Period Same period of last year

Direct input expense 20419421.63 24257520.75

Employee benefits 11534165.94 11798332.91

Depreciation and amortization 3284892.82 2981055.64

Other 600591.03 1122878.17

Total 35839071.42 40159787.47

42. Finance Costs

Unit: RMB

Item Reporting Period Same period of last year

Interest expense 3343884.90 3276786.93

Less: Interest income 4264102.18 6634812.22

Net foreign exchange gains or

-4784425.33-7111099.45

losses

Other 727989.66 -2531595.24

Total -4976652.95 -13000719.98

43. Other Income

Unit: RMB

Sources Reporting Period Same period of last year

Government grants directly

recorded into the current profit or 1594191.79 1602830.77

loss

Government grants related to

deferred income 1704864.73

44. Investment Income

Unit: RMB

Item Reporting Period Same period of last year

Investment income from holding of trading financial

assets 343730.00

Investment income from disposal of trading financial

assets 2430.18 364131.30

Dividend income from holding of other equity

instrument investment 9360000.00

Interest from holding of investments in debt

obligations 705680.77

Income from refinancing operations 14396.97 60799.49

140Changchai Company Limited Interim Report 2023

Investment income from financial products 4471297.06 4297768.75

Accounts receivable financing-discount interest of

-2310613.28-2338416.66

bank acceptance bills

Total 3226921.70 11744282.88

45. Gain on Changes in Fair Value

Unit: RMB

Sources Reporting Period Same period of last year

Held-for-trading financial assets 19360455.86 -30488388.88

Total 19360455.86 -30488388.88

46. Credit Impairment Loss

Unit: RMB

Item Reporting Period Same period of last year

Bad debt loss of other receivables -1750745.09 236946.29

Bad debt loss of accounts

-12796606.08-12169772.95

receivable

Total -14547351.17 -11932826.66

47. Asset Impairment Loss

Unit: RMB

Item Reporting Period Same period of last year

Loss on inventory valuation and

contract performance cost -565273.49 4342775.64

Total -565273.49 4342775.64

48. Asset Disposal Income

Unit: RMB

Sources Reporting Period Same period of last year

Disposal income of fixed assets 105395693.25 -361395.36

49. Non-operating Income

Unit: RMB

Item Reporting Period Same period of last year Amount recorded in the

current non-recurring

141Changchai Company Limited Interim Report 2023

profit or loss

Negative goodwill from

combination not under 1798981.78

the same control

Other 495538.97 550915.40 495538.97

Total 495538.97 2349897.18 495538.97

50. Non-operating Expense

Unit: RMB

Amount recorded in the

Item Reporting Period Same period of last year current non-recurring

profit or loss

Quality compensation 144428.82 144428.82

Compensation matters 731752.92 731752.92

Other 421166.39 392257.24 421166.39

Total 1297348.13 392257.24 1297348.13

51. Income Tax Expense

(1) List of Income Tax Expense

Unit: RMB

Item Reporting Period Same period of last year

Current income tax expense 2460114.33 1599680.00

Deferred income tax expense 4729214.00 -7805728.88

Total 7189328.33 -6206048.88

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

Unit: RMB

Item Reporting Period

Profit before taxation 143289052.25

Income tax expenses calculated based on

statutory/applicable tax rates 21493357.84

The impact of deductible losses on deferred income

tax assets recognized in the prior period of use -21668287.27

Influence of applying different tax rates by

subsidiaries 7364257.76

Income tax expense 7189328.33

142Changchai Company Limited Interim Report 2023

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 1594191.79 1602830.77

Other intercourses in cash 5293371.43 6000698.61

Interest income 4264102.18 7872212.72

Other 372352.32 392565.39

Total 11524017.72 15868307.49

(2) Cash Used in Other Operating Activities

Unit: RMB

Item Reporting Period Same period of last year

Selling and administrative expense

79187465.7175307038.72

paid in cash

Handling charges 1125365.36 1058635.32

Other 658923.36 749863.50

Other transactions 149835.21 67256.65

Total 81121589.64 77182794.19

(3) Cash Generated from Other Investing Activities

Unit: RMB

Item Reporting Period Same period of last year

Deposit of construction unit 169856.31

Total 169856.31

(4) Cash Generated from Other Financial Activities

Unit: RMB

Item Reporting Period Same period of last year

Discount of undue bank acceptance

49395924.99

bills with low credit rating

143Changchai Company Limited Interim Report 2023

Total 49395924.99

(5) Cash Used in Other Financial Activities

Unit: RMB

Item Reporting Period Same period of last year

Discount interest from bank

2604075.01

acceptance bills

Total 2604075.01

54. Supplemental Information for Cash Flow Statement

(1) Supplemental Information for Cash Flow Statement

Unit: RMB

Same period of last

Supplemental information Reporting Period

year

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

operating activities

Net profit 136099723.92 -14597001.69

Add: Provision for impairment of assets 15112624.66 -8871223.50

Depreciation of fixed assets of oil and gas assets of productive

44923816.0540934595.60

living assets

Depreciation of right-of-use assets

Amortization of intangible assets 3208767.08 3076523.63

Amortization of long-term deferred expenses 168946.50 1956.06

Losses on disposal of fixed assets intangible assets and other

-105395693.25361395.36

long-term assets (gains by “-”)

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

Losses on the changes in fair value (gains by “-”) -19360455.86 30488388.88

Financial expenses (gains by “-”) -4976652.95 -13000719.98

Investment losses (gains by “-”) -3226921.70 -11744282.88

Decrease in deferred income tax assets (increase by “-”) 21603212.61 -11774.06

Increase in deferred income tax liabilities (decrease by “-”) -17481773.65 -15920828.48

Decrease in inventory (increase by “-”) 14472740.38 117904290.23

Decrease in accounts receivable from operating activities

-269061905.84-241738053.67

(increase by “-”)

Increase in payables from operating activities (decrease by “-”) 79116755.30 55684539.07

144Changchai Company Limited Interim Report 2023

Other -16868305.69

Net cash flows generated from operating activities -104796816.75 -74300501.12

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 651307581.82 440638879.34

Less: Beginning balance of cash 810350966.05 573623529.10

Add: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase in cash and cash equivalents -159043384.23 -132984649.76

(2) Cash and Cash Equivalents

Unit: RMB

Item Ending balance Beginning balance

I. Cash 651307581.82 810350966.05

Including: Cash on hand 230083.56 251965.06

Bank deposit on demand 648401119.95 806914999.19

Other monetary assets on demand 2676378.31 3184001.80

III. Ending balance of cash and cash

equivalents 651307581.82 810350966.05

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 173206532.10

bill and for environment

Houses and buildings 1422559.69 Mortgaged for borrowings from banks

Land use right 863218.81 Mortgaged for borrowings from banks

Machinery equipment 25771609.33 Mortgaged for borrowings from banks

Obligation to pay bills discounted

110000000.00

before maturity

Obligation to pay bills transferred

before maturity 103721703.95

145Changchai Company Limited Interim Report 2023

Total 414985623.88

56. Foreign Currency Monetary Items

(1) Foreign Currency Monetary Items

Unit: RMB

Ending foreign currency Ending balance converted

Item Exchange rate

balance to RMB

Monetary assets 73299699.59

Of which: USD 10103155.25 7.2258 73003379.21

HKD 321388.70 0.9220 296320.38

Accounts receivable 78604894.44

Of which: USD 10878365.64 7.2258 78604894.44

Accounts payable 2186.53

Of which: USD 302.60 7.2258 2186.53

Contract liabilities 5646020.60

Of which: USD 781369.62 7.2258 5646020.60

(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

Subsidies for stabilizing and increasing job

positions and retaining workers 162791.79 Other income 162791.79

Subsidies for industry-university-research

cooperation 30000.00 Other income 30000.00

Incentive for municipal technology transfer in

Changzhou 400000.00 Other income 400000.00

Special funds for innovative development in

Changzhou 333000.00 Other income 333000.00

Incentives and subsidies for earlier phase-out

and scrapping of high-emission old cars in 19500.00 Other income 19500.00

Changzhou

146Changchai Company Limited Interim Report 2023

Subsidies for export 628900.00 Other income 628900.00

Job skills subsidies 20000.00 Other income 20000.00

Demolition compensation (replacing Zou Deferred

Village with Hehai Road) 13344397.90 income 133666.74

Demolition compensation - main workshops in Deferred

the base in Hehai Road 11864289.02 income 199320.07

The national major special project - the

flexible processing production line for diesel 13800000.00 Deferredincome 759633.00engine cylinder blocks

National III/IV Appropriation for the research

and development and industrialization of Deferred

standard high-horsepower high-efficiency 10000000.00 income 612244.92

agricultural diesel engine

(2) Return of Government Grants

□ Applicable √ Not applicable

VIII. Equity in Other Entities

1. Equity in Subsidiary

(1) Subsidiaries

Natur Holding percentage

Main Registrat

e of (%) Way of

Name operatin ion

busin gaining

g place place 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

147Changchai Company Limited Interim Report 2023

Zhenjiang Siyang Diesel Engine Zhenjia Zhenjian Indus Combination

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

Note: The Company holds 41.5% shares of Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. as the

largest shareholder of it. Other shares are employee shares and non-employee shares relatively dispersed. No

other shareholder has a higher shareholding ratio that is close to that of the actual controller. The Board of

Directors of Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. consists of seven members of which five

members including the Chairman of the Board are sent by the Company. Thus the Company is the actual

controller of Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. which forms the merge conditions.

(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% 85187.53 19790830.78

Engine Co. Ltd.Zhenjiang Siyang

Diesel Engine

Manufacturing Co. 58.50% 4077211.73 56835741.15

Ltd.Holding proportion of non-controlling interests in subsidiary different from voting proportion: Not applicable

(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary

Unit: RMB

Ending balance Beginning balance

Non- Non-

Non- Curre Non- Curre

Name Curre curre Total Curre curre Totalcurre 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 4807 2277 7085 2137 2137 4713 2322 7036 2109 2109

Diese 4711. 5552 0263 3187 3187 3617 8110. 1727 7619 7619

l 77 .20 .97 .02 .02 .16 09 .25 .13 .13

Engin

e Co.Ltd.

148Changchai Company Limited Interim Report 2023

Zhenj

iang

Siyan

g

Diese

l 8812 2720 1153 1783 3335 1816 8269 2804 1107 2023 2055Engin 4204 0773 2497 6297 67.42 9864 7983 5494 4347 5256

32277957

e .01 .86 7.87 .37 .79 .58 .39 7.97 .17 01.42 .59

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 2619004 212968.8 212968.8 -852564 1715426 -306598. -306598. -300598

Diesel 3.15 3 3 6.36 9.32 18 18 1.47

Engine

Co. Ltd.Zhenjian

g Siyang

Diesel

Engine 3809831 6969592 6969592 7732566 4813008 206678.9 206678.9 6994726

Manufact 2.48 .70 .70 .01 .16 6 6 .52

uring

Co. Ltd.

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

Notes to the structured entity excluded in the scope of consolidated financial statements:

In 2017 the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together with

Synergetic Innovation Fund Management Co. Ltd. through joint investment. On 18 October 2018 and 3

December 2020 new partners were respectively added. On 29 December 2022 the Company transferred the

partnership shares. In line with the revised Partnership Agreement the general partner is Synergetic Innovation

Fund Management Co. Ltd. and the limited partners are Changchai Company Limited Changzhou Zhongyou

Petroleum Sales Co. Ltd. Changzhou Fuel Co. Ltd. Tong Yinzhu Tong Yinxin Anhui Haiyunzhou Equity

Investment Partnership Enterprise (Limited) Shenzhen Jiaxin No. 1 Venture Capital Partnership (Limited

Partnership) and Zhong Wende. In accordance with the Partnership Agreement the limited partner does not

execute the partnership affairs. Thus the Company does not control Changzhou Xietong Private Equity Fund

(Limited Partnership) and did not include it into the scope of consolidated financial statements.

149Changchai Company Limited Interim Report 2023

IX. The Risk Related to Financial Instruments

The goal of the Company’s risk management was gaining the balance between the risk and income and reduced

the negative impact to the operation performance of the Company in the lowest level and maximized the interests

of shareholders and other equity investors. Base on the risk management goal the basis strategy of the Company’s

risk management was to recognized and analyze all kinds of risk that the Company faced set up suitable risk

bottom line and conduct risk management and supervised the risks timely and reliably and control the risk within

the limited scope.The main risks of the Company due to financial instruments were credit risk liquidity risk and market risk. The

management level had reviewed and approved the policies to manage the risks which summarized as follows:

(I) Credit Risk

Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the

other party.The credit of risk of the Company mainly was related to account receivable in order to control the risk the

Company conduct the following methods.The Company only conducts related transaction with approved and reputable third party in line with the policy of

the Company the Company need to conduct credit-check for the clients adopting way of credit to conduct

transaction. In addition the Company continuously monitors the balance of account receivable to ensure the

Company would not face the significant bad debt risk.(II) Liquidity Risk

Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in the way

of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash

to pay the due liabilities.The liquidity risk was centralized controlled by the financial department of the Company. The financial

departments through supervising the balance of the cash and securities can be convert to cash at any time and the

rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash to pay the liabilities

under the case of all reasonable prediction.(III) Market Risk

Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the change

of market price including foreign exchange rate risk interest rate risk.

1. Interest Rate Risk

Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due

to the change of market price.

2. Foreign Exchange Risk

Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. As for the Company’s

export business customers will be given a certain credit term if the RMB appreciates against the dollar the

company's accounts receivable will incur foreign currency exchange loss.X. The Disclosure of Fair Value

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

Unit: RMB

150Changchai Company Limited Interim Report 2023

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

111116698.21250354111.11361470809.32

assets

1. Financial assets

at fair value through 111116698.21 250354111.11 361470809.32

profit or loss

(1) Debt instrument

investment

(2) Equity

instrument 111116698.21 111116698.21

investment

(3) Derivative

financial assets

Wealth

management 250354111.11 250354111.11

investments

2. Financial assets

designated to be

measured at fair

value and the

changes included

into the current

profit or loss

(1) Debt instrument

investment

(2) Equity

instrument

investment

(II) Other

investments in debt

obligations

(III)Other equity

instrument 663290000.00 378929240.08 1042219240.08

investment

(IV) Investment

property

151Changchai Company Limited Interim Report 2023

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 73649132.14 73649132.14

Other non-current

financial assets 373500000.00 373500000.00

Total assets

consistently

774406698.21250354111.11826078372.221850839181.54

measured by fair

value

(VI) Trading

financial liabilities

Of which: Issued

trading bonds

Derivative financial

liabilities

Other

(VII) Financial

liabilities

designated to be

measured at fair

value and the

changes recorded

into the current

profit or loss

Total liabilities

consistently

measured by fair

value

152Changchai Company Limited Interim Report 2023

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

short maturity and low risk. The par amount is close to the fair value and is used as the fair value.

(2) Among the other non-current financial assets: for the investments in equity instrument of Jiangsu Horizon New

Energy Technology Co. Ltd. Jiangsu Horizon New Energy Technology Co. Ltd. entrusted an appraisal agency to

evaluate the value of all its shareholders’ equity due to the need for capital increase and share expansion in 2022

and confirmed the premium rate of capital increase based on the appreciation rate of the equity value. The

company’s new investors signed the investment agreements respectively 29 August 2022. Therefore the fair value

of the equity investment had been adjusted and confirmed accordingly based on the premium rate of the latest

financing.

(3) Among other equity investment instruments the total investment in Chengdu Changwan Diesel Engine

Distribution Co. Ltd. Chongqing Wanzhou Changwan Diesel Engine Parts Co. Ltd. Changzhou Economic and

Technological Development Company Changzhou Tractor Company Changzhou Economic Commission

Industrial Capital Mutual Aid Association Beijing Engineering Machinery Agricultural Machinery Company was

153Changchai Company Limited Interim Report 2023

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 increased the equity of partners at the end of the year due to the change in fair value of the equity

held by it. In addition the company's business environment operating conditions and financial status had not

undergone major changes. Therefore the company determined its fair value on the basis of the net book assets of

the partnership at the end of the period.

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

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

Not applicable

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

Conversion Happens among Consistent Fair Value Measurement Items at Different Levels

Not applicable

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

Not applicable

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

The financial assets and liabilities measured at amortization cost mainly include notes receivable accounts

receivable other receivables short-term borrowings accounts payable other payables etc. The difference

between the carrying value and fair value for financial assets and liabilities not measured at fair value is small.

9. Other

During the Reporting Period 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.XI. 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

154Changchai Company Limited Interim Report 2023

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

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

155Changchai Company Limited Interim Report 2023

Jiangsu Horizon New Energy Technology Co. Ltd. Shareholding enterprise of the Company

XII. Commitments and Contingency

1. Significant Commitments

Significant commitments on balance sheet date

As of 30 June 2023 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.XIII. Events after Balance Sheet Date

1. Notes to Other Events after Balance Sheet Date

There was no other event after balance sheet date.XIV. 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

XV. 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

156Changchai Company Limited Interim Report 2023

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

which bad debt 2736 2175 5605 2736 21607

4067.2.72%8623.79.52%444.04067.6.22%429.5

78.9657566

provision 34 26 8 34 0 % 37.84

separately

accrued

Of which:

Accounts

receivable for

which bad debt 9775 1017 8757 4127 89464

092597.28956210.411363691593.78855.721.67323304

provision 5.46 % 0.16 % 5.30 8.39 % 3 % 302.66

accrued by

group

Of which:

Accounts

receivable for

which bad debt 9775 1017 8757 4127 89464

provision 0925 97.28 9562 10.41 1363 6915 93.78% % % 855.7

21.67323304

accrued by 5.46 0.16 5.30 8.39 3

%302.66

credit risk

features group

1004

Total 8733 100.0

12358813440111107

0%5424

12.30

%19073322

100.002285.25.24329060

22.803.429.385.73%23%940.50

Accounts receivable with significant single amount for which bad debt provision separately accrued at the end of

the period:

Unit: RMB

Ending balance

Name Carrying Bad debt Withdrawal

Withdrawal reason

amount provision proportion

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

157Changchai Company Limited Interim Report 2023

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 1731493.71 1731493.71 100.00% Difficult to recover

Customer8 1511937.64 755968.82 50.00% Expected to difficultly recover

Customer9 3329074.84 720031.71 21.63% Expected to difficultly recover

Total 25175616.37 19697545.94

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

Unit: RMB

Ending balance

Name

Carrying amount Bad debt provision Withdrawal proportion

Within 1 year 859890514.81 17197810.30 2.00%

1 to 2 years 26758256.03 1337912.80 5.00%

2 to 3 years 7082680.52 1062402.08 15.00%

3 to 4 years 1750847.90 525254.38 30.00%

4 to 5 years 886788.94 532073.36 60.00%

Over 5 years 81140167.20 81140167.24 100.00%

Total 977509255.46 101795620.16

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) 863346963.30

1 to 2 years 27300968.69

2 to 3 years 7082680.52

Over 3 years 107142710.29

3 to 4 years 3838737.01

158Changchai Company Limited Interim Report 2023

4 to 5 years 2836538.50

Over 5 years 100467434.78

Total 1004873322.80

(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

21607429.50151193.7621758623.26

withdrawn

separately

Bad debt

provision

89464855.7312330764.43101795620.16

withdrawn

by group

Total 111072285.23 12481958.19 123554243.42

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 accounts Proportion to total ending Ending balance of bad

entity receivable balance of accounts receivable debt provision

Customer1 552639182.57 55.00% 12458137.94

Customer2 84694433.47 8.43% 1693888.67

Customer3 41213013.00 4.10% 824260.26

Customer4 40039625.72 3.98% 800792.51

Customer5 33964600.00 3.38% 679292.00

Total 752550854.76 74.89%

2. Other Receivables

Unit: RMB

Item Ending balance Beginning balance

159Changchai Company Limited Interim Report 2023

Other receivables 360599343.16 179596495.57

Total 360599343.16 179596495.57

(1) Other Receivable

1) Other Receivables Classified by Account Nature

Unit: RMB

Nature Ending carrying amount Beginning carrying amount

Collecting land collection and

47000000.00

storage funds on behalf

Cash deposit and Margin 1300.00 1300.00

Intercourse funds among units 347191045.14 214624107.53

Petty cash and borrowings by

642563.68671817.84

employees

Other 13593526.32 13635256.64

Total 408428435.14 228932482.01

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

26186.99209876.7049099922.7549335986.44

January 2023

Balance of 1

January 2023 in the

Current Period

Withdrawal of the

986089.16986089.16

Current Period

Reversal of the

2492983.622492983.62

Current Period

Balance of 30 June

20231012276.15209876.7046606939.1347829091.98

Changes of carrying amount with significant amount changed of loss provision in the Current Period

□ Applicable √ Not applicable

160Changchai Company Limited Interim Report 2023

Disclosure by aging

Unit: RMB

Aging Carrying amount

Within 1 year (including 1 year) 361587084.62

1 to 2 years 17302125.74

2 to 3 years 161608.32

Over 3 years 29377616.46

3 to 4 years 440952.49

4 to 5 years 389176.36

Over 5 years 28547487.61

Total 408428435.14

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

Bad debt

provision

25757409.372492983.6223264425.75

withdrawn

separately

Bad debt

provision

23578577.07986089.1624564666.23

withdrawn by

group

Total 49335986.44 986089.16 2492983.62 47829091.98

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

161Changchai Company Limited Interim Report 2023

Jiangsu Changchai Interco

Machinery urse 270624584.71 1-2 years 65.82% ——

Manufacturing Co. Ltd. funds

Changzhou Zhonglou

District Housing and Interco

Urban Rural urse 47000000.00 Within 1 year 11.43% 940000.00

Development Bureau funds

Changzhou Changchai Interco

Horizon Agricultural urse 17728140.31 Within 1 year 4.31% 17728140.31

Equipment Co. Ltd. funds

Changzhou Changniu Interco

Machinery Co. Ltd. urse 9000000.00 1-2 years 2.19% ——funds

Interco

Changzhou Compressors

urse 2940000.00 Over 5 years 0.72% 2940000.00

Factory

funds

Total 347292725.02 84.47% 21608140.31

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

7) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of

Other Receivables: none

3. Long-term Equity Investment

Unit: RMB

Ending balance Beginning balance

Item Carrying Depreciation Carrying Carrying Depreciation Carrying

amount reserves value amount reserves value

Investment to 576273530. 7000000.00 569273530. 576273530. 7000000.00 569273530.subsidiaries 03 03 03 03

Investment to

joint ventures

and 44182.50 44182.50 44182.50 44182.50

associated

enterprises

Total 576317712. 7044182.50 569273530. 576317712.53 03 53 7044182.50

569273530.

03

(1) Investment to Subsidiaries

Unit: RMB

Beginning Increase/decrease Ending Ending

Investee balance balance balance of

(carrying Additional Reduced Withdrawa Other (carrying depreciatio

162Changchai Company Limited Interim Report 2023

value) investment investment l of value) n reserve

depreciatio

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.Changzhou

Changchai

Horizon

0.000.007000000.

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 33520800 33520800

163Changchai Company Limited Interim Report 2023

Siyang .00 .00

Diesel

Engine

Manufacturi

ng Co. Ltd.Total 56927353 56927353 7000000.0.03 0.03 00

(2) Investment to Joint Ventures and Associated Enterprises

Unit: RMB

Increase/decrease

Gains Endin

Begin Adjustand Cash Endin g

ning ment Withdlosses bonus g

balanc of rawal

balanc

Invest Additi Reduc recogn Chang or

balanc

e other of

e of

ee onal ed ized es of profits

e

deprec

(carryi compr impair Otherinvest invest under other annou (carryi iation

ng ehensi mentment ment the equity nced ng

value) ve provis

reserv

equity to value)

incom ion e

metho issue

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

164Changchai Company Limited Interim Report 2023

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 1229806219.61 1080327550.17 1063899643.27 960873534.45

Other operations 15360013.94 12076793.29 14401885.93 10099571.18

Total 1245166233.55 1092404343.46 1078301529.20 970973105.63

Information on revenue:

Unit: RMB

Category of contracts Segment 1

Product Types

Of which:

Single-cylinder diesel engines 607361121.44

Multi-cylinder diesel engines 584029144.61

Other products 21859902.74

Fittings 16556050.82

Classified by business area

Of which:

Sales in domestic market 1046596379.76

Export sales 183209839.85

Total 1229806219.61

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 4322777.77 4099001.28

Dividend income from holding of other equity

instrument investment 9360000.00

Interest from holding of investments in debt

obligations 705680.77

Income from refinancing operations 14396.97 60799.49

Accounts receivable financing-discount interest of

-2310613.28-2338416.66

bank acceptance bills

Total 2732242.23 11181384.11

165Changchai Company Limited Interim Report 2023

XVI. Supplementary Materials

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

√ Applicable □ Not applicable

Unit: RMB

Item Amount Note

Due to the expropriation of houses on

Gain or loss on disposal of non-current assets 105395693.25 the state-owned land of ChangzhouWuxing Branch during the Reporting

Period

Government subsidies charged to current profit or

loss (exclusive of government subsidies given in

the Company’s ordinary course of business at 3299056.52

fixed quotas or amounts as per the government’s

uniform standards)

Gain/loss from change of fair value of trading Increase in the fair value of the stocks

financial assets and liabilities and investment of Jiangsu Liance Electromechanical

Technology Co. Ltd. Kailong High

gains from disposal of trading financial assets and Technology Co. Ltd. Guilin Stars

liabilities and derivative financial assets and 22587377.56 Science and Technology Co. Ltd. and

liabilities and available-for-sale financial assets Henan Lantian Gas Co. Ltd. held by

the Company’s wholly-owned

other than valid hedging related to the Company’s subsidiary Horizon Investment during

common businesses the Reporting Period

Other non-operating income and expenses other

-801809.16

than the above

Less: Income tax effects 4621569.20

Non-controlling interests effects -253031.71

Total 126111780.68 --

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

3.93%0.18700.1870

shareholders of the Company

166Changchai Company Limited Interim Report 2023

Net profit attributable to ordinary

shareholders of the Company after

0.17%0.00830.0083

deduction of non-recurring profit

or loss

3. Differences between Accounting Data under Domestic and Overseas Accounting Standards

(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International

and Chinese Accounting Standards

□ Applicable□ Not applicable

(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas and

Chinese Accounting Standards

□ Applicable□ Not applicable

The Board of Directors

Changchai Company Limited

22 August 2023

167