Changchai Company, Limited Abstract of Annual Report 2016 Stock code: 000570, 200570 Stock name: Changchai A, Changchai B Announcement No.: 2017-002 CHANGCHAI COMPANY, LIMITED
ABSTRACT OF ANNUAL REPORT 2016
I Important information
This Abstract is based on the full text of the Annual Report. In order for a full understanding of the operating results, financial condition and future development planning of the Company, investors are kindly reminded to read the full text carefully on the media designated by the China Securities Regulatory Commission (the “CSRC”).
This Annual Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
Modifiedauditor’s opinion
□ Applicable√ Not applicable
Proposal for profit distribution to common shareholders or converting capital reserve into share capital for this Reporting Period, which has been considered and approved by the Board
√ Applicable□ Not applicable
Share capital increase from capital reserve
□ Yes√ No
The Board has considered and approved the following proposal for profit distribution to common shareholders: Based on the total shares of 561,374,326, a cash dividend of RMB0.3 (tax inclusive) per 10 shares will be distributed to all shareholders of the Company. No bonus shares will be granted, nor will any capital reserve be converted into share capital.
Proposal for profit distribution to preference shareholders for this Reporting Period, which has been considered and approved by the Board
□ Applicable√ Not applicable
Stock profile
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|-|-|-|-|
|Stock name|Changchai A, Changchai B|Stock code|000570, 200570|
|Stock exchange|Shenzhen Stock Exchange|||
|Contact information|Board Secretary||Securities Representative|
|Name|He Jianjiang|||
||123 Huaide Middle Road, Changzhou, Jiangsu,China|||
|Office address||||
|Fax|(86)519-86630954|||
|Tel.|(86)519-68683155|||
|E-mail|cchjj@changchai.com|||

Changchai Company, Limited Abstract of Annual Report 2016 II Brief introduction to the main business or products in this Reporting Period
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings and castings, gasoline engines, gasoline engine fittings, cereal harvesting machinery, rotovators, walking tractors, molds and jigs as well as the assembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel engines under the brand of “Changchai”, which are often used in tractors, combine-harvesters, light commercial vehicles, agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
III Key financial results
1. Key financial results for the past three years
Indicate by tick mark whether the Company performed any retroactive adjustments to or restatement of its accounting data due to changes of accounting policies or correction of accounting errors.
□ Yes√ No
Unit: RMB
||||||
|-|-|-|-|-|
||2016|2015|+/-%|2014|
|Operating revenues|2,283,028,855.52|2,519,799,547.29|-9.40%|2,489,792,063.33|
|Net profit attributable to|62,539,896.17|71,102,792.49|||
||||-12.04%|64,202,144.29|
|shareholders of the Company|||||
|Net profit attributable to|||||
|shareholders of the Company|56,835,566.28|61,588,462.29|-7.72%|58,685,034.57|
|before exceptional profit and loss|||||
|Net cash flows from operating|99,473,944.04|127,926,882.95|||
||||-22.24%|-51,507,355.52|
|activities|||||
|Basic earnings per share|0.11|0.13|||
||||-15.38%|0.11|
|(RMB/share)|||||
|Diluted earnings per share|0.11|0.13|||
||||-15.38%|0.11|
|(RMB/share)|||||
|Weighted average return on|||||
||3.00%|3.53%|-0.53%|3.28%|
|equity (%)|||||
||December 31,|December 31,||December 31,|
||||+/-%||
||2016|2015||2014|
|Total assets|3,724,857,266.71|3,232,406,102.20|15.23%|3,166,783,758.18|
||2,323,712,892.92|2,002,910,311.01|||
|Net assets attributable to|||||
||||16.02%|1,936,936,835.27|
|shareholders of the Company|||||

Changchai Company, Limited Abstract of Annual Report 2016 2. Key financial results by quarter
Unit: RMB
||||||
|-|-|-|-|-|
||1Q|2Q|3Q|4Q|
|Operating revenues|654,517,225.08|509,143,496.61|605,182,860.65|514,185,273.18|
|Net profit attributable to|24,282,056.99|10,736,085.37|20,090,608.28|7,431,145.53|
|shareholders of the Company|||||
|Net profit attributable to|24,946,954.15|3,563,547.46|19,718,706.88|8,606,357.79|
|shareholders of the Company|||||
|before exceptional profit and loss|||||
|Net cash flows from operating|-5,947,696.22|123,983,609.51|-46,874,591.45|28,312,622.20|
|activities|||||

Indicate by tick mark whether there are any material differences between the financial indicators above or their summations and those which have been disclosed in quarterly or semi-annual reports.
□ Yes√ No
IV Share capital and shareholders
1. Numbers of common shareholders and preference shareholders with resumed voting rights as well as shareholdings of top ten shareholders
Unit: share
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||Total number||||||||Total number of||0|
|||of common||||Total number||||preference|||
|Total number|||||||||||||
|||shareholders at||||of preference||||shareholders with|||
|of common|||||||||||||
|||the prior||||shareholders||||resumed voting|||
|shareholders|49,929|||50,464||||0|||||
|||month-end||||with resumed||||rights at the prior|||
|at the|||||||||||||
|||before the||||voting rights at||||month-end before|||
|period-end|||||||||||||
|||disclosure of||||the period-end||||the disclosure of|||
|||this Report||||||||this Report|||
|Top 10 shareholders|||||||||||||
||||||Shareholdin||||||Pledged or frozen shares||
||||||||Total shares||Number of||||
|Name of shareholder|||Nature of||g||held at the||restricted||||
||||shareholder||percentage||||||Status|Number|
||||||||period-end||shares held||||
||||||(%)||||||||
|State-owned AssetsSupervision andAdministration Commissionof Changzhou MunicipalPeople’s Government|||On behalf ofthegovernment||30.43%||170,845,236||0||||
|Bosera Value Growth Fund|||Other||2.49%||14,000,000||0||||
|Galaxy Futures Co.,Ltd.-Galaxy FuturesShengshi No. 2 AssetManagement Plan|||Other||1.05%||5,915,274||0||||
|China ConstructionBank-Bosera Value GrowthNo. 1 Fund|||Other||0.96%||5,400,000||0||||

Changchai Company, Limited Abstract of Annual Report 2016
||||||
|-|-|-|-|-|
|KGI Asia Limited|Foreigncorporation|0.59%|3,324,845|0|
|Rongtong Capital-IndustrialBank-Rongtong CapitalRongteng No. 11 AssetManagement Plan|Other|0.56%|3,121,200|0|
|Bank ofCommunications-EverbrightPramerica State-ownedEnterprise Reform ThemeStock Fund|Other|0.53%|2,950,000|0|
|Zhong Ou AssetManagement-Bank ofChina-Ping An LifeInsurance- Zhong Ou AssetManagement - Ping An LifeInsurance EntrustedInvestment No. 1 AssetManagement Plan|Other|0.34%|1,899,930|0|
|Li Liang|Domesticindividual|0.33%|1,827,445|0|
|Vanguard Total InternationalStock Index Fund|Foreigncorporation|0.29%|1,626,592|0|
|||It is unknown whether there is among the top 10 tradable|||
|||shareholders and the top 10 non-restrictedly tradable shareholders|||
|Related or acting-in-concert parties among|||||
|||any related parties or acting-in-concert parties as defined in the|||
|the shareholders above|||||
|||Administrative Measures for Information Regarding Shareholding|||
|||Alteration.|||
|||Shareholder Li Liang held a total of 1,827,445 shares in the|||
|Shareholders conducting securities margin||Company, representing a stake of 0.33%, through the client account|||
|trading||of collateral securities for margin trading of Ping An Securities Co.,|||
|||Limited.|||

2. Number of preference shareholders and shareholdings of top ten of them
□ Applicable√ Not applicable
No preference shareholders in this Reporting Period.
3. Ownership and control relations between the actual controller and the Company
STATE-OWNED ASSETS SUPERVISION AND ADMINISTRATION
COMMISSION OF CHANGZHOU MUNICIPALPEOPLE’S GOVERNMENT
30.43%
CHANGCHAI COMPANY, LIMITED
Changchai Company, Limited Abstract of Annual Report 2016 V Performance discussion and analysis
1. Performance review for this Reporting Period
In the year 2016, facing difficulties such as the continuous downward trend of the macro-economy, stricter emission laws and regulations, and the enormous pressure from safety and environmental protection requirements, we took core competitiveness improvement as the most important measure, by speeding product upgrades, optimizing the product structure, improving product quality, continuously promoting important technological transformation projects, making full use of the resource advantage, seizing opportunities in domestic and overseas markets, and expanding the advantages of superior products and business segments. As a result, we managed to maintain a stable and orderly development.
In 2016, we sold about 724,400 engines and engine units, of which about 116,600 were multi-cylinder engines, and about 607,800 are single-cylinder engines. We exported about 124,600 engines and engine units; and we achieved sales revenue of RMB2.283 billion, a yearly decline of9.4%. The net profit attributable to shareholders of the Company was RMB62.5714 million, a yearly decline of12.00%. Under the grim overall situation of the national small diesel engine industry, although our company's total sales of products went down from last year, our overall market share was stable, maintaining a leading position in the industry.
In terms of single-cylinder engines, our company adapted to new changes in the market, stabilize the main supporting enterprise market share, integrate A dealer team and continuously promote the secondary network construction. At the same time, we also accelerated the pace of product and market structure optimization, increased the proportion of superior products, and fully involved in bidding projects and the development of key customers.
Concerning multi-cylinder engines, on the one hand, our company stabilized the existing supporting system to enhance the supporting market share, speed up the agricultural market support of 4G33 and 4L88 series of middle and high ranking new products, as well as the promotion of resources of national standard III. Our company also accelerated the support of end products such as light engines and rice transplanters, but the supporting sales of commercial vehicles decreased significantly.
Facing a more severe situation of foreign trade market in the past two years, our company's export business maintained stable and rapid development. Both export volume and export income of our company increased. As for market service, we focused on national standard III training for product upgrades and service station optimization, and continuously improved the service capacity of national standard III products. We made full use of the Internet, visualization and other means to improve the terminal market service capabilities by following-up and teamwork.
To sum up, in 2016, our company correctly grasped the industry trends, implemented targeted product structure adjustment, and did a lot to positively and effectively promote product upgrades. On the one hand, the upgrade of single multi-cylinder products to national standard III was basically completed. The technical route was recognized by the market and got an advantage in the development of the industry. On the other hand, the product structure adjustment achieved initial success. New key profitable products increased significantly, making good preparation for the new development of the company.
Changchai Company, Limited Abstract of Annual Report 2016 2. Significant changes in the main business in this Reporting Period
□ Yes√ No
3. Products contributing over10% of the main business revenue or profit
√ Applicable□ Not applicable
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||Operating|Operating|Gross profit|
||Operating||Gross profit||||
|Product||Operating profit||revenue: YoY|profit: YoY|margin: YoY|
||revenue||margin||||
|||||+/-%|+/-%|+/-%|
|Diesel engines|2,258,400,410.51|408,574,378.75|18.09%|-9.49%|1.92%|2.02%|

 4. Seasonal or periodic characteristics in the operating performance that need special attention
□ Yes√ No
5. Significant YoY changes in the operating revenues, operating costs and net profit attributable to the common shareholders or their composition
□ Applicable√ Not applicable
6. Possibility of listing suspension or termination
□ Applicable√ Not applicable
VI Issues related to the financial report
1. YoY changes in accounting policies, accounting estimations and measurement methods
□ Applicable√ Not applicable
No changes.
2. Retroactive restatements due to correction of significant accounting errors in this Reporting Period□ Applicable√ Not applicable
No such cases.
3. YoY changes in the scope of the consolidated financial statements
□ Applicable√ Not applicable
No changes.
Changchai Company, Limited Abstract of Annual Report 2016 4. Explanation by the Board of Directors and the Supervisory Board concerning the“auditor’s report with modified opinion” issued by the CPAs firm for the Company in the Reporting Period
□ Applicable√ Not applicable