Changchai Company Limited Annual Report 2024 CHANGCHAI COMPANY LIMITED ANNUAL REPORT 2024 April 2025 1Changchai Company Limited Annual Report 2024 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 and other forward-looking statements mentioned in this Report shall NOT be considered as absolute promises of the Company to investors. Therefore investors are kindly reminded to pay attention to possible investment risks.The Company has described in detail the risks it might face in “XI Prospects” in “Part IIIManagement Discussion and Analysis” herein.The Board has approved a final dividend plan as follows: based on the 705692507 shares a cash dividend of RMB0.1 (tax inclusive) per 10 shares is to be distributed to the shareholders with no bonus issue from either profit or capital reserves. 2Changchai Company Limited Annual Report 2024 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 ........ 11 Part IV Corporate Governance ....................... 36 Part V Environmental and Social Responsibility ..... 56 Part VI Significant Events ..........................57 Part VII Share Changes and Shareholder Information...66 Part VIII Preference Shares .........................73 Part IX Bonds ...................................... 73 Part X Financial Statements ........................ 74 3Changchai Company Limited Annual Report 2024 Documents Available for Reference 1. The financial statements signed and sealed by the Company’s legal representative General Manager and head of the financial department. 2. The original copy of the Independent Auditor’s Report signed and sealed by the CPAs as well as sealed by the CPA firm. 3. The originals of all the Company’s documents and announcements which were disclosed on Securities Time and Ta Kung Pao (HK) (newspapers designated by the CSRC for information disclosure) during the Reporting Period. 4. The Annual Report disclosed in other securities markets. The above-mentioned documents available for reference are all kept in the Secretariat of the Board of Directors of the Company.This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions the Chinese version shall prevail. 4Changchai Company Limited Annual Report 2024 Definitions Term Definition Changchai Company Limited and its consolidated subsidiaries “Changchai” the “Company” or “we” 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 Equipment Co. 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.Expressed in the Chinese currency of Renminbi expressed in tens RMB RMB’0000 of thousands of Renminbi The “Reporting Period” or “CurrentThe period from 1 January 2024 to 31 December 2024Period” 5Changchai Company Limited Annual Report 2024 Part II Corporate Information and Key Financial Information I Corporate Information Stock name Changchai Changchai B Stock code 000570 200570 Stock exchange for stock listing Shenzhen Stock Exchange Company name in Chinese 常柴股份有限公司 Abbr. 苏常柴 Company name in English (if any) CHANGCHAI COMPANYLIMITED Abbr. (if any) CHANGCHAI CO.LTD.Legal representative Xie Guozhong Registered address 123 Huaide Middle Road Changzhou Jiangsu China Zip code 213002 Registered addresses previously N/A used Office address 123 Huaide Middle Road Changzhou Jiangsu China Zip code of office address 213002 Company website http://www.changchai.com.cn Email address cctqm@public.cz.js.cn II Contact Information Board Secretary Securities Representative Name He Jianjiang 123 Huaide Middle Road Address Changzhou Jiangsu China Tel. (86) 519-68683155 Fax (86) 519-86630954 Email address cchjj@changchai.com III Media for Information Disclosure and Place where this Report Is Lodged Stock exchange website where this Report is disclosed http://www.szse.cn Securities Times Media and website where this Report is disclosed http://www.cninfo.com.cn 6Changchai Company Limited Annual Report 2024 Place where this Report is lodged Board Secretariat of the Company IV Change to Company Registered Information Unified social credit code 91320400134792410W Change to principal activity of the No change Company since going public On 22 November 2018 the State-owned Assets Supervision and Administration Commission of Changzhou Municipal People’s Every change of controlling shareholder Government transferred its entire holdings of 170845236 shares since incorporation in the Company (a stake of 30.43%) to Changzhou Investment Group Co. Ltd. for no compensation which has thus become the controlling shareholder of the Company.V Other Information The independent audit firm hired by the Company: Name Zhongxinghua Certified Public Accountants (Special GeneralPartnership) Office address 20th Floor South Building Building 1 Yard 20 Lize RoadFengtai District Beijing China Accountants writing signatures Wang Jun Pang Daliang The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period: □ Applicable √ Not applicable The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period: □ Applicable √ Not applicable VI Key Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes √ No 2024 2023 2024-over-2023 change (%) 2022 Operating revenue (RMB) 2415869028.32 2155698787.49 12.07% 2182043095.61 Net profit attributable to the listed company’s 18489896.00 108495607.05 -82.96% 76684796.91 shareholders (RMB) Net profit attributable to the listed company’s shareholders before 52958683.45 -47466184.54 —— -73636511.02 exceptional gains and losses (RMB) 7Changchai Company Limited Annual Report 2024 Net cash generated from/used in operating -154292968.70 137189827.35 —— 364930277.84 activities (RMB) Basic earnings per share (RMB/share) 0.0262 0.1537 -82.95% 0.1087 Diluted earnings per share (RMB/share) 0.0262 0.1537 -82.95% 0.1087 Weighted average return on equity (%) 0.55% 3.19% -2.64% 2.51% Change of 31 31 December 31 December December 2024 31 December 2024 2023 over 31 December 2022 2023(%) Total assets (RMB) 5381900903.82 5159394958.92 4.31% 5219359853.42 Equity attributable to the listed company’s 3362683464.32 3398946911.23 -1.07% 3284710665.90 shareholders (RMB) Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and losses was negative for the last three accounting years and the latest independent auditor’s report indicated that there was uncertainty about the Company’s ability to continue as a going concern.□ Yes √ No Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and losses was negative.□ Yes √ No VII Accounting Data Differences under China’s Accounting Standards for Business Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Net Profit and Equity under CAS and IFRS □ Applicable √ Not applicable No difference for the Reporting Period. 2. Net Profit and Equity under CAS and Foreign Accounting Standards □ Applicable √ Not applicable No difference for the Reporting Period.VIII Key Financial Information by Quarter Unit: RMB Q1 Q2 Q3 Q4 Operating revenue 836479520.73 659429631.90 462057774.62 457902101.07 Net profit attributable to the 32382777.7017714877.45-3740213.65-27867545.50 listed company’s shareholders 8Changchai Company Limited Annual Report 2024 Net profit attributable to the listed company’s shareholders 39340826.6820505438.29-17209332.1610321750.64 before exceptional gains and losses Net cash generated from/used in -16877796.78-144936716.22-148985056.86156506601.16 operating activities Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what have been disclosed in the Company’s quarterly or interim reports.□ Yes √ No IX Exceptional Gains and Losses √ Applicable □ Not applicable Unit: RMB Item 2024 2023 2022 Note Gain or loss on disposal of non-current assets 304377.71105702551.01393161.73 (inclusive of impairment allowance write-offs) Government grants The governmentsubsidies included in recognized in current the current period's profit or loss (exclusive profit and loss of those that are closely amounted toRMB7553294.84.related to the Company's Deducting government normal business grants related to assets operations and given in transferred from 3477338.38 3009573.87 3774298.59 deferred income totaling accordance with defined RMB3409729.46 and criteria and in job retention subsidies compliance with of RMB666227.00. The government policies and government subsidiesincluded in the current have a continuing impact period's non recurring on the Company's profit profit and loss or loss) amounted toRMB3477338.38.Gain or loss on During the reporting fair-value changes in period the decrease was attributable to: financial assets and (i) the decline in fair liabilities held by a value of the Company's non-financial enterprise -58411420.91 74628323.54 162319373.53 equity holdings in as well as on disposal of Jiangsu Horizon New Energy Technology Co.financial assets and Ltd. and liabilities (exclusive of (ii) the drop in share the effective portion of prices of Jiangsu Liance 9Changchai Company Limited Annual Report 2024 hedges that arise in the Electro-Mechanical Company’s ordinary Technology Co. Ltd.and Kailong High-Tech course of business) Co. Ltd. held by its wholly-owned subsidiary Horizon Investment.Reversed portions of impairment allowances for receivables which are 1122559.94 tested individually for impairment Non-operating income and expense other than 7735818.14 21618.24 30000.00 the above Negative goodwill due to business combination not under common 267434.70 control Less: Income tax effects 1952095.73 -254543.89 1735346.51 Non-controlling interests 1904132.58 effects (net of tax) Total -9444181.95 27193473.11 19859063.58 Gain or loss on disposal of non-current assets (inclusive of impairment 361173.09 -47741.93 -24058.57 allowance write-offs) Government grants recognized in current profit or loss (exclusive of those that are closely related to the Company's normal business operations and given in accordance with defined -34468787.45 155961791.59 150321307.93 -- criteria and in compliance with government policies and have a continuing impact on the Company's profit or loss) 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. 10Changchai Company Limited Annual Report 2024 Part III Management Discussion and Analysis I Industry Overview for the Reporting Period We are a manufacturer of internal combustion engines and fittings in general equipment manufacturing. According to the classification of fuel used internal combustion engines are mainly divided into diesel engines and gasoline engines. Our diesel engines and gasoline engines are mainly used in non-road mobile machinery fields such as harvesters tractors plant protection machinery small engineering machinery and shipborne machinery. (1) Basic information on the industry The internal combustion engine is an important support for China's manufacturing industry security energy security and national defense security and an important basic industry of national economy and national defense construction. The internal combustion engine is the most power-dense thermally efficient and widely used heat engine power unit.In order to implement the national overall development strategy of energy conservation emission reduction transformation and upgrading the internal combustion engine industry and agricultural machinery industry will strengthen independent innovation and research and development accelerate the construction of a common basic technology platform optimize the construction of the upstream and downstream industry chain implement intelligent manufacturing and actively carry out international exchange and cooperation to accelerate the realization of industrial technology upgrading. (2) Development pattern and trend of the industry From a policy perspective there is a strong emphasis on prioritizing energy conservation and emissions reduction promoting green circular low-carbon and environmentally friendly practices. Energy efficiency emission reduction and reliability have become the main themes in the development of internal combustion engines. The industry is gradually transitioning toward greener and smarter solutions leveraging optimized combustion technology emission control and intelligent monitoring to minimize environmental impact and enhance operational efficiency.In recent years the government has introduced a series of policies to support the agricultural machinery market including purchase subsidies scrappage and renewal incentives and support for the agricultural equipment distribution sector. The 2025 Central No. 1 Document outlines goals for rural revitalization and building a strong agricultural sector calling for high-quality development of agricultural machinery accelerated R&D and adoption of advanced domestic farm equipment and the phasing out of outdated machinery. It also supports smart agriculture expanding the application of AI big data and low-altitude technologies. These initiatives present new growth opportunities for the agricultural machinery sector while demanding higher levels of technological innovation and industrial upgrading.In 2024 the single-cylinder engine market continued to decline due to weakening agricultural demand remaining on a downward trend. Meanwhile multi-cylinder engines compliant with China IV emissions standards have fully entered the market. The overall agricultural machinery market remained stable but low livestock agricultural product and grain prices reduced operational income and subsidy adjustments have dampened purchasing power leading to insufficient demand. While the traditional agricultural machinery industry is in decline emerging segments and new applications continue to grow with rising demand for mid-to-high-end products. Leading companies are strengthening their competitive advantages further consolidating market share and driving industry 11Changchai Company Limited Annual Report 2024 concentration.From an industry development standpoint technological innovation is fueling industrial upgrades while policy support is expanding market potential. With the rapid advancement of AI big data new energy and energy-saving technologies agricultural machinery is evolving from traditional mechanization toward high-end intelligent digital and green solutions ushering in a new wave of structural transformation. Agricultural machinery companies are entering a high-quality development phase accelerating the adoption of advanced technologies and products in energy efficiency smart manufacturing and productivity enhancement. Amid national strategic initiatives and accelerated industrial transformation new growth opportunities are emerging paving the way for expansive prospects in the agricultural machinery market.II Principal Activity of the Company in the Reporting Period 1. Principal Operations of the Company We mainly specialize in the R&D manufacture and sales of diesel engines under the brand "Changchai" and gasoline engines under the brand "Robin". Our products are mainly used in agricultural machinery small engineering machinery 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 produc Graphic display Product description features fields ts Our diesel engine products include single-cylinder diesel engines and High power low Agricultural multi-cylinder engines covering oil consumption machinery power range from 3kW to 129kW low noise construction Diesel and cylinder diameters from 65mm compact machinery engine to 135mm. Besides sale in domestic structure low generator sets market our diesel engines are sold emission good shipborne to Southeast Asia South America reliability machinery the Middle East and Africa.Our gasoline engines are mainly general-purpose small gasoline engines covering the power range Agricultural Simple structure Gasolin from 1.5kW to 9.0kW. Besides sale machinery good reliability e in domestic market our gasoline small easy engine engines are sold to Southeast Asia construction maintenance the Middle East Europe and machinery America Africa Japan and other countries and regions. 3. Major Business Models 12Changchai Company Limited Annual Report 2024 (1) R&D model We have established an innovative technology management system for internal combustion engine based on market demand and forward-looking technologies. Prior to the new products or new technologies development the marketing department first conducts market assessment and customer research and then initiates a project according to the forecasted market demand; the technology center conducts development according to the project materials and collects feedback information from the market and customers in real time during the development process to ensure technology leadership and product suitability. (2) Purchasing model We adopt the "purchase-to-order" purchasing model. The ERP system converts the sales orders the sales plan developed by the sales department and the production plan drawn up by the production department into the demand of parts needed and the purchasing department organizes the purchase according to such demand.Meanwhile the purchasing department makes a plan to guide parts procurement according to the sales department's sales plan and provide it to the supplier and urge the supplier to prepare for the goods. (3) Production model We adopt the "make-to-order" production management model. The sales department makes sales plans for different stages according to the orders in hand sales data in previous years market demand judgment and feedback of existing customers' purchasing intentions. The Company's production department makes the production plan according to the sales orders displayed in the ERP system the sales plan made by the sales department and the reserve inventory demand and organizes the production task in strict accordance with the plan.During the production process the quality assurance department arranges regular inspection to ensure the product quality. (4) Sale model We adopt the sales model of "direct selling + distribution" i.e. the direct selling model for the main engine factory and the distribution model for the individual circulation market represented by farmers and overseas market. 4. The Company's position in the market We mainly specialize in the R&D manufacture and sales of diesel engines under the brand "Changchai" and gasoline engines under the brand "Robin". Up to now we have successfully developed a number of advanced core technologies with independent intellectual property rights. In terms of diesel engine according to the statistics of China Internal Combustion Engine Industry Association (CICEIA) as the largest small- and medium-sized single-cylinder diesel engine manufacturer in the agricultural machinery industry of China we have maintained a high market share of single-cylinder engines and our market share of single-cylinder diesel engines of some power ranges has ranked first in China. For many years in the process of achieving steady economic development of the enterprise we developed in a sound manner and cultivated the "Changchai" brand a famous small diesel engine brand of China with independent intellectual property rights. 5. Key Performance Drivers (1) National policy driver In recent years the No. 1 Document issued by the central government has demonstrated the government's intention to attach greater importance to agriculture and strengthen agricultural development so as to promote the development of agriculture and rural economy and society and strengthen the support of agricultural technology and equipment. China's agricultural machinery and equipment industry layout has always been based on the main line of innovation focused on core technology strengthened the construction of innovation capacity and strove to make up for the shortcomings and weaknesses. The full implementation of National Emission Standard IV and the high-end and intelligent trends of agricultural machinery have let the agricultural machinery industry towards a 13Changchai Company Limited Annual Report 2024 new stage of development. The Action Plan for Promoting Large-scale Equipment Renewals and Consumer Goods Trade-ins in 2024 clarifies that old agricultural and industrial machinery will be renewed subsidy policies will be continuously implemented for agricultural machinery scrapping and renewal the scrapping and renewal of old agricultural machinery will be promoted and the structural adjustment of agricultural machinery will be accelerated. The acceleration of the replacement process of old equipment of engineering machinery has created a favorable policy environment for the application of internal combustion engines. (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 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 and commercial vehicles show excellent performance in power range reliability power per liter noise control and emission standards and have been recognized by customers. We maintained a long-term partnership with major customers with cumulative partnership time exceeding 15 years. Many main engine plant customers of the Company are well-known enterprises in the agricultural machinery industry with their market shares being at the forefront of the market.III Core Competitiveness Analysis 1. Advantages in Brand Changchai is a century-old national industrial enterprise and one of China’s earliest specialized manufacturers of internal combustion engines. The "Changchai" brand is recognized as a China Famous Trademark and its diesel engines are China Brand Name Products. The company has obtained certifications including ISO 9001 IATF 16949 (Quality Management System) ISO 14001 (Environmental Management System) and IATF 16949 (Automotive Product Quality Management System) as well as the national qualification for export product exemption from inspection.Changchai has been repeatedly listed among China’s Top 100 Machinery Industry Enterprises and China’s Industry Leading Enterprises. It has been honored with titles such as: * National Contract-Honoring & Creditworthy Enterprise 14Changchai Company Limited Annual Report 2024 * Leading Agricultural Machinery Components Enterprise in China * AAA Credit-Rated Agricultural Machinery Enterprise * Jiangsu Provincial Quality Management Excellence Award * Changzhou Mayor’s Quality Award * "Fine Farming Cup" Award for Top 10 Most Satisfactory After-Sales Service Brands (multiple years) During the reporting period the company was further recognized as: * National Product & Service Quality Integrity Demonstration Enterprise * China Agricultural Machinery Annual TOP50+ Supporting Supplier Award * Key Large-Scale Machinery Industry Enterprise * Outstanding Brand in Jiangsu Agricultural Equipment Industry * Jiangsu Contract-Honoring & Creditworthy Enterprise Over the years while achieving steady economic growth Changchai has cultivated and developed the "Changchai" brand—a renowned national brand in China’s small diesel engine industry with independent intellectual property rights and a strong reputation at home and abroad. 2. Technological Advantages Changchai operates a National-Level Technical Center a Postdoctoral Research Station and the Jiangsu Provincial Small- and Medium-Power Internal Combustion Engine Engineering Research Center. The company specializes in manufacturing single- and multi-cylinder diesel engines in the small-to-medium power range offering the most comprehensive product portfolio and broadest power coverage in China’s small diesel engine sector with independent IP rights for all core products.During the reporting period Changchai: * Won the First Prize for Outstanding Quality Management Achievements in China’s machinery industry (2024). * Obtained 24 new patents bringing its total to 172 valid patents (including 18 domestic and 3 international invention patents) by the end of 2024. 3. Marketing & Service Advantages Changchai adopts a market-centric approach continuously innovating its sales strategies. It implements an integrated "Five-in-One" management system covering: * Whole-machine sales * Spare parts supply * Warranty services * Payment collection * Customer feedback The company has built an extensive nationwide sales and service network including: * 24 sales service centers * 736 authorized service stations * Coverage extending to both urban and rural areas This network ranks among the most comprehensive in China’s small-to-medium diesel engine industry. Through its Changchai Customer Call Center the company delivers proactive rapid convenient and precise pre-sales in-sales and after-sales services.To comply with China Non-Road Stage IV emission standards and enhance after-sales precision Changchai has 15Changchai Company Limited Annual Report 2024 developed a customized service monitoring platform further strengthening its competitive edge in customer support.IV Core Business Analysis 1. Overview In 2024 the global economic situation continued to decline with heightened international geopolitical tensions and complex global trade relations. Domestically China's economy maintained stable growth but structural supply-demand imbalances and insufficient effective demand persisted. With the full marketization of Non-Road China Stage IV products and factors such as low grain prices and subsidy adjustments market demand decreased and competition intensified. While the overall situation remained stable minor fluctuations were observed. The traditional agricultural machinery industry operated at a slower pace while emerging segments and new applications continued to grow driving the industry toward high-quality development with broad market prospects.Adhering to its development strategy and annual operational objectives the company actively adapted to market conditions. Through the united efforts of all employees it achieved steady orderly and healthy development maintaining its leading position in the small agricultural diesel engine industry. During the reporting period the company sold 604600 diesel engines gasoline engines and generator sets generating RMB 2.416 billion in revenue representing a 12.07% year-on-year increase.In product R&D and supporting applications the company continuously optimized its core products based on market demand strengthening the integration of Non-Road China Stage IV multi-cylinder engines with new OEM equipment. The installation volume of lightweight diesel engines increased significantly year-on-year. The company accelerated product development and expanded its product line speeding up the mass production of China Stage IV single-cylinder diesel engines which entered the market in bulk and gained user recognition.Phased progress was made in the development and supporting work for multi-cylinder products. Meanwhile the company increased investment in technological reserves steadily advancing hybrid power R&D projects. The D25 outboard engine obtained ship inspection certification and completed production and supply chain integration.In sales and services the domestic market adopted multiple measures to consolidate its main markets and strengthen competitive products across various sectors solidifying the company's share in the traditional agricultural machinery market while accelerating expansion into new fields such as construction crop protection electromechanical low-altitude and marine applications. The international market optimized its layout significantly increasing sales in core and emerging markets. Leveraging synergies between domestic and international markets the company refined its customer network improved service resource allocation and coordination and further enhanced service quality. It also expanded new media applications to boost marketing effectiveness and customer engagement through multiple channels.In quality management the company implemented measures such as component upgrades and production process improvements to address market quality issues. It strengthened technical and quality exchanges with suppliers and deepened quality engineering initiatives effectively improving overall quality standards. The company continued its supply chain assurance efforts focusing on strengthening supplementing and extending the supply chain to build a stable efficient and reliable supply system. By optimizing production processes and management models it reduced production and operational costs while continuously improving efficiency. Safety training risk identification hazard rectification emergency drills and occupational health measures were incorporated into 16Changchai Company Limited Annual Report 2024 routine institutional management and the environmental management system operated in an orderly and controlled manner. During the reporting period the company passed external audits for ISO 9001 and IATF 16949 quality management systems.In internal management the company further strengthened oversight of subsidiaries comprehensively improved its internal control system and implemented multiple cost-reduction and efficiency-boosting measures to enhance operational performance and governance. In talent development it intensified cadre training and rejuvenation efforts refined performance evaluation and incentive mechanisms and motivated employees to boost corporate vitality. Safety training fire drills and other activities were conducted with increased emphasis on inspections and hazard rectification to ensure a safe foundation for stable and healthy development. Various cultural and sports activities were organized to create a secure stable and cohesive work environment and corporate culture.Externally the company strengthened its corporate image and product promotion to enhance brand influence.During the reporting period wholly-owned subsidiary Changchai Robin absorbed and merged with wholly-owned subsidiary Horizon Agricultural Equipment inheriting all assets liabilities business operations and other rights and obligations. By February 2025 Horizon Agricultural Equipment's legal entity status was deregistered completing the merger. Additionally the company increased capital in wholly-owned subsidiary Changchai Machinery by RMB 291.8359 million through a "debt-to-capital reserve conversion" with the entire amount recorded as capital surplus. 2. Revenue and Cost Analysis (1) Breakdown of Operating Revenue Unit: RMB 20242023 As % of total As % of Change (%) Operating revenue operating Operating revenue total revenue (%) operatingrevenue (%) Total 2415869028.32 100% 2155698787.49 100% 12.07% By operating division Internal combustion 2371931691.41 98.18% 2110376920.43 97.90% 12.39% engines Other 43937336.91 1.82% 45321867.06 2.10% -3.05% By product category Diesel engines 2243543689.25 92.87% 1908040669.16 88.51% 17.58% Gasoline 122859838.38 5.09% engines 153677944.53 7.13% -20.05% Other 49465500.69 2.05% 93980173.80 4.36% -47.37% By operating segment Domestic 2059623002.73 85.25% 1778018604.18 82.48% 15.84% Overseas 356246025.59 14.75% 377680183.31 17.52% -5.68% By marketing model 17Changchai Company Limited Annual Report 2024 Distribution 961865962.18 39.81% 754228779.91 34.99% 27.53% Direct sales 1454003066.14 60.19% 1401470007.58 65.01% 3.75% (2) Operating Division Product Category Operating Segment or Marketing Model Contributing over 10% of Operating Revenue or Operating Profit □Applicable √ Not applicable Unit: RMB YoY YoY Operating Gros change in YoY change in Cost of sales s profit operating change in grossrevenue margin revenue cost of profit (%) sales (%) margin(%) By operating division Internal combustion 2371931691.41 2084092192.19 12.14% 12.39% 12.12% 0.21% engines By product category Diesel engines 2243543689.25 1937324581.91 13.65% 17.58% 13.40% 3.18% Gasoline engines 122859838.38 108205868.99 11.93% -20.05% -15.52% -4.73% By operating segment Domestic 2059623002.73 1780283448.38 13.56% 15.84% 17.02% -0.87% Overseas 356246025.59 339017017.69 4.84% -5.68% -6.58% 0.93% By marketing model Distribution 961865962.18 837305962.65 12.95% 27.53% 24.02% 2.47% Direct sales 1454003066.14 1281994503.42 11.83% 3.75% 6.03% -1.89% Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period: □ Applicable √ Not applicable (3) Whether Revenue from Physical Sales Is Higher than Service Revenue √ Yes □ No Operating division Item Unit 2024 2023 Change (%) Unit sales Unit 477592 478280 -0.14% Diesel engines Output Unit 473719 513177 -7.69% Inventory Unit 95891 99764 -3.88% Any over 30% YoYmovements in the data above and why: □ Applicable √ Not applicable 18Changchai Company Limited Annual Report 2024 (4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period □ Applicable √ Not applicable (5) Breakdown of Cost of Sales Unit: RMB 20242023 Product As % As %Item Changecategory Cost of sales of total of total (%)cost of Cost of sales cost of sales (%) sales (%) Raw materials 1594081880.39 77.93% 1458317249.89 77.39% 9.31% Diesel and gasoline Labor cost 230255452.63 11.26% 225056024.38 11.94% 2.31% engines Depreciation 58977062.10 2.88% 58676870.45 3.11% 0.51% Energy 25209330.48 1.23% 24344615.38 1.29% 3.55% (6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period □ Yes √ No (7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period □ Applicable √ Not applicable (8) Major Customers and Suppliers Major customers: Total sales to top five customers (RMB) 1177094563.31 Total sales to top five customers as % of total sales of the Reporting Period (%) 48.72% Total sales to related parties among top five customers as % of total sales of the Reporting 0.00% Period (%) Information about top five customers: Sales revenue contributed for the As % of total sales revenue No. Customer Reporting Period (RMB) (%) 1 Customer A 694759928.51 28.76% 2 Customer B 208352865.36 8.62% 3 Customer C 127606552.93 5.28% 4 Customer D 78389441.53 3.24% 5 Customer E 67985774.98 2.81% 19Changchai Company Limited Annual Report 2024 Total -- 1177094563.31 48.72% Other information about major customers: □ Applicable √ Not applicable Major suppliers: Total purchases from top five suppliers (RMB) 398156825.26 Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) 22.79% Total purchases from related parties among top five suppliers as % of total purchases of the 0.00% Reporting Period (%) Information about top five suppliers: Purchase in the Reporting Period No. Supplier As % of total purchases (%) (RMB) 1 Supplier A 128079527.00 7.33% 2 Supplier B 103700959.42 5.94% 3 Supplier C 70755470.41 4.05% 4 Supplier D 53533925.01 3.06% 5 Supplier E 42086943.42 2.41% Total -- 398156825.26 22.79% Other information about major suppliers: □ Applicable √ Not applicable 3. Expense Unit: RMB 2024 2023 Change (%) Reason for anysignificant change Selling expense 60617254.43 54069774.62 12.11% Administrative expense 115466341.90 123981333.99 -6.87% This growth mainly resulted from Finance costs -23423038.69 -11284676.92 —— increased interest income and exchange gains.R&D expenses 83401477.60 90339104.33 -7.68% 4. R&D Investments √ Applicable □ Not applicable Major Progre Expected impact on the Purpose Specific objectives R&D project ss Company 20Changchai Company Limited Annual Report 2024 Post-implementation the 4H11V16 Develop Optimize diesel engine upgraded diesel engine will Diesel higher-performanc In performance to meet comply with Non-Road China Engine e diesel engines progre Non-Road China Stage IV Stage IV emission standards Development that meet emission ss emission standards. with broad and promising market Project requirements application prospects.Upon project completion the Develop Enhance diesel engine 4H13V16 product will meet Non-Road higher-performanc performance to effectively Diesel In China Stage IV requirements e diesel engines reduce harmful emissions Engine progre advancing the company's compliant with and promote energy Development ss non-road product technology emission conservation and emission Project maturity while demonstrating regulations reduction.excellent market potential.After the implementation of the Optimize and 4G36V16A Improve product project the product will meet upgrade diesel Diesel In performance reach the market demand and complies engine Engine progre advanced level of similar with the Non-Road China Stage performance to Development ss foreign products and meet IV emission standards with meet market Project emission requirements. broad market prospects in the demand future. 4G33TC Develop Diesel Refine diesel engine Upon project completion the higher-performanc Engine In performance to achieve product will meet the e energy-saving Matching progre high-efficiency output with requirements of Non-Road China and Tractor ss energy-saving and Stage IV emission standards and emission-reducing Development emission-reducing benefits. market demand.diesel engines Project Develop L22 China Non-Road China Upon project completion the Improve product Stage IV Stage IV product will meet the In performance reach the Diesel mechanical pump requirements of Non-Road China progre advanced level of similar Engine engines that meet Stage IV emission standards the ss foreign products and meet Development emission product has broad market emission requirements.Project requirements and prospects.market demand L24 Common Develop Upgrade engine Upon project completion the Rail China higher-performanc performance to achieve product will meet the In Stage IV e diesel engines best-in-class domestic requirements of Non-Road China progre Diesel with energy reliability while meeting Stage IV emission standards and ss Engine conservation and Non-Road China Stage IV market demand the product has Optimization emission reduction emission requirements. broad market prospects.Project 390 Develop In Improve product After the implementation of the 21Changchai Company Limited Annual Report 2024 Turbocharged higher-performanc progre performance reach the project the product will meet the Diesel e diesel engines ss advanced level of similar emission requirements have a Engine with energy foreign products and meet clear target market positioning Development conservation and emission requirements. and broad market prospects.emission reduction Develop 4L88 China high-efficiency Post-project products will Stage IV environmentally-fr In Improve product maintain existing OEM Diesel iendly diesel progre performance and meet application compatibility while Engine engines meeting ss emission requirements.expanding market opportunities.Development emission requirements Develop Improve product higher-performanc After the implementation of the Mining performance meet non e mining pickup In project the company's product Pickup Truck road national emission engines with progre line will be further expanded to Engine regulations and related energy ss meet emission requirements and Development requirements and achieve conservation and have broad market prospects leading domestic indicators.emission reduction 178FA Develop After the implementation of the Improve product Air-Cooled high-efficiency project the product will meet In performance reach the China Stage energy-saving market demand comply with progre advanced level of similar IV Diesel diesel engines energy-saving and environmental ss foreign products and meet Engine compliant with protection policies and have emission requirements.Development emission standards broad market prospects.L12 Develop Water-Cooled high-efficiency Enhance product reliability Implementation will expand In China Stage eco-friendly and and energy efficiency while product applications enrich progre IV Diesel energy-efficient meeting Stage IV emission technical reserves and meet both ss Engine single-cylinder regulations. regulatory and market demands.Development diesel engines Upon project completion the Develop Improve product 3M82 Diesel product will meet the higher-performanc performance reach the Engine Compl requirements of Non-Road China e diesel engines advanced level of similar Development eted Stage IV emission standards the satisfying foreign products and meet Project product has broad market emission standards emission requirements.prospects.Improve product Upon project completion the Development Development of performance metrics products will meet market of 173FA high-efficiency achieve energy-saving and demand comply with Air-Cooled energy-saving Compl emission reduction and energy-saving and environmental China IV diesel engines that eted comply with the Non-Road protection policies and Diesel meet emission China IV emission demonstrate broad market Engine requirements standards. prospects. 22Changchai Company Limited Annual Report 2024 Mechanical Develop Pump higher-performanc Single-Cylin e mechanical Upon project completion the der Diesel pump Improve power product will meet the Engine single-cylinder Compl performance fuel economy requirements of Non-Road China Non-Road diesel engines eted service life and Non-Road Stage IV emission standards and China Stage meeting Non-Road China Stage IV compliance.market demand.IV China Stage IV Development emission Project requirements Develop Elevate all performance Upgraded engines will achieve 4G29 Diesel higher-performanc metrics to domestic Non-Road China Stage IV Engine e diesel engines Compl advanced levels while certification advancing the Development conforming to eted satisfying Non-Road China company's technological Project emission Stage IV standards. capabilities in this sector.regulations Motorcycle Develop Tricycle Improve product Upon project completion the lightweight Specialized performance reach the product will enrich the single-cylinder Compl Diesel advanced level of similar company's products further water-cooled eted Engine foreign products and meet explore the power market and high-speed diesel Development emission requirements. meet emission regulations.engines Project Details about R&D investments: 2024 2023 Change (%) Number of R&D personnel 214 225 -4.89% R&D personnel as % of total employees 8.84% 8.74% 0.10% Educational background of R&D personnel Bachelor’s degree 91 96 -5.21% Master’s degree 9 6 50.00% Age structure of R&D personnel Below 30 17 31 -45.16% 30~4081775.19% Details about R&D investments: 2024 2023 Change (%) R&D investments (RMB) 83401477.60 90339104.33 -7.68% R&D investments as % of operating revenue 3.45% 4.19% -0.74% Capitalized R&D investments (RMB) 0.00 0.00 —— 23Changchai Company Limited Annual Report 2024 Capitalized R&D investments as % of total R&D investments 0.00% 0.00% —— Reasons for any significant change in the composition of R&D personnel and the impact: □ Applicable √ Not applicable Reasons for any significant YoY change in the percentage of R&D expense in operating revenue: □ Applicable √ Not applicable Reasons for any sharp variation in the percentage of capitalized R&D expense and rationale: □ Applicable √ Not applicable 5. Cash Flows Unit: RMB Item 2024 2023 Change (%) Subtotal of cash generated from operating activities 2325383619.26 2169305862.90 7.19% Subtotal of cash used in operating activities 2479676587.96 2032116035.55 22.02% Net cash generated from/used in operating activities -154292968.70 137189827.35 —— Subtotal of cash generated from investing activities 1206915907.12 1197150475.33 0.82% Subtotal of cash used in investing activities 1198878172.96 1044165754.31 14.82% Net cash generated from/used in investing activities 8037734.16 152984721.02 -94.75% Subtotal of cash generated from financing activities 94412090.20 0.00 —— Subtotal of cash used in financing activities 33168340.22 131365400.07 -74.75% Net cash generated from/used in financing activities 61243749.98 -131365400.07 —— Net increase in cash and cash equivalents -78947638.62 161278557.41 —— Explanation of why any of the data above varies significantly: √Applicable□ Not applicable The significant year-on-year fluctuation in net cash flow from operating activities was primarily attributable to extended payment terms granted to most of the Company's multi-cylinder engine customers (OEM suppliers) coupled with increased market expansion expenditures for emission-standard upgraded products resulting in slower cash collection and relatively higher procurement payments to suppliers during the reporting period.The material change in net cash flow from investing activities was mainly due to increased investments in wealth management products during the reporting period.The substantial variation in net cash flow from financing activities principally arose from the discounting of bank acceptance bills with lower credit ratings during the reporting period as no such activities were conducted in the previous period.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period 24Changchai Company Limited Annual Report 2024 √Applicable□ Not applicable The significant variance between the Company's net cash flow from operating activities and its net profit for the reporting period was primarily attributable to (i) the impact of fair value changes in financial assets held by the Company on current-period earnings and (ii) increased procurement payments made to suppliers during the reporting period.V Analysis of Non-Core Businesses √Applicable□ Not applicable Unit: RMB Amount As % of Source Recurrentgross profit or not The increase was primarily attributable Return on investment 24265851.27 158.01% to dividends received from equity hol dings and investment income generated Yes from cash management activities.During the reporting period the fair v alue of the Company's equity interest i n Jiangsu Horizon New Energy Techn Gains/losses on ology Co. Ltd. declined and the shar changes in fair -65938196.89 -429.38% e prices of Jiangsu Liance Electromec value hanical Technology Co. Ltd. and Kail No ong High-Tech Co. Ltd. held by who lly-owned subsidiary Horizon Investme nt decreased compared to the beginnin g of the period.Asset impairment loss -14403371.83 -93.79% No Non-operating income 2838603.42 18.48% No Non-operating expense 886507.69 5.77% No Asset disposal income 304377.71 1.98% No VI Analysis of Assets and Liabilities 1. Significant Changes in Asset Composition Unit: RMB 31 December 2024 1 January 2024 Change As % of As % of in Reason for any Amount total Amount total percent significant change assets assets age (%) Cash and Cash Equivalents 1063700492.59 19.76% 1083867966.87 21.01% -1.25% 25Changchai Company Limited Annual Report 2024 The primary reas ons were that mo st of the Compan y's multi-cylinder engine customers are OEM supplier s with relatively l onger payment ter ms. Meanwhile d Accounts ue to product emi receivable 444254240.02 8.25% 316543159.91 6.14% 2.11% ssion upgrades the Company intens ified market expa nsion efforts duri ng the reporting period and approp riately extended c redit terms result ing in a significa nt increase in acc ounts receivable.Inventories 819201998.42 15.22% 789220185.68 15.30% -0.08% Investment property 37740844.55 0.70% 39837558.11 0.77% -0.07% Fixed assets 615414505.40 11.43% 675596920.95 13.09% -1.66% Construction in progress 3376866.69 0.06% 4275622.18 0.08% -0.02% The variance was principally attributable to the Company's discounting of bank acceptance Short-term bills with lower borrowings 94471787.41 1.76% 0.00 0.00% 1.76% credit ratings during the reporting period as no such transactions were conducted in the previous period.Contract liabilities 31640879.59 0.59% 33352877.66 0.65% -0.06% Indicate whether overseas assets take up a high percentage in total assets.□ Applicable √ Not applicable 2. Assets and Liabilities at Fair Value √ Applicable □ Not applicable 26Changchai Company Limited Annual Report 2024 Unit: RMB Gain/loss on Cumulati Impairme fair-value ve nt Purchase Sold in Item Beginnin changes fair-value allowance d in the the Other Endingg amount in the changes for the Reporting Reporting change amount Reporting charged Reporting Period Period Period to equity Period Financial assets 1. Held-for-t rading financial assets 2256414 -330239 1179550 1068500 3036674 (derivativ 0.00 0.00 0.00 e 29.94 70.29 000.00 000.00 59.65 financial assets exclusive ) 2. Investme nt in 9694880 7565500 9411200 other 0.00 0.00 0.00 0.00 0.00 equity 25.67 58.72 58.72 instrumen ts Subtotal of 1195129 -330239 7565500 1179550 1068500 1244787 financial 0.00 0.00455.61 70.29 58.72 000.00 000.00 518.37 assets 4536880-3504533778692 Other 0.00 0.00 0.00 0.00 0.00 86.5559.3117.49 Total of 1648817 -680693 7565500 1179550 1068500 1622656 above 0.00 0.00542.16 29.60 58.72 000.00 000.00 735.86 Financial liabilities 0.00 0.00 Contents of other change: N/A Significant changes to the measurement attributes of the major assets in the Reporting Period: □ Yes √ No 3. Restricted Asset Rights as at the Period-End Unit: RMB Item At the period-end Reason for restriction Bank acceptance bill guarantee deposits、Letter of guarantee Monetary assets 171018607.75 deposits、Performance bond deposits、Term deposits and acc rued interest Notes receivable 70878200.00 Payment obligations for undiscounted but discounted bills 27Changchai Company Limited Annual Report 2024 Notes receivable 163858135.20 Payment obligations for undiscounted but transferred bills VII Investments Made 1. Total Investment Amount √ Applicable □ Not applicable Investments made in Reporting Investments made in same period Period (RMB) of last year (RMB) +/-% 291835919.917170000.003970.24% The Company increased its capital contribution in its wholly-owned subsidiary Jiangsu Changchai Machinery Co.Ltd. by RMB291835919.91 (including unpaid loan interest of RMB4958090.18) through a "debt-to-capital reserve" arrangement with the entire amount being recorded as capital reserve. 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 Acco Begi on ted Purc Gain/ Initia untin nnin fair fair hase Sold loss Endi Varie Code Nam l g g value value d in in in ng Acco Fund ty of of e of the secur secur secur inves meas carry chan chan the the carry untin ing tmen urem ing ges ges Repo Repo Repo ing g sourc ity ity ity t cost ent amou in the recor rting rting meth Repo ded Perio Perio rting amou title e nt Perio ntod rting in d d d Perio equit d y Inves Dom estic/ Foto 4178 Fair 320362 3944 tmen Self- 6001 n value 911 695forei 4000 8500 0.00 0.00 0.00 0.00 t in fund gn 66 Motor .00 meth 000. 000. 0.00 other ed stock od 00 00 equit y 28Changchai Company Limited Annual Report 2024 instr umen ts Inves tmen t in Dom Bank Fair 187 181 229estic/ 1565 other Self-6009 of 4278 value 002 630 788forei 19 Jiang 6000 meth 4600 0.00 0.00 0.00 equit fundgn .00 000. 80.0 000.0.00 y ed stock su od 00 0 00 instr umen ts Held -for-t Dom Kailo 115 radin estic/ ng3009 High 2000 Fair 1811 -654 -654 Self- 701 g forei 12 Tech 1268 value meth 986 9711 0.00 0.00 0.00 971 fundgn .00 50.0 finannolo od 1.00 .00 1.00 edstock gy 0 cial asset s Held -for-t Dom Lian -238 407 radin estic/ ce 7200 Fair 6687 -261 Self-644 088 g forei 688113 Tech 000.value 360 6480 0.00 0.00 0.00 fund gn nolo 00 meth 13.5 00.0 finan0.00 0.00 ed stock gy od 9 0 cial asset s Held -for-t Dom Fair radinestic/ Lanti 585 320 Self-6053 1607 value 3015 1848 gforei 68 an 0.00 0.00 0.00 77.3 040. fundgn Gas 44.76 meth 60.00 0.00 finanod 6 00 edstock cial asset s 507-121645-1219 11196363-326 9139240812467. Total 3201 -- 2602 9603 0.00 0.00 23 -- 000.67.2990. 2.761.001.00 00300 29Changchai Company Limited Annual Report 2024 (2) Investments in Derivative Financial Instruments □ Applicable √ Not applicable No such cases in the Reporting Period. 5. Use of Raised Funds □ Applicable √ Not applicable During the reporting period the Company did not have any utilization of raised capital.VIII Sale of Major Assets and Equity Interests 1. Sale of Major Assets □ Applicable √ Not applicable No such cases in the Reporting Period. 2. Sale of Major Equity Interests □ Applicable √ Not applicable IX Major Subsidiaries √ Applicable □ Not applicable Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit: Unit: RMB Relatio nship with Principal Registere Total Net Operatin Operating Net Name the activity d capital assets assets g revenue profit profit Compa ny Production Changchai Subsidi of diesel 550630 167733 673293 197317 -993969 -962465 Benniu ary engine 00.00 258.21 03.86 344.78 8.59 9.68 accessories Diesel Changchai Subsidi 850000 664530 511181 407382 827260.0 679056.engine Wanzhou ary 00.00 54.91 30.95 84.52 3 41 assembly Horizon Subsidi External 400000 762802 692999 -300415 -2232350.00 Investment ary investment 00.00 78.94 25.93 48.20 11.82 30Changchai Company Limited Annual Report 2024 and consulting agricultural Horizon machinery Agricultura Subsidi product of 100000 657162. -162455 201690 -483407. -242516.l ary rice 00.00 26 94.49 6.93 44 86 Equipment transplanter etc.Gasoline Changchai Subsidi 372500 124877 106160 127473 6480470 592100 engines Robin ary 00.00 704.42 750.36 497.67 .70 4.60 assembly Internal combustion Changchai Subsidi 300000 807891 510083 863773 721291.8 102653.engine and Machinery ary 000.00 051.24 511.24 492.51 2 19 related accessories Xingsheng Real estate Real Estate Subsidi 100000 356146 196799 310220 526235.3 508897.manageme Manageme ary 0.00 1.17 9.30 9.12 2 27 nt service nt Manufactur ing and Zhenjiang Subsidi marketing 200000 127544 110945 694790 1292671 114824 Siyang ary of diesel 0.00 513.83 413.11 46.40 7.65 43.77 engines for ships Subsidiaries obtained or disposed of in the Reporting Period: □ Applicable √ Not applicable Other information about principal subsidiaries and joint stock companies: 1. Equity Ownership and Control of Zhenjiang Siyang As of the end of the reporting period the Company holds a 49% equity interest in Zhenjiang Siyang making it the largest shareholder. Given that other shareholders are highly dispersed and considering that 4 out of 7 board seats (including the Chairman) are appointed by the Company the Company exercises actual control over Zhenjiang Siyang. Accordingly Zhenjiang Siyang meets the criteria for consolidation under applicable accounting standards. 2. Acquisition of Remaining Stake in Horizon Agricultural Equipment (Horizon Agricultural Equipment) In June 2024 the Company acquired the remaining 25% equity interest in Horizon Agricultural Equipment from Horizon Investment. As of the reporting period end the Company now holds 100% Ownership of Horizon Agricultural Equipment. 31Changchai Company Limited Annual Report 2024 X Structured Bodies Controlled by the Company □ Applicable √ Not applicable XI Prospects 1. Development strategy of the Company The Company’s development strategy is to base on farm machinery become stronger in the engine business explore more markets and develop in a scientific way.The comprehensive national policies on rural revitalization and accelerated development of an agricultural powerhouse will generate significant positive impacts on the industry. The Company will fully capitalize on policy dividends from the government's strong support for agricultural production and farm machinery development. We will steadfastly advance: (1) Accelerating Technological Upgrades and Market Expansion for Existing Products First the Company will prioritize the optimization and enhancement of its core products. 1）By aligning with market demand and leveraging the Company's competitive products and technologies we will stabilize supply share with major OEM partners for single-cylinder engines increase market penetration in key industrial clusters tap into high-potential sales regions and consolidate our industry leadership position. For multi-cylinder engines we will accelerate product optimization and upgrades expedite R&D and commercialization of policy-compliant new products enhance profitability of existing products expand product line offerings strengthen supporting services in core market segments and increase market share in specialized applications. 2）To meet overseas market demands we will innovatively upgrade existing product technologies and develop export-oriented models with enhanced reliability and superior performance. Leveraging OEM partners' global distribution channels we will expand our international market presence. Through optimized resource allocation and synergies we aim to improve overall export efficiency enhance market service quality and actively increase customer satisfaction.Second we will focus on value chain extension by developing premium product offerings. 1）The Company will continue to optimize its power unit products and distribution network pursuing premium and specialized development in niche markets to move up the value chain. This includes expanding applications in specialized vehicles UAV crop protection stationary power and telecommunications markets. Our independently developed integrated UAV charging system has been launched with positive market feedback. 2）Aligned with the industry trends of electrification connectivity and intelligently in agricultural machinery the Company is integrating advanced technologies including Internet of Things (IoT) big data analytics artificial intelligence and new materials into product development. These innovations enhance intelligent control systems real-time monitoring capabilities and big data collection/analysis functions in diesel engines thereby increasing product value-added features and better meeting end-user requirements.Third we will extend its market reach toward end-user applications. The Company's core products consist of small-to-medium power diesel engines and general-purpose gasoline engines primarily serving off-road applications including agricultural machinery crop protection equipment construction machinery and marine engines. We are intensifying R&D efforts and market penetration in generator sets outboard motors cold chain systems fishing vessels and telecommunication tower applications.Through our subsidiary Zhenjiang Siyang we continue to optimize our marine engine business structure and 32Changchai Company Limited Annual Report 2024 strengthen collaborative partnerships to ensure sustainable development. Ongoing improvements to our outboard motor power platforms include: * Establishing comprehensive domestic and international sales networks * Continuous product optimization based on market demand and feedback * Expanding product line offerings * Enhancing overall business structure. (2) Driving Industrial Transformation Through New Energy Integration While the rapid advancement of new energy technologies has impacted traditional power systems in certain applications creating substitution risks long-term opportunities for conventional engines remain. Leveraging our expertise in light-duty power solutions we are: * Expanding New Energy Product Lines: Developing hybrid power systems and advancing their integration across multiple downstream applications * Accelerating Alternative Fuel R&D: Intensifying efforts in hydrogen combustion technology and other clean energy solutions * Strengthening Industry Collaboration: Building strategic partnerships with green technology providers to enhance market penetration 2. 2025 Operational Plan Strengthen our position in the traditional agricultural machinery market while expanding into emerging power segments. We will enhance product quality to solidify our core competitiveness drive continuous innovation to boost vitality implement lean management to improve efficiency and optimize resource allocation for high-performance operations. The Company targets RMB 2.4 billion in sales revenue for 2025 including USD 55 million in export revenue. 3. Potential Risks and the Company's Countermeasures (1) Market Risks The agricultural machinery industry has entered a period of deep adjustment dominated by optimization and upgrading. Due to the impact of national equipment purchase subsidy policies industrial development policies and environmental regulations the traditional product market is declining competition in the existing market is intensifying and the industry is moving toward high-end and intelligent development. Most companies are continuously strengthening product R&D and optimization in line with market demand increasing market maintenance and expansion efforts. With the full market entry of China IV emission standard products industry competition has further intensified.Countermeasures: First closely follow policy guidance optimize product structure adhere to the principle of profitable sales and strengthen both domestic and international markets. Second focus on market demand accelerate product R&D and innovation consolidate traditional supporting fields make further breakthroughs in advantageous areas and expand product applications in high-end industrial chain markets. Third enhance innovation awareness actively promote the application of advanced technologies such as internet big data artificial intelligence and new materials accelerate the development of smart terminals and hybrid power systems and build new competitive advantages. Fourth aim for quality improvement and efficiency enhancement strengthen internal and external quality responsibilities and improve corporate governance and operational efficiency. Fifth emphasize talent development use human resources as support and promote efficient internal collaboration. (2) Industry Risks 33Changchai Company Limited Annual Report 2024 The advancement of new energy application technologies and related policies has prompted enterprises to accelerate research application and market deployment in new energy power systems which has affected the market share of diesel engines in certain supporting fields to some extent. Currently new energy power systems still face challenges such as high costs and complex operating environments in agricultural machinery applications.However with continuous breakthroughs in new energy technologies some application scenarios of non-road diesel engines may be replaced by new energy power systems.Countermeasures: First develop products that comply with national energy conservation and emission reduction policies optimize and upgrade product lines according to market demand strengthen the application of artificial intelligence and new materials enhance product added value and competitiveness and consolidate market advantages. Second accelerate the research and development of new energy power systems leverage the company's advantages in light-duty power systems to expand new energy hybrid products and supporting fields and promote sustainable corporate development. Third maintain coordinated development between product operations and capital operations focus on emerging industries and utilize capital markets to accelerate the pace of external expansion. (3) International Trade Risks In recent years the global landscape has become increasingly complex with frequent geopolitical conflicts and international trade disputes. These developments have severely impacted regional politics and security global economic recovery food and energy security and ecological environments leading to varying degrees of influence on foreign trade policies worldwide. Significant changes in the political stability or trade policies of overseas markets could substantially affect our export sales.Countermeasures: First enhance collaborative service capabilities through complementary sharing of internal/external resources information and products to drive incremental market demand and improve overall trade efficiency. Second innovate and adapt products according to overseas market needs expanding promotion of high-performance products and new application solutions. Third cultivate key markets by leveraging overseas distribution channels of downstream OEMs strengthening local service personnel training service capacity building and authorized overseas service stations. (4) Exchange Rate Risks Recent years have seen growing challenges and uncertainties in the global political and economic environment with increased volatility in exchange rates. As our products are widely exported currency fluctuations may adversely affect sales.Countermeasures: First closely monitor exchange rate movements selecting optimal currencies for pricing/settlement while mitigating risks through payment method adjustments and export credit insurance.Second implement timely measures like product price adjustments and revised payment terms to address exchange rate and material cost fluctuations. Third enhance product and service competitiveness to reduce the impact of currency volatility on sales. (5) Raw Material Price Volatility Risk The market prices of raw materials are subject to fluctuations due to macroeconomic conditions production capacity and demand changes. Price volatility of key inputs such as steel and pig iron will increase our manufacturing costs and impact corporate profitability.Countermeasures: First we will strengthen internal management through technological improvements and enhanced cost control measures to optimize workflows and improve production efficiency. Second we will continue implementing supply assurance initiatives to build a stable efficient and reliable supply system. Third we will closely monitor market trends and strengthen inventory management to mitigate the adverse impacts of 34Changchai Company Limited Annual Report 2024 raw material price fluctuations. (6) Talent Risk Talent is one of the key factors for the Company's development. We require talented personnel to enhance operational efficiency and accelerate development. If the Company's compensation policies and talent incentive mechanisms are inadequate it may lead to insufficient high-level management and technical talents as well as a lack of talent reserves ultimately affecting R&D innovation capabilities and core competitiveness.Countermeasures: First in accordance with the Company's development plan and actual operational needs we will continuously improve talent recruitment mechanisms and talent cultivation systems optimize workforce structure and comprehensively enhance overall employee quality. Second based on business development requirements we will consistently upgrade employees' professional capabilities through systematic training programs. Third we will refine talent incentive methods and performance evaluation systems accelerate the rejuvenation of management teams and improve overall human resource contribution efficiency. Fourth we will strengthen the employee representative congress system and union services to create a harmonious development environment and enhance employees' sense of belonging and well-being.XII Communications with the Investment Community such as Researches Inquiries and Interviews during the Reporting Period √ Applicable □ Not applicable Place Date of visit of Way of Type of Contents and Visitor materials Index to main inquiry visit visit visitor provided information The Company’s production and Information on 00057 Onlin Investors operation 0 Changchai’s Result 23 April 2024 e Onlinemeeti exchange Other and the development and s Presentation and R public construction oadshow on www.cning investment and nfo.com.cn dated 23 wealth April 2024 management etc.XIII Implementation of Market Value Management System and Valuation Enhancement Plan Indicate whether the Company has disclosed the Market Value Management System □ Yes √ No Indicate whether the Company has disclosed the Valuation Enhancement Plan □ Yes √ No XIV. Implementation Status of the "Dual Enhancement of Quality and Returns" Initiative Indicate whether the Company has disclosed the “Quality and Earnings Dual Improvement” Action Plan.□ Yes √ No 35Changchai Company Limited Annual Report 2024 Part IV Corporate Governance I General Information of Corporate Governance In the Reporting Period the Company was strictly in line with laws statutes such as Company Law Securities Laws Code of Corporate Governance of Listed Companies Guide Opinion on Establishment of Independent Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and so on continuously perfected corporate governance established and accomplished internal management and control system consistently and deeply put forward corporate governance activities so as to further normalized operation of the Company raising corporate governance level laying a guard for steady and healthy development of the Company protect legal rights and interests of the Company and all shareholders.The Company promulgated or revised a series of internal control system through all aspects of normal operation and management activities in accordance with each national laws and regulations characteristics of the industry operation and self-managing business and improved it continuously and finally formed a normative management system. And formulated a series of management system process and standard covered each operation link and level of the financial assets control human resources management quality environment management and internal audit supervisor etc. which ensured all the work had rules to follow.Indicate by tick market whether there is any material incompliance with the applicable laws administrative regulations and regulations issued by the CSRC governing the governance of listed companies.□ Yes √ No No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder and Actual Controller in Asset Personnel Financial Affairs Organization and Business The Company was independent from the controlling shareholder Changzhou Investment Group Co. Ltd in terms of assets business personnel organization and financing with independent & complete business and capability to operate independently. 1. Assets: The property rights relationship between the Company and the controlling shareholder is clear assets are clearly defined and there are no funds assets and other resources being occupied or used without compensation between them. 2. Personnel: The Company and the controlling shareholder are independent of each other in terms of labor personnel and salary management and each has an independent management organization a sound management policy and an independent personnel appraisal and assessment system. 3. Finance: The Company has set up a special finance department established an independent accounting system and financial management policy opened an independent bank account and implemented independent accounting and independent tax payments. There is no interference in the financial activities of the Company by the controlling shareholder. 4. Institution: The Company has a complete and independent corporate governance structure and has established a sound organizational system that meets its own production and operation needs which operates independently and well and there is no subordinate relationship with the functional departments of the controlling shareholder. 36Changchai Company Limited Annual Report 2024 5. Business: The Company has an independent and complete business system with independent and autonomous production and operational capability. The Company conducts related transactions reasonably on the principle of independence.III Horizontal Competition □ Applicable √ Not applicable IV Annual and Special General Meetings Convened during the Reporting Period 1. General Meeting Convened during the Reporting Period Investor Date of Disclosur Meeting Type participatio the Resolution e date n ratio meeting The 2023 A All proposals were approved. See nnual Gener Annual General Meeting 32.34% 8 May 2 9 May 2 Announcement No. 2024-016 on al Meeting 024 024 Resolutions of the 2023 Annual General Meeting.The 1st Extr All proposals were approved. See aordinary G ExtraordinaryGeneral Meeti 32.58% 30 July 31 July Announcement No. 2024-024 oneneral Meeti ng 2024 2024 Resolutions of the 1 st Extraordinar ng of 2024 y General Meeting of 2024. 2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting Rights □ Applicable √ Not applicable V Directors Supervisors and Senior Management 1. General Information Begin Endin ning g+/- Name Gend Incum share er Age Office title bent/F Start of tenure End of shareh ormer tenure olding (share holdi (share ) ng ) (share) Li 1 Desen Male 43 Chairman of Incum the Board bent 12 June 2023 January 0 0 02025 Zhang Vice Xin Male 58 Chairman of Incum Ongoin the Board bent 12 June 2023 g 0 0 0 Xie Male 55 Director Incum 12 June 2023 Ongoin 0 0 0 37Changchai Company Limited Annual Report 2024 Guozho General bent g ng Manager Tan Jie Fema 45 Director Incum 12 June 2023 Ongoinle bent g 0 0 0 Jiang Director He Male 52 Incum Ongoin Chief bent 16 April 2020 g 0 0 0 Accountant Yang Feng Male 52 Director Incum bent 16 April 2020 Ongoin g 0 0 0 Wang Mancan Male 61 Independent Incum 16 April 2020 Ongoin 0 0 0 g director bent g Zhang Fema Independent Incum Ongoin Yan le 54 director bent 16 April 2020 g 0 0 0 Jia Bin Male 46 Independent Incumdirector bent 12 June 2023 Ongoin g 0 0 0 Ni Chairman of Minglia Male 57 the Incum Ongoin ng Supervisory bent 12 June 2023 g 0 0 0 Committee Shi Fema Xingyu le 44 Supervisor Incum bent 12 June 2023 Ongoin g 0 0 0 Lu Zhongg Male 57 Supervisor Incumbent 18 October 2016 Ongoin g 0 0 0ui Liu Yi Male 55 Supervisor Incum Ongoinbent 18 October 2016 g 0 0 0 Lin Wei Male 42 Supervisor Incumbent 12 June 2023 Ongoin g 0 0 0 Sun Jianzho Male 52 Vice-general IncumManager bent 16 April 2020 Ongoin ng g 000 He Vice-generalManager Incum 13 December 2021Jianjian Male 45 Ongoin g Secretary of bent 000 the Board 18 October 2016 g Wang Male 37 Vice-general IncumJing Manager bent 12 June 2023 Ongoin g 0 0 0 Wang Chief Incum Ongoin Weifeng Male 53 Engineer bent 12 June 2023 g 0 0 0 Total -- -- -- -- -- -- 0 0 0 Disclosures on Departures of Directors Supervisors and Dismissals of Senior Management During the Reporting Period □ Yes √ No Changes in the Company's Directors Supervisors and Senior Management □ Applicable √ Not applicable 2. Biographical Information Professional backgrounds major work experience and current duties in the Company of the incumbent directors 38Changchai Company Limited Annual Report 2024 supervisors and senior management: Li Desen: Previously served as Director of the Office of Qishuyan Rail Transit Industrial Park Management Committee Deputy Secretary of the Qishuyan Subdistrict Party Working Committee and Director of the Subdistrict Office Director of the Financial Development Bureau of Changzhou Economic Development Zone Deputy Director and Party Leadership Group Member of Changzhou Local Financial Supervision Bureau Standing Committee Member of Wujin District Committee of Changzhou Minister of the United Front Work Department Deputy District Chief and Party Leadership Group Member of the District Government Deputy Secretary of the Party Leadership Group of the District Political Consultative Conference Chairman of the Board of Directors and Party Committee Secretary of Changzhou Investment Group Co. Ltd. and Party Committee Secretary and Chairman of the Board of Directors of the Company. Currently serves as Deputy Secretary and District Chief of Changzhou Zhonglou District. (On January 1 2025 Mr. Li Desen resigned from his positions as Chairman of the Board Director Chairman and Member of the Board Strategy Committee and Member of the Board Remuneration and Appraisal Committee of the Company due to work reassignment. Following his resignation from the above positions Mr. Li Desen no longer holds any other positions in the Company.) Zhang Xin: Previously served as Manager of the Company's Sales Company Assistant General Manager Deputy General Manager and General Manager. Currently serves as Vice Chairman of the Board of Directors of the Company acting on behalf of the Chairman's duties.Xie Guozhong: Previously served as General Manager Assistant General Manager and Deputy General Manager of the Company's Sales Company. Currently serves as Deputy Secretary of the Party Committee Director General Manager of the Company Director of Changchai Machinery and Supervisor of Beiqi Foton Motor Co.Ltd.Tan Jie: Previously served as Deputy Director of the Accounting Department and Deputy Director of the Personnel and Education Department of Changzhou Municipal Finance Bureau Deputy Secretary-General of Changzhou Certified Public Accountants Association and Secretary of the Youth League Committee Director of the Comprehensive Department Director of the Agriculture Department Director of the Agriculture and Rural Affairs Department and Director of the Administrative and Political-Legal Department of Changzhou Municipal Finance Bureau and Assistant President of Changzhou Investment Group Co. Ltd. Currently serves as Member of the Party Committee Director and Vice President of Changzhou Investment Group Co. Ltd. and Director of the Company.Jiang He: Previously served as Accountant Assistant Minister and Deputy Minister of the Finance Department of the Company. Currently serves as Director Chief Accountant and Minister of the Finance Department of the Company.Yang Feng: Previously served as Business Manager of the Shanghai Investment Banking Department of China Economic Development Trust & Investment Corp. Business Director of the Investment Banking Department of Orient Securities Co. Ltd. General Manager of the Investment Banking Department and Operation Management Headquarters and Assistant to the Chairman of AJ Securities Executive General Manager of the Corporate Development Financing Department and Investment Banking Department of CITIC Securities Co. Ltd. and Managing Director of Daiwa Securities China Co. Ltd. Currently serves as Executive Director of De Xin Investment Management (Hong Kong) Co. Ltd. Independent Director of Shanghai Kindly Enterprise Development Group Co. Ltd. and Director of the Company.Wang Mancang: Previously served as Teacher and Lecturer in the Department of Management Lecturer and Professor in the Department of Finance at Northwest University School of Economics and Management.Currently serves as Director of the Department of Finance at Northwest University School of Economics and Management Director of the Public Economics Research Institute Counselor of Xi'an Municipal Government 39Changchai Company Limited Annual Report 2024 Expert of the "Finance and Fiscal Group" of the Government Decision-making Advisory Committee Independent Director of Xi'an Focuslight Technologies Co. Ltd. Independent Director of Xi'an Wonder Energy Chemical Co.Ltd. and Independent Director of the Company.Zhang Yan: Previously served as Chief Accountant of Changzhou Zhengda Certified Public Accountants Co. Ltd.and Executive Deputy Chief Accountant of Jiangsu Gongzheng Certified Public Accountants Co. Ltd. Currently serves as Associate Professor at Jiangsu University of Technology School of Management Director of Changzhou Communications Holding Group Co. Ltd. Director of Changzhou Transportation Industry Group Co. Ltd.Independent Director of DinoPark Cultural Tourism Group Co. Ltd. Independent Non-executive Director of Seazen Enjoy Services Group Limited Independent Director of Jiangsu Tianmu Lake Tourism Co. Ltd. and Independent Director of the Company.Jia Bin: Previously served as Deputy Director of the First Research Office of Tianjin Internal Combustion Engine Research Institute Assistant Secretary-General and Deputy Secretary-General of China Internal Combustion Engine Industry Association and Secretary-General of Small Gasoline Engine Branch of China Internal Combustion Engine Industry Association. Currently serves as Director of the First Research Office of Tianjin Internal Combustion Engine Research Institute (Tianjin Motorcycle Technology Center) Secretary-General of China Internal Combustion Engine Industry Association Independent Director of Lutian Machinery Co. Ltd.Director of Tianjin Tianbo Keda Technology Co. Ltd. and Independent Director of the Company.Ni Mingliang: Previously served as Clerk and Vice Chairman of the Labor Union of the Company. Currently serves as Deputy Secretary of the Party Committee Chairman of the Board of Supervisors Chairman of the Labor Union of the Company Chairman of the Board of Directors of the Property Management Company and Director of Horizon Investment.Shi Xingyu: Previously served as Clerk Section Chief Deputy General Manager and General Manager of the Finance Department of Changzhou Investment Group Co. Ltd. Currently serves as General Manager of Changzhou Xinhui Venture Capital Co. Ltd. Director of Donghai Securities Co. Ltd. and Supervisor of the Company.Lu Zhonggui: Previously served as Clerk of the Organization and Personnel Department Full-time Discipline Inspector of the Discipline Inspection Commission and Deputy Secretary of the Organ Party General Branch of the Company. Currently serves as Secretary of the Organ Party General Branch Minister of the Political Department Director of the Office Employee Supervisor of the Company and Director of Xingsheng Real Estate Management.Liu Yi: Previously served as Assistant Minister of the Enterprise Management Department Deputy Minister of the Finance Department and Deputy Minister of the Auditing Department of the Company. Currently serves as Minister of the Auditing Department Employee Supervisor of the Company Director of Zhenjiang Siyang Supervisor of Changchai Wanzhou Supervisor of Changchai Benniu Supervisor of Horizon Investment Supervisor of Horizon Agricultural Equipment Supervisor of Changchai Robin Supervisor of Changchai Machinery and Supervisor of Xingsheng Real Estate Management.Lin Wei: Previously served as Clerk Deputy Minister and Minister of the Enterprise Management Department and Deputy General Manager of Changchai Machinery of the Company. Currently serves as Supervisor and Minister of the Human Resources Department of the Company.Sun Jianzhong: Previously served as Director of the Technology Center and Assistant General Manager of the Company. Currently serves as Deputy General Manager of the Company and General Manager of Changchai Machinery.He Jianjiang: Previously served as Clerk Assistant Minister and Deputy Minister of the Investment and Development Department and Securities Affairs Representative of the Company. Currently serves as Deputy 40Changchai Company Limited Annual Report 2024 General Manager Board Secretary and Minister of the Investment and Development Department of the Company Chairman and General Manager of Horizon Investment Director of Horizon Agricultural Equipment Chairman of Zhenjiang Siyang Director of Jiangsu Horizon New Energy Technology Co. Ltd. and Supervisor of Donghai Securities Co. Ltd.Wang Jing: Previously served as Foreign Trade Salesperson of the Overseas Business Division Technician Deputy Workshop Director Assistant Factory Director Deputy Factory Director and Secretary of the Single-Cylinder Party General Branch of the Single-Cylinder Engine Factory and Assistant General Manager of the Company. Currently serves as Deputy General Manager of the Company and Chairman of Changchai Benniu.Wang Weifeng: Previously served as Designer of the Development Department Designer of the Technology Center and Deputy Chief Engineer of the Company. Currently serves as Chief Engineer and Deputy Director of the Technology Center of the Company.Offices held concurrently in shareholding entities: √ Applicable □ Not applicable Remuneratio n or Name Shareholding Office held in the allowanceentity shareholding entity Start of tenure End of tenure from the shareholding entity Li Secretary of the Party Desen Committee Chairman of the January 2024 January 2025 Yes Changzhou Board Investment Member of the Party Tan Jie Group Co. Committee Director Vice April 2023 Ongoing Yes Ltd. President Shi General Manager of Finance Xingyu Department November 2021 May 2024 Yes Notes Nil Offices held concurrently in other entities: √ Applicable □ Not applicable Rem uner ation or Office allo Name Other entity held in the Start of tenure End of tenure wan entity ce from the entit y Xie Guozho Beiqi Foton Motor Co. Ltd.Superviso r 15 November 2022 Ongoing No ng He Donghai Securities Co. Ltd.Superviso r 18 January 2023 Ongoing No 41Changchai Company Limited Annual Report 2024 Jianjian Jiangsu Horizon New Energy Technology g Co. Ltd.Director 28 July 2023 Ongoing De Xin Investment Manage Co. Limited ExecutiveDirector 1 June 2022 Ongoing NoYang Feng Shanghai Kindly Enterprise Development Independe Group Co. Ltd. nt 17 April 2023 OngoingDirector Shi Donghai Securities Co. Ltd. Director 20 May 2021 Ongoing No Xingyu Changzhou Xinhui Venture Capital Co. General Ltd. Manager 11 November 2024 Ongoing Yes Department of Finance of the School of Head of Yes Economics and Management of Department 1 September 2006 OngoingNorthwest University Professor Public Economics Research Institute Director Ongoing Xi'an Municipal Government Counselor Ongoing Financial and Fiscal Affairs Panel of the Government Decision-making Advisory Expert Ongoing Committee Independe Wang Focuslight Technologies Inc. nt 2 May 2019 Ongoing Yes Director Mancan Independe Yes g Xi'an Wonder Energy Chemical Co. Ltd. nt 24 June 2020 Ongoing Director Independe Yes Ccoop Group Co. Ltd. nt 18 September 2020 26 April 2024 Director Independe Yes Shaanxi Construction Machinery Co. Ltd. nt 16 November 2018 5 February 2024 Director Chang'an International Trust Co. Ltd. Director 1 September 2018 11 November 2024 Xi'an Guolian Quality Testing Technology Co. Ltd. Director 1 June 2020 2 September 2024 Director Tianjin Internal Combustion Engine of the Research Institute First March 2009 Ongoing YesResearch Office China Internal Combustion Engine Secretary- Industry Association General December 2024 Ongoing No Jia Bin Independe Yes Lutian Machinery Co. Ltd. nt 31 December 2019 Ongoing Director Suzhou Parsun Power Machinery Co. Independe Yes Ltd. nt 31 July 2021 31 October 2024Director Tianjin Tianbo Keda Technology Co. Ltd. Director 18 August 2020 Ongoing No 42Changchai Company Limited Annual Report 2024 Jiangsu University of Technology Associateprofessor August 2008 Ongoing Yes Independe Yes Jiangsu Tianmu Lake Tourism Co. Ltd. nt 8 February 2021 Ongoing Director Independe Yes nt Zhang S-Enjoy Service Group Co. Limited non-execu 20 October 2018 Ongoingtive Yan Director DinoPark Cultural Tourism Group Co. Independe Yes Ltd. nt September 2024 OngoingDirector Changzhou Communications Holding Yes Group Co. Ltd. Director 23 April 2024 Ongoing Changzhou Transportation Industrial Group Co. Ltd. Director 14 April 2022 Ongoing Yes Notes Nil Punishments imposed in the recent three years by the securities regulator on the incumbent directors supervisors and senior management as well as those who left in the Reporting Period: □ Applicable √ Not applicable 3. Remuneration of Directors Supervisors and Senior Management Decision-making procedure determination basis and actual payments of remuneration for directors supervisors and senior management: In 2024 the monthly salaries of directors supervisors and senior management personnel who received remuneration from the Company were disbursed in accordance with the Company’s regulations on salary management and grade standards. Year-end incentive compensation was paid based on the Company’s performance and assessment results. Current directors Li Desen and Tan Jie as well as supervisor Shi Xingyu receive their remuneration from shareholder entities.Remuneration of directors supervisors and senior management for the Reporting Period Unit: RMB’0000 Total before-tax Any Name Gender Age Office title Incumbent/Former remuneration from remuneration the Company from relatedparty Chairman of Li Desen Male 43 Incumbent 0 Yes the Board Vice Zhang Male 58 Chairman of Incumbent 90.11 No Xin the Board 43Changchai Company Limited Annual Report 2024 Xie Director Guozhon Male 55 General Incumbent 90.11 No g Manager Tan Jie Female 45 Director Incumbent 0 Yes Director Jiang He Male 52 Chief Incumbent 78.26 No Accountant Yang Male 52 Director Incumbent 0 No Feng Wang Independent Male 61 Incumbent 10 No Mancang director Zhang Independent Female 54 Incumbent 10 No Yan director Independent Jia Bin male 46 Incumbent 10 No director Chairman of Ni the Minglian Male 57 Incumbent 85.36 No Supervisory g Committee Shi Female 44 Supervisor Incumbent 0 Yes Xingyu Lu Male 57 Supervisor Incumbent 26.59 No Zhonggui Liu Yi Male 55 Supervisor Incumbent 26.05 No Lin Wei Male 42 Supervisor Incumbent 24.72 No Sun Vice-general Jianzhon male 52 Incumbent 77.86 No Manager g He Male 45 Vice-general Incumbent 76.23 No 44Changchai Company Limited Annual Report 2024 Jianjiang Manager Secretary of the Board Wang Vice-general Male 37 Incumbent 77.86 No Jing Manager Wang Chief Male 53 Incumbent 78.67 No Weifeng Engineer Total -- -- -- -- 761.82 -- Other situation explanations： □ Applicable √ Not applicable VI Performance of Duty by Directors in the Reporting Period 1. Board Meetings Convened in the Reporting Period Meeting Date ofmeeting Disclosure date Resolution The meeting reviewed and approved the "2023 The 4th Meeting of General Manager Work Report" "2024 Company the 10th Board of January 26 / Operational Policy Objectives" "2023 Senior Directors 2024 Management Performance Evaluation Results""2024 Senior Management Assessment Plan" and "Proposal on Applying for 2024 Bank Credit Lines." The meeting reviewed and approved the "2023 Annual Report and Its Summary" "2023 Board of Directors Work Report" "Proposal on Amending the Articles of Association" "Proposal on Amending the Rules of Procedure for Shareholders' Meetings" "Proposal on Amending the Rules of Procedure for Board Meetings" "Proposal on Amending the Independent Director System" "Proposal on The 5th Meeting of Revising the Three-Year (2023–2025) Shareholder the 10th Board of April 10 2024 April 12 2024 Return Plan" "2023 Profit Distribution and Capital Directors Reserve Capitalization Proposal" "Proposal on Establishing the 'Accounting Firm Selection Policy'" "Proposal on Making 2023 Credit Impairment and Asset Impairment Provisions" "Special Report on the Deposit and Use of 2023 Raised Funds" "2023 Internal Control Self-Assessment Report" "2023 Corporate Social Responsibility and ESG Report" and "Proposal on Convening the 2023 Annual General Meeting of Shareholders." The 1st Extraordinary Meeting of the April 29 2024 April 30 2024 The meeting reviewed and approved the "2024 First Board of Directors Quarter Report." in 2024 45Changchai Company Limited Annual Report 2024 The 2nd The meeting reviewed and approved the "Proposal Extraordinary on Appointing the 2024 Financial Audit Firm and Its Meeting of the July 12 2024 July 13 2024 Audit Fees" "Proposal on Appointing the 2024 Board of Directors Internal Control Audit Firm and Its Audit Fees" and in 2024 "Proposal on Convening the 2024 FirstExtraordinary General Meeting of Shareholders." The 3rd Extraordinary The meeting reviewed and approved the "2024 Meeting of the August 21 August 23 Interim Report" and "Proposal on Making 2024 Board of Directors 2024 2024 Interim Credit Impairment and Asset Impairment in 2024 Provisions." The 4th Extraordinary The meeting reviewed and approved the "Proposal Meeting of the August 29 August 30 on Capital Increase in Jiangsu Changchai Machinery Board of Directors 2024 2024 Co. Ltd." in 2024 The 6th Meeting of the 10th Board of October 28 October 30 The meeting reviewed and approved the "2024 Third Directors 2024 2024 Quarter Report." The meeting reviewed and approved the "Proposal on Continuing to Use Idle Own Funds for Wealth The 5th Management Products" "Proposal on the Merger of Extraordinary Meeting of the November 22 November 23 Changzhou Changchai Horizon Agricultural 2024 2024 Equipment Co. Ltd. and Changzhou Fuji ChangchaiBoard of Directors Robin Gasoline Engine Co. Ltd." and "Proposal on in 2024 Extending the Operating Period of Changzhou Collaborative Innovation Equity Investment Partnership (Limited Partnership)." 2. Attendance of Directors at Board Meetings and General Meetings Attendance of directors at board meetings and general meetings Total The number of Board director board Board meetings Board Board meetings meetings attended by meetings meetings failed to Director attended the director attend two General the director attended on way of meetings was site telecommu through a failed to consecutiv e board attended eligible to nication proxy attend meetings attend (yes/no) Li Desen 8 2 6 0 0 No 1 Zhang Xin 8 2 6 0 0 No 2 Xie Guozhong 8 2 6 0 0 No 2 Tan Jie 8 2 6 0 0 No 2 Jiang He 8 2 6 0 0 No 2 Yang Feng 8 2 6 0 0 No 2 Wang Mancang 8 2 6 0 0 No 2 Zhang Yan 8 2 6 0 0 No 2 Jia Bin 8 0 8 0 0 No 2 46Changchai Company Limited Annual Report 2024 Explanation of why any director failed to attend two consecutive board meetings: N/A 3. Objections Raised by Directors on Matters of the Company Indicate by tick mark whether any directors raised any objections on any matter of the Company.□ Yes √ No No such cases in the Reporting Period. 4. Other Information about the Performance of Duty by Directors Indicate by tick mark whether any suggestions from directors were adopted by the Company.√ Yes □ No Suggestions from directors adopted or not adopted by the Company: All directors of the Company in line with the law rules normative documents and obligations given by the Company of the Company law Article of Associations Rules of Procedure of the Board and Independent Directors System comprehensively focused on the development and operation of the Company actively attended the general meeting of shareholder and meeting of board of directors. Independent directors given independent opinions for the significant events of the Company and effectively maintained the profits of the Company and all the shareholders. The Company actively listened to the suggestions from directors upon the significant events and adopted them. For more details please refer to the Report on the Work of the Board of Directors for 2024 disclosed by the Company on http://www.cninfo.com.cn dated 11April 2025.VII Special Committees under the Board of Directors during the Reporting Period Speci Num ber Other fic Name of Date perfo detail of Member meeti of Contents Important comments and rman s of commit s ngs meeti suggestions ce of the tee ng dutie objecconv tion ened s matte r Janua The meeting reviewed ry 4 and approved the "2023 2024 Annual Report Audit Nil Plan." Zhang The meeting reviewed The Company's 2023 Yan Audit and approved the annual report audit plan is Wang "Preliminary Review relatively reasonable andCommi 8 Communication Matters Mancan the key communication Nil Nil ttee Janua for the 2023 Annual matters align with the g ry Report" "Audit Company's actual situation.Lin Tian 25 Department's 2023 Work It is expected that the 2024 Summary and 2024 Work Company's management Plan" and "Special will continue to work Report on the Deposit closely with the accounting and Use of 2023 Raised firm to ensure the smooth Funds." completion of the disclosure 47Changchai Company Limited Annual Report 2024 of the Company's 2023 annual report.The meeting reviewed The financial statements and approved the "2023 fairly present in all material Annual Report" respects the Company's "Proposal on Making financial position as of 2023 Credit Impairment December 31 2023 as well and Asset Impairment as its operating results and Provisions" "Proposal on cash flows for the year April Establishing the 2023. It is agreed to submit 7 'Accounting Firm the "2023 Annual Report" 2024 Selection Policy'" and the "Proposal on Making "2023 Assessment Report 2023 Credit Impairment and on the Accounting Firm's Asset Impairment Performance and the Provisions" and the Board Audit Committee's "Proposal on Establishing Report on Supervisory the 'Accounting Firm Duties over the Selection Policy'" to the Accounting Firm." Board of Directors forreview.The meeting reviewed April the "Audit Department'sQ1 2024 Work Agreed to submit the26 Summary" and approved proposal to the Board of2024 the "2024 First Quarter Directors for review.Report." The content of the Company's "2024 Accounting Firm Selection Work Plan" is scientific and reasonable. The selection method workflow and evaluation criteria for the June The meeting reviewed accounting firm comply and approved the "2024 with the requirements of the6 Accounting Firm "Accounting Firm Selection2024 Selection Work Plan." Policy." It is agreed that theCompany's selection working group shall implement this work plan and submit it for internal decision-making procedures for review and approval after the bidding results are finalized. 48Changchai Company Limited Annual Report 2024 July The meeting reviewed 8 and approved the Agreed to submit the "Proposal on Changing proposal to the Board of2024 the Accounting Firm." Directors for review.The meeting reviewed and approved the "2024 Augu Interim Report" and Agreed to submit the st 20 "Proposal on Making proposal to the Board of 2024 2024 Interim Credit Directors for review. Impairment and Asset Impairment Provisions." Octo The meeting reviewed ber the "Audit Department's Agreed to submit the "2024 25 Q3 2024 Work Report" Third Quarter Report" to and approved the "2024 the Board of Directors for2024 Third Quarter Report." review.Li Desen Zhang Strategi c Xin Xie The meeting reviewed Janua and approved the "2023 Develo Guozho ry General Manager Work Agreed to submit all pment 1ng 26 Report" and "2024 proposals to the Board of Commi 2024 Company Operational Directors for review.ttee Wang Policy Objectives." Mancan g Jia Bin Remun Wang The meeting reviewed eration Janua and approved the "2023and Mancan Senior Management Agreed to submit all Apprais g Li 1 ry26 Assessment Results" and proposals to the Board ofal Desen 2024 "2024 Senior Directors for review.Commi Management Assessment ttee Jia Bin Plan." VIII Performance of Duty by the Supervisory Committee Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.□ Yes √ No The Supervisory Committee raised no objections in the Reporting Period. 49Changchai Company Limited Annual Report 2024 IX Employees 1. Number Functions and Educational Backgrounds of Employees Number of in-service employees of the Company as the parent at 1886 the period-end Number of in-service employees of major subsidiaries at the 535 period-end Total number of in-service employees at the period-end 2421 Total number of paid employees in the Reporting Period 2421 Number of retirees to whom the Company as the parent or its 0 major subsidiaries need to pay retirement pensions Functions Function Employees Production 1574 Sales 179 Technical 327 Financial 43 Administrative 262 Other 36 Total 2421 Educational backgrounds Educational background Employees Junior high school graduates and below 982 High school graduates 633 College graduates and technical secondary school graduates 494 Bachelors 292 Masters and above 20 Total 2421 2. Employee Remuneration Policy The Company always adhered to the principle of tilting the remuneration incentive mechanism towards excellent talents so as to display the roles of various professional technicians management staffs and skilled backbones.Besides it adhered to the principle of increasing the employee’s income integrated with increasing labor production efficiency and production & operation efficiency so as to perfect the salary structure and further increase employees’ income steadily. 50Changchai Company Limited Annual Report 2024 3. Employee Training Plans The Company established the Management Rules on the Education & Training for Employees aiming to enhance employees’ quality and try its best to cultivate a team of faithful and highly professional talents. Besides it innovated the training mechanism optimized the training environment and reinforced to encourage employees to attend various training so as to inspire the employees’ potential to the maximum extent and further promote the sustainable development of the Company. 4. Labor Outsourcing □ Applicable √ Not applicable X Profit Distributions (in the Form of Cash and/or Stock) How the profit distribution policy especially the cash dividend policy was formulated executed or revised in the Reporting Period: √ Applicable □ Not applicable In Articles of Association which had confirmed the specific profits distribution and cleared out the conditions standards and proportion of the cash bonus stipulated the decision-making progress of the formulation and alternation of the profits distribution policies and the chapters as well as the regulations fully ensure the opportunities for the medium and small shareholders to exert the functions and to provide advices as well as appeals. The cash bonus of recent 3 years of the Company met with the regulations of the Articles of Association and during the decision-making process of the profit’s distribution proposal fully respected the advices from the medium and small shareholders. The profits distribution pre-plan and the turning capital reserve into share capital preplan of the Company were both met with the relevant regulations of the Articles of Association and so on.Special statement about the cash dividend policy In compliance with the Company’s Articles of Association and resolution of general meeting Yes Specific and clear dividend standard and ratio Yes Complete decision-making procedure and mechanism Yes Independent directors faithfully performed their duties and played their due role Yes Specific reasons and the next steps it intend to take to enhance the investor return level if the Company did not pay cash dividend: N/A Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected Yes In case of adjusting or changing the cash dividend policy the conditions and procedures involved are in compliance with applicable regulations and transparent N/A Indicate by tick mark whether the Company fails to put forward a cash dividend proposal despite the facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are positive.□ Applicable √ Not applicable Final dividend plan for the Reporting Period: √ Applicable □ Not applicable Bonus shares for every 10 shares (share) 0 51Changchai Company Limited Annual Report 2024 Dividend for every 10 shares (RMB) (tax inclusive) 0.1 Additional shares to be converted from capital reserve for every 0 10 shares (share) Total shares as the basis for the profit distribution proposal 705692507 (share) Cash dividends (RMB) (tax inclusive) 7056925.07 Cash dividends in other forms (such as share repurchase) (RMB) 0 Total cash dividends (including those in other forms) (RMB) 7056925.07 Distributable profit (RMB) 983627999.95 Total cash dividends (including those in other forms) as % of 100% total profit distribution Cash dividend policy Other Particulars about the dividend plan The profit distribution plan approved by the Board of Directors is as follows: Based on the Company's total share capital as of December 31 2024 a cash dividend of RMB 0.1 per 10 shares (tax inclusive) will be distributed to all shareholders with no bonus shares issued and no capital reserve converted into share capital.XI Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures for Employees □ Applicable √ Not applicable No such cases in the Reporting Period.XII Formulation and Implementation of Internal Control System during the Reporting Period 1. Internal Control Formulation and Implementation During the Reporting Period the Company strictly complied with national laws and regulations and relevant regulations such as the Basic Code for Internal Control of Enterprises and the Guidelines for Application of Enterprise Internal Control as well as the provisions and requirements of the Company's internal control standards and optimized important business processes and improved and perfected the internal control system through continuous supervision and effective evaluation of the operation of the Company's internal control so as to adapt to the changing external environment and internal management requirements and improve the efficiency of the Company's operation and management. By doing so the Company effectively prevented risks in operation and management and promoted the achievement of internal control objectives. The Company's internal control system can cover the major aspects of the Company's operation and management and the internal control design is sound and reasonable with no material omissions. 2. Material Internal Control Weaknesses Identified for the Reporting Period □ Yes √ No 52Changchai Company Limited Annual Report 2024 XIII Management of Subsidiaries by the Company during the Reporting Period Subsidiary Integration Progress on Problems found in Solutions Solution Subsequentplan integration integration taken progress solution Nil Nil Nil Nil Nil Nil Nil XIV Self-Evaluation Report or Independent Auditor’s Report on Internal Control 1. Internal Control Self-Evaluation Report Disclosure date of the internal 11April 2024 control self-evaluation report Index to the disclosed internal control self-evaluation report Evaluated entities’ combined assets 100.00% as % of consolidated total assets Evaluated entities’ combined operating revenue as % of 100.00% consolidated operating revenue Identification standards for internal control weaknesses Type Financial reporting Non-financial reporting The Company classifies internal A deficiency shall be identified control deficiencies based on their as a material weakness if it impact severity into material exhibits any of the following weaknesses significant deficiencies characteristics: and general deficiencies: (1) Serious violations of national (1) Material Weakness: One or more laws administrative regulations control deficiencies that could result and regulatory documents; in a severe deviation from control (2) Failure to follow collective objectives; decision-making procedures for Nature standard (2) Significant Deficiency: One or "three major and one big" more control deficiencies with lesser matters; severity and economic consequences (3) Lack of systematic controls than a material weakness but still or complete failure of control likely to cause deviation from systems for critical business control objectives; operations related to corporate (3) General Deficiency: Deficiencies production and management; not classified as material (4) Failure of internal controls weaknesses or significant over information disclosure deficiencies. resulting in public censure by Qualitative Criteria: A deficiency regulatory authorities; 53Changchai Company Limited Annual Report 2024 shall be identified as a material (5) Material weaknesses weakness if it exhibits any of the identified in internal control following characteristics: assessments that remain (1) Involves fraud by directors unaddressed. supervisors or senior management; Requires restatement of previously issued financial statements; (2) External auditors identify a material misstatement in current financial statements that internal controls failed to detect; (3) The Audit Committee and internal audit function are ineffective in overseeing internal controls.Quantitative Criteria: With Quantitative Criteria: Based on the reference to the quantitative 2024 consolidated financial standards for internal control statements data the quantitative deficiencies in financial thresholds for determining the reporting the quantitative materiality of misstatements thresholds for determining the (including omissions) in the significance of non-financial Company's consolidated financial reporting internal control Quantitative standard statements are as follows: deficiencies in the listed Material Weakness: Misstatement ≥ company are as follows: 5% of annual profit; Material Weakness: Potential Significant Deficiency: 2.5% of direct loss ≥ 0.1% of net assets; annual profit ≤ Misstatement < 5% Significant Deficiency: 0.05% of of annual profit; net assets ≤ potential direct loss < General Deficiency: Misstatement < 0.1% of net assets; 2.5% of annual profit. General Deficiency: Potential direct loss < 0.05% of net assets.Number of material weaknesses in internal control over financial 0 reporting Number of material weaknesses in internal control not related to 0 financial reporting Number of serious weaknesses in internal control over financial 0 reporting Number of serious weaknesses in 0 54Changchai Company Limited Annual Report 2024 internal control not related to financial reporting 2. Independent Auditor’s Report on Internal Control √ Applicable □ Not applicable Opinion paragraph in the independent auditor’s report on internal control We believed that Changchai Company Limited maintained effective internal control of the financial report in significant aspects according to the Basic Norms of Internal Control and relevant regulations on 31 December 2024. Independent auditor’s report on Disclosed internal control disclosed or not Disclosure date 11April 2025 Index to such report disclosed Zhongxinghua Audit (2025) No. 020590 Type of the auditor’s opinion Unmodified unqualified opinion Material weaknesses in internal control not related to financial None reporting Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.□ Yes √ No Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal control self-evaluation report issued by the Company’s Board.√ Yes □ No XV Remediation of Problems Identified by Self-inspection in the Special Action on the Governance of Listed Companies Nil 55Changchai Company Limited Annual Report 2024 Part V Environmental and Social Responsibility I Major Environmental Issues Indicate by tick mark whether the Company or any of its subsidiaries was identified as a key polluter by the environment authorities.□ Yes √ No Administrative punishments received in the Reporting Period due to environmental issues: Rectification Company or Reason for Impact on the Violation Punishment measures of the subsidiary punishment Company Company N/A N/A N/A N/A N/A N/A Other environmental information disclosed with reference to key polluters: N/A Actions taken during the Reporting Period to reduce carbon emissions and the impact: √ Applicable □ Not applicable See the 2024 Social Responsibility and ESG Report of Changchai Company Limited disclosed on http://www.cninfo.com.cn dated 11April 2025.The reason for not disclosing other environmental information: The Company and its subsidiaries are not listed as key polluting units by the environmental protection department. The production and operation of the Company and its subsidiaries strictly comply with relevant national laws and regulations. The Company will continue to strengthen environmental supervision and management to ensure that the development of the enterprise complies with environmental protection policies and regulations.II Social Responsibility See the 2024 Social Responsibility and ESG Report of Changchai Company Limited disclosed on http://www.cninfo.com.cn dated 11April 2025.III Efforts in Poverty Alleviation and Rural Revitalization Nil 56Changchai Company Limited Annual Report 2024 Part VI Significant Events I Fulfillment of Commitments 1. Commitments of the Company’s De Facto Controller Shareholders Related Parties and Acquirers as well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at the Period-End √ Applicable □ Not applicable Type of Date of Term of Fulf Commitment Promisor commitme Details of commitment commitme commit illm nt nt making ment ent The shares subscribed by our Commitment Changzhou About company in this private placement July 5 Full y s made in Investment share shall not be transferred within 36 July 5 2021 - refinancing Group Co. trading months from the listing date of 2021 July 5 Perf Ltd. restriction Changchai Co. Ltd.'s 2024 orm non-publicly issued A-shares. ed 1. Commit to not overstep authority in interfering with the Company's operational and management activities and not to appropriate the Company's interests; 2. Commit to not providing benefits to other entities or individuals free of charge or under unfair conditions nor taking any other actions that may harm the Company's interests; Commitment 3. From the date of this s Made Changzhou commitment until the completion April 11 During Initial Investment of the Company's current privateOther April 11 2020 - Ong Public Group Co. placement if the China Securities 2020 Decemb oing Offering or Ltd. Regulatory Commission (CSRC) er 31 Refinancing issues new regulatory 9999 requirements regarding measures to mitigate dilution of returns and related commitments and if the above commitments do not satisfy such CSRC requirements the undersigned further commits to supplementing this undertaking in accordance with the CSRC's latest regulations; 4. Commit to earnestly fulfilling the Company's measures to mitigate dilution of returns and any related commitments made 57Changchai Company Limited Annual Report 2024 herein. If the undersigned violates these commitments and causes losses to the Company or its investors it shall bear corresponding compensation liabilities in accordance with the law.Shareholder Return Plan for the Next Three Years (2023-2025): Under the premise that the Company's distributable profit (i.e. after-tax profit after making up for losses and withdrawing statutory reserves) is positive in a given year or semi-annual period Other and that the Company has commitments Changchai Dividend sufficient cash flow to ensure that made to Company Commitm cash dividend distribution will not May 18 2023 - Ong minority Limited ent affect its sustainable operations 2023 2025 oing shareholders the Company shall distribute noless than 10% of the annual distributable profit of the parent company in cash each year.Additionally the cumulative cash dividends distributed over any three consecutive fiscal years shall be no less than 30% of the average annual distributable profit during those three years.Fulfilled on time or not Yes Specific reasons for failing to fulfill commitments N/A on time and plans for next step (if any) 2. Where there had been an-earnings forecast for an asset or project and the Reporting Period was still within the forecast period explain why the forecast has been reached for the Reporting Period.□ Applicable √ Not applicable II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 58Changchai Company Limited Annual Report 2024 III Irregularities in the Provision of Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period.IV Explanations Given by the Board of Directors Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of the Latest Period □ Applicable √ Not applicable V Explanations Given by the Board of Directors the Supervisory Board and the Independent Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of the Reporting Period □ Applicable √ Not applicable VI YoY Changes to Accounting Policies Estimates and Correction of Material Accounting Errors √Applicable □ Not applicable Impact on the Changes to the accounting policies and why Company's financial Impact Amount statements 1. Implementation of "Accounting Standards for Business Enterprises Interpretation No. 17" In October 2023 the Ministry of Finance issued "Accounting Standards The implementation for Business Enterprises Interpretation No. 17" (Cai Kuai [2023] No. of Interpretation 21) which stipulates provisions regarding "the classification of current No. 17 has no and non-current liabilities" "disclosures for supplier financing material impact on 0.00 arrangements" and "accounting treatment for sale-and-leaseback the Company's transactions". This interpretation became effective on January 1 2024. financial statements The Company has adopted the provisions of Interpretation No. 17 for the reporting starting from January 1 2024. The application of Interpretation No. 17 period.has no material impact on the Company's financial statements for the reporting period. 2. Implementation of "Accounting Standards for Business Enterprises Interpretation No. 18" In December 2024 the Ministry of Finance issued "Accounting Refer to "Notes toRefer to "Notes to Standards for Business Enterprises Interpretation No. 18" (Cai Kuai Changes inChanges in [2024] No. 24) which stipulates that for assurance-type warranties that AccountingAccounting do not constitute separate performance obligations entities shall account Policies" forPolicies" for details.for them in accordance with the relevant provisions of "Accounting details.Standards for Business Enterprises No. 13 - Contingencies".Specifically entities shall debit "Cost of Main Business" or "Cost of 59Changchai Company Limited Annual Report 2024 Other Business" and credit "Estimated Liabilities" based on the determined amount of provisions. This interpretation became effective upon issuance and allows early adoption in the year of release.Notes to Changes in Accounting Policies: Implementation of "Accounting Standards for Business Enterprises Interpretation No. 18" had the following impacts on the financial statements as of January 1 2024: Unit: RMB Consolidated Financial Statements Parent Company Financial Statements Items Amount as of Amount as of Amount as of Amount as of December 31 2023 January 1 2024 December 31 2023 January 1 2024 (Before) (After) (Before) (After) Provisions 60070382.24 60070382.24 Other Payables 159023382.81 98953000.57 151919473.64 91849091.40 (continued) FY2023 Consolidated Financial Statements Parent Company Financial Statements Items Amount before Amount before Amount after change Amount after change change change Operating Costs 1838755831.41 1884289338.95 1788129884.67 1831801124.99 Selling Expenses 99603282.16 54069774.62 92935731.73 49264491.41 VII YoY Changes to the Scope of the Consolidated Financial Statements □ Applicable √ Not applicable VIII Engagement and Disengagement of Independent Auditor Current independent auditor: Zhongxinghua Certified Public Accountants Name of the domestic independent auditor (Special General Partnership) The Company’s payment to the domestic independent 60 auditor (RMB’0000) How many consecutive years the domestic independent 1 auditor has provided audit service for the Company Names of the certified public accountants from the domestic independent auditor writing signatures on the Wang Jun Pan Daliang auditor’s report How many consecutive years the certified public One year for Wang Jun One year for Pan Daliang accountants have provided audit service for the 60Changchai Company Limited Annual Report 2024 Company Indicate by tick mark whether the independent auditor was changed for the Reporting Period.√ Yes □ No Whether There Was a Change of Accounting Firms During the Audit Period □ Yes √ No Whether the Replacement of the Accounting Firm Complied with Approval Procedures √ Yes □ No Detailed Explanation Regarding the Change of Accounting Firm The Company's former auditing firm Gongzheng Tianye Certified Public Accountants (Special General Partnership) had provided audit services for the Company for 22 consecutive years. In accordance with the "Measures for the Selection and Appointment of Accounting Firms by State-Owned Enterprises and Listed Companies" and the "Changchai Co. Ltd. Accounting Firm Selection Policy" and to ensure the compliance independence and objectivity of the Company's audit work the Company decided not to renew its engagement with Gongzheng Tianye as the annual audit firm.The Company conducted an open competitive bidding process to select the 2024 auditing firm with Zhongxinghua Certified Public Accountants (Special General Partnership) being the winning bidder. On July 12 2024 the Company held the Second Interim Board Meeting of 2024 where the following proposals were reviewed and approved: (1) "Proposal on Appointing the 2024 Financial Audit Firm and Its Audit Fees" (2) "Proposal on Appointing the 2024 Internal Control Audit Firm and Its Audit Fees". This matter was further approved at the 2024 First Extraordinary General Meeting of Shareholders on July 30 2024 formally appointing Zhongxinghua Certified Public Accountants (Special General Partnership) as the Company's financial and internal control audit service provider for 2024.Engagement of Internal Control Audit Accounting Firm Financial Advisor or Sponsor √ Applicable □ Not applicable During the current year the Company engaged Zhongxinghua Certified Public Accountants (Special General Partnership) as its internal control audit firm with audit fees amounting to RMB 135000.IX Possibility of Delisting after Disclosure of this Report □ Applicable √ Not applicable X Insolvency and Reorganization □ Applicable √ Not applicable No such cases in the Reporting Period.XI Major Legal Matters □ Applicable √ Not applicable No such cases in the Reporting Period. 61Changchai Company Limited Annual Report 2024 XII Punishments and Rectifications □ Applicable √ Not applicable No such cases in the Reporting Period.XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual Controller √ Applicable □ Not applicable The de facto controller of the Company is SASAC of Changzhou People’s Government and the controlling shareholder of it is Changzhou Investment Group Co. Ltd. There is no such case that the controlling shareholder fails to perform any legally effective judgment of courts or to pay off matured debts with a large amount.XIV Major Related-Party Transactions 1. Continuing Related-Party Transactions □ Applicable √ Not applicable No such cases in the Reporting Period. 2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments □ Applicable √ Not applicable No such cases in the Reporting Period. 3. Related-Party Transactions Regarding Joint Investments in Third Parties □ Applicable √ Not applicable No such cases in the Reporting Period. 4. Amounts Due to and from Related Parties □ Applicable √ Not applicable No such cases in the Reporting Period. 5. Transactions with Related Finance Companies □ Applicable √ Not applicable The Company did not make deposits in receive loans or credit from and was not involved in any other finance business with any related finance company or any other related parties. 6. Transactions with Related Parties by Finance Companies Controlled by the Company □ Applicable √ Not applicable The finance company controlled by the Company did not make deposits receive loans or credit from and was not 62Changchai Company Limited Annual Report 2024 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.XV Major Contracts and Execution thereof 1. Entrustment Contracting and Leases (1) Entrustment □ Applicable √ Not applicable No such cases in the Reporting Period. (2) Contracting □ Applicable √ Not applicable No such cases in the Reporting Period. (3) Leases □ Applicable √ Not applicable No such cases in the Reporting Period. 2. Major Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period. 3. Cash Entrusted for Wealth Management (1) Cash Entrusted for Wealth Management √ Applicable □ Not applicable Overviews of cash entrusted for wealth management during the Reporting Period Unit: RMB’0000 Unrecovered Unrecovered Capital overdue amount Specific type Amount incurred Undue balance overdue resources with provision for amount impairment Bank financial Self-funded 42675 23075 0 0 63Changchai Company Limited Annual Report 2024 products Broker financial Self-funded 5924.43 500 0 0 products Total 48599.43 23575 0 0 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 impairment may be incurred: □ Applicable √ Not applicable (2) Entrusted Loans □ Applicable √ Not applicable No such cases in the Reporting Period. 4. Other Major Contracts □ Applicable √ Not applicable No such cases in the Reporting Period.XVI Other Significant Events □ Applicable √ Not applicable No such cases in the Reporting Period.XVII Significant Events of Subsidiaries √ Applicable □ Not applicable 1. Capital Increase to Changchai Machinery via "Debt-to-Capital Reserve" Conversion On August 29 2024 the Company convened the Fourth Interim Board Meeting of 2024 and reviewed and approved the "Proposal on Capital Increase to Jiangsu Changchai Machinery Co. Ltd." The Board agreed to increase capital to its wholly-owned subsidiary Jiangsu Changchai Machinery Co. Ltd. by RMB 291835919.91 (including unpaid loan interest of RMB 4958090.18) through a "debt-to-capital reserve" arrangement with the entire amount recorded as capital reserve. As of the reporting period end the Company had completed this capital increase in Jiangsu Changchai Machinery Co. Ltd. 2. Absorption Merger of Horizon Agricultural Equipment by Changchai Robin On November 22 2024 the Company convened the Fifth Interim Board Meeting of 2024 and reviewed and approved the "Proposal on the Merger between Changzhou Changchai Horizon Agricultural Equipment Co. Ltd.and Changzhou Fuji Changchai Robin Gasoline Engine Co. Ltd." The Board agreed that the wholly-owned subsidiary Changzhou Fuji Changchai Robin Gasoline Engine Co. Ltd. would acquire all assets liabilities business operations and other rights and obligations of the wholly-owned subsidiary Changzhou Changchai Horizon Agricultural Equipment Co. Ltd. through statutory absorption merger. Post-merger Changchai Robin continues normal operations while Horizon Agricultural Equipment's legal entity status has been deregistered. In 64Changchai Company Limited Annual Report 2024 February 2025 the Company received the Registration Notice (No. Dengzi [2025] 02270081) issued by the Government Services Management Office of Changzhou High-Tech Industrial Development Zone (Xinbei District) confirming completion of Horizon Agricultural Equipment's industrial and commercial deregistration procedures. 65Changchai Company Limited Annual Report 2024 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 Percenta New dividend dividendNumber ge (%) issues converte converte Other Subtotal Number Percenta ge (%) d from d from profit capitalreserves 1. Restricte 568181 8.05% 0 0 0 -56818 -56818 0 0.00% d shares 81 181 181 1.1 Shares held by 0 0.00% 0 0 0 0 0 0 0.00% governm ent 1.2 Shares held by state-ow 568181 8.05% 0 0 0 -56818 -56818 ned 81.00 181 181 00.00% legal persons 1.3 Shares held by other domesti 0 0.00% 0 0 0 0 0 0 0.00% c investor s Among which: Shares held by 0 0.00% 0 0 0 0 0 0 0.00% domesti c legal persons Shares held by 0 0.00% 0 0 0 0 0 0 0.00% domesti c natural 66Changchai Company Limited Annual Report 2024 persons 1.4 Shares held by foreign 0 0.00% 0 0 0 0 0 0 0.00% investor s Among which: Shares held by 0 0.00% 0 0 0 0 0 0 0.00% foreign legal persons Shares held by foreign 0 0.00% 0 0 0 0 0 0 0.00% natural persons 2. Unrestri 648874 cted 326 91.95% 0 0 0 568181568181705692100.00 8181507% shares 2.1 RMB-de nominat 498874 70.69% 0 0 0 568181 568181 555692ed 326 81 81 507 78.74% ordinary shares 2.2 Domesti cally 150000 150000 listed 000 21.26% 0 0 0 0 0 000 21.26% foreign shares 2.3 Oversea listed 0 0.00% 0 0 0 0 0 0 0.00% foreign shares 2.4 Other 0 0.00% 0 0 0 0 0 0 0.00% 3. Total 705692 100.00 shares 507 % 0 0 0 0 0 705692100.00 507% Reasons for the share changes: □ Applicable √ Not applicable Approval of share changes: □ Applicable √ Not applicable Transfer of share Ownership: □ Applicable √ Not applicable Effects of share changes on the basic and diluted earnings per share equity per share attributable to the 67Changchai Company Limited Annual Report 2024 Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period respectively: □ Applicable √ Not applicable Other information that the Company considers necessary or is required by the securities regulator to be disclosed: □ Applicable √ Not applicable 2. Changes in Restricted Shares √ Applicable □ Not applicable Unit: share Increase in Lifted Opening Restricted Restricted Name Restricted Shares Shares Closing Reasons for Lift Date of During the During the Restricted Share ShareShares Reporting Reporting Shares Restrictions Restrictions Period Period Private Changzhou Placement Investment Group Co. 56818181 0 56818181 0 Issuance of 56818181 July 5 2024 Ltd. Additional Shares Total 56818181 0 56818181 0 -- -- II Issuance and Listing of Securities 1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period □ Applicable √ Not applicable 2. Changes to Total Shares Shareholder Structure and Asset and Liability Structures □ Applicable √ Not applicable 3. Existing Staff-Held Shares □ Applicable √ Not applicable III Shareholders and Actual Controller 1. Shareholder Structure and Holdings Unit: share Number of Number of Number of Number of ordinary 47819 ordinary 53790 preferred preferredshareholder 0 0shareholders shareholders shareholders with s at the with resumed voting 68Changchai Company Limited Annual Report 2024 month-end resumed rights at the prior to the voting rights month-end prior disclosure to the disclosure of this of this Report Report 5% or greater shareholders or top 10 shareholders Shares in Shareh Increase/d pledge or Name of Nature of olding Total shares ecrease in Restricte Unrestricte frozen shareholder shareholder percent held at the the d shares d shares age period-end Reporting held held Sh Period Status are s Changzhou Investment State-owned Group Co. legal person 32.26% 227663417 0 0 22766341 7 Ltd Domestic Chen Jian natural 0.51% 3627800 149200 0 3627800 person KGI ASIA Foreign legal LIMITED person 0.44% 3100195 -1500 0 3100195 Wang Domestic Shuiqing natural 0.27% 1899100 1899100 0 1899100person Domestic Li Suinan natural 0.23% 1600300 6500 0 1600300 person N/A 0 Zhang Domestic Wenbing natural 0.22% 1556700 0 0 1556700person Huang Domestic Guoliang natural 0.22% 1547891 19000 0 1547891person Domestic Wang Ying natural 0.22% 1525200 1525200 0 1525200 person Domestic Xie Deqing natural 0.21% 1456800 536400 0 1456800 person Domestic Lu Zhang natural 0.20% 1384743 -451900 0 1384743 person Strategic investor or general legal person becoming a top-10 ordinary shareholder N/A due to rights issue (if any) It is unknown whether there is among the top 10 public shareholders and the Related or acting-in-concert top 10 unrestricted public shareholders any related parties or acting-in-concert parties among the shareholders above parties as defined in the Administrative Measures for Information Regarding Shareholding Alteration.Above shareholders involved in entrusting/being entrusted N/A with voting rights and giving 69Changchai Company Limited Annual Report 2024 up voting rights Special account for share repurchases (if any) among N/A the top 10 shareholders Top 10 unrestricted shareholders Unrestricted shares held at the Shares by type Name of shareholder period-end Type Shares Changzhou Investment Group Co. Ltd 227663417 RMB-denominated ordinary share 227663417 Chen Jian 3627800 RMB-denominatedordinary share 3627800 KGI ASIA LIMITED 3100195 Domestically listedforeign share 3100195 Wang Shuiqing 1899100 RMB-denominatedordinary share 1899100 Li Suinan 1600300 Domestically listedforeign share 1600300 Zhang Wenbing 1556700 RMB-denominatedordinary share 1556700 Huang Guoliang 1547891 Domestically listedforeign share 1547891 Wang Ying 1525200 RMB-denominatedordinary share 1525200 Xie Deqing 1456800 Domestically listedforeign share 1456800 Lu Zhang 1384743 Domestically listedforeign share 1384743 Related or acting-in-concert parties among top 10 unrestricted public It is unknown whether there is among the top 10 public shareholders and the shareholders as well as top 10 unrestricted public shareholders any related parties or acting-in-concert between top 10 unrestricted parties as defined in the Administrative Measures for Information Regarding public shareholders and top Shareholding Alteration. 10 shareholders Top 10 ordinary shareholders Shareholders Chen Jian Wan Shuiqing and Wang Ying hold 3627800 shares involved in securities margin 1114400 shares and 1525200 shares of the Company's stock respectively trading (if any) through margin trading accounts.Top 10 shareholders involved in refinancing shares lending □ Applicable √ Not applicable Changes in Top 10 Shareholders Due to Securities Lending/Return Activities □ Applicable √ Not applicable Repurchase Agreements Involving Top 10 Shareholders During Reporting Period □ Yes √ No No such cases in the Reporting Period. 2. Controlling Shareholder Nature of the controlling shareholder: Controlled by a local state-owned legal person Type of the controlling shareholder: Legal person 70Changchai Company Limited Annual Report 2024 Legal Name of controlling representati Date of Unified social credit Principal activity shareholder ve/person establishment code in charge Property Changzhou Investment Li Desen 20 June 2002 91320400467283980X investment and Group Co. Ltd management Controlling shareholder’s holdings in other listed companies at home or Nil abroad in the Reporting Period Change of the controlling shareholder in the Reporting Period: □ Applicable √ Not applicable No such cases in the Reporting Period. 3. Actual Controller and Its Acting-in-Concert Parties Nature of the actual controller: Local institution for state-owned assets management Type of the actual controller: Legal person Legal representativ Date of Name of actual controller Unified social credit code Principal activity e/person in establishment charge State-owned Assets Supervision and Administration Shi Jiangshui 11320400014110251M Not applicable Commission of Changzhou Municipal People’s Government Other listed companies at home or abroad controlled by the actual None controller in the Reporting Period Change of the actual controller during the Reporting Period: □ Applicable √ Not applicable No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company: 71Changchai Company Limited Annual Report 2024 Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.□ Applicable √ Not applicable 4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the Largest Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held by Them □ Applicable √ Not applicable 5. Other 10% or Greater Corporate Shareholders □ Applicable √ Not applicable 6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder Actual Controller Reorganizer and Other Commitment Makers □ Applicable √ Not applicable IV Specific Implementation of Share Repurchase during the Reporting Period Progress on any share repurchase □ Applicable √ Not applicable Progress on reducing the repurchased shares by means of centralized bidding □ Applicable √ Not applicable 72Changchai Company Limited Annual Report 2024 Part VIII Preference Shares □ Applicable √ Not applicable No preference shares in the Reporting Period.Part IX Bonds □ Applicable √ Not applicable 73Changchai Company Limited Annual Report 2024 Part X Financial Statements I Independent Auditor’s Report Type of the independent auditor’s opinion Unmodified unqualified opinion Date of signing this report 9 April 2025 Zhongxinghua Certified Public Accountants (Special Name of the independent auditor General Partnership) No. of the auditor’s report Zhongxinghua Audit (2025) No. 020589 Name of the certified public accountants Wang Jun Pan Daliang Text of the Independent Auditor’s Report To the Shareholders of Changchai Company Limited I Opinion We have audited the accompanying financial statements of Changchai Company Limited. (together with its consolidated subsidiaries included in the consolidated financial statements the “Changchai Company”) which comprise the parent’s and consolidated balance sheets as at 31 December 2024 the parent’s and consolidated income statements the parent’s and consolidated cash flow statements the parent’s and consolidated statements of changes in shareholders’ equity for the year then ended as well as the notes to the financial statements.In our opinion the financial statements attached were prepared in line with the regulations of Accounting Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated and parent financial position of Changchai Company. As at 31 December 2024 and the consolidated and parent business performance and cash flow for 2024.II Basis for Opinion We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants and we have fulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.III Key Audit Matters Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements for the current period. These matters were addressed in the context of our audit of the financial statements as a whole and we do not provide a separate opinion on these matters. We have determined the following matters to be the key audit matters to be communicated in the audit report.(I) Revenue Recognition 1. Matter Description Changchai Company's operating revenue primarily derives from the sales of diesel engines and related components. For details on the accounting policies for revenue recognition and the analysis of revenue please refer to the accounting policies described in Note IV.27 "Significant Accounting Policies and Estimates" and Note 74Changchai Company Limited Annual Report 2024 V.39 "Consolidated Financial Statement Items" in the notes to the consolidated financial statements. For the year 2024 Changchai Company reported operating revenue of RMB 2415869028.32. As operating revenue is one of Changchai Company’s key performance indicators there is an inherent risk that management (hereinafter referred to as "Management") may recognize revenue inappropriately to achieve specific targets or expectations. Therefore we identified the recognition and measurement of Changchai Company’s revenue as a key audit matter. 2. Audit Response (1) Gained an understanding of key internal controls related to revenue recognition evaluated the design of these controls determined whether they were implemented and tested the operating effectiveness of relevant internal controls; (2) Conducted interviews with Management to understand Changchai Company’s revenue recognition policies; (3) Reviewed sales contracts to understand key contractual terms and conditions and assessed whether the revenue recognition methods were appropriate; (4) Performed analytical procedures on operating revenue and gross profit margin by month product and customer to identify any significant or unusual fluctuations and investigated the reasons for such fluctuations; (5) Examined supporting documents related to revenue recognition on a sample basis including but not limited to sales contracts purchase orders sales invoices delivery notes customer acknowledgments settlement documents export declarations and bills of lading; (6) Conducted confirmations of sales revenue and accounts receivable balances with major customers to verify the authenticity and accuracy of revenue recognition; (7) Performed sample testing on sales revenue recognized around the balance sheet date to assess whether revenue was recorded in the appropriate period; (8) Obtained business registration information of Changchai Company’s major customers and inquired with relevant personnel to confirm whether any related-party relationships existed between major customers and Changchai Company; (9) Reviewed whether information related to operating revenue was appropriately presented in the financial statements.(II) Impairment of Accounts Receivable 1. Matter Description As of December 31 2024 the gross carrying amount of accounts receivable in the consolidated balance sheet of Changchai Company was RMB 589230509.70 with an allowance for doubtful accounts of RMB 144976269.68 resulting in a net carrying amount of RMB 444254240.02.Management of Changchai Company measures the allowance for impairment based on the expected credit losses over the lifetime of the receivables either individually or collectively according to the credit risk characteristics of the accounts receivable. For accounts receivable measured individually for expected credit losses Management considers reasonable and supportable information about past events current conditions and forecasts of future economic conditions to estimate the expected collectible cash flows thereby determining the appropriate allowance. For accounts receivable measured collectively for expected credit losses they are grouped based on aging and the allowance is determined by referencing historical credit loss experience adjusted for forward-looking estimates. An aging analysis of accounts receivable is prepared and matched with expected credit loss rates to calculate the allowance.Given the materiality of accounts receivable and the significant management judgment involved in impairment 75Changchai Company Limited Annual Report 2024 assessment we identified the impairment of accounts receivable as a key audit matter. 2. Audit Response (1) Gained an understanding of key internal controls related to accounts receivable impairment evaluated their design determined whether they were implemented and tested the operating effectiveness of relevant controls; (2) Reviewed subsequent actual write-offs or reversals of allowances for doubtful accounts from prior years to assess the accuracy of Management’s past estimates; (3) Evaluated Management’s considerations and supporting evidence in assessing the credit risk of accounts receivable to determine whether credit risk characteristics were appropriately identified; (4) For individually assessed accounts receivable obtained and examined Management’s cash flow projections assessed the reasonableness of key assumptions and data accuracy and corroborated them with external evidence; (5) For collectively assessed accounts receivable evaluated the appropriateness of grouping based on credit risk characteristics and assessed the reasonableness of the aging analysis and expected credit loss rates by comparing them with historical loss experience and forward-looking adjustments; (6) Tested the accuracy and completeness of data used by Management and verified the correctness of the allowance calculation; (7) Performed confirmations on a sample of year-end accounts receivable balances discussed collection status and potential risks with Management and examined subsequent collections to assess the reasonableness of the allowance; (8) Reviewed whether disclosures related to accounts receivable impairment were appropriately presented in the financial statements.IV. Other Information The management of Changchai Company (hereinafter referred to as "Management") is responsible for the other information. The other information comprises the information included in the 2024 Annual Report of Changchai Company but does not include the financial statements and our audit report.Our opinion on the financial statements does not cover the other information nor do we express any form of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.Based on the work we have performed if we conclude that there is a material misstatement in the other information we are required to report that fact. In this regard we have nothing to report.V. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for Business Enterprises and for the design implementation and maintenance of internal control relevant to the preparation of financial statements that are free from material misstatement whether due to fraud or error.In preparing the financial statements Management is responsible for assessing Changchai Company’s ability to continue as a going concern disclosing matters related to going concern (as applicable) and using the going concern basis of accounting unless Management either intends to liquidate the Company cease operations or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial Statements 76Changchai Company Limited Annual Report 2024 Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an audit report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.In conducting the audit in accordance with auditing standards we exercised professional judgment and maintained professional skepticism. Furthermore we: (1) Identified and assessed the risks of material misstatement of the financial statements whether due to fraud or error; designed and performed audit procedures responsive to those risks; and obtained sufficient and appropriate audit evidence as a basis for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal controls. (2) Obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. (3) Evaluated the appropriateness of accounting policies used by management and the reasonableness of accounting estimates and related disclosures made by management. (4) Concluded on the appropriateness of management’s use of the going concern basis of accounting. Based on the audit evidence obtained we concluded whether a material uncertainty exists related to events or conditions that may cast significant doubt on Changchai Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists auditing standards require us to draw attention in our audit report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the information available to us up to the date of the audit report. However future events or conditions may cause Changchai Company to cease to continue as a going concern. (5) Evaluated the overall presentation structure and content of the financial statements and assessed whether the financial statements represent the underlying transactions and events fairly. (6) Obtained sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within Changchai Company to express an opinion on the financial statements. We were responsible for directing supervising and performing the group audit and remain solely responsible for our audit opinion.We communicated with those charged with governance regarding among other matters the planned scope and timing of the audit significant audit findings and any significant deficiencies in internal control identified during our audit.We also provided those charged with governance with a statement that we complied with relevant ethical requirements regarding independence and communicated all relationships and other matters that may reasonably be thought to bear on our independence including relevant safeguards (where applicable).From the matters communicated with those charged with governance we determined those matters that were of most significance in the audit of the financial statements of the current period and were therefore the key audit matters. We describe these matters in our audit report unless law or regulation precludes public disclosure or in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits. 77Changchai Company Limited Annual Report 2024 Zhongxinghua Certified Public Accountants LLP Chinese CPA: Wang Jun (Special General Partnership) (Engagement Partner) Chinese CPA: Pan Daliang Beijing · China 9 April 2025 II Financial Statements Currency unit for the financial statements and the notes thereto: RMB 1. Consolidated Balance Sheet Prepared by Changchai Company Limited 31 December 2024 Unit: RMB Item 31 December 2024 1 January 2024 Current assets: Monetary assets 1063700492.59 1083867966.87 Settlement reserve Interbank loans granted Held-for-trading financial assets 303667459.65 225641429.94 Derivative financial assets Notes receivable 318814017.13 161632567.94 Accounts receivable 444254240.02 316543159.91 Accounts receivable financing 223261002.76 195875948.92 Prepayments 12725958.70 12333310.85 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 9847441.82 49699753.61 Including: Interest receivable Dividends receivable 7165080.00 Financial assets purchased under resale agreements Inventories 819201998.42 789220185.68 Including: Data resources Contract assets Assets held for sale 78Changchai Company Limited Annual Report 2024 Current portion of non-current assets 40773509.75 Other current assets 54605021.67 20910504.84 Total current assets 3250077632.76 2896498338.31 Non-current assets: Loans and advances to customers Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments Investments in other equity instruments 941120058.72 969488025.67 Other non-current financial assets 377869217.49 412914576.80 Investment property 37740844.55 39837558.11 Fixed assets 615414505.40 675596920.95 Construction in progress 3376866.69 4275622.18 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 142805785.86 148458185.68 Including: Data resources Development costs Including: Data resources Goodwill Long-term prepaid expense 2664557.06 8227958.66 Deferred income tax assets 6458337.99 1518995.79 Other non-current assets 4373097.30 2578776.77 Total non-current assets 2131823271.06 2262896620.61 Total assets 5381900903.82 5159394958.92 Current liabilities: Short-term borrowings 94471787.41 Borrowings from the central bank Interbank loans obtained Held-for-trading financial liabilities Derivative financial liabilities 79Changchai Company Limited Annual Report 2024 Notes payable 491643629.88 528139582.33 Accounts payable 690733575.75 641484184.05 Advances from customers 30183376.84 1647441.22 Contract liabilities 31640879.59 33352877.66 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 48792254.98 47738883.57 Taxes payable 4214324.70 6231169.74 Other payables 117736961.52 98953000.57 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 175064677.93 67069965.96 Total current liabilities 1684481468.60 1424617105.10 Non-current liabilities: Insurance contract reserve Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term employee benefits payable Provisions 73002860.52 60070382.24 Deferred income 29386167.02 32795896.48 Deferred income tax liabilities 154449852.33 171843455.52 80Changchai Company Limited Annual Report 2024 Other non-current liabilities Total non-current liabilities 256838879.87 264709734.24 Total liabilities 1941320348.47 1689326839.34 Shareholders’ equity: Share capital 705692507.00 705692507.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 640509675.84 640509675.84 Less: Treasury stock Other comprehensive income 643067549.91 667180321.82 Specific reserve 21959066.35 19432089.52 Surplus reserves 367826665.27 363695592.34 General reserve Retained earnings 983627999.95 1002436724.71 Total equity attributable to Shareholders of the Company as 3362683464.32 3398946911.23 the parent Non-controlling interests 77897091.03 71121208.35 Total shareholders’ equity 3440580555.35 3470068119.58 Total liabilities and shareholders’ equity 5381900903.82 5159394958.92 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 81Changchai Company Limited Annual Report 2024 2. Balance Sheet of the Company as the Parent Unit: RMB Item 31 December 2024 1 January 2024 Current assets: Monetary assets 932456827.90 971143382.52 Held-for-trading financial assets 200209027.78 100437916.67 Derivative financial assets Notes receivable 291060042.38 152906979.84 Accounts receivable 424946666.41 291996837.94 Accounts receivable financing 215854639.00 193679203.92 Prepayments 8720127.77 5850589.29 Other receivables 24288767.65 399142024.92 Including: Interest receivable Dividends receivable 7165080.00 Inventories 551350588.20 475538711.10 Including: Data resources Contract assets Assets held for sale Current portion of non-current assets 40773509.75 Other current assets 31935179.39 5839708.73 Total current assets 2680821866.48 2637308864.68 Non-current assets: Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments 868279449.94 576443530.03 Investments in other equity instruments 941120058.72 969488025.67 Other non-current financial assets 377869217.49 412914576.80 Investment property 37740844.55 39837558.11 Fixed assets 188539011.23 229931726.27 Construction in progress 3132433.82 2166940.74 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 56046446.22 58781756.11 Including: Data resources Development costs 82Changchai Company Limited Annual Report 2024 Including: Data resources Goodwill Long-term prepaid expense Deferred income tax assets 5814276.42 920609.18 Other non-current assets 3755279.00 830991.15 Total non-current assets 2482297017.39 2291315714.06 Total assets 5163118883.87 4928624578.74 Current liabilities: Short-term borrowings 49843838.91 Held-for-trading financial liabilities Derivative financial liabilities Notes payable 652752618.33 524671742.33 Accounts payable 572396386.79 526544716.02 Advances from customers 30183376.84 1647441.22 Contract liabilities 23493204.39 26149334.52 Employee benefits payable 39221119.16 40766429.54 Taxes payable 2116355.96 2069482.65 Other payables 111060096.07 91849091.40 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 39139067.15 53417011.96 Total current liabilities 1520206063.60 1267115249.64 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term employee benefits payable Provisions 70293055.65 60070382.24 Deferred income 29386167.02 32795896.48 Deferred income tax liabilities 147506745.60 157053077.87 Other non-current liabilities Total non-current liabilities 247185968.27 249919356.59 83Changchai Company Limited Annual Report 2024 Total liabilities 1767392031.87 1517034606.23 Shareholders’ 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 643067549.91 667180321.82 Specific reserve 19117263.36 19010793.43 Surplus reserves 367826665.27 363695592.34 Retained earnings 1000604165.79 996592057.25 Total shareholders’ equity 3395726852.00 3411589972.51 Total liabilities and shareholders’ equity 5163118883.87 4928624578.74 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 84Changchai Company Limited Annual Report 2024 3. Consolidated Income Statement Unit: RMB Item 2024 2023 1. Revenue 2415869028.32 2155698787.49 Including: Operating revenue 2415869028.32 2155698787.49 Interest income Insurance premium income Handling charge and commission income 2. Costs and expenses 2371544119.17 2156452273.22 Including: Cost of sales 2119300466.07 1884289338.95 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 16181617.86 15057398.25 Selling expense 60617254.43 54069774.62 Administrative expense 115466341.90 123981333.99 R&D expense 83401477.60 90339104.33 Finance costs -23423038.69 -11284676.92 Including: Interest expense 341136.21 1825195.98 Interest income 17940638.39 9008657.82 Add: Other income 23621255.14 6788111.97 Return on investment (“-” for loss) 24265851.27 19102348.95 Including: Share of profit or loss of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) -3313989.60 -5709875.91 Exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) -65938196.89 49816098.68 Credit impairment loss (“-” for loss) 1229820.12 -172171.65 Asset impairment loss (“-” for loss) -14403371.83 -27893895.75 Asset disposal income (“-” for loss) 304377.71 105702551.01 3. Operating profit (“-” for loss) 13404644.67 152589557.48 Add: Non-operating income 2838603.42 927993.65 Less: Non-operating expense 886507.69 1182537.54 85Changchai Company Limited Annual Report 2024 4. Profit before tax (“-” for loss) 15356740.40 152335013.59 Less: Income tax expense -9260824.48 37636658.03 5. Net profit (“-” for net loss) 24617564.88 114698355.56 5.1 By operating continuity 5.1.1 Net profit from continuing operations (“-” for net loss) 24617564.88 114698355.56 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By shareholders’ equity 5.2.1 Net profit attributable to shareholders of the Company as the parent 18489896.00 108495607.05 5.2.1 Net profit attributable to non-controlling interests 6127668.88 6202748.51 6. Other comprehensive income net of tax -24112771.91 11838617.75 Attributable to shareholders of the Company as the parent -24112771.91 11838617.75 6.1 Items that will not be reclassified to profit or loss -24112771.91 11838617.75 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 equity instruments -24112771.91 11838617.75 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 504792.97 126536973.31 Attributable to shareholders of the Company as the parent -5622875.91 120334224.80 Attributable to non-controlling interests 6127668.88 6202748.51 8. Earnings per share 8.1 Basic earnings per share 0.0262 0.1537 8.2 Diluted earnings per share 0.0262 0.1537 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 86Changchai Company Limited Annual Report 2024 4. Income Statement of the Company as the Parent Unit: RMB Item 2024 2023 1. Operating revenue 2261596684.92 2057120913.33 Less: Cost of sales 2025918153.26 1831801124.99 Taxes and surcharges 9757870.85 8602178.79 Selling expense 54333372.12 49264491.41 Administrative expense 86953834.51 87122617.94 R&D expense 74555192.15 79855291.69 Finance costs -26393666.49 -19194141.71 Including: Interest expense 14172.26 1562299.35 Interest income 21371554.39 17311210.31 Add: Other income 22448967.24 6016229.41 Return on investment (“-” for loss) 22651325.15 15102581.80 Including: Share of profit or loss of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) -2778698.46 -4894619.98 Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) -34836331.53 39852493.47 Credit impairment loss (“-” for loss) 621287.63 3495307.23 Asset impairment loss (“-” for loss) -11574638.78 -20288104.38 Asset disposal income (“-” for loss) 428278.54 105727630.80 2. Operating profit (“-” for loss) 36210816.77 169575488.55 Add: Non-operating income 1069126.99 319236.80 Less: Non-operating expense 7440.00 51648.54 3. Profit before tax (“-” for loss) 37272503.76 169843076.81 Less: Income tax expense -4038225.54 24864410.60 4. Net profit (“-” for net loss) 41310729.30 144978666.21 4.1 Net profit from continuing operations (“-” for net loss) 41310729.30 144978666.21 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income net of tax -24112771.91 11838617.75 5.1 Items that will not be reclassified to profit or loss -24112771.91 11838617.75 5.1.1 Changes caused by remeasurements on defined benefit schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of investments in other equity instruments -24112771.91 11838617.75 5.1.4 Changes in the fair value arising from changes in own credit risk 5.1.5 Other 87Changchai Company Limited Annual Report 2024 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 17197957.39 156817283.96 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 88Changchai Company Limited Annual Report 2024 5. Consolidated Cash Flow Statement Unit: RMB Item 2024 2023 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services 2238358650.77 2031067538.52 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 19164629.21 98155472.59 Cash generated from other operating activities 67860339.28 40082851.79 Subtotal of cash generated from operating activities 2325383619.26 2169305862.90 Payments for commodities and services 1962599108.34 1533814952.73 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 327926688.72 310775202.76 Taxes paid 50158557.19 33394657.94 Cash used in other operating activities 138992233.71 154131222.12 Subtotal of cash used in operating activities 2479676587.96 2032116035.55 Net cash generated from/used in operating activities -154292968.70 137189827.35 2. Cash flows from investing activities: Proceeds from disinvestment 1118117547.48 1101955152.04 Return on investment 11949697.38 23632366.98 Net proceeds from the disposal of fixed assets intangible assets and other long-lived assets 76848662.26 71562956.31 Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from investing activities 1206915907.12 1197150475.33 89Changchai Company Limited Annual Report 2024 Payments for the acquisition of fixed assets intangible assets and other long-lived assets 19328172.96 97110602.27 Payments for investments 1179550000.00 947055152.04 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 1198878172.96 1044165754.31 Net cash generated from/used in investing activities 8037734.16 152984721.02 3. Cash flows from financing activities: Capital contributions received Including: Capital contributions by non-controlling interests to subsidiaries Borrowings raised 94412090.20 Cash generated from other financing activities Subtotal of cash generated from financing activities 94412090.20 Repayment of borrowings 7000000.00 Interest and dividends paid 33168340.22 7195400.07 Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing activities 117170000.00 Subtotal of cash used in financing activities 33168340.22 131365400.07 Net cash generated from/used in financing activities 61243749.98 -131365400.07 4. Effect of foreign exchange rates changes on cash and cash equivalents 6063845.94 2469409.11 5. Net increase in cash and cash equivalents -78947638.62 161278557.41 Add: Cash and cash equivalents beginning of the period 971629523.46 810350966.05 6. Cash and cash equivalents end of the period 892681884.84 971629523.46 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 90Changchai Company Limited Annual Report 2024 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item 2024 2023 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services 1986603574.57 2151742371.58 Tax rebates 13751464.43 40874390.40 Cash generated from other operating activities 27621885.18 21935914.65 Subtotal of cash generated from operating activities 2027976924.18 2214552676.63 Payments for commodities and services 1860419699.59 1636385419.97 Cash paid to and for employees 188575870.97 212298042.01 Taxes paid 30952518.43 8731121.51 Cash used in other operating activities 86011290.15 302274673.41 Subtotal of cash used in operating activities 2165959379.14 2159689256.90 Net cash generated from/used in operating activities -137982454.96 54863419.73 2. Cash flows from investing activities: Proceeds from disinvestment 1004382432.65 1010000000.00 Return on investment 11093937.38 18887391.07 Net proceeds from the disposal of fixed assets intangible assets and other long-lived assets 76459461.84 71055306.33 Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities 1177096.12 Subtotal of cash generated from investing activities 1093112927.99 1099942697.40 Payments for the acquisition of fixed assets intangible assets and other long-lived assets 9040777.20 7558187.67 Payments for investments 1056000000.00 837170000.00 Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities 6000000.00 Subtotal of cash used in investing activities 1071040777.20 844728187.67 Net cash generated from/used in investing activities 22072150.79 255214509.73 3. Cash flows from financing activities: Capital contributions received Borrowings raised 49829666.65 Cash generated from other financing activities Subtotal of cash generated from financing activities 49829666.65 Repayment of borrowings Interest and dividends paid 33167547.83 7056925.07 Cash used in other financing activities 110000000.00 Subtotal of cash used in financing activities 33167547.83 117056925.07 91Changchai Company Limited Annual Report 2024 Net cash generated from/used in financing activities 16662118.82 -117056925.07 4. Effect of foreign exchange rates changes on cash and cash equivalents 5173303.38 2008960.07 5. Net increase in cash and cash equivalents -94074881.97 195029964.46 Add: Cash and cash equivalents beginning of the period 899689740.60 704659776.14 6. Cash and cash equivalents end of the period 805614858.63 899689740.60 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 92Changchai Company Limited Annual Report 2024 7. Consolidated Statements of Changes in Shareholders’ Equity 2024 Unit: RMB 2024 Equity attributable to shareholders of the Company as the parent Other equity G instruments en Total Item Other er Non-contPer Capital Less: shareholdShare compreh Specific Surplus al Retained Ot rolling capital Preferr pet reserve Treasury Subtotal ers’ Oth ensive reserve reserves re earnings her interests ed ual s stock equity er income se shares bon rv ds e 1. Balance as at the end of the 705692507 6405066718019432036369510024333989471121203470068.00 9675.84 321.82 89.52 592.34 6724.71 6911.23 8.35 119.58prior year Add: Adjustment for change in accounting policy Adjustment for correction of previous error 93Changchai Company Limited Annual Report 2024 Other adjustments 2. Balance as at 64050 the beginning of 705692507 9675.8 667180 194320 363695 100243 339894 7112120 3470068.00 4 321.82 89.52 592.34 6724.71 6911.23 8.35 119.58the year 3. Increase/ decrease in the -24112 252697 413107 -188087 -36263 6775882 -294875 period (“-” for 771.91 6.83 2.93 24.76 446.91 .68 64.23 decrease) 3.1 Total comprehensive -24112 184898 -56228 6127668 504792.9771.91 96.00 75.91 .88 7 income 3.2 Capital increased and reduced by shareholders 3.2.1 Ordinary shares increased by shareholders 3.2.2 Capital increased by holders of other equity instruments 94Changchai Company Limited Annual Report 2024 3.2.3 Share-based payments included in shareholders’ equity 3.2.4 Other 3.3 Profit 413107 -372986 -33167 -331675 distribution 2.93 20.76 547.83 47.83 3.3.1 Appropriation to 413107 -4131072.93 2.93 surplus reserves 3.3.2 Appropriation to general reserve 3.3.3 Appropriation to -331675 -33167 -33167547.83 547.83 47.83 shareholders 3.3.4 Other 3.4 Transfers within shareholders’ equity 95Changchai Company Limited Annual Report 2024 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 252697 252697 648213.8 3175190 reserve 6.83 6.83 0 .63 3.5.1 Increase in 995801 995801 912151.3 1087016 the period 6.52 6.52 0 7.82 96Changchai Company Limited Annual Report 2024 3.5.2 Used in the 743103 743103 263937.5 7694977 period 9.69 9.69 0 .19 3.6 Other 4. Balance as at 64050 the end of the 705692507.00 9675.8 64306721959036782698362733626877897093440580 4 549.91 66.35 665.27 999.95 3464.32 1.03 555.35period 2023 2023 Equity attributable to shareholders of the Company as the parent Other equity G instruments en Total Item Less: Other er Non-cont sharehold Share Perpe Capital Trea compreh Specific Surplus al Retained Ot rolling Ot Subtotal ers’capital Preferred tual reserves sury ensive reserve reserves re earnings her interests he equity shares bond stock income se r s rv e 1. Balance as at the end of 7056925 6401339 655341 188488 349197 915495 328471 7246417 335717407.00 63.01 704.07 56.75 725.72 909.35 0665.90 2.67 838.57 the prior year 97Changchai Company Limited Annual Report 2024 Add: Adjustment for change in accounting policy Adjustment for correction of previous error Other adjustments 2. Balance as at the 7056925 6401339 655341 188488 349197 915495 328471 7246417 3357174 beginning of 07.00 63.01 704.07 56.75 725.72 909.35 0665.90 2.67 838.57 the year 3. Increase/ decrease in the 375712.8 118386 583232. 144978 869408 114236 -134296 1128932 period (“-” for 3 17.75 77 66.62 15.36 245.33 4.32 81.01 decrease) 3.1 Total comprehensive 118386 108495 120334 6202748 126536917.75 607.05 224.80 .51 73.31 income 3.2 Capital increased and 375712.8 375712. -754571 -717000 reduced by 3 83 2.83 0.00 shareholders 98Changchai Company Limited Annual Report 2024 3.2.1 Ordinary shares increased by shareholders 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in shareholders’ equity 3.2.4 Other 375712.8 375712. -754571 -7170003 83 2.83 0.00 3.3 Profit 144978 -215547 -70569 -705692 distribution 66.62 91.69 25.07 5.07 3.3.1 Appropriation 144978 -144978 to surplus 66.62 66.62 reserves 3.3.2 Appropriation to general reserve 99Changchai Company Limited Annual Report 2024 3.3.3 Appropriation -705692 -70569 -7056925.07 25.07 5.07 to shareholders 3.3.4 Other 3.4 Transfers within shareholders’ 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 100Changchai Company Limited Annual Report 2024 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 583232. 583232. 583232.7 reserve 77 77 7 3.5.1 Increase 513698 513698 5136988 in the period 8.70 8.70 .70 3.5.2 Used in 455375 455375 4553755 the period 5.93 5.93 .93 3.6 Other 4. Balance as at the end of 7056925 6405096 667180 194320 363695 100243 339894 7112120 347006807.00 75.84 321.82 89.52 592.34 6724.71 6911.23 8.35 119.58 the period Unit: RMB 101Changchai Company Limited Annual Report 2024 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 102Changchai Company Limited Annual Report 2024 8. Statements of Changes in Shareholders’ Equity of the Company as the Parent 2024 Unit: RMB 2024 Other equity instruments Le Pe ss: rp Other Item Pre Tre Ot Totalet Capital comprehen Specific Surplus RetainedShare capital fer Ot asu he shareholders 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 66718032 19010793. 363695592. 996592057. 34115899 prior year 0 0.67 1.82 43 34 25 72.51 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 66718032 19010793. 363695592. 996592057. 34115899 the year 0 0.67 1.82 43 34 25 72.51 3. Increase/ decrease in the period -2411277 1.91106469.934131072.934012108.54 -15863120.(“-” for decrease) 51 103Changchai Company Limited Annual Report 2024 3.1 Total comprehensive income -2411277 41310729.3 17197957.1.91 0 39 3.2 Capital increased and reduced by shareholders 3.2.1 Ordinary shares increased by shareholders 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in shareholders’ equity 3.2.4 Other 3.3 Profit distribution 4131072.93 -37298620.7 -33167547.6 83 3.3.1 Appropriation to surplus 4131072.93-4131072.93 reserves 3.3.2 Appropriation to -33167547.8 -33167547. shareholders 3 83 3.3.3 Other 3.4 Transfers within shareholders’ 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 104Changchai Company Limited Annual Report 2024 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 106469.93 106469.93 3.5.1 Increase in the period 4667120.9 4667120.91 1 3.5.2 Used in the period 4560650.9 4560650.98 8 3.6 Other 4. Balance as at the end of the 705692507.0 65941870 64306754 19117263. 367826665. 100060416 33957268 period 0 0.67 9.91 36 27 5.79 52.00 2023 Unit: RMB 2023 Item Other equity Capital Share capital Le Other Specific Surplus Retained Ot Total instruments reserves ss: comprehen reserve reserves earnings he shareholders 105Changchai Company Limited Annual Report 2024 Pe Tre sive r ’ equity rp asu income Pre et ry fer Ot ua sto red he l ck sha r bo res nd s 1. Balance as at the end of the 705692507.0 65941870 65534170 18848856. 349197725. 873168182. 32616676 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 year 0 0.67 4.07 75 72 73 76.94 3. Increase/ decrease in the period 11838617 161936.68 14497866.6 123423874. 149922295 (“-” for decrease) .75 2 52 .57 3.1 Total comprehensive 11838617 144978666. 156817283 income .75 21 .96 3.2 Capital increased and reduced by shareholders 3.2.1 Ordinary shares increased by shareholders 106Changchai Company Limited Annual Report 2024 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in shareholders’ equity 3.2.4 Other 3.3 Profit distribution 14497866.6 -21554791.6 -7056925.02 9 7 3.3.1 Appropriation to 14497866.6 -14497866.6 surplus reserves 2 2 3.3.2 Appropriation to -7056925.07-7056925.0 shareholders 7 3.3.3 Other 3.4 Transfers within shareholders’ 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 107Changchai Company Limited Annual Report 2024 3.4.5 Other comprehensive income transferred to retained earnings 3.4.6 Other 3.5 Specific reserve 161936.68 161936.68 3.5.1 Increase in the period 4598473.0 4598473.04 4 3.5.2 Used in the period 4436536.3 4436536.36 6 3.6 Other 4. Balance as at the end of the 705692507.0 65941870 66718032 19010793. 363695592. 996592057. 34115899 period 0 0.67 1.82 43 34 25 72.51 Legal representative: Xie Guozhong General Manager: Xie Guozhong Head of the accounting department: Jiang He 108Changchai Company Limited Annual Report 2024 III. Company Profile 1. Registered location organization form and headquarter address of the Company 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 “Changchai” for short of stock as well as “0570” as stock code (present stock code is “000570”).In 1996 upon recommendation by Document No. 13 [1996] of the General Office of Jiangsu Provincial People's Government preliminary review by Document No. 24 [1996] of Shenzhen Securities Regulatory Office and approval by Document No. 27 [1996] of the State Council Securities Commission the Company privately placed 100 million B-shares to qualified investors from August 27 to August 30 1996. The shares were listed on September 13 1996 with the stock abbreviation "Changchai B" and stock code "2570" (current stock code: "200570").Through years of bonus share distributions rights offerings capital reserve conversions and additional share issuances as of December 31 2024 the Company's total issued share capital reached 705692507 shares with registered capital of RMB 705692507.Registered Address: 123 Huaide Middle Road Changzhou Jiangsu Province Headquarters Address: 123 Huaide Middle Road Changzhou Jiangsu Province Unified Social Credit Code: 91320400134792410W 2. Principal Business Operations of the Company The Company operates in the manufacturing industry with its business scope primarily covering: the manufacturing and sales of diesel engines diesel engine components and castings gasoline engines gasoline engine components grain harvesting machinery rotary tillers walking tractors molds and fixtures as well as the assembly and sales of diesel engine units and gasoline engine units.The Company's main products or services include: the production and sales of small and medium-sized single-cylinder and multi-cylinder diesel engines under the "Changchai" brand. The diesel engines produced and sold by the Company are mainly used in tractors combine harvesters light commercial vehicles agricultural equipment small construction machinery generator sets and marine engines.During the reporting period there were no changes to the Company's core business operations. 3. Authorization of Financial Statements The financial report has been approved to be issued by the Board of Directors on April 9 2025.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 109Changchai Company Limited Annual Report 2024 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 2023) 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 These financial statements are prepared on a going concern basis. The Company has the ability to continue as a going concern for at least 12 months from the end of the reporting period.V. Important Accounting Policies and Estimations Notification of specific accounting policies and accounting estimations: The Company and its subsidiaries are principally engaged in the production and sales of small-to-medium sized single-cylinder and multi-cylinder diesel engines under the 'Changchai' trademark. In accordance with their actual production and operating characteristics and the relevant Accounting Standards for Business Enterprises the Company and its subsidiaries have formulated specific accounting policies and accounting estimates for various transactions and events as detailed in the following descriptions. 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company comply with the requirements of the Accounting Standards for Business Enterprises (ASBE) and present fairly in all material respects the consolidated and parent company's financial position as of December 31 2024 and the consolidated and parent company's operating results and cash flows for the year then ended. 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. 110Changchai Company Limited Annual Report 2024 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 Business Combination refers to transactions or events that integrate two or more separate enterprises into a single reporting entity. Business combinations are categorized into Business Combinations under the Same Control and Business Combinations not under the Same Control. (1) Business combinations under the same control The enterprises involved in combination are ultimately controlled by the same party or parties before and after the combination. The control is not temporary and the combination is under the same control. For business combination under the same control the party that obtains control over other participating enterprises on the purchase date is the acquirer and other enterprises that participate in the combination are the acquirees.Combination date refers to the date on which the combing party actually obtains control to the combined party.The Company measures the assets and liabilities obtained from consolidation of enterprises according to the book value of consolidated party’s assets and liabilities (including the goodwill arising from ultimate controller’s acquisition of the consolidated party) in the ultimate controller’s consolidated financial statement on the consolidation date; adjusts the capital premium in capital reserve by the difference between obtained net asset book value and paid consolidated consideration book value (or total par value of shares issued) and adjusts retained earnings if the capital premium in capital reserve is insufficient to offset.The direct expenses generated by the acquirer for the purpose of business combinations shall be recorded into the profits and losses for the current period. (2) Business combinations not under the same control A business combination involving enterprises that are not ultimately controlled by the same party or parties both before and after the combination is a business combination not under common control. In a business combination not under common control the party that obtains control over the other combining enterprises on the acquisition date is the acquirer and the other enterprises participating in the combination are the acquirees. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.For a business combination not under common control the cost of combination includes the fair value at the acquisition date of assets given liabilities incurred or assumed and equity instruments issued by the acquirer in exchange for control of the acquiree. Professional fees such as audit legal valuation and consulting services as well as other administrative costs related to the business combination are expensed as incurred. Transaction costs incurred by the acquirer in issuing equity or debt instruments as consideration for the combination are included in the initial recognition amount of the equity or debt instruments. Any contingent consideration is included in the cost of combination at its fair value at the acquisition date. If new or additional evidence relating to circumstances existing at the acquisition date arises within twelve months after the acquisition date and results in an adjustment to the contingent consideration the amount of goodwill is adjusted accordingly. The acquirer measures the cost of combination and the identifiable assets and liabilities acquired at their fair values at the acquisition date. The excess of the cost of combination over the acquirer's interest in the fair value of the identifiable net assets of the acquiree at the acquisition date is recognized as goodwill. If the cost of combination is less than the acquirer's interest in the fair value of the identifiable net assets of the acquiree the acquirer first reassesses the measurement of the identifiable assets liabilities and contingent liabilities acquired and the cost of combination. If the cost of 111Changchai Company Limited Annual Report 2024 combination remains less than the acquirer's interest in the fair value of the identifiable net assets of the acquiree after the reassessment the difference is recognized in profit or loss for the period.If the acquirer obtains deductible temporary differences of the acquiree that do not meet the recognition criteria for deferred tax assets at the acquisition date and are therefore not recognized and if within twelve months after the acquisition date new or additional information becomes available indicating that the relevant circumstances existed at the acquisition date and that the economic benefits associated with the deductible temporary differences of the acquiree at the acquisition date are probable the related deferred tax assets are recognized with a corresponding decrease in goodwill. If the goodwill is insufficient to absorb the decrease the excess is recognized in profit or loss. In all other cases deferred tax assets arising from a business combination are recognized in profit or loss.A business combination not under common control achieved in stages through multiple transactions is accounted for by reference to the preceding paragraphs and Note V.14 "Long-term equity investments" if the transactions are part of a single arrangement. If the transactions are not part of a single arrangement the accounting treatment is differentiated between the separate financial statements and the consolidated financial statements: In the separate financial statements the initial cost of the investment is the sum of the carrying amount of the equity investment in the acquiree held prior to the acquisition date and the cost of the additional investment incurred on the acquisition date. If the equity investment in the acquiree held prior to the acquisition date involves other comprehensive income the related other comprehensive income is accounted for on the same basis as if the acquiree had directly disposed of the related assets or liabilities when the investment is disposed of (i.e. except for the relevant share of changes arising from the acquiree's remeasurement of defined benefit plan net liabilities or assets accounted for under the equity method the remainder is reclassified to investment income in the current period).In the consolidated financial statements the equity investment in the acquiree held prior to the acquisition date is remeasured at its fair value on the acquisition date with any difference between the fair value and the carrying amount recognized in investment income for the period. If the equity investment in the acquiree held prior to the acquisition date involves other comprehensive income the related other comprehensive income is accounted for on the same basis as if the acquiree had directly disposed of the related assets or liabilities (i.e. except for the relevant share of changes arising from the acquiree's remeasurement of defined benefit plan net liabilities or assets accounted for under the equity method the remainder is reclassified to investment income in the period in which the acquisition date falls). 6. Criteria for Determining Control and Methods for Preparing Consolidated Financial Statements (1) Criteria for Determining Control The scope of consolidation is determined based on control. Control means that the Company has power over an investee is exposed or has rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the returns. This generally includes situations where: the parent holds more than half of the voting rights of the investee; or the parent holds half or less of the voting rights but has more than half of the voting rights through agreements with other investors; or has the power to govern the financial and operating policies of the investee under the investee’s articles of association or agreements; or has the power to appoint or remove the majority of the members of the board of directors of the investee; or has the majority of voting rights at the board of directors of the investee. (2) Methods for Preparing Consolidated Financial Statements The Company includes subsidiaries in the consolidated financial statements from the date on which it obtains 112Changchai Company Limited Annual Report 2024 control over the subsidiaries’ net assets and operating decisions and excludes them from the date on which such control ceases. For subsidiaries disposed of the results of operations and cash flows prior to the disposal date are properly included in the consolidated income statement and consolidated cash flow statement; for subsidiaries disposed of during the period the opening balances of the consolidated balance sheet are not adjusted. For subsidiaries acquired in business combinations not under common control their results of operations and cash flows after the acquisition date are properly included in the consolidated income statement and consolidated cash flow statement and the opening balances and comparative figures in the consolidated financial statements are not adjusted. For subsidiaries acquired in business combinations under common control and entities acquired through mergers their results of operations and cash flows from the beginning of the period in which the combination occurs to the combination date are properly included in the consolidated income statement and consolidated cash flow statement and the comparative figures in the consolidated financial statements are adjusted accordingly.When preparing the consolidated financial statements if the accounting policies or reporting periods adopted by a subsidiary differ from those of the Company the subsidiary’s financial statements are adjusted to conform to the Company’s accounting policies and reporting periods. For subsidiaries acquired in business combinations not under common control their financial statements are adjusted based on the fair values of the identifiable net assets at the acquisition date.All significant intercompany balances transactions and unrealized profits are eliminated in full in the consolidated financial statements.The portion of equity and net profit or loss of subsidiaries attributable to non-controlling interests is presented separately in the consolidated financial statements under equity and net profit respectively. The portion of net profit or loss of subsidiaries attributable to non-controlling interests is presented as “non-controlling interests” under net profit in the consolidated income statement. Losses attributable to non-controlling interests in a subsidiary that exceed the non-controlling interests’ share of equity in the subsidiary at the beginning of the period are allocated against non-controlling interests.When control over a former subsidiary is lost due to disposal of part of the equity investment or other reasons the remaining equity interest is remeasured at its fair value at the date when control is lost. The difference between the sum of the consideration received from the disposal and the fair value of the remaining equity interest and the share of the carrying amount of the former subsidiary’s net assets attributable to the original equity interest from the acquisition date is recognized in profit or loss for the period in which control is lost. Other comprehensive income related to the equity investment in the former subsidiary is accounted for on the same basis as if the investee had directly disposed of the related assets or liabilities when control is lost (i.e. except for the relevant share of changes arising from the investee’s remeasurement of defined benefit plan net liabilities or assets the remainder is reclassified to profit or loss for the current period). Subsequently the remaining equity interest is accounted for in accordance with the relevant provisions of Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investments or Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments. For details see Note 5.14 “Long-term Equity Investments” or Note V.10 “Financial Instruments”.When the Company loses control over a subsidiary through multiple transactions that involve disposing of equity investments in the subsidiary step by step it is necessary to determine whether the transactions should be accounted for as a single transaction. The terms conditions and economic effects of the transactions meet one or more of the following circumstances which generally indicate that the transactions should be accounted for as a single transaction: (1) the transactions are entered into simultaneously or in contemplation of one another; (2) the transactions form a single transaction to achieve an overall commercial effect; (3) the occurrence of one transaction depends on the occurrence of at least one other transaction; or (4) one transaction considered alone is 113Changchai Company Limited Annual Report 2024 not economically justified but is economically justified when considered together with other transactions. If the transactions are not part of a single transaction each transaction is accounted for separately as appropriate underthe principles applicable to “partial disposal of long-term equity investments in subsidiaries without loss ofcontrol” and “loss of control over former subsidiaries due to disposal of part of equity investments or otherreasons”. If the transactions are part of a single transaction they are accounted for as a single transaction involving disposal of the subsidiary and loss of control; however the difference between the consideration received from each disposal before the loss of control and the share of the subsidiary’s net assets attributable to the disposed investment is recognized as other comprehensive income in the consolidated financial statements and reclassified to profit or loss for the period in which control is lost. 7. Classification of Joint Arrangements and Accounting Treatment for Joint Operations A joint arrangement is an arrangement of which two or more parties have joint control. The Company classifies joint arrangements into joint operations and joint ventures based on the rights and obligations arising from the arrangement. A joint operation is a joint arrangement whereby the Company has rights to the assets and obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement whereby the Company has rights to the net assets of the arrangement.The Company accounts for its investments in joint ventures using the equity method applying the accounting policies described in Note V.14(2) * "Long-term Equity Investments Accounted for Using the Equity Method".As a joint operator in a joint operation the Company recognizes its individually held assets and assumed liabilities as well as its share of jointly held assets and jointly assumed liabilities; recognizes revenue from the sale of its share of the output from the joint operation; recognizes its share of revenue arising from the sale of output by the joint operation; and recognizes expenses it incurs individually as well as its share of expenses incurred by the joint operation.When the Company as a joint operator contributes or sells assets (which do not constitute a business the same below) to a joint operation or purchases assets from a joint operation the Company only recognizes the portion of gains or losses arising from the transaction that is attributable to the other joint operators until such assets are sold to third parties. If these assets meet the criteria for impairment losses as stipulated in Accounting Standards for Business Enterprises No. 8 - Impairment of Assets and other relevant standards the Company fully recognizes such losses for assets contributed or sold to the joint operation by the Company and recognizes its share of such losses for assets purchased from the joint operation by the Company. 8. Determination of cash and cash equivalents The Company’s cash and cash equivalents include cash on hand deposits that can be used for payment at any time investments that owned by the Company which are in short-term (usually due within three months from the purchase date) highly liquid easy to convert to a known amount of cash low risk of value change. 9. Foreign currency operations (1) Translation Methods for Foreign Currency Transactions The Company translates foreign currency transactions into the functional currency amount at the spot exchange rate on the transaction date upon initial recognition. However for foreign currency exchange transactions or transactions involving currency exchange conducted by the Company the actual exchange rate adopted is used for 114Changchai Company Limited Annual Report 2024 translation into the functional currency amount. (2) Translation Methods for Foreign Currency Monetary Items and Non-monetary Items At the balance sheet date foreign currency monetary items are translated using the spot exchange rate on that date.The resulting exchange differences are recognized in profit or loss except for: * exchange differences arising from foreign currency-specific borrowings related to the acquisition or construction of qualifying assets which are accounted for in accordance with the principles for capitalizing borrowing costs; and * exchange differences arising from changes in the carrying amount of available-for-sale foreign currency monetary items other than amortized cost which are recognized in other comprehensive income.Non-monetary items denominated in foreign currency and measured at historical cost continue to be translated using the spot exchange rate on the transaction date. Non-monetary items denominated in foreign currency and measured at fair value are translated using the spot exchange rate on the date when the fair value is determined.The difference between the translated functional currency amount and the original functional currency amount is treated as a fair value change (including exchange rate effects) and recognized in profit or loss or other comprehensive income. 10. Financial Instruments A financial asset or financial liability is recognized when the Company becomes a party to the financial instrument contract. (1) Classification confirmation and measurement of financial assets Based on business model of managing financial assets and contractual cash flow characteristics of financial assets the Company divides financial assets into: financial assets measured at amortized cost; financial assets measured at fair value with changes included in other comprehensive income; financial assets measured at fair value through profit and loss.Financial assets are measured at fair value at initial recognition. For the financial assets at fair value and through current profit or loss the transaction expenses thereof should be recognized directly in profit or loss; for other categories of financial assets the transaction expenses thereof should be recognized into initially recognized amount. For the accounts receivable or bills receivable arising from product sales or labor service provision excluding or not considering significant financing components the Company regards the amount of consideration expected to charge as the initial recognition amount.* Financial assets measured at amortized costs The corporate business model for managing financial assets measured at amortized cost aims at charging contractual cash flow and the contractual cash flow characteristics of such financial assets are consistent with basic borrowing and loan arrangements namely cash flow is generated on a specific date only for payment of principal and interests based on outstanding principal amount. The Company utilizes effective interest rate method for such financial assets and performs subsequent measurement as per amortized cost with gains or losses arising from amortization or impairment included in current profits and losses.* Financial assets measured at fair value with changes included in other comprehensive income The corporate business model for managing such financial assets aims at both contractual cash flow charging and sales and the contractual cash flow characteristics of such financial assets are consistent with basic borrowing and loan arrangements. The Company measures such financial assets at fair value with changes included in other comprehensive income but impairment losses or gains exchange gains and losses and interest income calculated according to the actual interest rate method are included in current profits and losses. 115Changchai Company Limited Annual Report 2024 In addition the Company designates some non-trading equity instrument investments as financial assets measured at fair value with changes included in other comprehensive income. The Company records relevant dividend income of such financial assets into current profits and losses and records fair value changes into other comprehensive income. When such financial assets are derecognized the cumulative gains or losses previously recorded in other comprehensive income will transfer from other comprehensive income into retained earnings excluded in current profits and losses.* Financial Liabilities measured at fair value through profit and loss The Company classifies the above financial assets measured at amortized cost and the financial assets other than the financial assets measured at fair value with changes included in other comprehensive income as the financial assets measured at fair value through profit and loss. In addition during initial recognition in order to eliminate or significantly reduce accounting mismatches the Company designates some financial assets as financial assets measured at fair value through profit and loss. For such financial assets the Company uses fair value for subsequent measurement and fair value changes are included in current profits and losses. (2) Classification recognition and measurement of financial liabilities Financial liabilities are classified during initial recognition as the financial liabilities measured at fair value through profit and loss and other financial liabilities. For financial liabilities at fair value through profit or loss the transaction expenses thereof should be recognized directly in current profit or loss and for other financial liabilities the transaction expenses thereof should be recognized into initially recognized amount.* Financial liabilities measured at fair value through profit and loss Financial liabilities measured at fair value through profit and loss contain transactional financial liabilities (including derivatives that belong to financial liabilities) and financial liabilities designated as measured at fair value during initial recognition with changes included in current profits and losses.Transactional financial liabilities (including derivatives that belong to financial liabilities) are subsequently measured at fair value and except for hedge accounting-related the fair value changes are included in current profits and losses.The financial liabilities designated as measured at fair value with changes included in current profits and losses such liabilities are caused by the Company’s own credit risk changes with fair value changes included in other comprehensive income and when the liabilities are derecognized they are included in other comprehensive income caused by own credit risk changes with cumulative fair value changes transferred into retained earnings.The remaining fair value changes are included in current profits and losses. If treatment of own credit risk change impact of such financial liabilities in the above manner will cause or expand accounting mismatch in profits and losses the Company includes all gains or losses of such financial liabilities (including the amount of corporate own credit risk change impact) in current profits and losses.* Other financial liabilities Except the financial liabilities and financial guarantee contract arising from financial asset transfer at variance with derecognition conditions or continuous involvement of transferred financial assets other financial liabilities are classified as financial liabilities measured at amortized cost and subsequently measured at amortized cost with gains or losses resulting from derecognition or amortization included in current profits and losses. (3) Recognition basis and measurement method of financial assets transfer Financial assets are derecognized in one of the following conditions: * the contractual right to receive cash flow of such financial assets is terminated; * such financial assets have been transferred and almost all risks and rewards on the financial asset Ownership are transferred to the transferee; * such financial assets have been transferred and although the Company has neither transferred nor retained almost all risks and rewards on the 116Changchai Company Limited Annual Report 2024 financial asset Ownership it has given up control of such financial assets.If the enterprise neither transfers nor retains substantially all the risks and rewards of Ownership of a financial asset and it has not abandoned the control of that financial asset the relevant financial asset is recognized at the extent of continuing involvement in the transferred financial asset and the corresponding liability is recognized accordingly. The degree of continuous involvement in the transferred financial asset refers to the risk level that the enterprise faces due to the change of the value of the financial asset.Where a transfer of a financial asset in its entirely meets the criteria of de-recognition the difference between the carrying amount of the financial asset transferred and the sum of the consideration received from the transfer and any cumulative change in fair value that has been recognized in other comprehensive income is recognized in current profit or loss.Where a transfer of financial asset partly meets the criteria of de-recognition the carrying amount of the financial asset transferred should be amortized between the part that is derecognized and the part that is not derecognized according to the fair value and the difference between the sum of the consideration received from the transfer and any cumulative change in fair value that has been recognized in other comprehensive income and should be amortized to the derecognized part and the amortized above-mentioned carrying amount shall be recorded into current profit or loss.When the Company uses financial assets sold with recourse or sells financial assets held in an endorsement it must determine whether all risks and rewards of Ownership of the financial assets have been almost transferred. If all the risks and rewards of Ownership of the financial asset are almost transferred to the transferee and the financial asset is derecognized; if all the risks and rewards on the Ownership of the financial asset are retained the financial asset is not derecognized; all the risks and rewards of Ownership of financial assets are not almost transferred or retained continue to determine whether the Company retains the control over the assets and perform the accounting operation based on the principles described in the preceding paragraphs. (4) De-recognition of financial liabilities If current obligations of financial liabilities (or a part thereof) are removed the Company derecognizes such financial liabilities (or a part thereof). If the Company (borrower) signs an agreement with the lender to replace the original financial liabilities by bearing new financial liabilities and contract clauses of new financial liabilities and original financial liabilities are substantially different the original financial liabilities are derecognized while recognizing a new financial liability. If the Company makes substantial modification to the contractual clauses of original financial liabilities (or a part thereof) the original financial liabilities are derecognized and a new financial liability is recognized according to the clauses after modification.If financial liabilities (or a part thereof) are derecognized the Company records the difference between their book value and consideration paid (including non-cash assets transferred out or liabilities assumed) into current profits and losses. (5) Offset of financial assets and financial liabilities When the Company has legal right to offset financial assets and financial liabilities of the recognized amount and such legal rights are currently enforceable meanwhile the Company plans to settle by net assets or concurrently liquidate such financial assets and repay such financial liabilities financial assets and financial liabilities are presented in the balance sheet by net amounts after mutual offset. In addition financial assets and financial liabilities are separately presented in the balance sheet which are not offset by each other. (6) Determining method of the fair value of financial assets and financial liabilities Fair value refers to the price that a market participant can be received for the sale of an asset or the price he needs to pay for transferring a liability in an orderly transaction occurring on the measurement date. Where the financial 117Changchai Company Limited Annual Report 2024 instruments exist on active market the Company determines their fair value by using quotation on active market.Quoted market prices in an active market refer to the prices that are readily to get regularly from the exchange the broker the trade association pricing services institution etc. and they represent the actual market transaction prices in the fair transactions. Where the financial instruments do not exist on active market the Company determines their fair value by using valuation techniques. Valuation techniques include refers to the prices used in recent market transactions by the parties that are familiar to the situation and are voluntary to participate in the transaction refers to the current fair values of other essentially the same financial instruments discount cash flow valuation option pricing models etc. At the time of valuation the Company leverages valuation techniques that are applicable in the current circumstances and adequately supported by available data and other information chooses the input value consistent with the characteristics of assets or liabilities considered by market participants in transaction of relevant assets or liabilities and prefers to use the relevant observable input value. The value that cannot be inputted is utilized when the relevant observable input value is unavailable or unfeasible to obtain. 11. Impairment of financial assets The Company assesses impairment losses for the following financial assets: Financial assets measured at amortized cost; Debt instruments measured at fair value through other comprehensive income (FVOCI); These primarily include: Notes receivable; Accounts receivable; Contract assets; Other receivables; Debt investments; Other debt investments; Long-term receivables; Additionally impairment provisions and credit impairment losses for certain financial guarantee contracts are recognized in accordance with the accounting policies outlined below. (1) Method for Recognizing Impairment Provisions The Company measures expected credit losses (ECL) for the above items using either the general approach or the simplified approach depending on their applicability and recognizes corresponding credit impairment losses.Credit loss refers to the present value of all contractual cash flows the Company is entitled to receive under the contract discounted at the original effective interest rate minus the present value of all expected cash flows to be collected. For purchased or originated credit-impaired (POCI) financial assets the discount rate applied is the credit-adjusted effective interest rate.General Approach for ECL Measurement At each reporting date the Company assesses whether the credit risk of a financial asset has increased significantly since initial recognition: If credit risk has increased significantly the Company measures the loss allowance at an amount equal to lifetime ECL.If credit risk has not increased significantly the loss allowance is measured at 12-month ECL.The assessment incorporates all reasonable and supportable information including forward-looking data.For financial instruments with low credit risk at the reporting date the Company assumes no significant increase in credit risk since initial recognition and applies the 12-month ECL approach. (2) Criteria for Determining Significant Increase in Credit Risk A significant increase in credit risk is presumed if the probability of default (PD) over the remaining lifetime at the reporting date is substantially higher than the PD estimated at initial recognition. Unless exceptional circumstances exist the Company uses changes in the 12-month PD as a reasonable proxy for lifetime PD changes to determine whether credit risk has increased significantly.Factors considered in assessing significant increases in credit risk: Actual or expected material deterioration in the debtor’s operating performance; 118Changchai Company Limited Annual Report 2024 Material adverse changes in the debtor’s regulatory economic or technological environment; Significant decline in collateral value or quality of third-party guarantees/credit enhancements which may reduce the debtor’s economic incentive to repay or affect PD; Material changes in the debtor’s expected behavior or repayment patterns; Changes in the Company’s credit management practices for the financial instrument.Low credit risk presumption: At the reporting date if a financial instrument is determined to have low credit risk the Company assumes no significant increase in credit risk since initial recognition. A financial instrument is considered low risk if: The debtor has a strong capacity to meet short-term contractual cash flow obligations; Adverse economic or operational conditions over a longer period would not necessarily impair the debtor’s ability to fulfill its obligations. (3) Portfolio-Based Assessment of Expected Credit Risk The Company evaluates credit risk individually for financial assets with distinctly different risk profiles such as: Receivables under dispute litigation or arbitration; Receivables with clear evidence indicating the debtor’s inability to repay.For all other financial assets the Company groups them based on shared credit risk characteristics including: Financial instrument type Credit risk rating Aging profile (e.g. current overdue segments) (4) Accounting Treatment for Financial Asset Impairment At period-end the Company calculates ECL for each category of financial assets: If the ECL exceeds the current carrying amount of the impairment allowance the difference is recognized as an impairment loss; If the ECL is lower than the current allowance the difference is recognized as an impairment gain. (5) Method for recognizing credit losses of various financial assets * Bills receivable The Company measures loss provision for bills receivable based on the amount equivalent to expected credit losses throughout the existence period. Based on credit risk characteristics of bills receivable they are divided into different portfolios: Items Basis of determining the portfolio Bank acceptance bill Acceptors are banks with low credit risks Bank Acceptance Draft (Issued by Finance Companies) Issued by Finance Companies Commercial acceptance bill All of commercial acceptance bill * Accounts receivable and contract assets With regard to accounts receivable and contract assets excluding major financing components the Company measures loss reserve at the amount equivalent to the expected credit loss throughout the duration.With regard to accounts receivable and contract assets including major financing components the Company chooses to always measure loss reserve at the amount equivalent to the expected credit loss throughout the duration. 119Changchai Company Limited Annual Report 2024 In addition to accounts receivable with individual assessment of credit risks they are divided into different portfolios based on their credit risk characteristics: Items Basis of determining the portfolio Credit risk characteristics portfolio Portfolio based on aging of receivables as credit risk characteristic Related party within consolidation scope Related party within consolidation scope a. The aging of the Company's receivables is calculated from the date of occurrence.For the portfolio the aging-based grouping method is adopted to measure expected credit losses (ECL): Provision ratios of notes Provision ratios of Provision ratios of Provision ratios of other Aging Receivable (%) accounts receivable (%) contract assets (%) receivables (%) Within 1 2.00 2.00 2.00 2.00 year 1-2 years 5.00 5.00 5.00 5.00 2-3 years 15.00 15.00 15.00 15.00 3-4 years 30.00 30.00 30.00 30.00 4-5 years 60.00 60.00 60.00 60.00 Over 5 100.00 100.00 100.00 100.00 years b. Criteria for Recognizing Individually Assessed Bad Debt Provisions: A financial asset is considered credit-impaired when one or more events that have a detrimental impact on the asset's expected future cash flows occur. Observable evidence of credit impairment includes but is not limited to the following: The issuer or debtor is experiencing significant financial difficulties.The debtor has breached contractual terms such as defaulting or delaying payments of interest or principal.The creditor has granted concessions to the debtor (e.g. payment extensions reduced interest rates or principal forgiveness) that would not otherwise be considered due to the debtor's financial distress.The debtor is likely to enter bankruptcy or undergo financial restructuring.The active market for the financial asset has disappeared due to the financial difficulties of the issuer or debtor.The financial asset was acquired or originated at a significant discount reflecting incurred credit losses.Credit impairment may result from a combination of factors and does not necessarily stem from a single identifiable event.* Receivables Financing Financial assets classified as notes receivable and accounts receivable measured at fair value through other comprehensive income (FVTOCI) shall be presented as follows: "Receivables financing" for portions with original maturities of one year or less from the date of acquisition; "Other debt investments" for portions with original maturities exceeding one year from the date of acquisition. 120Changchai Company Limited Annual Report 2024 Except for individually assessed accounts receivable these financial assets are grouped into different portfolios based on their credit risk characteristics.Item Basis of determining the portfolio Notes receivable Bank acceptance drafts issued by banks with high credit ratings Accounts receivable This portfolio uses the aging of receivables as the credit risk characteristic.* Other receivables The Company measures impairment losses based on whether the credit risks of other receivables have increased significantly since initial recognition by using the amount equivalent to expected credit losses within the next 12 months or throughout the existence period. In addition to other receivables with individual assessment of credit risks they are divided into different portfolios based on their credit risk characteristics: Item Basis of determining the portfolio Aging portfolio Other receivables excluding related parties Related party within consolidation Other receivables from related parties within the scope of consolidation scope 12. Inventories (1) Classification of Inventories Inventories mainly include raw materials materials in outside processing work in progress finished goods and low-value consumables. (2) Measurement Method for Issuance All categories of inventories are purchased and received at planned costs and issued using the weighted average method. Finished goods costs are transferred at actual costs incurred during the period while cost of sales is recognized using the weighted average method. (3) Inventory Counting System The perpetual inventory system is adopted. (4) Amortization Method for Low-Value Consumables and Packaging Materials Low-value consumables are fully amortized upon issuance (one-time amortization method). Packaging materials are fully amortized upon issuance (one-time amortization method). (5) Recognition Criteria and Provision Method for Inventory Write-Down The net realizable value (NRV) of inventory refers to the estimated selling price in the ordinary course of business minus the estimated costs to complete selling expenses and related taxes. The determination of NRV is based on reliable evidence while also considering the purpose of holding the inventory and the impact of events after the reporting period.At the balance sheet date inventories are measured at the lower of cost or NRV. Based on a comprehensive year-end physical count provisions are made for inventories that are damaged obsolete priced below cost or otherwise unrecoverable. Write-downs are recognized for individual inventory items where cost exceeds NRV with the loss recorded in profit or loss.Methods for Determining NRV: 121Changchai Company Limited Annual Report 2024 Finished goods merchandise and materials held for sale: NRV = Estimated selling price ? Estimated selling expenses ? Related taxes.Materials requiring further processing: NRV = Estimated selling price of finished products ? Estimated costs to complete ? Estimated selling expenses ? Related taxes.Partial contract pricing: If part of an inventory item has a contract price while the remainder does not NRV is determined separately.Aggregate assessment: For inventories with similar use or produced/sold in the same region write-downs are assessed collectively if individual valuation is impractical.High-volume low-cost items: Write-downs are assessed by inventory category.If the factors that previously caused inventory write-downs no longer exist resulting in NRV exceeding the carrying amount the reversal (limited to the original provision amount) is recognized in profit or loss. 13. Held-for-sale and Discontinued Operations (1) Non-current Assets and Disposal Groups Held-for-sale The Company classifies a non-current asset or disposal group as held-for-sale if its carrying amount will be recovered principally through a sale transaction (including non-monetary asset exchanges with commercial substance the same applies below) rather than through continuing use. The specific criteria are that all of the following conditions are met: (i) the non-current asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; (ii) the Company has approved the sale plan and obtained a firm purchase commitment; and (iii) the sale is expected to be completed within one year. A disposal group refers to a group of assets to be disposed of by sale or otherwise together as a group in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction. If the goodwill acquired in a business combination was allocated to a cash-generating unit or group of cash-generating units to which the disposal group belongs under Accounting Standards for Business Enterprises No. 8—Impairment of Assets the disposal group shall include the goodwill allocated to it.When initially measuring or remeasuring non-current assets or disposal groups classified as held-for-sale at the balance sheet date if their carrying amount exceeds their fair value less costs to sell the carrying amount is written down to fair value less costs to sell. The amount of the write-down is recognized as an impairment loss in profit or loss for the current period and a provision for impairment of held-for-sale assets is made. For disposal groups the recognized impairment loss is first allocated to reduce the carrying amount of any goodwill in the disposal group and then to reduce the carrying amounts of the other non-current assets in the disposal group that are subject to the measurement requirements of Accounting Standards for Business Enterprises No. 42—Non-current Assets Held-for-sale and Discontinued Operations (hereinafter referred to as the "held-for-sale standards") on a pro-rata basis. If the fair value less costs to sell of a held-for-sale disposal group increases in subsequent balance sheet dates the previously recognized impairment loss shall be reversed. The reversal is limited to the cumulative impairment loss recognized for the non-current assets in the disposal group that are subject to the measurement requirements of the held-for-sale standards after classification as held-for-sale and the reversal amount is recognized in profit or loss for the current period. The carrying amounts of the non-current assets in the disposal group that are subject to the measurement requirements of the held-for-sale standards (excluding goodwill) are increased on a pro-rata basis according to their relative carrying amounts. The carrying amount of goodwill that has been reduced as well as impairment losses recognized for non-current assets subject to the measurement requirements of the held-for-sale standards before classification as held-for-sale shall not be 122Changchai Company Limited Annual Report 2024 reversed.Non-current assets in a disposal group classified as held-for-sale are not depreciated or amortized while interest and other expenses on liabilities in a held-for-sale disposal group continue to be recognized.When a non-current asset or disposal group no longer meets the criteria for classification as held-for-sale the Company ceases to classify it as held-for-sale or removes the non-current asset from the held-for-sale disposal group and measures it at the lower of: (i) its carrying amount before classification as held-for-sale adjusted for any depreciation amortization or impairment that would have been recognized had it not been classified as held-for-sale; and (ii) its recoverable amount. (2) Criteria for Identifying and Presentation Methods for Discontinued Operations A discontinued operation is a component of the Company that either has been disposed of or is classified as held-for-sale and meets any of the following criteria: (i) the component represents a separate major line of business or geographical area of operations; (ii) the component is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or (iii) the component is a subsidiary acquired exclusively with a view to resale.The Company presents the relevant profit or loss from discontinued operations in the income statement and discloses the effects of discontinued operations in the notes. 14. Long-term Equity Investments The long-term equity investments referred to in this section are those in which the Company has control joint control or significant influence over the investee. Long-term equity investments in which the Company does not have control joint control or significant influence are accounted for as financial assets measured at fair value through profit or loss. For non-trading investments the Company may elect at initial recognition to classify them as financial assets measured at fair value through other comprehensive income as detailed in Note V.10 "Financial Instruments." Joint control refers to the Company's shared control over an arrangement in accordance with relevant agreements where decisions regarding the relevant activities of the arrangement require unanimous consent from all parties sharing control. Significant influence refers to the Company's power to participate in the financial and operating policy decisions of the investee but not to control or jointly control those policies with other parties. (1) Determination of Investment Cost For long-term equity investments acquired through business combinations under common control the initial investment cost is measured at the share of the carrying value of the acquiree's equity in the consolidated financial statements of the ultimate controlling party on the combination date. The difference between the initial investment cost and the sum of the cash paid the carrying value of non-cash assets transferred and liabilities assumed is adjusted against capital reserve. If capital reserve is insufficient the remaining difference is adjusted against retained earnings. If equity instruments are issued as consideration the initial investment cost is measured at the share of the carrying value of the acquiree's equity in the consolidated financial statements of the ultimate controlling party on the combination date with the total par value of the shares issued recognized as share capital.The difference between the initial investment cost and the total par value of the shares issued is adjusted against capital reserve. If capital reserve is insufficient the remaining difference is adjusted against retained earnings. For step-by-step acquisitions of equity in an acquiree under common control that ultimately result in a business combination under common control the transactions are accounted for separately based on whether they constitute a "package transaction." If they constitute a "package transaction" the transactions are treated as a single transaction to obtain control. If not the initial investment cost on the combination date is measured at the 123Changchai Company Limited Annual Report 2024 share of the carrying value of the acquiree's equity in the consolidated financial statements of the ultimate controlling party. The difference between the initial investment cost and the sum of the carrying value of the long-term equity investment before the combination and the carrying value of additional consideration paid on the combination date is adjusted against capital reserve. If capital reserve is insufficient the remaining difference is adjusted against retained earnings. Other comprehensive income recognized for equity investments held before the combination date under the equity method or as financial assets measured at fair value through other comprehensive income is not accounted for at this stage.For long-term equity investments acquired through business combinations not under common control the initial investment cost is measured at the combination cost on the acquisition date. The combination cost includes the sum of the fair value of assets paid liabilities incurred or assumed and equity instruments issued by the acquirer.For step-by-step acquisitions of equity in an acquiree that ultimately result in a business combination not under common control the transactions are accounted for separately based on whether they constitute a "package transaction." If they constitute a "package transaction" the transactions are treated as a single transaction to obtain control. If not the initial investment cost of the long-term equity investment accounted for under the cost method is the sum of the carrying value of the previously held equity investment and the additional investment cost. Other comprehensive income related to the previously held equity investment accounted for under the equity method is not accounted for at this stage.Intermediary fees such as audit legal and valuation consulting services as well as other related administrative expenses incurred by the combining or acquiring party for the business combination are recognized in profit or loss when incurred.For other equity investments not formed through business combinations the initial measurement is based on cost which is determined according to the actual cash purchase price paid by the Company the fair value of equity instruments issued by the Company the value agreed in the investment contract or agreement the fair value or original carrying value of assets exchanged in non-monetary asset exchanges or the fair value of the long-term equity investment itself. Directly attributable costs taxes and other necessary expenses are also included in the investment cost. For additional investments that enable the Company to exert significant influence or joint control over the investee (but not control) the cost of the long-term equity investment is the sum of the fair value of the previously held equity investment determined in accordance with Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments and the additional investment cost. (2) Subsequent Measurement and Profit/Loss Recognition Methods Long-term equity investments in which the Company has joint control (excluding joint operations) or significant influence are accounted for using the equity method. Additionally the Company's financial statements use the cost method to account for long-term equity investments that enable the Company to control the investee.* Long-term Equity Investments Accounted for Using the Cost Method Under the cost method long-term equity investments are measured at initial investment cost with adjustments made for additional investments or disposals. Investment income for the period is recognized based on the Company's share of cash dividends or profits declared by the investee excluding any dividends or profits declared but not yet distributed at the time of investment.* Long-term Equity Investments Accounted for Using the Equity Method Under the equity method if the initial investment cost exceeds the Company's share of the investee's identifiable net assets at fair value at the investment date the initial investment cost is not adjusted. If the initial investment cost is less than the Company's share of the investee's identifiable net assets at fair value at the investment date the difference is recognized in profit or loss and the cost of the long-term equity investment is adjusted 124Changchai Company Limited Annual Report 2024 accordingly.Under the equity method the Company recognizes investment income and other comprehensive income based on its share of the investee's net profit or loss and other comprehensive income adjusting the carrying value of the long-term equity investment accordingly. The carrying value is reduced by the Company's share of profits or cash dividends declared by the investee. For other changes in the investee's equity not included in net profit or loss other comprehensive income or profit distribution the carrying value of the long-term equity investment is adjusted and recognized in capital reserve. When recognizing the share of the investee's net profit or loss the investee's net profit is adjusted based on the fair value of identifiable assets at the investment date. If the investee's accounting policies or reporting periods differ from the Company's the investee's financial statements are adjusted to align with the Company's policies and periods before recognizing investment income and other comprehensive income.For transactions between the Company and its associates or joint ventures where the assets contributed or sold do not constitute a business unrealized internal transaction profits or losses attributable to the Company are eliminated based on the Company's share and investment income is recognized after this adjustment. However unrealized internal transaction losses attributable to impairment losses on the transferred assets are not eliminated.If the Company contributes assets constituting a business to a joint venture or associate and obtains long-term equity investment without control the fair value of the contributed business is used as the initial investment cost of the new long-term equity investment. The difference between the initial investment cost and the carrying value of the contributed business is fully recognized in profit or loss. Similarly if the Company sells assets constituting a business to a joint venture or associate the difference between the consideration received and the carrying value of the business is fully recognized in profit or loss. If the Company purchases assets constituting a business from an associate or joint venture the transaction is accounted for under Accounting Standards for Business Enterprises No. 20—Business Combinations with gains or losses fully recognized.When recognizing the share of the investee's net losses the carrying value of the long-term equity investment and other long-term interests that substantially constitute a net investment in the investee are reduced to zero. If the Company has an obligation to assume additional losses a provision is recognized for the estimated obligation and included in investment losses for the period. If the investee subsequently reports net profits the Company resumes recognizing its share of profits after offsetting unconfirmed loss shares.* Acquisition of Minority Interests When preparing consolidated financial statements the difference between the additional long-term equity investment from acquiring minority interests and the share of the subsidiary's net assets calculated based on the additional Ownership percentage continuously measured from the acquisition date (or combination date) is adjusted against capital reserve. If capital reserve is insufficient the remaining difference is adjusted against retained earnings.* Disposal of Long-term Equity Investments In consolidated financial statements if the parent partially disposes of its long-term equity investment in a subsidiary without losing control the difference between the disposal proceeds and the share of the subsidiary's net assets corresponding to the disposed long-term equity investment is recognized in equity. If the partial disposal results in loss of control over the subsidiary the relevant accounting policy described in Note 5.6(2) "Preparation Methods for Consolidated Financial Statements" applies.For other disposals of long-term equity investments the difference between the carrying value of the disposed equity and the actual proceeds is recognized in profit or loss.For long-term equity investments accounted for under the equity method if the remaining equity after disposal 125Changchai Company Limited Annual Report 2024 continues to be accounted for under the equity method the portion of other comprehensive income previously recognized in equity is accounted for on the same basis as if the investee had directly disposed of the related assets or liabilities. Changes in equity recognized due to other changes in the investee's equity (excluding net profit or loss other comprehensive income and profit distribution) are proportionally reclassified to profit or loss.For long-term equity investments accounted for under the cost method if the remaining equity after disposal continues to be accounted for under the cost method other comprehensive income recognized before obtaining control under the equity method or financial instrument standards is accounted for on the same basis as if the investee had directly disposed of the related assets or liabilities and proportionally reclassified to profit or loss.Changes in equity recognized under the equity method due to other changes in the investee's equity (excluding net profit or loss other comprehensive income and profit distribution) are proportionally reclassified to profit or loss.If the Company loses control of an investee due to partial disposal of equity investments in its separate financial statements the remaining equity that enables the Company to exert joint control or significant influence over the investee is reclassified to the equity method with adjustments made as if the equity method had been applied from the initial acquisition. If the remaining equity does not enable joint control or significant influence it is reclassified under the financial instrument standards with the difference between fair value and carrying value at the date of losing control recognized in profit or loss. Other comprehensive income recognized before obtaining control under the equity method or financial instrument standards is accounted for on the same basis as if the investee had directly disposed of the related assets or liabilities. Changes in equity recognized under the equity method due to other changes in the investee's equity (excluding net profit or loss other comprehensive income and profit distribution) are reclassified to profit or loss at the date of losing control. For remaining equity accounted for under the equity method other comprehensive income and other equity changes are proportionally reclassified. For remaining equity reclassified under the financial instrument standards other comprehensive income and other equity changes are fully reclassified.If the Company loses joint control or significant influence over an investee due to partial disposal of equity investments the remaining equity is reclassified under the financial instrument standards with the difference between fair value and carrying value at the date of losing joint control or significant influence recognized in profit or loss. Other comprehensive income recognized under the equity method is accounted for on the same basis as if the investee had directly disposed of the related assets or liabilities when the equity method is discontinued. Changes in equity recognized due to other changes in the investee's equity (excluding net profit or loss other comprehensive income and profit distribution) are fully reclassified to investment income when the equity method is discontinued.If the Company disposes of its equity investments in a subsidiary step-by-step through multiple transactions until control is lost and these transactions constitute a "package transaction" they are treated as a single transaction to dispose of the subsidiary's equity investments and lose control. Before losing control the difference between the disposal proceeds and the carrying value of the disposed equity corresponding to the long-term equity investment is initially recognized in other comprehensive income and reclassified to profit or loss at the time control is lost. 15. Investment Properties Investment properties refer to properties held to earn rental income or for capital appreciation or both. These include leased land use rights land use rights held for future appreciation and transfer and leased buildings.Investment properties are initially measured at cost. Subsequent expenditures related to investment properties are capitalized if it is probable that future economic benefits associated with the property will flow to the Company and the cost can be measured reliably. All other subsequent expenditures are recognized in profit or loss as 126Changchai Company Limited Annual Report 2024 incurred.The Company applies the cost model for subsequent measurement of investment properties and depreciates or amortizes them using policies consistent with those applied to buildings or land use rights.The impairment testing method and provision method for investment properties are detailed in Note V.20 "Impairment of Long-term Assets." When owner-occupied properties or inventories are converted to investment properties or vice versa the carrying amount prior to conversion is used as the post-conversion carrying amount.When the use of an investment property changes to owner-occupied the property is reclassified as fixed assets or intangible assets from the date of change. When the use of owner-occupied property changes to rental or capital appreciation purposes the fixed asset or intangible asset is reclassified as an investment property from the date of change.For conversions: To investment properties measured using the cost model the pre-conversion carrying amount is used as the post-conversion carrying amount.To investment properties measured using the fair value model the fair value at the conversion date is used as the post-conversion carrying amount.An investment property is derecognized when disposed of or permanently withdrawn from use with no expected future economic benefits. Gains or losses from the sale transfer retirement or damage of investment properties are calculated as the disposal proceeds minus the carrying amount and related taxes/expenses and are recognized in profit or loss. 16. Fixed Assets (1) Recognition Criteria for Fixed Assets Fixed assets are tangible assets held for the production of goods provision of services rental or administrative purposes with a useful life exceeding one accounting year. Fixed assets are recognized only when it is probable that related economic benefits will flow to the Company and their costs can be reliably measured. Fixed assets are initially measured at cost taking into account the effects of estimated abandonment costs. (2) Depreciation Methods for Various Categories of Fixed Assets Depreciation of fixed assets is calculated on a straight-line basis over their useful lives commencing from the month following the date when the assets are ready for intended use. The useful lives estimated residual values and annual depreciation rates for each category of fixed assets are as follows: Estimated useful life Category Depreciation method Depreciation rate (%) (years) Houses and buildings Straight-line method 20-40 2.50-5 Machinery equipment Straight-line method 6-15 6.67-16.67 Transportation equipment Straight-line method 5-10 10-20 Other equipment Straight-line method 5-10 10-20 (2) Estimated residual value refers to the amount that the Company currently expects to obtain from disposal of the asset after deducting estimated disposal expenses assuming the fixed asset has reached the end of its expected 127Changchai Company Limited Annual Report 2024 useful life and is in the expected condition at that time. (3) The impairment testing method and provision method for fixed assets are detailed in Note V.20 "Impairment of Long-term Assets." (4) Other Disclosures Subsequent expenditures related to fixed assets are capitalized if it is probable that future economic benefits associated with the fixed asset will flow to the Company and the cost can be measured reliably. The carrying amount of replaced parts is derecognized. All other subsequent expenditures are recognized in profit or loss as incurred.A fixed asset is derecognized when it is disposed of or when no future economic benefits are expected from its use or disposal. Gains or losses arising from the sale transfer retirement or damage of fixed assets are calculated as the disposal proceeds minus the carrying amount and related taxes/expenses and are recognized in profit or loss.The Company reviews the useful lives estimated residual values and depreciation methods of fixed assets at least at each financial year-end. Changes in estimates are accounted for as changes in accounting estimates. 17. Construction in progress The Company classifies construction in progress into two types: self-constructed and contractor-constructed.Construction in progress is transferred to fixed assets when the project is completed and reaches the intended usable condition. The criteria for determining the intended usable condition shall meet any of the following circumstances: The physical construction (including installation) of the fixed asset has been fully completed or substantially completed; Trial production or test operation has been conducted and the results indicate that the asset can operate normally or stably produce qualified products or the test operation results show that it can operate or function normally; The amount of expenditures on the construction of the fixed asset is minimal or almost no longer occurs; The constructed or acquired fixed asset has met or substantially met the design or contract requirements.When construction in progress reaches the intended usable condition it is transferred to fixed assets at the actual project cost. For projects that have reached the intended usable condition but have not yet completed final settlement they are first transferred to fixed assets at an estimated value. After final settlement is completed the original provisional value is adjusted to the actual cost but no adjustment is made to previously calculated depreciation.The impairment testing method and provision method for construction in progress are detailed in Note V.20 "Impairment of Long-term Assets." 18. Borrowing Costs Borrowing costs include interest expenses on borrowings amortization of discounts or premiums ancillary costs and exchange differences arising from foreign currency borrowings. Borrowing costs directly attributable to the acquisition construction or production of a qualifying asset are capitalized when: Expenditures for the asset have been incurred; Borrowing costs have been incurred; and 128Changchai Company Limited Annual Report 2024 Activities necessary to prepare the asset for its intended use or sale have commenced.Capitalization ceases when the qualifying asset reaches its intended usable or saleable condition. All other borrowing costs are recognized as expenses in the period in which they are incurred.For specific borrowings the amount to be capitalized is the actual interest expense incurred during the period less any interest income earned on the unused portion of the borrowings deposited in banks or from temporary investments.For general borrowings the amount to be capitalized is determined by multiplying the weighted average of accumulated expenditures on the qualifying asset in excess of specific borrowings by the capitalization rate applicable to the general borrowings. The capitalization rate is calculated based on the weighted average interest rate of the general borrowings.During the capitalization period exchange differences on foreign currency specific borrowings are fully capitalized while exchange differences on foreign currency general borrowings are recognized in profit or loss.A qualifying asset refers to assets such as fixed assets investment properties and inventories that require a substantial period of time for their acquisition construction or production before they are ready for their intended use or sale.If the acquisition construction or production of a qualifying asset is interrupted abnormally and the interruption lasts for more than three consecutive months the capitalization of borrowing costs shall be suspended until the acquisition construction or production activities recommence.A qualifying asset refers to assets such as fixed assets investment properties and inventories that require a substantial period of time for their acquisition construction or production before they are ready for their intended use or sale. 19. Intangible Assets (1) Intangible Assets Intangible assets refer to identifiable non-monetary assets without physical form that are owned or controlled by the Company.Intangible assets are initially measured at cost. Expenditures related to intangible assets are capitalized if it is probable that future economic benefits will flow to the Company and the costs can be reliably measured. All other expenditures are recognized as expenses when incurred.Land use rights acquired are normally accounted for as intangible assets. For self-constructed buildings such as factories the related land use rights expenditures and building construction costs are accounted for as intangible assets and fixed assets separately. For purchased buildings the purchase price is allocated between the land use rights and buildings. If the allocation cannot be made reasonably the entire amount is accounted for as fixed assets.Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives from the date when they are available for use based on the original cost less estimated residual value and accumulated impairment losses. Intangible assets with indefinite useful lives are not amortized.At the end of each period the useful lives and amortization methods of intangible assets with finite useful lives are reviewed. Any changes are treated as changes in accounting estimates. In addition the useful lives of intangible assets with indefinite useful lives are reviewed. If evidence indicates that the period of economic benefits from the intangible asset is foreseeable its useful life is estimated and amortized according to the policy for intangible assets with finite useful lives. 129Changchai Company Limited Annual Report 2024 (2) Research and Development Expenditures The Company classifies internal research and development project expenditures into research phase expenditures and development phase expenditures.Expenditures in the research phase are recognized as expenses when incurred.The Company's R&D expenditures include materials consumed labor and service costs amortization of R&D equipment amortization of other intangible assets and fixed assets used in the development process and utilities expenses.The Company's specific criteria for distinguishing between research phase and development phase expenditures: The research phase refers to the stage of original and planned investigation undertaken to gain new scientific or technical knowledge. The development phase refers to the stage of applying research findings or other knowledge to a plan or design to produce new or substantially improved materials devices products etc. before commercial production or use.Development phase expenditures are recognized as intangible assets only when all the following conditions are met. Otherwise they are recognized as expenses when incurred: * Technical feasibility of completing the intangible asset for use or sale; * Intention to complete and use or sell the intangible asset; * Ability to generate economic benefits including demonstrating a market for products using the intangible asset or for the intangible asset itself or its usefulness for internal use; * Availability of adequate technical financial and other resources to complete development and to use or sell the intangible asset; * Ability to reliably measure expenditures attributable to the development phase.The Company's specific conditions for capitalizing development phase expenditures: technical feasibility of completion; intention to complete and use/sell; ability to generate economic benefits; availability of adequate resources; and reliable measurement of attributable expenditures.If research phase and development phase expenditures cannot be distinguished all R&D expenditures are recognized as expenses when incurred. (3) Impairment Testing Method and Provision Method for Intangible Assets The impairment testing method and provision method for intangible assets are detailed in Note V.20 "Impairment of Long-term Assets." 20. Long-term Asset Impairment For non-current non-financial assets such as fixed assets construction in progress intangible assets with finite useful lives right-of-use assets investment properties measured at cost model and long-term equity investments in subsidiaries joint ventures and associates the Company assesses at each balance sheet date whether there is any indication of impairment. If any such indication exists the recoverable amount of the asset is estimated to determine the impairment loss. Goodwill intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually regardless of whether there is any indication of impairment.When the recoverable amount is less than the carrying amount an impairment loss is recognized for the difference.The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. Fair value is determined based on the price in the sales agreement under fair transactions; if there is no sales agreement but 130Changchai Company Limited Annual Report 2024 an active market exists fair value is determined based on the asset's bid price; if neither exists fair value is estimated based on the best available information. Costs of disposal include legal fees related taxes transportation costs and other direct costs to bring the asset to a saleable condition. Value in use is determined by discounting the estimated future cash flows expected from the asset's continuing use and ultimate disposal at an appropriate discount rate. Impairment losses are calculated and recognized for individual assets. If it is difficult to estimate the recoverable amount of an individual asset the recoverable amount is determined for the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows independently.For goodwill presented separately in the financial statements the carrying amount of goodwill is allocated to cash-generating units or groups of cash-generating units expected to benefit from the synergies of the business combination when performing impairment tests. If the recoverable amount of a cash-generating unit or group of units including allocated goodwill is less than its carrying amount the impairment loss is recognized. The impairment loss is first allocated to reduce the carrying amount of goodwill allocated to the unit or group then to other assets of the unit or group pro rata based on their carrying amounts.Once recognized impairment losses for the above assets are not reversed in subsequent periods. 21. Long-term Deferred Expenses Long-term deferred expenses refer to expenses incurred but to be amortized over more than one year in the current and future periods. The Company measures long-term deferred expenses at actual cost and amortizes them evenly over the expected benefit period. For long-term deferred expenses that will not benefit future accounting periods their carrying amounts are fully recognized in profit or loss when determined. 22. Contract Liabilities Contract liabilities represent the Company's obligation to transfer goods or services to customers for which consideration has been received or is receivable. If the customer has paid consideration or the Company has obtained an unconditional right to payment before transferring goods or services the Company presents the amount received or receivable as a contract liability at the earlier of when payment is actually received or when payment is due. Contract assets and liabilities under the same contract are presented net while those under different contracts are not offset. 23. Employee Benefits The Company's employee benefits mainly include short-term employee benefits post-employment benefits and termination benefits.Short-term benefits mainly include wages bonuses allowances and subsidies employee welfare expenses medical insurance maternity insurance work injury insurance housing provident fund labor union funds and employee education funds and non-monetary benefits. The Company recognizes actual short-term employee benefits as liabilities during the accounting periods when employees render services and charges them to profit or loss or relevant asset costs. Non-monetary benefits are measured at fair value.Post-employment benefits mainly include basic pension insurance and unemployment insurance.Post-employment benefit plans include defined contribution plans. For defined contribution plans the corresponding payable amounts are charged to relevant asset costs or profit or loss when incurred. 131Changchai Company Limited Annual Report 2024 Termination benefits are recognized as employee benefit liabilities when the Company can no longer unilaterally withdraw the termination benefits offered under the redundancy plan or proposal or when the Company recognizes costs related to restructuring involving termination benefits whichever is earlier and charged to profit or loss. However termination benefits expected to be paid more than twelve months after the reporting period are treated as other long-term employee benefits.Internal retirement plans are accounted for using the same principles as termination benefits above. The Company recognizes salaries and social insurance contributions to be paid to internally retired employees from the date they stop rendering services to the normal retirement date as profit or loss (termination benefits) when the recognition criteria for provisions are met.Other long-term employee benefits provided by the Company are accounted for as defined contribution plans if they meet the criteria; otherwise they are accounted for as defined benefit plans. 24. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.Provisions are initially measured at the best estimate of the expenditure required to settle the present obligation and the carrying amounts are reviewed at each balance sheet date.If all or part of the expenditure required to settle a provision is expected to be reimbursed by a third party the reimbursement is recognized as a separate asset when its receipt is virtually certain and the amount recognized does not exceed the carrying amount of the provision. 25. Share-based Payment (1) Accounting Treatment for Share-based Payment Share-based payment refers to transactions in which equity instruments are granted or liabilities based on equity instruments are assumed in exchange for services provided by employees or other parties. Share-based payments are classified into equity-settled share-based payments and cash-settled share-based payments.* Equity-settled Share-based Payment For equity-settled share-based payments to obtain employee services the fair value of the equity instruments granted is measured at the grant date.If the vesting of the equity instruments is conditional upon completing a specified service period or meeting performance conditions the fair value is recognized over the vesting period on a straight-line basis based on the best estimate of the number of instruments expected to vest with corresponding increases in capital reserves.If the equity instruments vest immediately upon grant the fair value is recognized as an expense on the grant date with a corresponding increase in capital reserves.At each balance sheet date during the vesting period the Company revises its estimate of the number of equity instruments expected to vest based on the latest information (e.g. changes in the number of employees eligible for vesting). Any adjustments are recognized in the current period’s costs or expenses with corresponding adjustments to capital reserves.For equity-settled share-based payments to obtain services from non-employees: 132Changchai Company Limited Annual Report 2024 If the fair value of the services received can be reliably measured the expense is recognized based on the fair value of the services at the acquisition date.If the fair value of the services cannot be reliably measured but the fair value of the equity instruments can the expense is recognized based on the fair value of the equity instruments at the service acquisition date with a corresponding increase in shareholders’ equity.* Cash-settled Share-based Payment Cash-settled share-based payments are measured at the fair value of the liability incurred determined based on shares or other equity instruments.If the instruments vest immediately upon grant the liability is recognized on the grant date as an expense.If vesting is conditional upon completing a service period or meeting performance conditions the expense is recognized over the vesting period based on the best estimate of the number of instruments expected to vest with a corresponding increase in liabilities.At each balance sheet date until settlement the liability is remeasured at fair value with changes recognized in profit or loss. (2) Accounting for Modifications or Terminations of Share-based Payment Plans If a modification increases the fair value of the equity instruments granted the incremental fair value (i.e.the difference between the fair value before and after modification) is recognized as additional service cost.If a modification reduces the total fair value or is otherwise unfavorable to employees the original accounting treatment continues as if the modification never occurred unless the equity instruments are partially or fully canceled.If granted equity instruments are canceled during the vesting period the remaining unvested amount is recognized immediately in profit or loss as an accelerated vesting expense with a corresponding adjustment to capital reserves. If employees or other parties fail to meet non-vesting conditions (despite having the option to do so) the grant is treated as canceled. (3) Accounting for Share-based Payments Involving the Company’s shareholders or Controlling Parties For share-based payment transactions between the Company and its shareholders or controlling parties where one party (the settlement entity) is within the Company’s consolidated scope and the other (the service recipient) is outside: Consolidated Financial Statements Treatment: If the settlement entity settles using its own equity instruments the transaction is treated as an equity-settled share-based payment. Otherwise it is treated as a cash-settled share-based payment.If the settlement entity is an investor in the service recipient it recognizes a long-term equity investment at the grant-date fair value of the equity instruments or liability with a corresponding increase in capital reserves (other capital reserves) or liabilities.If the service recipient has no settlement obligation or grants its own equity instruments to employees the transaction is treated as equity-settled. If the service recipient has a settlement obligation and grants instruments other than its own equity the transaction is treated as cash-settled.Individual Financial Statements Treatment: For transactions between entities within the Company’s consolidated scope where the service recipient and settlement entity differ each entity accounts for the transaction in its individual financial statements following the above principles. 133Changchai Company Limited Annual Report 2024 26. Other Financial Instruments Such as Preference Shares and Perpetual Bonds (1) Classification of Perpetual Bonds and Preference Shares Financial instruments such as perpetual bonds and preference shares issued by the Company shall be classified as equity instruments only if they meet all of the following conditions: * The instrument does not impose any contractual obligation to deliver cash or other financial assets to another party or to exchange financial assets or liabilities under potentially unfavorable conditions; * If settlement may or must occur using the Company’s own equity instruments in the future: For non-derivative instruments there is no contractual obligation to deliver a variable number of the Company’s own equity instruments for settlement; For derivative instruments settlement can only be made by exchanging a fixed number of the Company’s own equity instruments for a fixed amount of cash or other financial assets.Financial instruments issued by the Company that do not meet the above conditions shall be classified as financial liabilities.For compound financial instruments issued by the Company: The liability component is measured at fair value and recognized as a liability.The residual amount (total proceeds received minus the fair value of the liability component) is recognized as "other equity instruments." Transaction costs are allocated between the liability and equity components in proportion to their respective shares of the total issuance proceeds. (2) Accounting Treatment for Perpetual Bonds and Preference Shares For perpetual bonds and preference shares classified as financial liabilities: Interest dividends gains/losses and gains/losses from redemption or refinancing are recognized in profit or loss except for borrowing costs eligible for capitalization (see Note V.18 "Borrowing Costs").For perpetual bonds and preference shares classified as equity instruments: Issuance (including refinancing) repurchase sale or cancellation is treated as a change in equity with related transaction costs deducted from equity.Distributions to holders of equity instruments are treated as profit distributions.The Company does not recognize changes in the fair value of equity instruments. 27. Revenue The Company recognizes revenue when control of the relevant goods is transferred to the customer provided all the following conditions are met: the contract has been approved by all parties who are committed to fulfilling their respective obligations; the contract clearly specifies the rights and obligations of each party regarding the goods or services to be transferred; the contract contains clear payment terms related to the goods to be transferred; the contract has commercial substance meaning its performance will change the risk timing or amount of the Company's future cash flows; and the consideration to which the Company is entitled for transferring goods to the customer is probable of collection.At contract inception the Company identifies the distinct performance obligations in the contract and allocates the transaction price to each performance obligation based on the relative stand-alone selling prices of the goods or services promised. In determining the transaction price the Company considers the effects of variable 134Changchai Company Limited Annual Report 2024 consideration significant financing components in the contract non-cash consideration and consideration payable to customers.For each performance obligation the Company recognizes revenue over time by measuring progress toward complete satisfaction of that performance obligation if any of the following criteria are met: the customer simultaneously receives and consumes the benefits as the Company performs; the customer controls the asset as it is created or enhanced; or the asset has no alternative use and the Company has an enforceable right to payment for performance completed to date. Progress is measured using an input method appropriate to the nature of the goods transferred. When progress cannot be reasonably measured revenue is recognized to the extent of costs incurred that are expected to be recoverable until progress can be reasonably measured.If none of the above criteria are met revenue is recognized at the point in time when control of the goods is transferred to the customer. In assessing whether control has transferred the Company considers indicators including: the Company's present right to payment; transfer of legal title; physical possession; transfer of significant risks and rewards of Ownership; customer acceptance; and other indicators of control transfer.For contracts with variable consideration the Company estimates the amount using either the expected value or most likely amount method. The transaction price including variable consideration does not exceed the amount for which it is highly probable that cumulative revenue recognized will not reverse when uncertainty is resolved. At each reporting date the Company reassesses estimates of variable consideration included in the transaction price.Consideration payable to a customer is deducted from the transaction price unless it is for distinct goods or services with the reduction recognized at the later of revenue recognition or payment (or commitment to pay) date.The Company assesses whether it is a principal or agent based on whether it controls the goods or services before transfer to the customer. As principal revenue is recognized at the gross amount of consideration; as agent revenue is recognized at the net amount retained after paying other parties.The Company's specific revenue recognition methods are as follows: Sales contracts typically contain a single performance obligation to transfer goods satisfied at a point in time.Domestic sales revenue is recognized when: goods are delivered and accepted per contract; payment is received or collectability is probable; significant risks/rewards are transferred; and legal title passes.Export sales revenue is recognized when: goods are cleared through customs with bill of lading obtained; payment is received or collectability is probable; significant risks/rewards are transferred; and legal title passes.Interest income is recognized based on time and effective interest rate. 28. Contract Costs Contract costs comprise costs to fulfill and costs to obtain contracts.Costs to fulfill are capitalized as assets if: (1) Directly related to a contract (labor materials overhead client-reimbursable costs); (2) Enhance resources for future performance; and (3) Probable of recovery. Incremental costs to obtain contracts are capitalized if probable of recovery unless the amortization period would be one year or less.Capitalized contract costs are amortized consistently with revenue recognition.Impairment losses are recognized when carrying amount exceeds the higher of: 135Changchai Company Limited Annual Report 2024 (1) Expected remaining consideration; and (2) Estimated costs to complete transfer. Reversals cannot exceed the carrying amount that would have existed without impairment. 29. Government Grants Government grants refer to monetary or non-monetary assets obtained by the Company from the government without compensation excluding capital contributions made by the government as an investor with corresponding Ownership rights. Government grants are classified into asset-related government grants and income-related government grants. Grants obtained for the acquisition or construction of long-term assets through other means are defined as asset-related government grants; other government grants are defined as income-related government grants. If government documents do not explicitly specify the grant recipient the following methods are used to classify the grants: (1) For government documents that specify particular projects classification is based on the relative proportion of expenditures forming assets versus expenses in the project budget with this proportion reviewed at each balance sheet date and adjusted if necessary; (2) For government documents that only provide general descriptions of usage without specifying particular projects the grants are treated as income-related government grants.Government grants in the form of monetary assets are measured at the amount received or receivable.Government grants in the form of non-monetary assets are measured at fair value; if fair value cannot be reliably determined they are measured at nominal amount. Government grants measured at nominal amount are directly recognized in current period profit or loss.The Company generally recognizes and measures government grants based on the actual amount received.However at period-end if there is conclusive evidence that the Company meets the relevant conditions of fiscal support policies and expects to receive fiscal support funds the grants are measured at the receivable amount.Government grants measured at receivable amount must simultaneously meet the following conditions: (1) The receivable grant amount has been confirmed by the competent government authority or can be reasonably estimated based on officially released fiscal fund management regulations with no significant uncertainty expected in the amount; (2) The grants are based on fiscal support projects and corresponding fiscal fund management regulations officially released by local finance departments in accordance with the "Government Information Disclosure Regulations" and such regulations must be universally applicable (available to any enterprise meeting the specified conditions) rather than specifically designed for particular enterprises; (3) The relevant grant approval documents clearly specify the payment timeline and the payment is supported by corresponding fiscal budgets thereby reasonably ensuring receipt within the stipulated period.Asset-related government grants are recognized as deferred income and systematically amortized into current period profit or loss over the useful life of the relevant assets. Income-related government grants used to compensate for future related costs expenses or losses are recognized as deferred income and amortized into current period profit or loss when the related costs expenses or losses are recognized; those used to compensate for already incurred related costs expenses or losses are directly recognized in current period profit or loss.Government grants containing both asset-related and income-related components are accounted for separately by component; if the components cannot be reasonably distinguished the entire grant is classified as income-related.Government grants related to the Company's ordinary activities are recognized in other income or offset against 136Changchai Company Limited Annual Report 2024 related costs and expenses based on the economic substance of the transaction; grants unrelated to ordinary activities are recognized in non-operating income or expenses.When recognized government grants need to be returned any remaining deferred income balance is first offset with any excess recognized in current period profit or loss; in other cases the return is directly recognized in current period profit or loss. 30. Deferred Tax Assets/Deferred Tax Liabilities Deferred tax assets or deferred tax liabilities are recognized based on the differences between the carrying amounts and tax bases of assets and liabilities (including items not recognized as assets or liabilities but having determinable tax bases under tax laws) calculated using the applicable tax rates expected to apply when the assets are recovered or liabilities are settled.Deferred tax assets are recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. At the balance sheet date if there is conclusive evidence indicating sufficient taxable profit will likely be available in future periods to utilize deductible temporary differences previously unrecognized deferred tax assets are recognized.At each balance sheet date the carrying amounts of deferred tax assets are reviewed. If it is no longer probable that sufficient taxable profit will be available to realize the benefit of the deferred tax asset the carrying amount is reduced. The reduction is reversed when it becomes probable that sufficient taxable profit will be available.The Company's current tax and deferred tax are recognized as income tax expense or income in profit or loss except for income taxes arising from: business combinations; and transactions or events recognized directly in equity.When the Company has a legally enforceable right to settle current tax assets and liabilities on a net basis and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously current tax assets and current tax liabilities are presented net. 31. Leases (1) The Company as a Lessee The Company's leased assets are primarily buildings.At the commencement date of the lease term the Company recognizes right-of-use assets and lease liabilities for leases other than short-term leases and leases of low-value assets and recognizes depreciation expenses and interest expenses separately during the lease term.For short-term leases and leases of low-value assets the Company recognizes lease payments on a straight-line basis as expenses in the respective periods of the lease term.* Right-of-use Assets Right-of-use assets represent the lessee's right to use the leased asset during the lease term. At the commencement date of the lease term right-of-use assets are initially measured at cost which includes: The initial measurement amount of the lease liability; Lease payments made at or before the commencement date less any lease incentives received; Initial direct costs incurred by the lessee; Estimated costs to be incurred by the lessee for dismantling and removing the leased asset restoring the site where the asset is located or returning the asset to the condition required by the lease terms. 137Changchai Company Limited Annual Report 2024 The Company depreciates right-of-use assets using the straight-line method by category. For assets where Ownership is reasonably certain to be obtained at the end of the lease term depreciation is calculated over the remaining useful life of the leased asset. For assets where Ownership cannot be reasonably determined depreciation is calculated over the shorter of the lease term or the remaining useful life of the leased asset.The Company determines whether right-of-use assets are impaired and accounts for them in accordance with the relevant provisions of Accounting Standards for Business Enterprises No. 8—Impairment of Assets.* Lease Liabilities Lease liabilities are initially measured at the present value of lease payments not yet paid at the commencement date of the lease term. Lease payments include: Fixed payments (including in-substance fixed payments) less any lease incentives; Variable lease payments that depend on an index or rate; Amounts expected to be payable under residual value guarantees provided by the lessee; The exercise price of purchase options if the lessee is reasonably certain to exercise the option; Payments required to exercise termination options if the lease term reflects the lessee exercising the termination option.The Company uses the interest rate implicit in the lease as the discount rate; if this cannot be reasonably determined the Company's incremental borrowing rate is used. Interest expenses on lease liabilities are calculated using a fixed periodic interest rate and recorded in financial expenses. The periodic interest rate is the discount rate or revised discount rate used by the Company.Variable lease payments not included in the measurement of lease liabilities are recognized in profit or loss when incurred.When the Company's assessment of renewal options termination options or purchase options changes the lease liability is remeasured at the present value of the revised lease payments using the revised discount rate with corresponding adjustments to the carrying amount of the right-of-use asset. When in-substance fixed payments expected payments under residual value guarantees or variable lease payments dependent on an index or rate change the lease liability is remeasured at the present value of the revised lease payments using the original discount rate with corresponding adjustments to the carrying amount of the right-of-use asset.* Short-term Leases and Leases of Low-value Assets For short-term leases (leases with a term of 12 months or less at commencement date) and leases of low-value assets (value below RMB 2000) the Company applies a simplified approach by not recognizing right-of-use assets or lease liabilities and instead recognizes lease payments on a straight-line basis or another systematic and rational basis as expenses in the respective periods of the lease term. (2) The Company as a Lessor * Operating Leases The Company recognizes lease receipts from operating leases as rental income on a straight-line basis over the lease term. Variable lease payments not included in lease receipts are recognized in profit or loss when incurred.* Finance Leases At the commencement date of the lease term the Company recognizes finance lease receivables and derecognizes the leased assets. Finance lease receivables are initially measured at the net investment in the lease (the sum of the unguaranteed residual value and the present value of lease receipts not yet received at the commencement date discounted using the interest rate implicit in the lease) with interest income recognized during the lease term using a fixed periodic interest rate. Variable lease payments not included in the measurement of the net investment 138Changchai Company Limited Annual Report 2024 in the lease are recognized in profit or loss when incurred. 32. Methods for Determining Materiality Thresholds and Basis for Selection √ Applicable □ Not applicable Disclosure Matters Involving Materiality Materiality Threshold Determination Methods and Selection Judgment Criteria Basis Significant individually assessed receivables Receivables with ending balance exceeding RMB with specific bad debt provisions 1000000 Construction in progress projects either transferred to fixed Material construction in progress assets or with ending balance exceeding RMB 3000000 Significant accounts payable aged over one Accounts payable with ending balance exceeding RMB year or past due 1000000 Advance receipts with ending balance exceeding RMB Material advance receipts aged over one year 1000000 Contract liabilities with ending balance exceeding RMB Material contract liabilities aged over one year 1000000 Other payables with ending balance exceeding RMB Material other payables aged over one year 1000000 Significant cash receipts related to investing Individual investing activities with cash inflows exceeding activities RMB 3000000 Significant cash payments related to investing Individual investing activities with cash outflows exceeding activities RMB 3000000 Subsidiaries whose total assets exceed 5% of consolidated Material non-wholly owned subsidiaries total assets 33. Other Significant Accounting Policies and Accounting Estimates Debt Restructuring (1) Timing of Recognizing Debt Restructuring Gains and Losses The Company may derecognize the relevant receivables and payables and recognize gains and losses related to debt restructuring only on the debt restructuring completion date when the derecognition conditions for financial assets and financial liabilities are met. The debt restructuring completion date refers to the date when the board of directors and shareholders' meeting resolutions have been approved the debt restructuring agreement has been signed or the court ruling has been issued the relevant assets have been transferred to the creditor the debt has been converted into capital or the modified debt terms have commenced execution. 139Changchai Company Limited Annual Report 2024 For debt restructuring through asset settlement the recognition point is when the relevant assets have been delivered and the Ownership transfer procedures have been completed. For debt restructuring through conversion of debt into equity the recognition point is when the industrial and commercial registration procedures or the equity registration with the registration authority have been completed. For debt restructuring through modification of debt terms the recognition point is when it is determined that the terms can be performed and execution has commenced. Debt restructuring negotiations that commenced during the reporting period but were completed after the balance sheet date are not treated as post-balance-sheet events. (2) Accounting Treatment by the Creditor When the Company acts as a creditor the difference between the fair value of the relinquished claim and its carrying amount is recognized in profit or loss. (3) Accounting Treatment by the Debtor A. For debt restructuring through asset settlement the relevant assets and the settled debt are derecognized when the derecognition conditions are met. The difference between the carrying amount of the settled debt and the carrying amount of the transferred assets is recognized in profit or loss.B. For debt restructuring through conversion of debt into equity instruments the settled debt is derecognized when the derecognition conditions are met. The difference between the carrying amount of the settled debt and the amount determined based on the fair value of the equity instruments is recognized in profit or loss.C. For debt restructuring through modification of other terms the restructured debt is re-recognized and remeasured. The difference between the remeasured debt and the original debt is recognized in profit or loss.D. For debt restructuring through settlement with multiple assets or a combination of methods the equity instruments and restructured debt are recognized and measured in accordance with the Accounting Standards for Business Enterprises. The difference between the carrying amount of the settled debt and the sum of the carrying amounts of the transferred assets and the recognized amounts of the equity instruments and restructured debt is recognized in profit or loss. 34. Changes in Main Accounting Policies and Estimates (1) Change of Accounting Policies √ Applicable □ Not applicable Unit: RMB Name of report items Changes to the accounting policies and why that are significantly Affected amount affected 1. Implementation of "Accounting Standards for Business Enterprises The implementation Interpretation No. 17" of Interpretation No.In October 2023 the Ministry of Finance issued "Accounting 17 has not had any Standards for Business Enterprises Interpretation No. 17" (Cai Kuai material impact on [2023] No. 21) which stipulates relevant contents regarding "the 0.00the Company's classification of current liabilities and non-current liabilities" financial statements "disclosures about supplier financing arrangements" and "accounting for the reporting treatment for sale and leaseback transactions". This interpretation shall period.be applied from January 1 2024. Our company has implemented the 140Changchai Company Limited Annual Report 2024 provisions of Interpretation No. 17 from January 1 2024. The implementation of the relevant provisions of Interpretation No. 17 has no material impact on our company's financial statements for the reporting period. 2. Implementation of "Accounting Standards for Business Enterprises Interpretation No. 18" In December 2024 the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No. 18" (Cai Kuai [2024] No. 24) which stipulates that for warranty-type quality Refer to "Notes to assurance that does not constitute a separate performance obligation Refer to "Notes to Changes in the accounting treatment shall follow the relevant provisions of Changes in Accounting "Accounting Standards for Business Enterprises No. 13 - Accounting Policies" Policies" for Contingencies". Specifically the estimated liability amount shall be for details. details.recorded by debiting accounts such as "Cost of Main Business" and "Cost of Other Business" and crediting the "Estimated Liabilities" account. This interpretation shall be effective from the date of issuance with early adoption permitted for the fiscal year in which it is published.Notes to Changes in Accounting Policies: Implementation of "Accounting Standards for Business Enterprises Interpretation No. 18" had the following impacts on the financial statements as of January 1 2024: Unit: RMB Consolidated Financial Statements Parent Company Financial Statements Items Amount as of Amount as of Amount as of Amount as of December 31 2023 January 1 2024 December 31 2023 January 1 2024 (Before) (After) (Before) (After) Provisions 60070382.24 60070382.24 Other Payables 159023382.81 98953000.57 151919473.64 91849091.40 (continued) FY2023 Consolidated Financial Statements Parent Company Financial Statements Items Amount before Amount before Amount after change Amount after change change change Operating Costs 1838755831.41 1884289338.95 1788129884.67 1831801124.99 Selling Expenses 99603282.16 54069774.62 92935731.73 49264491.41 141Changchai Company Limited Annual Report 2024 (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 2024 √ Applicable □ Not applicable Implementation of "Accounting Standards for Business Enterprises Interpretation No. 18" had the following impacts on the financial statements as of January 1 2024: Unit: RMB Consolidated Financial Statements Parent Company Financial Statements Items Amount as of Amount as of Amount as of Amount as of December 31 January 1 2024 December 31 2023 January 1 2024 2023 (Before) (After) (Before) (After) Provisions 60070382.24 60070382.24 Other Payables 159023382.81 98953000.57 151919473.64 91849091.40 (continued) FY2023 Consolidated Financial Statements Parent Company Financial Statements Items Amount before Amount before Amount after change Amount after change change change Operating Costs 1838755831.41 1884289338.95 1788129884.67 1831801124.99 Selling Expenses 99603282.16 54069774.62 92935731.73 49264491.41 VI. Taxation 1. Main Taxes and Tax Rate Category of taxes Tax rate Output VAT is calculated on taxable revenue at rates of 13% 9% 6% VAT and 5% with VAT payable being the balance after deducting input VAT credits allowable in the current period.Urban maintenance and Payment is calculated and made in accordance with local tax regulations construction tax applicable to each tax-paying unit.Enterprise income tax See the table below for details.Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate Name Income tax rate Changchai Company Limited 15% 142Changchai Company Limited Annual Report 2024 Changchai Wanzhou Diesel Engine Co. Ltd. 15% Changzhou Changchai Benniu Diesel Engine Fittings Co. Ltd. 25% Changzhou Horizon Investment Co. Ltd. 25% Changzhou Changchai Horizon Agricultural Equipment Co. Ltd. 25% Changzhou Fuji Changchai Robin Gasoline Engine Co. Ltd. 15% Jiangsu Changchai Machinery Co. Ltd. 25% Changzhou Xingsheng Real Estate Management Co. Ltd. 5% Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. 15% 2. Tax Preference (1) Preferential Corporate Income Tax Rates On November 6 2024 the Company was re-certified as a High-Tech Enterprise and continues to enjoy a preferential corporate income tax rate of 15% during the reporting period. (2) Western Development Policy Benefit The controlling subsidiary Changchai Wanzhou Diesel Engine Co. Ltd. qualifies for the Western Development tax incentive under: Notice on Tax Policies for the Implementation of Western Development Strategy (jointly issued by the Ministry of Finance GAC and SAT) Announcement No. 23 [2020] of the Ministry of Finance (extending the Western Development corporate income tax policy) From January 1 2011 to December 31 2030 it is subject to a reduced tax rate of 15%. (3) High-Tech Subsidiary On November 6 2023 the wholly-owned subsidiary Changzhou Fuji Changchai Robin Gasoline Engine Co. Ltd.was re-certified as a High-Tech Enterprise and applies a 15% preferential tax rate during the reporting period. (4) Small and Micro Enterprise The wholly-owned subsidiary Changzhou Xingsheng Real Estate Management Co. Ltd. qualifies as an eligible small and low-profit enterprise and is taxed at 5% during the reporting period. (5) High-Tech Certification On December 12 2022 the subsidiary Zhenjiang Siyang Diesel Engine Manufacturing Co. Ltd. obtained High-Tech Enterprise certification and benefits from a 15% tax rate during the reporting period. 143Changchai Company Limited Annual Report 2024 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 84482.59 157238.05 Bank deposits 933972475.61 963604998.68 Other monetary assets 129643534.39 120105730.14 Total 1063700492.59 1083867966.87 Including: Total amount of funds deposited overseas Total amount of funds with usage restrictions due to mortgage 171018607.75 112238443.41 pledge freezing or other reasons Other Disclosures: As of the period-end the other monetary funds within cash and cash equivalents include: Accrued interest on time deposits: RMB 380122.48 Restricted funds: Bills guarantee deposits: RMB 126841969.27 Bid/tender bonds and performance bonds: RMB 1796516.00 Time deposits and accrued interest (restricted): RMB 42380122.48 2. Trading Financial Assets Unit: RMB Item Ending balance Beginning balance Financial assets at fair value through profit or loss 303667459.65 225641429.94 Of which: Stocks 52598990.00 85295021.00 Bank financial products 251068469.65 140346408.94 Of which: Total 303667459.65 225641429.94 3. Notes Receivable (1) Notes Receivable Listed by Category Unit: RMB Item Ending balance Beginning balance 144Changchai Company Limited Annual Report 2024 Bank acceptance bill 318814017.13 161632567.94 Total 318814017.13 161632567.94 (2) Disclosure by Withdrawal Methods for Bad Debts Unit: RMB Ending balance Beginning balance Carrying amount Bad debtprovision Carrying amount Bad debt provision Category Carryi CarryWithdr ng Withdr ing Amou Propor Amou awal value Amoun Proport Amoun awal value nt tion nt propor t ion t proport tion ion Notes receivable for which bad debt 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00 provision separately accrued Of which: Notes receivable for which bad 31881 debt 4017. 100.00 31881161631616 %0.000.00%4017.2567.9 100.00 % 0.00 0.00% 3256provision 13 13 4 7.94 accrued by group Of which: Bank 31881 31881 16163 1616 acceptance 4017. 100.00% 0.00 0.00% 4017. 2567.9 100.00 % 0.00 0.00% 3256bills 13 13 4 7.94 3188131881161631616 Total 4017. —— 0.00 0.00% 4017. 2567.9 —— 0.00 0.00% 3256 131347.94 Number of categories under the portfolio approach: 1 Provision for Bad Debts by Portfolio: the provision for bad debts is calculated based on the bank acceptance bills portfolio Unit: RMB Ending balance Category Carrying amount Bad debt provision Withdrawal proportion Bank acceptance bill 318814017.13 0.00 0.00% Total 318814017.13 0.00 145Changchai Company Limited Annual Report 2024 If adopting the general mode of expected credit loss to withdraw bad debt provision of notes receivable: □Applicable √ Not applicable (3) Notes Receivable Pledged by the Company at the Period-end: None (4) Notes Receivable which Had Endorsed by the Company or had Discounted but had not Due on the Balance Sheet Date at the Period-end Unit: RMB Amount of recognition termination Amount of not terminated Item at the period-end recognition at the period-end Bank acceptance bill 234736335.20 Total 234736335.20 (5) Notes Transferred to Accounts Receivable Due to Non-performance by Issuers at Period-end As of the period-end there were no notes transferred to accounts receivable due to non-performance by issuers. 4. Accounts Receivable (1) Disclosure by Aging Unit: RMB Aging Ending carrying amount Beginning carrying amount Within 1 year (including 1 year) 441388545.87 313597375.85 1 to 2 years 6801120.23 1873298.19 2 to 3 years 936696.44 4436548.28 Over 3 years 140104147.16 144403241.11 3 to 4 years 4100421.27 5278022.33 4 to 5 years 4863744.65 1815570.52 Over 5 years 131139981.24 137309648.26 Total 589230509.70 464310463.43 (2) Disclosure by Withdrawal Methods for Bad Debts Unit: RMB Ending balance Beginning balance Category Carrying Bad debt Carryi Carrying Bad debt Carryin amount provision ng amount provision g value 146Changchai Company Limited Annual Report 2024 Withd value Withd Amou Propo Amou rawal Amou Propor Amou rawal nt rtion nt propo nt tion nt propor rtion tion Accounts receivable withdrawal of 2685 2685 3380 33805 100.0100.0 Bad debt 6788. 4.56% 6788. 0.00 5182. 7.28% 182.7 0.00 0%0% provision 69 69 71 1 separately accrued Of which: Accounts receivable 562311814442430511396 withdrawal of 95.44 21.00 92.72 26.47 316543 73721948542405282120. bad debt % % % % 159.91 1.010.990.020.7281 provision of by group Of which: Accounts receivable for which bad debt 5623 1181 4442 4305 11396 95.4421.0092.7226.47316543 provision 7372 1948 5424 0528 2120.%%%%159.91 accrued by 1.01 0.99 0.02 0.72 81 credit risk features group 589214494442464314776 316543 Total 3050 —— 7626 —— 5424 1046 —— 7303. —— 159.91 9.709.680.023.4352 Number of categories of bad debt provision by individual item: 1 Individually Assessed Bad Debt Provisions: RMB26856788.69 including significant impairment items of RMB25079184.81. The details are presented below: Unit: RMB Beginning balance Ending balance Withdraw Name ReasonCarrying Bad debt Carrying Bad debt al for amount provision amount provision proportio withdraw n Customer 1 5972101.90 5972101.90 5972101.90 5972101.90 100.00% Difficultto recover Customer 2 4592679.05 4592679.05 4592679.05 4592679.05 100.00% Difficultto recover 147Changchai Company Limited Annual Report 2024 Customer 3 2797123.26 2797123.26 2797123.26 2797123.26 100.00% Difficultto recover Customer 4 2584805.83 2584805.83 2584805.83 2584805.83 100.00% Difficultto recover Customer 5 2025880.18 2025880.18 2025880.18 2025880.18 100.00% Difficultto recover Customer 6 1902326.58 1902326.58 1902326.58 1902326.58 100.00% Difficultto recover Customer 7 1726935.65 1726935.65 1759397.30 1759397.30 100.00% Difficultto recover Customer 8 0.00 0.00 1564000.07 1564000.07 100.00% Difficultto recover Customer 9 1470110.64 1470110.64 1470110.64 1470110.64 100.00% Difficultto recover Customer 10 420000.00 420000.00 410760.00 410760.00 100.00% Difficultto recover Total 23491963.09 23491963.09 25079184.81 25079184.81 -- -- Number of categories of bad debt provision by group: 1 Withdrawal of bad debt provision by group: Provision for bad debts by credit risk characteristic group Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Within 1 year 441388545.87 8827770.92 2.00% 1 to 2 years 6801120.23 340056.01 5.00% 2 to 3 years 936696.44 140504.47 15.00% 3 to 4 years 3558158.61 1067447.59 30.00% 4 to 5 years 4863744.65 2918246.79 60.00% Over 5 years 104825455.21 104825455.21 100.00% Total 562373721.01 118119480.99 -- 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 (3) Bad Debt Provision Withdrawal Reversed or Recovered in the Current Period Withdrawal of bad debt provision: Unit: RMB Changes in the current period Beginning Category balance Reversed or Ending balance Withdrawal Verification Others recovered 148Changchai Company Limited Annual Report 2024 Bad debt provision 33805182.711598787.127735818.14811363.0026856788.69 separately accrued Withdrawal of bad debt 113962120.814553431.31396071.13118119480.99 provision by group Total 147767303.52 6152218.43 7735818.14 1207434.13 144976269.68 Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: Unit: RMB Name Reversed orrecovered Method of Recovery Basis and Rationale for Determining the Original Provision for Bad Debt Ratios Recovered in cash Customer 1 6215662.64 through mutual Accounts receivable aged over 5 years mediation fully provided for bad debts Recovered in cash Customer 2 1510915.50 through mutual Accounts receivable aged over 5 years mediation fully provided for bad debts Total 7726578.14 (4) Accounts Receivable Written-off in Current Period Unit: RMB Item Written-off amount Accounts receivable with actual verification 1207434.13 Of which the verification of significant accounts receivable: Unit: RMB Name of the Nature of the Verification Arising from entity accounts Verified Reason for procedures related-party receivable amount verification performed transactions ornot Accounts The portion Minutes of the Customer 1 receivable for 811363.00 unrecoverable after Executive No goods mutual mediation Office Total 811363.00 (5) Top 5 of the Ending Balance of the Accounts Receivable and the Contract Assets Collected according to Arrears Party Unit: RMB Name of the Ending balance Ending balance Ending balance Proportion to Ending balance of accounts of contract of accounts total ending of bad debtentity receivable assets receivable and balance of provision ofcontract assets accounts accounts 149Changchai Company Limited Annual Report 2024 receivable and receivable and contract assets impairment provision for contract assets Customer 1 137231328.98 0.00 137231328.98 23.29% 2744626.58 Customer 2 136022798.00 0.00 136022798.00 23.08% 2869530.46 Customer 3 37488328.71 0.00 37488328.71 6.36% 749766.57 Customer 4 25787025.82 0.00 25787025.82 4.38% 515740.52 Customer 5 21455202.45 0.00 21455202.45 3.64% 429104.05 Total 357984683.96 0.00 357984683.96 60.75% 7308768.18 5. Accounts Receivable Financing (1) Accounts Receivable Financing Listed by Category Unit: RMB Item Ending balance Beginning balance Bank acceptance bills 223261002.76 195875948.92 Total 223261002.76 195875948.92 (2) Notes Receivable Pledged by the Company at the Period-end: None (3) Accounts receivable financing which had endorsed by the Company or had discounted but had not due at the period-end Unit: RMB Amount of recognition termination Amount of not terminated Category at the period-end recognition at the period-end Bank acceptance bill 865680649.89 Total 865680649.89 (4) Changes in Receivables Financing and Fair Value Fluctuations During the Reporting Period Unit: RMB Beginning balance Changes in the current period Ending balance Item FairFair Value Fair Value Cost Cost Cost Value Changes Changes Changes Notes 195875948.9227385053.84223261002.76 Receivable 150Changchai Company Limited Annual Report 2024 6. Other Receivables Unit: RMB Item Ending balance Beginning balance Interest receivable Dividend receivable 7165080.00 Other receivables 2682361.82 49699753.61 Total 9847441.82 49699753.61 （1）Dividend receivable Unit: RMB Projects (or Investee Entities) Ending balance Beginning balance Jiangsu Bank 2024 Interim Dividend Announcement 7165080.00 Total 7165080.00 （2）Other Receivables 1) Other Receivables Classified by Accounts Nature Unit: RMB Nature Ending carrying value Beginning carrying value Margin and cash pledge 1300.00 595723.55 Intercourse funds 23292830.56 69845564.95 Petty cash and borrowings by 865253.08922370.54 employees Other 14177743.14 13638079.94 Total 38337126.78 85001738.98 2) Disclosure by Aging Unit: RMB Aging Ending carrying amount Beginning carrying amount Within 1 year (including 1 year) 2514999.73 49610086.44 1 to 2 years 103639.66 115776.00 2 to 3 years 354590.84 12802.00 Over 3 years 35363896.55 35263074.54 151Changchai Company Limited Annual Report 2024 3 to 4 years 281647.36 30300.00 4 to 5 years 30300.00 321735.17 Over 5 years 35051949.19 34911039.37 Total 38337126.78 85001738.98 3) Disclosure by Withdrawal Methods for Bad Debts √Applicable □Not applicable Provision for bad debts based on general model of expected credit losses Unit: RMB First stage Second stage Third stage Expected loss in Expected loss in Bad debt provision Expected credit the duration (credit the duration Total loss of the next impairment not (credit impairment 12 months occurred) occurred) Balance of 1 January 211671.732715705.9932374607.6535301985.37 2024 Balance of 1 January 2024 in the Current Period --Transfer to Second -2072.792072.79 stage -- Transfer to Third stage -2698996.89 2698996.89 -- Reverse to Second stage -- Reverse to First stage Withdrawal of the -159302.3525607.09487474.85353779.59 Current Period Reversal of the Current Period Write-offs of the Current Period Verification of the 1000.001000.00 Current Period Other changes Balance of 31 December 50296.5944388.9835560079.3935654764.96 2024 The basis for the division of each stage and the withdrawal proportion of bad debt provision: None 152Changchai Company Limited Annual Report 2024 Changes of carrying amount with significant amount changed of loss provision in the current period □ Applicable √ Not applicable 4) Bad Debt Provision Withdrawn Reversed or Recovered in the Current Period Withdrawal of bad debt provision: Unit: RMB Changes in the current period Beginning Ending Category balance Reversed or Charged-off OtherWithdrawal balance recovered /Written-off s Bad debt provision 5282163.35333706.205615869.55 separately accrued Withdrawal of bad debt 30019822.0220073.391000.0030038895.41 provision by group Total 35301985.37 353779.59 1000.00 35654764.96 5）Write-off of Other Receivables During the Reporting Period Unit: RMB Item Write-off Amount Write-off of Other Receivables 1000.00 6) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party Unit: RMB Proportion to total ending Ending Name of the entity Nature Ending balance Aging balance of balance of bad other debt provision receivables % Changzhou Compressor Intercourse 2940000.00 Over 5 years 7.67% 2940000.00 Factory funds Changchai Group Imp. Intercourse 2853188.02 Over 5 years 7.44% 2853188.02 & Exp. Co. Ltd. funds Changzhou New Intercourse District Accounting 1626483.25 Over 5 years 4.24% 1626483.25 funds Center 153Changchai Company Limited Annual Report 2024 Changchai Group Intercourse 1128676.16 Over 5 years 2.94% 1128676.16 Settlement Center funds Chuangye Diesel Intercourse 1000000.00 Over 5 years 2.61% 1000000.00 Engine Repair Factory funds Total 9548347.43 24.90% 9548347.43 7. Prepayments (1) Prepayment Listed by Aging Analysis Unit: RMB Ending balance Beginning balance Aging Amount Proportion Amount Proportion Within 1 year 11874660.61 93.32% 11196498.47 90.78% 1 to 2 years 355228.45 2.79% 840617.01 6.82% 2 to 3 years 489219.64 3.84% 289345.37 2.35% Over 3 years 6850.00 0.05% 6850.00 0.05% Total 12725958.70 -- 12333310.85 -- (2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target Unit: RMB Name of the entity Ending balance Proportion of Total PrepaymentBalance at Period-End (%) Supplier1 3570770.82 28.06% Supplier2 1962319.51 15.42% Supplier3 1860501.67 14.62% Supplier4 686364.94 5.39% Supplier5 653239.74 5.13% Total 8733196.68 68.62% 8. Inventories Whether the Company needs to comply with the disclosure requirements for the real estate industry No (1) Category of Inventory Unit: RMB 154Changchai Company Limited Annual Report 2024 Ending balance Beginning balance Depreciation Depreciation reserves of reserves of inventories inventories Item or orCarrying Carrying Carrying Carrying impairment impairment amount value amount value provision for provision for contract contract performance performance costs costs Raw 210549278. 779266290.45 201282988.199751010. 32257529878.82 192221131. materials 43 Materials processed on 13598683.1 0.00 13598683.1 12422107.03 3 2 0.00 12422107.0 commission Goods in 79357978.3 4128144.66 75229833.6 90202210.0 6761129.14 83441080.9 process 4 8 5 1 Finished 559878239. 32330091.1 527548148. 527412149. 27690142.4 499722006.goods 54 6 38 21 2 79 Low priced and easily 1542344.91 0.00 1542344.91 1413859.53 0.00 1413859.53 worn articles Total 864926524. 45724526.2 819201998. 831201336. 41981150.3 789220185.69 7 42 06 8 68 (2) Falling Price Reserves of Inventory and Impairment Reserves for Contract Performance Costs Unit: RMB Increase Decrease Beginning Item Transferred-ba Other Ending balancebalance Withdrawal Others ck or s charged-off Raw materials 7529878.82 1979765.82 243354.19 9266290.45 Goods in 6761129.14331582.562964567.044128144.66 process Finished goods 27690142.42 12097868.82 7457920.08 32330091.16 Total 41981150.38 14409217.20 10665841.31 45724526.27 155Changchai Company Limited Annual Report 2024 (3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories. 9. Non-current assets due within one year Unit: RMB Item Ending balance Beginning balance Note Investments in debt obligations Three-year time deposits 0.0040773509.75 due within one year maturing within one year Total 0.00 40773509.75 (1) Investments in Debt Obligations Due within One Year √Applicable □Not applicable 1）Investments in Debt Obligations Due within One Year Unit: RMB Ending balance Beginning balance Group name Carrying Fallingprice Carrying Carrying Falling Carrying amount reserves value amount price reserves value Three-year fixed term deposit 0.00 0.00 40773509.75 40773509.75 Total 0.00 0.00 40773509.75 40773509.75 10. Other Current Assets Unit: RMB Item Ending balance Beginning balance The VAT tax credits 51823671.46 19940871.92 Prepaid corporate income tax 2705816.46 908233.33 Prepaid expense 75533.75 61399.59 Total 54605021.67 20910504.84 11. Other Equity Instrument Investment Unit: RMB Gains Losses Accumul Accumul Reason recorded recorded ative ative Dividend for in other in other gains losses income assigning Item Ending Beginnin comprehe comprehe recorded recorded recognize tobalance g balance nsive nsive in other in other d in measure income in income in comprehe comprehe current in fair the the nsive nsive year value of current current income in income in which 156Changchai Company Limited Annual Report 2024 period period the the changes current current included period period other comprehe nsive income Non-tradi Non-tradi ng equity 9411200 9694880 7324200 1016099 7565500 1816308 ng equity investme 58.72 25.67 0.00 66.95 58.72 0.00 investme nt nt 941120096948807324200101609975655001816308 Total 58.7225.670.0066.9558.720.00 Non-trading equity instrument investment disclosed by category Unit: RMB Reason for assigning to Amount of measure by Reason for Dividend other fair value of other Item income Accumulativ Accumulativ comprehensi which comprehensi recognized e gains e losses ve transferred changes be ve income to retained included to transferred to earnings other retained comprehensi earnings ve income Changzhou Synergetic Innovation Non-trading 248637058. Private equity 72 Equity Fund investment (Limited Partnership) Non-trading Foton Motor 320911000.equity Co. Ltd. 00 investment Bank of Non-trading 18163080.0187002000. Jiangsu Co. equity 000 Ltd. investment 12. Long-term Equity Investment Unit: RMB Begin Begin Increase/decrease Endin Endin ning ning Addit Redu Gain Adjus Chan Cash Withd g g Invest balan balan balan balan ees ce ce of ional ced or tment ges in bonus rawal loss of or of Other ce ce of (carry depre invest invest other ment ment recog other equity profit depre (carry depre ing ciatio nized comp annou ciatio ing ciatio 157Changchai Company Limited Annual Report 2024 value) n under rehen nced n value) n reserv the sive to reserv reserv es equity incom issue es es metho e d I. Joint venture Subto tal 0.00 0.00 0.00 0.00 II. Associated enterprises Beijin g Tsing hua Indust rial 44184418 Invest 0.00 0.00 2.502.50 ment Mana geme nt Co.Ltd.Subto 4418 4418 tal 0.00 0.002.50 2.50 44184418 Total 0.00 0.00 2.502.50 The recoverable amount is determined based on the net amount of the fair value minus disposal costs □ Applicable √ Not applicable The recoverable amount is determined by the present value of the forecasted future cash flow.□ Applicable √ Not applicable The reason for the discrepancy between the foregoing information and the information used in the impairment tests in prior years or external information: Not applicable The reason for the discrepancy between the information used in the Company's impairment tests in prior years and the actual situation of those years: Not applicable 13. Other Non-current Financial Assets Unit: RMB Item Ending balance Beginning balance Financial Assets at Fair Value Through Profit or Loss (Including: Equity Instrument Investments) 377869217.49 412914576.80 Total 377869217.49 412914576.80 158Changchai Company Limited Annual Report 2024 14. Investment Property (1) Investment Property Adopting the Cost Measurement Mode √ Applicable □ Not applicable Unit: RMB Item Houses and buildings Total I. Original carrying value 1. Beginning balance 93077479.52 93077479.52 2. Increased amount of the period (1) Outsourcing (2) Transfer from inventories/fixed assets/construction in progress (3) Enterprise combination increase 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Ending balance 93077479.52 93077479.52 II. Accumulative depreciation and accumulative amortization 1. Beginning balance 53239921.41 53239921.41 2. Increased amount of the period 2096713.56 2096713.56 (1) Withdrawal or amortization 2096713.56 2096713.56 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Ending balance 55336634.97 55336634.97 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 159Changchai Company Limited Annual Report 2024 1. Ending carrying value 37740844.55 37740844.55 2. Beginning carrying value 39837558.11 39837558.11 The recoverable amount is determined based on the net amount of the fair value minus disposal costs □ Applicable √ Not applicable The recoverable amount is determined by the present value of the forecasted future cash flow.□ Applicable √ Not applicable The reason for the discrepancy between the foregoing information and the information used in the impairment tests in prior years or external information: Not applicable The reason for the discrepancy between the information used in the Company's impairment tests in prior years and the actual situation of those years: Not applicable 15. Fixed Assets Unit: RMB Item Ending balance Beginning balance Fixed assets 615414505.40 675596920.95 Disposal of fixed assets Total 615414505.40 675596920.95 (1) List of Fixed Assets Unit: RMB Houses and Machinery Transportation Other Item Total buildings equipment equipment equipment I. Original carrying value 1. Beginning 683973527.801117118836.8916527248.9361820174.731879439788.35 balance 2. Increased amount of the 6505869.57 17670002.80 166991.14 1586115.85 25928979.36 period (1) Purchase 1212045.63 5007147.44 5309.73 340386.83 6564889.63 (2) Transfer from 5293823.9412662855.36161681.411245729.0219364089.73 construction in progress (3) Enterprise combination increase 160Changchai Company Limited Annual Report 2024 3. Decreased amount of the 47976401.54 14818301.47 652187.97 1178213.20 64625104.18 period (1) Disposal or 1962362.6214467299.97652187.971000734.4818082585.04 scrap (2) Transfer from 169416.42177478.72346895.14 construction in progress (3) Others 46014038.92181585.0846195624.00 (Note 1) 4. Ending 642502995.831119970538.2216042052.1062228077.381840743663.53 balance II. Accumulated Depreciation 1. Beginning 331778938.87822480700.9610101717.8039184289.071203545646.70 balance 2. Increased amount of the 19921195.02 55334455.58 1325317.19 5646380.17 82227347.96 period (1) Withdraw 19921195.02 55334455.58 1325317.19 5646380.17 82227347.96 3. Decreased amount of the 44564770.15 14360225.31 652187.97 1163873.80 60741057.23 period (1) Disposal or 1475019.0814009223.81652187.97986395.0817122825.94 scrap (2) Transfer from 169416.42177478.72346895.14 construction in progress (3) Others 43089751.07181585.0843271336.15 (Note 1) 4. Ending 307135363.74863454931.2310774847.0243666795.441225031937.43 balance III. Impairment Provision 1. Beginning 297220.70297220.70 balance 161Changchai Company Limited Annual Report 2024 2. Increased amount of the 20122.51 20122.51 period (1) Withdraw 20122.51 20122.51 3. Decreased amount of the 20122.51 20122.51 period (1) Disposal or 20122.5120122.51 scrap 4. Ending 297220.70297220.70 balance IV. Carrying value 1. Ending 335367632.09256218386.295267205.0818561281.94615414505.40 carrying value 2. Beginning 352194588.93294340915.236425531.1322635885.66675596920.95 carrying value Note 1: The "Other Disposals" of fixed assets relate to buildings and equipment demolished for the urban redevelopment project at the Changchai Co. Ltd. Sanjing Branch site (see Note VII. 20 for details). (2) List of Temporarily Idle Fixed Assets Unit: RMB Original Accumulative Depreciation Item Carrying value Note carrying value depreciation reserves Houses and 59157112.1652780229.966376882.20 buildings Transportation Refer to note 2 15654026.8614125584.981528441.88 equipment Other equipment 55205.86 40841.58 14364.28 Machinery 309407.5012186.80297220.70 equipment Note 2: Due to public interest requirements for urban redevelopment the Xinbei District People's Government of Changzhou has decided to implement the expropriation of buildings within the Phase I scope of the Sanjing 162Changchai Company Limited Annual Report 2024 Subdistrict Foundry Plant and surrounding area urban renewal project. The expropriation area covers the Company's former foundry production base where portions of the fixed assets were in an idle state. 16. Construction in Progress Unit: RMB Item Ending balance Beginning balance Construction in progress 3376866.69 4253721.78 Engineering materials 21900.40 Total 3376866.69 4275622.18 (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 Technology Center Innovation 898041.60898041.60981532.17981532.17 Capability Construction Project Equipment Installation 2478825.092478825.092866348.902866348.90 Pending Project Miscellaneou s 405840.71405840.71 Engineering Works Total 3376866.69 3376866.69 4253721.78 4253721.78 (2) Significant Changes in Construction-in-Progress Projects During the Current Period Unit: RMB Transfers to Beginning Transfers to Ending Sources of Item New additions intangible balance fixed assets balance Funds assets 163Changchai Company Limited Annual Report 2024 Equipme nt Equity 2866348.9018055852.7917344261.501099115.102478825.09 Installatio Funds n Works Total 2866348.90 18055852.79 17344261.50 1099115.10 2478825.09 -- （3）Impairment Test of Construction in Progress □Applicable□Not applicable （4）Engineering Materials Unit: RMB Ending balance Beginning balance Item ImpairmeCarrying Carrying Carrying Impairment Carrying nt amount value amount provision value provision Engineerin 0.000.0021900.4021900.40 g materials Total 0.00 0.00 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 205187775.71 20419604.15 5538000.00 1650973.47 232796353.33 2. Increased amount of 1154048.731154048.73 the period (1) Purchase 54933.63 54933.63 (2) Internal R&D (3) Business combination increase (4) Transfer from construction in 1099115.10 1099115.10 progress 164Changchai Company Limited Annual Report 2024 3. Decreased amount of the period (1) Disposal 4. Ending balance 205187775.71 21573652.88 5538000.00 1650973.47 233950402.06 II. Accumulated amortization 1. Beginning balance 63473422.16 16541171.87 3800133.10 523440.52 84338167.65 2. Increased amount of 4181823.361910163.91548799.96165661.326806448.55 the period (1) Withdrawal 4181823.36 1910163.91 548799.96 165661.32 6806448.55 3. Decreased amount of the period (1) Disposal 4. Ending balance 67655245.52 18451335.78 4348933.06 689101.84 91144616.20 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 137532530.193122317.101189066.94961871.63142805785.86 value 2. Beginning carrying 141714353.553878432.281737866.901127532.95148458185.68 value 18. Long-term Prepaid Expenses Unit: RMB Beginning Amortized Ending Item Increase Decrease balance amount balance Trademark renewal 268208.1241732.6733556.84276383.95 fee External power line 2754000.00 319370.91 46455.98 2388173.11 165Changchai Company Limited Annual Report 2024 access project Processing reserved floor paving and 5205750.545205750.54 lighting installation works Total 8227958.66 41732.67 352927.75 5252206.52 2664557.06 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 Bad debt provision 12526884.12 1949082.99 9431907.00 1518995.79 Provisions 61700.00 9255.00 Advance tax paid on pre-collected demolition 30000000.00 4500000.00 compensation Total 42588584.12 6458337.99 9431907.00 1518995.79 (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 5308792.40 796318.85 5489891.06 823483.65 under the same control Changes of fair value of other equity instrument 1008689955.98 153653533.48 1102931935.12 171019971.87 investments Total 1013998748.38 154449852.33 1108421826.18 171843455.52 166Changchai Company Limited Annual Report 2024 (3) List of Unrecognized Deferred Income Tax Assets Unit: RMB Item Ending balance Beginning balance Deductible temporary differences 214123380.22 215915752.97 Deductible tax losses 94504005.70 137917562.93 Total 308627385.92 353833315.90 (4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years Unit: RMB Years Ending balance 20294463227.36 20301489106.18 20311470853.20 203227506664.76 203350340092.01 20349234062.19 Total 94504005.70 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 Prepayments for the acquisition 1448809.45 1448809.45 2578776.77 2578776.77 of long-term assets Assets held for disposal 2924287.85 2924287.85 Total 4373097.30 4373097.30 2578776.77 2578776.77 Other Notes: The assets held for disposal relate to buildings and equipment demolished under the old town redevelopment project at Changchai Co. Ltd.'s Changzhou Sanjing Branch (see Note XVI.2). The company has currently received the first compensation payment of RMB 30000000.00 which is expected to cover the associated demolition losses. Since the related expropriation process is anticipated to take more than one year to complete the company has reclassified the carrying value of the demolished fixed assets to other non-current assets. 167Changchai Company Limited Annual Report 2024 21. Assets with Restricted Ownership or Right of Use Unit: RMB Ending balance Beginning balance Item Carrying Carrying Type of Status of Carrying Carrying Type of Status of amount value restriction restriction amount value restriction restriction Bank Bank acceptanc acceptanc e bill e bill guarantee guarantee deposits、 deposits、 Letter of Letter of guarantee guarantee Occupied Occupied Monetary 1710186 1710186 deposits、 7623844 7623844 deposits、 as cash as cash assets 07.75 07.75 Performa 3.41 3.41 Performa deposit deposit nce bond nce bond deposits、 deposits、 Term Term deposits deposits and and accrued accrued interest interest Discounte d by the Notes Payment Company receivabl obligation at the e -- s for 7087820 7087820 period-en outstandi undiscou 0.00 0.00 d and not ng nted but due on discounte discounte the d notes d bills balance sheet date Endorsed by the Notes Payment Endorsed Company Undue receivabl obligation bills not at the transferre e -- s for yet 1638581 1638581 period-en 5597983 5597983 d bill outstandi undiscou matured 35.20 35.20 d and not 2.64 2.64 payment ng nted but at the due on obligation transferre transferre balance the s d notes d bills sheet date balance sheet date Fixed Mortgage 1332812 1332812 Mortgage Assets - d for 168Changchai Company Limited Annual Report 2024 Houses .48 .48 d issuing and bank buildings acceptanc e bills Mortgage Intangible d for Assets - 847162.2 847162.2 Mortgage issuing Land Use 8 8 d bank Rights acceptanc e bills Fixed Mortgage Assets - d for Machiner 2372873 2372873 Mortgage issuing y 3.18 3.18 d bank equipmen acceptanc t e bills 4057549405754915812691581269 Total 42.9542.9583.9983.99 22. Short-term Borrowings (1) Category of Short-term Borrowings Unit: RMB Item Ending balance Beginning balance Bank acceptance bills with 94471787.41 financing nature Total 94471787.41 23. Notes Payable Unit: RMB Item Ending balance Beginning balance Bank acceptance bill 491643629.88 528139582.33 Total 491643629.88 528139582.33 At the end of the current period there were no notes payable due and not paid. 24. Accounts Payable (1) List of Accounts Payable Unit: RMB 169Changchai Company Limited Annual Report 2024 Item Ending balance Beginning balance Payment for goods 690733575.75 641484184.05 Total 690733575.75 641484184.05 (2) Significant Accounts Payable Aging over One Year or Overdue Unit: RMB Item Ending balance Unpaid/ Un-carry-over reason Payables for goods and services 76052261.47 Not yet settled Payables for construction works and equipment 6736282.92 Not yet settled Total 82788544.39 25. Other Payables Unit: RMB Item Ending balance Beginning balance Interest payable 0.00 0.00 Dividends payable 3891433.83 3891433.83 Other payables 113845527.69 95061566.74 Total 117736961.52 98953000.57 (1) Dividends Payable Unit: RMB Item Ending balance Beginning balance Ordinary share dividends 3243179.97 3243179.97 Dividends for non-controlling 648253.86648253.86 shareholders Total 3891433.83 3891433.83 The reason for non-payment for over one year: Not gotten by shareholders yet. (2) Other Payables 1) Other Payables Listed by Nature of Account Unit: RMB Item Ending balance Beginning balance Margin & cash pledged 2595993.50 2671042.33 170Changchai Company Limited Annual Report 2024 Intercompany balances 14989385.23 11107514.80 Personal advances and receivables 647001.19 398761.04 Sales discounts and product 78652203.8665026250.12 warranties Other 16960943.91 15857998.45 Total 113845527.69 95061566.74 2) Significant Other Payables Aging over One Year The significant other payables with aging over one year at period-end mainly consist of unsettled temporary receipts and outstanding payables. 26. Advances from customers (1) List of Advances from customers Unit: RMB Item Ending balance Beginning balance Advance rental receipts 183376.84 647441.22 Advance receipts for land 30000000.001000000.00 compensation Total 30183376.84 1647441.22 (2) Significant changes in the carrying amount during the current period and the reasons thereof Unit: RMB Item Amount of change Reason for change Advance receipts During the current period the Company received demolition for land 29000000.00 compensation payments for the old town renovation project at the compensation Changzhou Sanjing Branch site of Changchai Co. Ltd. 27. Contract liabilities Unit: RMB Item Ending balance Beginning balance Contract liabilities 31640879.59 33352877.66 Total 31640879.59 33352877.66 171Changchai Company Limited Annual Report 2024 28. Employee benefits payable (1) List of employee benefits payable Unit: RMB Item Beginning balance Increase Decrease Ending balance I. Short-term salary 47738883.57 295899743.45 294846372.04 48792254.98 II.Post-employment 33075703.0733075703.07 benefit-defined contribution plans III. Termination benefits IV. Current portion of other benefits Total 47738883.57 328975446.52 327922075.11 48792254.98 (2) List of Short-term Salary Unit: RMB Beginning Item Increase Decrease Ending balance balance 1. Salary bonus 40196939.41244255226.90243761424.2440690742.07 allowance subsidy 2.Employee welfare 1592.74 8747217.24 8747217.24 1592.74 3. Social insurance 19369371.09 19369371.09 Of which: Medical 16089051.7816089051.78 insurance premiums Work-related injury 1751915.101751915.10 insurance Maternity insurance 1528404.21 1528404.21 4. Housing fund 19303926.23 19303926.23 5.Labor union budget and employee education 7540351.42 4224001.99 3664433.24 8099920.17 budget 6. Short-term absence with salary 172Changchai Company Limited Annual Report 2024 7. Short-term profit sharing scheme Total 47738883.57 295899743.45 294846372.04 48792254.98 (3) List of Defined Contribution Plans Unit: RMB Beginning Item Increase Decrease Ending balance balance 1. Basic pension 32068582.8132068582.81 benefits 2. Unemployment 1007120.261007120.26 insurance 3. Enterprise annuities Total 33075703.07 33075703.07 29. Taxes Payable Unit: RMB Item Ending balance Beginning balance VAT 239602.32 189045.23 Corporate income tax 611800.65 1686812.32 Personal income tax 210290.78 312930.09 Urban maintenance and construction tax 19983.59 881885.27 Property tax 1715080.20 1678590.95 Land use tax 943261.64 943261.64 Stamp duty 437390.87 349554.08 Education Surcharge 14240.95 36841.50 Comprehensive fees 120291.58 Environmental protection tax 22673.70 31957.08 Total 4214324.70 6231169.74 30. Other Current Liabilities Unit: RMB Item Ending balance Beginning balance Sale service fee 485055.17 393790.53 173Changchai Company Limited Annual Report 2024 Transportation storage fee 353692.31 830881.27 Electric charge 2530866.25 1457500.39 Tax to be transferred 3818328.30 2830696.17 Estimated share value added tax 745360.75 2230084.52 Obligation to pay bills transferred 163858135.2055979832.64 before maturity Other withholding expenses 3273239.95 3347180.44 Total 175064677.93 67069965.96 31. Provisions Unit: RMB Item Ending balance Beginning balance Reason for formation Estimated after-sales Product warranty 73002860.52 60070382.24 expenses Total 73002860.52 60070382.24 32. Deferred Income Unit: RMB Beginning Reason for Item Increase Decrease Ending balance balance formation Government Government 32795896.483409729.4629386167.02 grants appropriation Total 32795896.48 3409729.46 29386167.02 -- Note: Liability items involving government grants Unit: RMB Amount recorded into Related to Beginning Amount of other income Item Ending balance assets/related balance new subsidy in the income Reporting Period National major project special allocations- Flexible processing production line 10001835.00 1519266.00 8482569.00 Related to assets for cylinders of diesel engines Remove compensation 17181816.74 665973.62 16515843.12 Related to assets 174Changchai Company Limited Annual Report 2024 Research and development and industrialization allocations of national III/IV 5612244.74 1224489.84 4387754.90 Related to assets standard high-powered efficient diesel engine for agricultural use Total 32795896.48 3409729.46 29386167.02 —— 33. Share Capital Unit: RMB Increase/decrease (+/-) Beginning Bonus Ending balance New shares Bonus issue from Other Subtotal balance issued shares profit The sum of 70569250 70569250 shares 7.00 7.00 34. Capital Reserves Unit: RMB Item Beginning balance Increase Decrease Ending balance Capital premium 620338243.21620338243.21 (premium on stock) Other capital reserves 20171432.63 20171432.63 Total 640509675.84 640509675.84 35. Other Comprehensive Income Unit: RMB Item Beginni Reporting Period Endin 175Changchai Company Limited Annual Report 2024 ng Less: g balance Record balan Less: ed in ce Recorded other in other compre comprehe hensiv Attribu nsive e Attribu Income table to income in income table to before Less: the prior in prior non-co taxatio Income Compa period period ntrollin n in the tax ny as and and g Curren expens the transferre transfe interest t e parent d in rred in s after Period after profit or retaine tax tax loss in d the earning Current s in the Period Curren t Period I. Other comprehensive -2836 -2411 6430667180 -4255 income that will not be 7966.9 2771.9 6754 reclassified to profit or loss 321.82 195.045 1 9.91 Changes in fair value of -2836 -2411 6430667180 -4255 other equity instrument 7966.9 2771.9 6754 investment 321.82 195.045 1 9.91 -2836-24116430 Total of other 667180 -4255 7966.92771.96754 comprehensive income 321.82 195.04 519.91 Other notes including the adjustment of the effective gain/loss on cash flow hedges to the initial recognized amount: None 36. Specific Reserve Unit: RMB Item Beginning balance Increase Decrease Ending balance Safety production 19432089.529958016.527431039.6921959066.35 cost Total 19432089.52 9958016.52 7431039.69 21959066.35 176Changchai Company Limited Annual Report 2024 37. Surplus Reserves Unit: RMB Item Beginning balance Increase Decrease Ending balance Statutory surplus reserves 350538734.44 4131072.93 354669807.37 Discretional surplus reserves 13156857.90 13156857.90 Total 363695592.34 4131072.93 367826665.27 Surplus reserve explanation: Pursuant to the Company Law of the People's Republic of China and the company's articles of association the Company appropriates 10% of its net profit as statutory surplus reserve. 38. Retained Earnings Unit: RMB Item Reporting Period Same period of last year Beginning balance of retained earnings before adjustments 1002436724.71 915495909.35 Total retained earnings at the beginning of the adjustment period (“+” means up “-” means down) Beginning balance of retained earnings after adjustments 1002436724.71 915495909.35 Add: Net profit attributable to shareholders of the Company as 18489896.00 108495607.05 the parent Less: Withdrawal of statutory 4131072.9314497866.62 surplus reserves Withdrawal of discretional surplus reserves Withdrawal of general reserve Dividend of ordinary shares 33167547.837056925.07 payable Dividends of ordinary shares transferred as share capital Ending retained earnings 983627999.95 1002436724.71 Adjustments to opening retained earnings details: (1) Retrospective adjustment due to the Accounting Standards for Business Enterprises and related new regulations: RMB 0.00 impact on opening retained earnings. (2) Change in accounting policies: RMB 0.00 impact on opening retained earnings. (3) Correction of material accounting errors: RMB 0.00 impact on opening retained earnings. (4) Changes in consolidation scope due to transactions under common control: RMB 0.00 impact on opening 177Changchai Company Limited Annual Report 2024 retained earnings. (5) Other adjustments net impact on opening retained earnings: RMB 0.00. 39. 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 2371931691.41 2084092192.19 2110376920.43 1858767201.32 Other operations 43937336.91 35208273.88 45321867.06 25522137.63 Total 2415869028.32 2119300466.07 2155698787.49 1884289338.95 Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses is negative □ Yes √No Revenue-related information: Unit: RMB Contract Segment revenue 1 Total Classification Operating revenue Cost of sales Operating revenue Cost of sales By business type Of which: Diesel Engines - 901718157.69774338404.49901718157.69774338404.49 Single-Cylinder Diesel Engines - 1184603268.881059649606.201184603268.881059649606.20 Multi-Cylinder Other Products 176108095.29 154164550.29 176108095.29 154164550.29 Parts & 109502169.5595939631.21109502169.5595939631.21 Accessories By geographical segment Of which: Domestic Sales 2015685665.82 1740075174.50 2015685665.82 1740075174.50 Export sales 356246025.59 344017017.69 356246025.59 344017017.69 Total 2371931691.41 2084092192.19 2371931691.41 2084092192.19 The revenue amount corresponding to performance obligations under contracts signed as of the end of the reporting period that have not yet been fulfilled or partially fulfilled is RMB 0.00. 40. Taxes and Surtaxes Unit: RMB 178Changchai Company Limited Annual Report 2024 Item Reporting Period Same period of last year Urban maintenance and 1722364.511195680.92 construction tax Education surcharge 1230223.15 854061.84 Property tax 7045665.54 7027411.47 Land use tax 4013319.52 4209985.02 Vehicle and vessel use tax 2803.52 2803.52 Stamp duty 2043184.49 1546467.17 Environment tax 124057.13 204264.65 Other 16723.66 Total 16181617.86 15057398.25 41. Administrative Expense Unit: RMB Item Reporting Period Same period of last year Employee benefits 61402397.77 51674294.80 Office expenses 10322299.02 10787236.38 Depreciation and amortization 16092889.89 24825227.36 Safety expenses 5823550.54 4782552.29 Repair charge 196736.76 741750.01 Inventory scrap and inventory loss (profit) -149986.94 6291477.71 Consulting fees 4933152.81 2380158.31 Insurance premiums 1852716.96 2170875.39 Utilities expenses 2438996.99 2492684.37 Other 12553588.10 17835077.37 Total 115466341.90 123981333.99 42. Selling Expense Unit: RMB Item Reporting Period Same period of last year Employee benefits 45964550.56 42024752.56 Office expenses 11079843.97 10212761.75 Advertising and exhibition expenses 1494362.92 773352.98 Depreciation and amortization 716473.37 665547.75 179Changchai Company Limited Annual Report 2024 Other 1362023.61 393359.58 Total 60617254.43 54069774.62 43. Development Costs Unit: RMB Item Reporting Period Same period of last year Direct input expense 46708069.23 51504815.69 Employee benefits 24323024.76 24744156.04 Depreciation and amortization 5756990.16 4895983.48 Entrusted development charges 704000.00 684195.77 Other 5909393.45 8509953.35 Total 83401477.60 90339104.33 44. Finance Costs Unit: RMB Item Reporting Period Same period of last year Interest expense 341136.21 1825195.98 Less: Interest income 17940638.39 9008657.82 Net foreign exchange gains or -6063845.94-4234188.82 losses Other 240309.43 132973.74 Total -23423038.69 -11284676.92 45. Other Income Unit: RMB Amount included in Same period of last non-recurring profit or Sources Reporting Period year loss for the current period VAT additional deduction 16017274.94 294256.13 Withholding individual income 50685.3674552.51 tax handling fee refund Government grants recognized directly in current period profit 4143565.38 3009573.87 3477338.38 or loss Government grants related to deferred income 3409729.46 3409729.46 180Changchai Company Limited Annual Report 2024 The details of government subsidies are as follows: Unit: RMB Asset-related grants/ Items Reporting Period Income-related grants National Major Special Fund Allocation - Flexible Machining Production Line for Diesel Engine Cylinder 1519266.00 Asset-related grants Blocks Demolition Compensation - Hehai Road Land 267333.49 Asset-related grants Demolition Compensation - Hehai Road Base Main 398640.13 Asset-related grants Workshop Grant for R&D and Industrialization of High-Efficiency Agricultural Diesel Engines Meeting National Phase III/IV 1224489.84 Asset-related grants Emission Standards Changzhou Financial Development Special Fund (for 2000000.00 Income-related grants Enterprise Shareholding Reform and Listing) Provincial-Level Commerce Development Special Fund 525300.00 Income-related grants Changzhou Innovation Development Special Fund (2023 150000.00 Income-related grants Support for Enterprise R&D Investment) Talent Special Fund 42000.00 Income-related grants 2024 High-Tech Zone Industrial and Information 30000.00 Income-related grants Technology Special Fund Municipal Science and Technology Innovation Fund 56973.38 Income-related grants Project Financial Subsidy 12000.00 Income-related grants "Four Above" Units Statistical Quality Assessment Reward 800.00 Income-related grants High-Quality Development Excellence Award 30000.00 Income-related grants Coordination Technology Award 20000.00 Income-related grants Subsidy and Bonus for Employing Disabled Persons 31920.00 Income-related grants (Meeting/Exceeding Quota) VAT Deduction for Employing Poverty-Alleviation 22100.00 Income-related grants Workforce 2023 Party Fee Reimbursement for "Two New" and 16945.00 Income-related grants Retiring Party Organizations Longcheng Talent Plan - Foreign Talent Special Subsidy 100000.00 Income-related grants Enterprise Technology-Driven Innovation Award 51000.00 Income-related grants 2023 Innovation Entity Cultivation Bonus 100000.00 Income-related grants Patent Award 300.00 Income-related grants 2023 First Batch Patent Application and Utilization Award 8000.00 Income-related grants 181Changchai Company Limited Annual Report 2024 Asset-related grants/ Items Reporting Period Income-related grants Intellectual Property Standardization Certification Reward 50000.00 Income-related grants 2024 Industrial High-Quality Development Special Fund 200000.00 Income-related grants 2023 First Batch District-Level Manufacturing 30000.00 Income-related grants High-Quality Development Special Fund Employment Stabilization Subsidy 666227.00 Income-related grants Total 7553294.84 —— 46. Gain on Changes in Fair Value Unit: RMB Sources Reporting Period Same period of last year Held-for-trading financial assets -30892837.58 10401521.88 Other non-current financial assets -35045359.31 39414576.80 Total -65938196.89 49816098.68 47. Investment Income Unit: RMB Item Reporting Period Same period of last year Long-term equity investment income accounted by equity method Investment income from disposal of long-term equity investment Investment income from holding of trading 855760.00343730.00 financial assets Investment income from disposal of trading 6671015.983820476.37 financial assets Dividend income from holding of other equity 18163080.0011482380.00 instrument investment Income from re-measurement of residual stock rights at fair value after losing control power Interest income from holding of investment in debt 499990.251463921.82 obligations Interest income from holding of investment in other debt obligations 182Changchai Company Limited Annual Report 2024 Investment income from disposal of investment in other debt obligations Debt restructuring gains 267434.70 Securities lending and borrowing business income 95937.38 28498.48 Investment income from wealth management 1026622.567673218.19 products Accounts receivable financing - Discount interest -3313989.60-5709875.91 on bank acceptance bills Total 24265851.27 19102348.95 48. Credit Impairment Loss Unit: RMB Item Reporting Period Same period of last year Bad debt loss of accounts 1583599.712961043.75 receivable Bad debt loss of other receivables -353779.59 -3133215.40 Total 1229820.12 -172171.65 49. Asset Impairment Loss Unit: RMB Item Reporting Period Same period of last year Loss on inventory valuation and contract performance cost -14383249.32 -27893895.75 Impairment loss on property plant and equipment -20122.51 Total -14403371.83 -27893895.75 50. Asset Disposal Income Unit: RMB Amount included in Same period of last non-recurring profit or Sources Reporting Period year loss for the current period Disposal income of fixed assets 304377.71105702551.01304377.71 and intangible assets 183Changchai Company Limited Annual Report 2024 51. Non-operating Income Unit: RMB Amount included in Item Reporting Period Same period of last year non-recurring profit or loss for the current period Income from disposal of 222436.80 fixed assets Income from penalty 97216.00 10840.00 97216.00 Accounts not required to be 1556125.20263791.001556125.20 paid Other 1185262.22 430925.85 1185262.22 Total 2838603.42 927993.65 2838603.42 52. Non-operating Expense Unit: RMB Amount included in Item Reporting Period Same period of last year non-recurring profit or loss for the current period Loss on disposal of fixed assets 418860.88 206219.59 418860.88 Donation 250000.00 150000.00 250000.00 Other 217646.81 826317.95 217646.81 Total 886507.69 1182537.54 886507.69 53. Income Tax Expense (1) List of Income Tax Expense Unit: RMB Item Reporting Period Same period of last year Current income tax expense 8816925.87 4541041.54 Deferred income tax expense -18077750.35 33095616.49 Total -9260824.48 37636658.03 (2) Adjustment Process of Accounting Profit and Income Tax Expense Unit: RMB Item Reporting Period 184Changchai Company Limited Annual Report 2024 Profit before taxation 15356740.40 Current income tax expense accounted at statutory/applicable tax rate 2303511.06 Influence of applying different tax rates by subsidiaries -4209583.50 Influence of income tax before adjustment 80224.15 Influence of non-taxable income -2938402.00 Impact of non-deductible costs expenses and losses 1307320.76 Impact of utilizing previously unrecognized deductible tax losses -9319890.92 Impact of unrecognized deductible temporary differences and tax losses in 9568669.34 current period Impact of super-deduction incentives on income tax -6052673.37 Income tax expense -9260824.48 54. Other Comprehensive Income See Note VII 35 for details. 55. Cash Flow Statement (1) Cash Related to Operating Activities Cash Generated from Other Operating Activities Unit: RMB Item Reporting Period Same period of last year Subsidy and appropriation 4121465.38 3084694.38 Other intercourses in cash 6834709.31 2744200.31 Interest income 17560515.91 9008657.82 Recovery of time deposits at 36000000.0024000000.00 maturity Other 3343648.68 1245299.28 Total 67860339.28 40082851.79 Cash Used in Other Operating Activities Unit: RMB Item Reporting Period Same period of last year Selling and administrative expense 95660891.03114918107.53 paid in cash Time deposits withdrawn 42000000.00 36000000.00 Other transactions 851981.36 1580265.70 185Changchai Company Limited Annual Report 2024 Other 479361.32 1632848.89 Total 138992233.71 154131222.12 (2) Cash Related to Investing Activities Cash Generated from Other Investing Activities Unit: RMB Item Reporting Period Same period of last year Cash paid for acquisition of minority 7170000.00 interests in subsidiaries Discounting of bank acceptance bills 110000000.00 with low credit ratings Total 117170000.00 Changes in liabilities arising from financing activities □Applicable √Not applicable 56. Supplemental Information for Cash Flow Statement (1) Supplemental Information for Cash Flow Statement Unit: RMB Supplemental information Reporting Period Same period of lastyear 1. Reconciliation of net profit to net cash flows generated from operating activities Net profit 24617564.88 114698355.56 Add: Provision for impairment of assets 14403371.83 27893895.75 Credit impairment loss -1229820.12 172171.65 Depreciation of fixed assets of investment properties 84324061.52 88980118.41 Depreciation of right-of-use assets Amortization of intangible assets 6806448.55 7081433.87 Amortization of long-term deferred expenses 352927.75 349871.11 Losses on disposal of fixed assets intangible assets and other long-term assets (gains by “-”) -304377.71 -105702551.01 Losses on the scrapping of fixed assets (gains by “-”) 418860.88 -16217.21 Losses on the changes in fair value (gains by “-”) 65938196.89 -49816098.68 Financial expenses (gains by “-”) -5722709.73 -644213.13 Investment losses (gains by “-”) -27579840.87 -24812224.86 Decrease in deferred income tax assets (increase by “-”) -4939342.20 24701580.14 186Changchai Company Limited Annual Report 2024 Increase in deferred income tax liabilities (decrease by “-”)-13138408.158394036.35 Decrease in inventory (increase by “-”) -44365062.06 -245117199.69 Decrease in accounts receivable from operating activities (increase by “-”) -515169470.57 27662484.38 Increase in payables from operating activities (decrease by “-”) 264499562.26 263364384.71 Other -3204931.85 Net cash flows generated from operating activities -154292968.70 137189827.35 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 892681884.84 971629523.46 Less: Beginning balance of cash 971629523.46 810350966.05 Add: Ending balance of cash equivalents Less: Beginning balance of cash equivalents Net increase in cash and cash equivalents -78947638.62 161278557.41 (2) Cash Flows from Significant Investing Activities Received or Paid Unit: RMB Item Reporting Period Cash received from significant investing activities Including: Cash Received from Redemption of Wealth Management Products Structured Deposits and Debt 1118117547.48 Investments Cash paid for significant investing activities Including: Cash paid for purchase of wealth management products and structured deposits 1179550000.00 (3) Cash and Cash Equivalents Unit: RMB Item Ending balance Beginning balance I. Cash 892681884.84 971629523.46 Including: Cash on hand 84482.59 157238.05 Bank deposit on demand 891972475.61 963604998.68 187Changchai Company Limited Annual Report 2024 Other monetary assets on demand 624926.64 7867286.73 Accounts deposited in the central bank available for payment Deposits in other banks Accounts of interbank II. Cash equivalents Of which: Bond investment expired within three months III. Ending balance of cash and cash 892681884.84971629523.46 equivalents Of which: Cash and cash equivalents with restriction in use for the Company as the parent or subsidiaries of the Group (4) Disclosure of changes in financing-related liabilities from opening to closing balances by category Unit: RMB Increase Decrease Opening Closing Item balance Non-cash Cash Non-cashCash changes balance changes changes changes Short-term borrowing 94412090.20 59697.21 94471787.41 s Other payables-d 3891433.833891433.83 ividends payable Total 3891433.83 94412090.20 59697.21 98363221.24 57. Foreign Currency Monetary Items (1) Foreign Currency Monetary Items Unit: RMB Item Ending foreign currency Exchange rate Ending balance convertedbalance to RMB Monetary assets 224364347.14 Of which: USD 31162617.52 7.1884 224009359.79 188Changchai Company Limited Annual Report 2024 HKD 383339.11 0.92604 354987.35 Accounts receivable 110124478.86 Of which: USD 15197105.67 7.1884 109242874.42 EUR 117145.84 7.5257 881604.44 Accounts payable 2175.21 Of which: USD 302.60 7.1884 2175.21 (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 58. Lease (1) The Company Was Lessor: Operating leases with the Company as lessor √Applicable□Not applicable Unit: RMB Of which: income related to Item Rental income variable lease payments not included in lease receipts Lease income 2441811.39 Total 2441811.39 Finance leases with the Company as lessor □Applicable √Not applicable Undiscounted lease receipts for each of the next five years □Applicable √Not applicable Reconciliation of undiscounted lease receipts to net investment in leases: Not applicable VIII. Research and Development Expenditure Unit: RMB Item Amount for the current period Amount for the previous period Direct input 46708069.23 51504815.69 Employee remuneration 24323024.76 24744156.04 Depreciation and amortization 5756990.16 4895983.48 Outsourcing development fees 704000.00 684195.77 Others 5909393.45 8509953.35 Total 83401477.60 90339104.33 189Changchai Company Limited Annual Report 2024 Of which: Expensed research and development expenditure 83401477.60 90339104.33 Capitalized research and development expenditure IX. Equity in Other Entities 1. Equity in Subsidiary (1) Subsidiaries Unit: RMB Nature Holding percentage Main Registra Registere of (%) Way of Name operating tion d capital busine gaining place place Indirect ss Directly ly Changchai Wanzhou Diesel 8500000 Chongqi Chongqi Indust 60.00% Set-up Engine Co. Ltd. 0.00 ng ng ry Changzhou Changchai 5506300 Changzh Changz Indust Benniu Diesel Engine 99.00% 1.00% Set-up 0.00 ou hou ry Fittings Co. Ltd.Changzhou Horizon 4000000 Changzh Changz Servic 100.00% Set-up Investment Co. Ltd. 0.00 ou hou e Changzhou Changchai 1000000 Changzh Changz Indust Horizon Agricultural 100.00% Set-up 0.00 ou hou ry Equipment Co. Ltd.Combinati Changzhou Fuji Changchai on not 3725000 Changzh Changz Indust Robin Gasoline Engine Co. 100.00% under the 0.00 ou hou ry Ltd. same control Jiangsu Changchai 3000000 Changzh Changz Indust 100.00% Set-up Machinery Co. Ltd. 00.00 ou hou ry Changzhou Xingsheng 1000000 Changzh Changz Servic Property Management Co. 100.00% Set-up.00 ou hou e Ltd.Combinati Zhenjiang Siyang Diesel 2000000 Engine Manufacturing Co. Zhenjian Zhenjia Indust on not 49.00% under the Ltd. .00 g ng ry same control Note: The Company holds a 49% equity interest in Zhenjiang Siyang making it the largest shareholder. With other shareholders being relatively dispersed and given that the Company appoints 4 out of the 7 board members 190Changchai Company Limited Annual Report 2024 of Zhenjiang Siyang (including the Chairman) the Company is the de facto controlling party of Zhenjiang Siyang meeting the consolidation criteria. (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% 271622.56 20447252.38 Engine Co. Ltd.Zhenjiang Siyang Diesel Engine Manufacturing Co. 51.00% 5856046.32 57449838.65 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 4492 2153 6645 1533 1533 4117 2235 6353 1358 1358 Diese 0697 2357 3054 4923 4923 9375 1977 1353 4154 4154 l .17 .74 .91 .96 .96 .84 .78 .62 .77 .77 Engin e Co.Ltd. 191Changchai Company Limited Annual Report 2024 Zhenj iang Siyan g Diese l 1048 2269 1275 1653 1659 9474 2439 1191 2029 2029 6170 Engin 4937 5139 4451 7400 9100 7199 6092 4329 5436 5436 0.00 e 4.35 .48 3.83 .72 .72 .90 .80 2.70 .96 .96 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 4073828 679056.4 679056.4 2764335 4336424 261794.6 261794.6 -845101 Diesel 4.52 1 1 .63 6.66 4 4 3.52 Engine Co. Ltd.Zhenjian g Siyang Diesel 6947904 1148244 1148244 3116694 6693515 1042398 1042398 1349693 Engine Manufact 6.40 3.77 3.77 .39 6.33 4.02 4.02 .24 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. Partnership Shares transfer was made on 29 December 2022 and 10 October 2023. 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 192Changchai Company Limited Annual Report 2024 Equity Investment Partnership Enterprise (Limited) Shenzhen Jiaxin One Venture Capital Partnership (limited partnership)Zhong Wende and Qingdao Yinjiahui Industrial Investment Partnership Enterprise (Limited Partnership). In accordance with the Partnership Agreement the limited partner does not execute the partnership affairs. Thus the Company does not control Changzhou Xietong Private Equity Fund (Limited Partnership) and did not include it into the scope of consolidated financial statements.X. Government Grants 1. Government Grants Recognized at the End of the Reporting Period at the Amount Receivable □Applicable□Not applicable Reasons for failing to receive government grants in the estimated amount at the estimated point in time □Applicable□Not applicable 2. Liability Items Involving Government Grants □Applicable □Not applicable Unit: RMB Amount recorded Amount into recorded Accounting Beginning Amount ofnew non-operati into other Related to items balance ng income income in Other Ending subsidy the changes balance assets/relat in the ed income Reporting Reporting Period Period Deferred 32795896 3409729. 29386167 Related to income .48 46 .02 assets 3. Government Grants Recognized as Current Profit or Loss □Applicable □Not applicable Unit: RMB Accounting items Amount for the current period Amount for the previous period Other income 7553294.84 6419303.33 XI. The Risk Related to Financial Instruments 1. Various Types of Risks Arising from Financial Instruments The Company’s principal financial instruments include financial assets at fair value through profit or loss other equity instrument investments other non-current financial assets accounts receivable accounts payable etc.Detailed disclosures of these financial instruments are provided in the relevant sections of Note VII. The risks associated with these financial instruments as well as the Company’s risk management policies to mitigate such risks are described below. The Company’s management manages and monitors these risk exposures to ensure they remain within defined limits. 193Changchai Company Limited Annual Report 2024 The Company employs sensitivity analysis to assess the potential impact of reasonably possible changes in risk variables on current period profit or loss or shareholders’ equity. Since risk variables rarely change in isolation and the correlation between variables significantly influences the ultimate impact of changes in any single variable the following analysis assumes each variable changes independently. 1. Risk Management Objectives and Policies The Company’s risk management objectives are to achieve an appropriate balance between risk and return minimize the adverse impact of risks on operational performance and maximize the interests of shareholders and other equity investors. Based on these objectives the Company’s fundamental risk management strategy involves identifying and analyzing risks establishing risk tolerance thresholds implementing risk management measures and conducting reliable monitoring to maintain risks within defined limits. (1) Market Risk * Foreign Exchange Risk Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations. The Company is primarily exposed to foreign exchange risk related to USD and EUR. Apart from overseas operations denominated in USD and EUR the Company’s other major business activities are settled in RMB. As of December 31 2024 the Company’s foreign currency monetary items include cash and cash equivalents accounts receivable and accounts payable (see Note VII.57). The foreign exchange risk arising from these assets and liabilities may impact the Company’s financial performance.The Company closely monitors the effects of exchange rate fluctuations on its foreign exchange risk exposure.* Interest Rate Risk – Cash Flow Variability Risk The Company’s exposure to cash flow variability due to interest rate changes primarily relates to floating-rate bank deposits. The Company’s policy is to maintain these deposits at floating rates.* Other Price Risk The Company’s investments classified as financial assets at fair value through profit or loss or fair value through other comprehensive income are measured at fair value at the balance sheet date. Consequently the Company is exposed to price volatility in the securities market. The Company mitigates equity price risk by maintaining a diversified portfolio of equity securities. (2) Credit Risk Credit risk refers to the risk that one party to a financial instrument fails to fulfill its obligations resulting in financial loss to the other party.The Company’s credit risk primarily arises from receivables. To manage this risk the Company has implemented the following measures: * Transactions are conducted only with approved and creditworthy third parties.* Credit assessments are performed for all customers requesting credit terms.* Accounts receivable balances are continuously monitored to avoid significant bad debt exposure.Credit Risk Exposure: * Cash and bank acceptance bills have low credit risk as they involve reputable highly rated banks.* Other financial assets (e.g. accounts receivable other receivables) are exposed to counterparty default risk with maximum exposure equal to their carrying amounts.The Company does not require collateral as it transacts only with approved and creditworthy parties. Credit risk concentration is managed by customer. As of December 31 2024 60.75% (December 31 2023: 54.66%) of the Company’s accounts receivable balance was attributable to its top five customers. No collateral or credit enhancements are held for accounts receivable.Criteria for Significant Increase in Credit Risk: 194Changchai Company Limited Annual Report 2024 At each reporting date the Company assesses whether credit risk has increased significantly since initial recognition. This evaluation considers qualitative and quantitative factors including historical data external credit ratings and forward-looking information.A significant increase in credit risk is deemed to occur when one or more of the following triggers are met: * Quantitative: Probability of default (PD) increases by a material margin compared to initial recognition.* Qualitative: Material adverse changes in the debtor’s financial condition or inclusion in a watchlist.Definition of Credit-Impaired Assets: To determine credit impairment the Company aligns with internal risk management objectives and considers quantitative and qualitative indicators including: * Significant financial difficulty of the debtor; * Breach of contract (e.g. payment default or delinquency); * Concessions granted due to the debtor’s financial distress; * Likelihood of bankruptcy or restructuring; * Disappearance of an active market for the asset; * Purchase or origination of a financial asset at a deep discount reflecting credit loss.Expected Credit Loss (ECL) Measurement Parameters: ECL is measured based on 12-month or lifetime expected credit losses depending on whether credit risk has increased significantly or impairment has occurred. Key parameters include: * Probability of Default (PD): Likelihood of default within 12 months or the remaining lifetime. Adjusted for forward-looking macroeconomic factors.* Loss Given Default (LGD): Expected loss severity upon default varying by counterparty type recourse and collateral.* Exposure at Default (EAD): Amount expected to be owed at the time of default.Forward-Looking Information: ECL calculations incorporate forward-looking macroeconomic indicators analyzed through historical data regression and expert judgment. (3) Liquidity Risk The Company manages liquidity risk by maintaining sufficient cash and cash equivalents monitored to meet operational needs and mitigate cash flow volatility. Management ensures compliance with borrowing agreements and monitors bank loan utilization. 2. Financial Assets (1) Classification of Transfer Methods □Applicable □Not applicable Unit: RMB Transfer Nature of Amount of Recognition method transferred transferred termination or Basis for recognition terminationfinancial assets financial assets not Endorsement Notes /discount receivable 234736335.20 Not The Company retains substantially all derecognized of the risks and rewards including the 195Changchai Company Limited Annual Report 2024 risk of default associated with its Endorsement Accountsreceivable 865680649.89 Derecognized The Company transfers almost all the/discount financing risks and rewards Total 1100416985.09 (2) Financial Assets Derecognized due to Transfer □Applicable □Not applicable Unit: RMB Item Transfer method of Amount of derecognized Gains or losses related tofinancial assets financial assets derecognition Accounts receivable Endorsement 301693937.09 financing Accounts receivable Discount 563986712.80 -3313989.60 financing Total 865680649.89 -3313989.60 (3) Continued Involvement in the Transfer of Assets Financial Assets □Applicable □Not applicable Unit: RMB Item Transfer method of Amount of assets resulting from Amount of liabilities resultingassets continued involvement from continued involvement Notes receivable Endorsement 163858135.20 163858135.20 Notes receivable Discount 70878200.00 70878200.00 Total 234736335.20 234736335.20 XII. The Disclosure of Fair Value 1. Ending Fair Value of Assets and Liabilities at Fair Value Unit: RMB Ending fair value Item Fair value Fair value Fair value measurement items measurement items measurement items Total at level 1 at level 2 at level 3 I. Consistent fair value measurement -- -- -- -- (I) Trading financial assets 1. Financial assets at fair value through profit or loss 196Changchai Company Limited Annual Report 2024 (1) Debt instrument investment (2) Equity instrument 52598990.00 52598990.00 investment (3) Derivative financial assets (4) Wealth management 251068469.65 251068469.65 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 592483000.00 348637058.72 941120058.72 investment (IV) Investment property 1. Land use right for lease 2. Buildings leased out 3. Land use right held and planned to be transferred once appreciating (V) Living assets 1. Consumptive living assets 2. Productive living assets Accounts receivable financing 223261002.76 223261002.76 Other non-current financial assets 377869217.49 377869217.49 Total assets consistently 645081990.00 251068469.65 949767278.97 1845917738.62 measured by fair 197Changchai Company Limited Annual Report 2024 value (VI) Trading financial liabilities Of which: Issued trading bonds Derivative financial liabilities Other (VII) Financial liabilities designated to be measured at fair value and the changes recorded into the current profit or loss Total liabilities consistently measured by fair value II. Inconsistent fair value measurement (1) Assets held for sale Total assets inconsistently measured by fair value Total liabilities inconsistently measured by fair value 2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level 1 For the listed company stocks held by the company in the held-for-trading financial assets measured at fair value the closing market price on the balance sheet date was the basis for the measurement of fair value. 3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for Consistent and Inconsistent Fair Value Measurement Items at Level 2 Wealth management and investment: The underlying assets of investment in wealth management products include bond assets deposit assets fund assets etc. The portfolio of investment assets should be dynamically managed.The fair value of wealth management products should be adjusted according to the yield of similar products provided by the counterparty. 198Changchai Company Limited Annual Report 2024 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 other non-current financial assets: The equity instrument investment in Jiangsu Horizon New Energy Technology Co. Ltd. (a manufacturer of lithium battery separators whose main products include coated products and base films primarily used in new energy vehicle power batteries 3C consumer batteries and energy storage batteries) is characterized by high technical complexity lengthy R&D cycles and substantial capital investment. The company is in a rapid development phase with numerous investment projects still under construction that have not yet generated stable revenue or profits. However financing activities have been frequent with five equity financings conducted in the past three years. Accordingly the Company has determined the fair value of this equity investment using the most recent financing price adjustment method and engaged an appraisal firm to validate the valuation. (3) Among other equity instrument investments: The investments in Chengdu Changwan Diesel Engine Sales Co. Ltd. Chongqing Wanzhou Changwan Diesel Engine Parts Co. Ltd. Changzhou Economic and Technological Development Company Changzhou Tractor Company Changzhou Industrial Capital Mutual Aid Association of the Economic Commission and Beijing Engineering Machinery Agricultural Machinery Company totaling RMB 1.21 million are measured at a fair value of RMB 0.00 due to the recoverability of the invested amounts.For Changzhou Collaborative Innovation Equity Investment Partnership (Limited Partnership) established in October 2017 the year-end partners' equity has increased due to fair value changes in its equity holdings. No material changes have occurred in its operating environment business conditions or financial position. Thus the Company has determined its fair value based on the partnership’s net asset value at the period-end. 5. Transfers Between Fair Value Hierarchy Levels for Recurring Fair Value Measurements: Reasons for Transfers and Policies for Determining Transfer Timing During the current year no transfers occurred between Level 1 and Level 2 of the fair value hierarchy for the Company’s financial assets and liabilities nor were there any transfers into or out of Level 3. 6. Changes in Valuation Techniques and Reasons for Such Changes During the Period No changes were made to valuation techniques during the reporting period. 7. Fair Value Information 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. 199Changchai Company Limited Annual Report 2024 XIII. 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 Regist Registered the Company as owned by the Name ration Nature of business capital the parent Company as the place against the parent against Company the Company Investment and operations of state-owned assets assets Changzhou management (excluding Investment Chang RMB1.2 financial business) investment 32.26% 32.26% Group Co. zhou billion consulting (excluding Ltd.consulting on investment in securities and options) etc.Information about the parent company of the enterprise: The parent company of the enterprise is Changzhou Investment Group Co. Ltd. According to the "Implementation Plan for Transferring Part of State-owned Capital to Enrich Social Security Funds in Jiangsu Province" (Su Zhengfa [2020] No. 27) issued by the provincial government the "Notice on Transferring Part of State-owned Capital in Cities and Counties to Enrich Social Security Funds" (Su Caigongmao [2020] No. 139) issued by Jiangsu Provincial Department of Finance and five other departments and the "Notice on Transferring Part of Municipal (District) State-owned Capital to Enrich Social Security Funds" (Chang Caigongmao [2020] No. 4) issued by Changzhou Municipal Finance Bureau and four other departments 10% of the state-owned equity of the Investment Group held by the People's Government of Changzhou City was transferred to Jiangsu Provincial Department of Finance without compensation. After the equity transfer the People's Government of Changzhou City holds 90% of the state-owned equity of Changzhou Investment Group Co. Ltd. and Jiangsu Provincial Department of Finance holds 10% of the state-owned equity of Changzhou Investment Group Co. Ltd. According to the document of the People's Government of Changzhou City (Chang Zhengfa [2006] No. 62) Changzhou Investment Group Co. Ltd. is an enterprise where the State-owned Assets Supervision and Administration Commission of Changzhou City performs the investor's responsibilities as authorized by the People's Government of Changzhou City. Therefore Changzhou Investment Group Co. Ltd. is the controlling shareholder of the company and the State-owned Assets Supervision and Administration Commission of Changzhou City remains the actual controller of the company. The ultimate controlling party of the enterprise is the State-owned Assets Supervision and Administration Commission of Changzhou City. 2. Subsidiaries of the Company Refer to Note IX for details. 3. Situation of joint ventures and associated enterprises of the company Refer to Note VII. 12.Long term Equity Investments for details. 200Changchai Company Limited Annual Report 2024 4. Information on Other Related Parties Name Relationship with the Company Changzhou Synergetic Innovation Private Equity Participated in establishing the industrial investment Fund (Limited Partnership) fund Jiangsu Horizon New Energy Technology Co. Ltd. Shareholding enterprise of the Company 5. Related Party Transactions (1) Compensation for key management personnel Unit: RMB Amount incurred in the previous Item Current amount incurred period Compensation for key 8896700.007820700.00 management personnel 6. Related-party receivables and payables There were no related-party receivables or payables during the reporting period.XIV. Commitments and Contingency 1. Significant Commitments Significant commitments on balance sheet date As of 31 December 2024 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.XV. Events after Balance Sheet Date 1. Profit Distribution Dividend to be distributed for every 10 shares (RMB) 0.1 Bonus shares to be distributed for every 10 shares 0 201Changchai Company Limited Annual Report 2024 (share) Additional shares to be converted from capital reserve for every 10 shares (share) 0 Dividend for every 10 shares (RMB) declared after review and approval 0.1 Bonus shares to be distributed for every 10 shares (share) declared after review and approval 0 Additional shares to be converted from capital reserve for every 10 shares (share) declared after review and 0 approval On April 9 2025 the eighth meeting of the tenth Board of Directors of the Company approved the 2024 profit distribution plan proposing a cash dividend Profit distribution plan distribution of RMB 7056925.07. This distribution plan remains subject to review and approval by the shareholders' general meeting. 2. Sales Return None 3. Notes to Other Events after Balance Sheet Date There was no other event after balance sheet date.XVI. Other Significant Events 1. Segment Information (1) Basis for Determining Reportable Segments and Accounting Policies As the Company and its major subsidiaries operate similar business activities under unified management without separate business units the Company operates as a single reportable segment. 2. Other Significant Transactions and Events Relevant to Investors' Decision-Making The Xinbei District People's Government of Changzhou ("Notice of Expropriation Decision on State-owned Land Housing" Changxin Zheng Gao [2022] No. 6) decided to expropriate the houses within the scope of the old town renovation project at the site of Changchai Co. Ltd.'s (hereinafter referred to as "the Company") single-cylinder engine plant i.e. Changchai Co. Ltd. Changzhou Sanjing Branch. On November 29 2023 the Company signed a compensation agreement with the Housing and Urban-Rural Development Bureau of Changzhou National Hi-Tech District (Xinbei) and the Housing Expropriation and Compensation Service Center of Sanjing Subdistrict Xinbei District Changzhou (hereinafter referred to as "Sanjing Subdistrict") with a total agreed compensation amount of RMB 99929868. According to the payment terms stipulated in the Compensation Agreement the Company has received the first installment of compensation (30% of the compensation amount) of RMB 30000000 (including RMB 1000000 received on December 29 2023 and RMB 29000000 received on January 202Changchai Company Limited Annual Report 2024 3 2024). The relevant land expropriation work is currently in progress. XVII. Notes of Main Items in the Financial Statements of the Company as the Parent 1. Accounts Receivable (1) Disclosure by Aging Unit: RMB Aging Ending carrying amount Beginning carrying amount Within one year (including 1 year) 421962024.85 289665029.12 One to two years 6757507.16 1642898.19 Two to three years 936696.44 4274309.13 More than three years 99831716.27 103238762.39 Three to four years 4041196.12 4376325.51 Four to five years 4363228.39 1398123.34 Over 5 years 91427291.76 97464313.54 Total 529487944.72 398820998.83 (2) Disclosure by Withdrawal Methods for Bad Debts Unit: RMB Ending balance Beginning balance Carrying Bad debt Bad debt Carrying amount amount provision provision Category Carry CarryiWithd ing Withd ng Amou Propor Amou rawal value Amoun Propor Amou rawal value nt tion nt propor t tion nt propo tion rtion Accounts receivable withdrawal of 1410 14107 21058 100.021058100.0 Bad debt 7982. 2.66% 982.7 0.00 5.28% 702.1 0.00 0%702.180% provision 76 6 8 separately accrued Of which: 203Changchai Company Limited Annual Report 2024 Accounts receivable 515390433424937776857652919 withdrawal of 97.34 17.55 94.72 22.70 7996295.546662296.6458.79683 bad debt % % % % 1.9656.41517.94 provision of by group Of which: Accounts receivable with provision for 5147 90433 4242 37776 85765 2919 97.2117.5794.7222.70 bad debts based 0428 295.5 7099 2296.6 458.7 9683 %%%% on credit risk 6.47 5 0.92 5 1 7.94 characteristics portfolio Accounts receivable with provision for bad debts based on related-party 6756 6756 0.13%0.000.000.000.000.000.000.00 transactions 75.49 75.49 portfolio within the consolidation scope 529410454424939882106822919 Total 8794 —— 1278. —— 4666 0998.8 —— 4160. —— 9683 4.72316.413897.94 Number of categories of bad debt provision by individual item: 1 Provision for bad debts assessed individually: RMB14107982.76 including significant impairment items totaling RMB12488523.68. The details are as follows: Unit: RMB Beginning balance Ending balance Withdraw Name ReasonCarrying Bad debt Carrying Bad debt al for amount provision amount provision proportio withdraw n Difficult Customer 1 2797123.26 2797123.26 2797123.26 2797123.26 100.00% to recover Difficult Customer 2 2584805.83 2584805.83 2584805.83 2584805.83 100.00% to recover 204Changchai Company Limited Annual Report 2024 Difficult Customer 3 1902326.58 1902326.58 1902326.58 1902326.58 100.00% to recover Difficult Customer 4 1726935.65 1726935.65 1759397.30 1759397.30 100.00% to recover Difficult Customer 5 0.00 0.00 1564000.07 1564000.07 100.00% to recover Difficult Customer 6 1470110.64 1470110.64 1470110.64 1470110.64 100.00% to recover Difficult Customer 7 420000.00 420000.00 410760.00 410760.00 100.00% to recover Total 10901301.96 10901301.96 12488523.68 12488523.68 -- -- Number of categories of bad debt provision by group: 1 Withdrawal of bad debt provision by group: Unit: RMB Ending balance Item Carrying amount Bad debt provision Withdrawal proportion Within 1 year 421286349.36 8425726.99 2.00 % 1 to 2 years 6757507.16 337875.36 5.00 % 2 to 3 years 936696.44 140504.47 15.00% 3 to 4 years 3498933.46 1049680.04 30.00% 4 to 5 years 4363228.39 2617937.03 60.00% Over 5 years 77861571.66 77861571.66 100.00% Total 514704286.47 90433295.55 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 (3) Bad Debt Provision Withdrawal Reversed or Recovered in the Current Period Unit: RMB Changes in the current period Beginning Category Ending balance balance Reversed orWithdrawal Verification Others recovered Bad debt provision 21058702.181596461.727735818.14811363.0014107982.76 accrued by item 205Changchai Company Limited Annual Report 2024 Withdrawal of bad debt 85765458.714882766.98214930.1490433295.55 provision by group Total 106824160.89 6479228.70 7735818.14 1026293.14 104541278.31 Of which significant amount of recovered or transferred-back bad debt provision for the current period: Unit: RMB Name Reversed orrecovered Method of Recovery Basis and Rationale for Determining the Original Provision for Bad Debt Ratios Recovered in cash Customer 1 6215662.64 through mutual Accounts receivable aged over 5 years mediation fully provided for bad debts Recovered in cash Customer 2 1510915.50 through mutual Accounts receivable aged over 5 years mediation fully provided for bad debts Total 7726578.14 (4) Accounts Receivable Written-off in Current Period Unit: RMB Item Written-off amount Accounts receivable with actual verification 1026293.14 Of which the verification of significant accounts receivable: Unit: RMB Nature of the Arising from Name of the entity accounts Verified Reason for Verification amount verification procedures related-party receivable performed transactions ornot Accounts The portion Minutes of Customer 1 receivable 811363.00 unrecoverable after the for goods mutual mediation Executive No Office Total 811363.00 (5) Top 5 of the Ending Balance of the Accounts Receivable and the Contract Assets Collected according to Arrears Party Unit: RMB Ending balance Proportion to of bad debt Ending balance Ending balance Ending balance total ending provision ofName of the of accounts of contract of accounts balance of accountsentity receivable assets receivable and accounts receivable andcontract assets receivable and impairment contract assets provision for contract assets 206Changchai Company Limited Annual Report 2024 Customer 1 137231328.98 0.00 137231328.98 25.92% 2744626.58 Customer 2 136022798.00 0.00 136022798.00 25.69% 2869530.46 Customer 3 37488328.71 0.00 37488328.71 7.08% 749766.57 Customer 4 25787025.82 0.00 25787025.82 4.87% 515740.52 Customer 5 21455202.45 0.00 21455202.45 4.05% 429104.05 Total 357984683.96 0.00 357984683.96 67.61% 7308768.18 2. Other Receivables Unit: RMB Item Ending balance Beginning balance Interest receivable Dividend receivable 7165080.00 Other receivables 17123687.65 399142024.92 Total 24288767.65 399142024.92 (1) Dividend receivable Unit: RMB Projects (or Investee Entities) Ending balance Beginning balance Jiangsu Bank 2024 Interim Dividend Announcement 7165080.00 Total 7165080.00 (2) Other Receivables 1) Other Receivables Classified by Accounts Nature Unit: RMB Nature Ending carrying value Beginning carrying value Related-party transactions within 31828957.95366245432.00 the consolidation scope Margin and cash pledge 1300.00 1300.00 Other entity current accounts 20438842.07 67344009.68 Petty cash and borrowings by 763839.63884233.75 employees Other 13697080.26 13638079.94 Total 66730019.91 448113055.37 207Changchai Company Limited Annual Report 2024 2) Disclosure by Aging Unit: RMB Aging Ending carrying amount Beginning carrying amount Within 1 year (including 1 year) 5982988.63 301730833.26 1 to 2 years 11494533.03 113974034.71 2 to 3 years 16754590.84 12802.00 Over 3 years 32497907.41 32395385.40 3 to 4 years 281647.36 30300.00 4 to 5 years 30300.00 321735.17 Over 5 years 32185960.05 32043350.23 Total 66730019.91 448113055.37 3) Disclosure by Withdrawal Methods for Bad Debts Provision for bad debts based on general model of expected credit losses Unit: RMB First stage Second stage Third stage Expected loss in the Bad debt provision Expected credit Expected loss in theduration (credit Total loss of the next 12 duration (credit impairment not months impairment occurred) occurred) Balance of 1 46873.2016709.1048907448.1548971030.45 January 2024 Balance of 1 January 2024 in the —— —— —— —— Current Period --Transfer to -5181.985181.98 Second stage -- Transfer to Third stage -- Reverse to Second stage -- Reverse to First stage Withdrawal of the -2796.1422497.90615600.05635301.81 Current Period Reversal of the Current Period 208Changchai Company Limited Annual Report 2024 Write-offs of the Current Period Verification of the Current Period Other changes Balance of 31 38895.0844388.9849523048.2049606332.26 December 2024 Changes of carrying amount with significant amount changed of loss provision in the current period □ Applicable √ Not applicable 4) Bad Debt Provision Withdrawn Reversed or Recovered in the Current Period Withdrawal of bad debt provision: Unit: RMB Changes in the current period Beginning Category ChargedReversed or Ending balancebalance Withdrawal -off/Writ Others recovered ten-off Bad debt provision 21844634.06600193.4422444827.50 separately accrued Withdrawal of bad debt 27126396.3935108.3727161504.76 provision by group Total 48971030.45 635301.81 49606332.26 5）Write-off of Other Receivables During the Reporting Period: Nil 6) 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 % 209Changchai Company Limited Annual Report 2024 Related-part Changzhou y Changchai Horizon transactions 16828957.95 1-3 years 25.22% 16828957.95 Agricultural within the Equipment Co. Ltd. consolidatio n scope Related-part Changzhou y Changchai Benniu transactions 15000000.00 1-3 years 22.48% Diesel Engine within the Fittings Co. Ltd. consolidatio n scope Changzhou Current 2940000.00 Over 5 years 4.41% 2940000.00 Compressor Factory accounts Changchai Group Current Imp. & Exp. Co. accounts 2853188.02 Over 5 years 4.28% 2853188.02 Ltd.Changzhou New Current District Accounting accounts 1626483.25 Over 5 years 2.44% 1626483.25 Center Total 39248629.22 58.83% 24248629.22 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 875279449. 868279449. 583443530. 576443530. 7000000.007000000.00 subsidiaries 94 94 03 03 Investment to joint ventures and 44182.50 44182.50 44182.50 44182.50 associated enterprises 875323632.868279449.583487712.576443530. Total 7044182.50 7044182.50 44945303 (1) Investment to Subsidiaries Unit: RMB 210Changchai Company Limited Annual Report 2024 Increase/decrease for the current period Beginnin Ending Beginning g balance Withdra Ending balance balance of Addition wal ofReduced balance ofInvestee (carrying depreciat al impairminvestme Others (Carrying depreciat value) ion investme entnt value) ion reserve nt provisio reserve n Changchai Wanzhou 51000005100000 Diesel 0.000.00 Engine Co.Ltd.Changzhou Changchai Benniu 96466509646650 Diesel 0.000.00 Engine Fittings Co.Ltd.Changzhou Horizon 4000000 4000000 Investment 0.00 0.00 Co. Ltd.Changzhou Changchai Horizon 700000 700000 0.000.00 Agricultural 0.00 0.00 Equipment Co. Ltd.Changzhou Fuji Changchai 47286234728623 Robin 0.030.03 Gasoline Engine Co.Ltd.Jiangsu Changchai 3000000 291835 5918359 Machinery 00.00 919.91 19.91 Co. Ltd. 211Changchai Company Limited Annual Report 2024 Changzhou Xingsheng 1000000.1000000. Property 0000 Managemen t Co. Ltd.Zhenjiang Siyang Diesel 4069080 4069080 Engine 0.00 0.00 Manufacturi ng Co. Ltd. 57644357000002918358682794700000 Total 30.030.00919.9149.940.00 (2) Investment to Joint Ventures and Associated Enterprises Unit: RMB Increase/decrease for the current period Begin Gains Endin Begin ning and Adjus Cash Endin g ning balan losses tment bonus Withd g balan Invest balan ce of Addit Redu recog of Chan or rawal balan ce ofother profit of ee ce depre ional ced nized ce depre(carry ciatio invest invest under comp ges of s impai Otherother s (Carr ciatio ing n ment ment the rehensive equity annou rment ying n value) reserv equity nced provis value) reserv e metho incom to ion e d e issue I. Joint ventures Subto tal 0.00 0.00 0.00 0.00 II. Associated enterprises Beijin g Tsing hua Xingy e 4418 4418 Indust 0.00 0.002.50 2.50 rial Invest ment Mana geme nt 212Changchai Company Limited Annual Report 2024 Co.Ltd.Subto 4418 4418 tal 0.00 0.002.50 2.50 44184418 Total 0.00 0.00 2.502.50 The recoverable amount is determined based on the net amount of the fair value minus disposal costs □ Applicable √ Not applicable The recoverable amount is determined by the present value of the forecasted future cash flow.□ Applicable √ Not applicable The reason for the discrepancy between the foregoing information and the information used in the impairment tests in prior years or external information: Not applicable The reason for the discrepancy between the information used in the Company's impairment tests in prior years and the actual situation of those years: Not applicable 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 2152289877.26 1923630912.50 1978548527.91 1769939205.73 Other operations 109306807.66 102287240.76 78572385.42 61861919.26 Total 2261596684.92 2025918153.26 2057120913.33 1831801124.99 Breakdown information of operating income and operating cost: Unit: RMB Category of Segment 1 Total contracts Operating Revenue Operating cost Operating Revenue Operating cost Business Type Of which: Single-cylinder 900810856.26824628837.72900810856.26824628837.72 diesel engines Multi-cylinder 1142838583.701011740533.201142838583.701011740533.20 diesel engines Other products 47720093.13 42848780.41 47720093.13 42848780.41 Fittings 60920344.17 44412761.17 60920344.17 44412761.17 Classification by operating region 213Changchai Company Limited Annual Report 2024 Of which: Sales in domestic 1872581326.841647638286.261872581326.841647638286.26 market Export sales 279708550.42 275992626.24 279708550.42 275992626.24 Total 2152289877.26 1923630912.50 2152289877.26 1923630912.50 Information in relation to the transaction price apportioned to the residual contract performance obligation: The amount of revenue corresponding to performance obligations of contracts signed but not performed or not fully performed yet was RMB0 at the period-end. 5. Investment Income Unit: RMB Item Reporting Period Same period of last year Investment income from disposal of held-for-trading financial assets 6671015.98 7022401.48 Dividend income from holding of other equity instrument investment 18163080.00 11482380.00 Interest income from holding of debt obligation investments 499990.25 1463921.82 Accounts receivable financing-discount interest of bank acceptance bills -2778698.46 -4894619.98 Income from refinancing operations 95937.38 28498.48 Total 22651325.15 15102581.80 XVIII. Supplementary Materials 1. Items and Amounts of Non-recurring Profit or Loss √ Applicable □ Not applicable Unit: RMB Item Amount Note Gain or loss on disposal of non-current assets 304377.71 The government subsidies included in the current period's profit and loss amounted to RMB7553294.84.Government subsidies charged to current profit or Deducting government grants related loss (exclusive of government subsidies given in to assets transferred from deferred the Company’s ordinary course of business at 3477338.38 income totaling RMB3409729.46 and fixed quotas or amounts as per the government’s job retention subsidies of uniform standards) RMB666227.00. The government subsidies included in the current period's non recurring profit and loss amounted to RMB3477338.38. 214Changchai Company Limited Annual Report 2024 Gains or losses from changes in fair value of financial assets and liabilities held by non-financial enterprises and gains or losses from disposal of financial assets and liabilities except -58411420.91 for effective hedging activities related to the company's normal business operations Gains or losses from entrusting others with investments or asset management 1122559.94 Reversal of impairment provisions for receivables that have undergone separate impairment testing 7735818.14 Gains or losses from debt restructuring 267434.70 Other non-operating income and expenses other than the above 1952095.73 Less: Income tax effects -9444181.95 Non-controlling interests effects (after tax) 361173.09 Total -34468787.45 Others that meets the definition of non-recurring gain/loss: □ Applicable √ Not applicable No such cases in the Reporting Period.Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as a recurrent gain/loss item □ Applicable √ Not applicable 2. Return on Equity and Earnings Per Share Weighted average ROE EPS (Yuan/share) Profit as of Reporting Period (%) EPS-basic EPS-diluted Net profit attributable to ordinary 0.55%0.02620.0262 shareholders of the Company Net profit attributable to ordinary shareholders of the Company after 1.57%0.07500.0750 deduction of non-recurring profit or loss 3. Differences between Accounting Data under Domestic and Overseas Accounting Standards (1) Differences between Disclosed Net Profits and Net Assets in Financial Report in accordance with International Accounting Standards and Chinese Accounting Standards □ Applicable□ Not applicable 215Changchai Company Limited Annual Report 2024 (2) Differences between Disclosed Net Profits and Net Assets in Financial Report in accordance with Overseas Accounting Standards and Chinese Accounting Standards □ Applicable□ Not applicable (3) Explain Reasons for the Differences between Accounting Data Under Domestic and Overseas Accounting Standards; for Any Adjustment Made to the Difference Existing in the Data Audited by the Foreign Auditing Agent Such Foreign Auditing Agent's Name Shall Be Clearly Stated □ Applicable□ Not applicable The Board of Directors Changchai Company Limited 11 April 2025 216