苏常柴Ａ(000570)*ST常柴Ｂ2003年年度报告摘要（英文版）

CHANGCHAI COMPANY, LIMITED SUMMARY OF ANNUAL REPORT 2003 §1. Important Notes 1.1 Board of Directors of the Changchai Company, Limited (hereinafter referred to as the Company) individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. The summary of annual report 2003 is abstracted from the full text of annual report; the investors are suggested to read the full text of annual report to understand more details. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 Due to certain reasons, Director Mr.Qian Shufa was absent from the Board meeting, and entrusted Director Mr. Shi Jianchun to attend and vote on his behalf. Director Mr. Zhu Xinmin was absent from the Board meeting without entrusting the other directors to vote on his behalf. 1.4 Horwath Hong Kong CPA Limited produced Auditors’ Report with qualified opinion for the Company; the investors are suggested to read the Financial Report enclosed in the full text of Annual Report to understand more details. 1.5 Person in charge of the Company Mr. Zhang Junyuan, person in charge of the accounting Mr. Xue Guojun and person in charge of handling accounting affairs Mr. Tang Jianzhong hereby confirm that the Financial Report enclosed in the Annual Report is accurate and complete. §2. Company Profile 2.1 Basic information Short form of the stock *STchangchai A, *STchangchai B Stock code 000570, 200570 Listed stock exchange Shenzhen Stock Exchange Registered address and office address No. 123, Huaide Middle Road, Changzhou, Jiangsu Post code 213002 Internet website of the Company http://www.changchai.com.cn E-mail of the Company cctqm@public.cz.js.cn 2.2 Contact person and method Authorized representative in Secretary of the Board of Directors charge of securities affairs Name Zhang Jianhe He Jianjiang Contact address No. 123, Huaide Middle Road, No. 123, Huaide Middle Road, Changzhou, Jiangsu Changzhou, Jiangsu Tel 86-519-6600448 86-519-6603656-3155 Fax 86-519-6630954 86-519-6630954 E-mail Zjh000570@163.com Hjj000570@163.com §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data (Unit: RMB) Increase/decrea 2003 2002 se over last year 2001 （％） Income from main operations 1,542,779,893.12 1,579,968,446.58 -2.35 1,743,487,434.00 Total profit 42,798,344.13 -577,101,359.81 — -435,572,757.00 Net profit 61,447,089.30 -477,475,855.99 — -381,428,646.00 Net profit after deducting non- 28,655,655.83 -465,368,723.11 — -372,354,254 recurring gains and losses At the end of Increase/decrea At the end of At the end of 2003 2002 se from the end 2001 of previous year （％） Total assets 1,951,625,309.92 2,184,414,065.98 -10.66 2,926,504,166 Shareholder’s equity (excluding 791,684,991.89 738,664,376.31 7.18 1,239,420,564 minority interests) Net cash flows from operating 187,763,577.90 112,886,329.85 66.33 166,167,555 activities 3.2 Major financial indexes (Unit: RMB) Increase/decrease over 2003 2002 2001 last year（％） Earnings per share 0.16 -1.28 — -1.02 Return on equity (%) 7.76 -64.64 — -30.8 Return on equity as calculated based on net profit after deducting non-recurring 3.62 -63.00 — -30.90 gains and losses (%) Net cash flows per share arising from 0.50 0.30 66.67 0.44 operating activities At the At the Increase or decrease At the end of end of from the end of end of 2003 2002 previous year（％） 2001 Net assets per share 2.12 1.97 7.61 3.31 Net assets per share after adjustment 1.69 1.82 -7.14 3.19 3.3 Difference in net profit as audited by PRC Accounting Regulations and International Accounting Standards (IAS) √Applicable □Inapplicable Net assets as at Dec. 31, Net profit as of the year 2003 2003 (RMB’000) (RMB’000) As calculated pursuant to PRC 61,447 791,685 Accounting Regulations Net gain on sale of subsidiaries 5,732 10,000 Written back of unrecognized losses of -8,872 investment Income of capital public reserve reckoned into based on PRC 167 Accounting Regulations Written back of minority interest -6,965 -27,866 Others -1,777 -3 As calculated pursuant to International 49,732 773,816 Accounting Standards §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase / decrease Before the change After the change in this time (+, -) I. Unlisted shares 1. Sponsor’s shares 153,160,000 0 153,160,000 Including: State-owned shares 153,160,000 0 153,160,000 Share held by domestic legal person Share held by foreign legal person Others 2. Raised legal person’s shares 10,064,000 0 10,064,000 3. Inner employees’shares 4. Preference shares or others Total unlisted shares 163,224,000 0 163,224,000 II. Listed shares 1. RMB ordinary shares 111,025,551 0 111,025,551 2. Domestically listed foreign shares 100,000,000 0 100,000,000 3. Overseas listed foreign shares 4. Others Total listed shares 211,025,551 0 211,025,551 III. Total shares 374,249,551 0 374,249,551 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulating share Total 71,724 shareholders (55,655 shareholders of domestic share and Total shareholders at the end of report year 16,069 shareholders of foreign share) Particulars about shares held by the top ten shareholders Increase / Number Holding shares Proportion decrease in of share Nature of Name of Shareholder at the year-end in total Type of shares the report pledged shareholders (share) shares (%) year or frozen 1. CHANGZHOU STATE ASSETS State-owned 0 153,160,000 40.92 Non-circulating 0 ADMINISTRATIVE BUREAU shareholder 2. WUJIN DIESEL ENGINEER Legal person 0 5,330,000 1.42 Non-circulating 0 BLOCK FACTORY shareholder 3. BENNIU AGRICULTURAL Legal person 0 1,760,000 0.47 Non-circulating 0 MACHINERY FACTORY shareholder 4. NAM NGAI Foreign - 1,682,410 0.45 Circulating Unknown shareholder 5. MERRL LYNCH Foreign 0 1,000,000 0.27 Circulating Unknown INTERNATIONAL shareholder 6. HE YONG HANG Foreign 8,298 926,598 0.25 Circulating Unknown shareholder 7. XU BIN SHENG Foreign - 722,550 0.19 Circulating Unknown shareholder 8. LI FANG Circulating - 680,345 0.18 Circulating Unknown shareholder 9. REN XIU FU Circulating - 680,000 0.18 Circulating Unknown shareholder 10. LIU ZILI Foreign - 659,000 0.18 Circulating Unknown shareholder Explanation on associated Among the top ten shareholders, the Company is unknown whether there exists relationship among the top ten associated relationship and the consistent actionist regulated by the Management shareholders or consistent action Measure of Information Disclosure on Change of Shareholding for Listed Companies among domestic shareholders of circulating shares and shareholders of foreign shares. Particula rs about shares held by the top ten shareholders of circulating share Holding circulating shares at the Type of shares (A-share, B-share, Shareholders’name (full name) year-end (share) H-share and other) MAN NGAI 1,682,410 B-share MERRL LYNCH INTERNATIONAL 1,000,000 B-share HE YONG HANG 926,598 B-share XU BIN SHENG 722,550 B-share LI FANG 680,345 A-share REN XIU FU 680,000 A-share LIU ZILI 659,000 B-share LI DE DI 645,210 B-share LIV LY 637,300 B-share TOYO SECURITIES ASIA LIMITED-A/C CLIENT. 555,900 B-share Explanation on associated relationship among the The Company was unknown whether there exists associated top ten shareholders of circulating share relationship and the consistent actionist regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies among the top ten shareholders of circulating share. 4.3 Particulars about holding shareholders and actual controller of the Company 4.3.1 Particulars about change in holding shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for holding shareholder and other actual controller Changzhou State Assets Management Bureau is the holding shareholder of the Company as non- legal person organ. Changzhou State Assets Administrative Bureau, the first largest shareholder of the Company, was changed as Changzhou State Assets Investment Management Corporation due to reform of government organ, and the relevant procedure of change was still in process. The Company shall disclose the relevant events timely. §5. Particulars About Director, Supervisor, Senior Executive 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Holding Holding Reason of Name Title Sex Age Office term shares at the shares at the change year-begin year-end Zhang Junyuan Chairman of the Board Jun. 2003- 0 0 Male 49 Jun. 2006 Xue Guojun Director, General Manager Jun. 2003- 0 0 Male 40 Jun. 2006 Zhu Zhihong Director Jun. 2003- 0 0 Male 40 Jun. 2006 Shi Jianchun Director, Deputy General Jun. 2003- 0 0 Male 41 Manager Jun. 2006 Zhu Xinmin Director, Deputy General Jun. 2003- 0 0 Male 56 Manager Jun. 2006 Xu Zhenping Director, Assistant General Jun. 2003- 0 0 Male 46 Manager Jun. 2006 Qian Shufa Independent Director Jun. 2003- 0 0 Male 47 Jun. 2006 He Yihua Independent Director Jun. 2003- 0 0 Male 41 Jun. 2006 Lu Gang Independent Director Jun. 2003- 0 0 Male 39 Jun. 2006 Lu Jin Chairman of the Supervisory Jun. 2003- 18483 18483 Male 53 Committee Jun. 2006 Ni Mingliang Supervisor Jun. 2003- 0 0 Male 36 Jun. 2006 Lu Zhonggui Supervisor Jun. 2003- 0 0 Male 36 Jun. 2006 Wu Keyun Supervisor Jun. 2003- 0 0 Male 39 Jun. 2006 Yan Gang Supervisor Jun. 2003- 0 0 Male 46 Jun. 2006 He Jianguang Chief Engineer Jun. 2003- 0 0 Male 39 Jun. 2006 Zhang Jianhe Secretary of the Board of Jun. 2003- 0 0 Male 46 Directors Jun. 2006 5.2 Particulars about the position held by directors, supervisors in Shareholding Company □Applicable √Inapplicable 5.3 Particulars about the annual remuneration of directors, supervisors and senior executives Total annual payment RMB 1,472,000 Total annual payment of the top three directors drawing the RMB 586,000 highest payment Total annual payment of the top three senior executives RMB 526,000 drawing the highest payment Allowance of independent director RMB 20,000 per person/ year Other treatment of Independent Directors None Name of directors and supervisors received no payment or Director: Zhu Zhihong allowance from the Company Supervisor: Yan Gang Payment Number of persons Over RMB 150,000 6 RMB 100,000 ～ RMB 150,000 2 Under RMB 100,000 3 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period 2003 is a significant year for the Company, under the guide of the Board of Directors and the Management, the staff of the Company solidified and strived, overcome the unfavorable factors of SARS and rising of the material price, through putting emphasis on new products development, strengthening market exploitation and decreasing costs and expenses, changed the situation that the Company’s indexes kept descending in sequential years and realized making up the deficits and getting surpluses. The main economic indexes are increasing and the Company is pacing into favorable circulation. In the report period, the parent company totally produced and sold diesels amounting to 943,100 pieces and 952,000 pieces respectively, an increase of 3.09% and 3.44% respectively over the corresponding period of the last year, realized sales income of RMB 1,386.0960 million, an increase of 8.46% and realized a profit of RMB 47.2468 million, a net increase of RMB 536.5934 million. The total assets, net assets and assets- liability rate of the Company was RMB 1,758.8452 million, RMB 771.0268 million and 56.16% respectively. 6.2 Statement of main operations classified according to industries or products Classified according to Income from main Cost of main Gross Increase/decrease in Increase/decrease in Increase/decrease in industries or products operations operations profit ratio income from main cost of main gross profit ratio over (%) operations over the last operations over the the last year (%) year (%) last year (%) Diesels and accessories 1,507,631,614.08 1,280,929,897.51 15.66 -1.97 -5.66 33.73 Agro-vehicles 35,148,279.04 38,883,718.99 -10.63 -16.46 -14.95 22.61 Accessories and components 67,119,758.45 57,026,998.18 15.66 -25.79 -28.58 33.73 Including: related 72,791,109.07 transactions Pricing rules for related Pricing rules for related transactions are: to confirm the price of detailed related transactions referring to the market price of products in transactions the same kind, in compliance with the principles of fairness, justness and openness. Necessity and durative of All related transactions are normal sales of goods. related transactions 6.3 Particulars about main operations classified according to areas Areas Income from main operations Increase/decrease in income from (RMB) main operations over the last year (%) East China 1,003,232,261.48 13.68 Northeast 140,727,042.54 -23.94 Southwest 106,616,855.90 0.50 Central China 105,006,309.09 -0.17 North China 68,889,246.13 -21.04 Northwest 78,620,809.99 -0.96 South China 53,418,073.89 93.16 6.4 Particulars about the customers of purchase and sales Total amount of purchase of 243,020,302.34 Proportion in the total 23.21% the top five suppliers amount of purchase Total amount of sales of the 489,672,990.59 Proportion in the total 31.74% top five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation where investment equity takes over 10% of its net profit) □Applicable √Inapplicable 6.6 Explanation on reasons of material changes in main operations and its structure □Applicable √Inapplicable 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year √Applicable □Inapplicable In the report period, sticking to the principle of benefit sales, the Company reinforced the sales in profitable varieties and reduced the cost and expenditure of those products without profitability, thus, though the sales income in the year decreased somewhat over the same period of last year, gross profit ratio climbed up by a relatively large margin. 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable Due to the appropriation of large amount of impairment losses, the Company incurred a loss in the last year, thus the profit structure changed a lot in the year over the last year. Analysis to reasons of material changes in the whole financial position than that in the last year √Applicable □Inapplicable The whole financial position changed by a relatively great margin in the year over the last year and all economic indexes became good over the last year, which was mainly because that the Company realized profitability in the report period and the refunding capability increased somewhat. 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment , macro-policies and regulations on the Company’s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds Total amount of 19471.31 Total amount of raised proceeds used in 0 raised proceeds the report period Total amount of raised proceeds used 17770.36 accumulatively Committed Planned amount Change of projects or Actual Accrued Compliance with projects of input not amount of amount of planned progress input earning and estimated earning or not Back-carried 4990 The project remained 5910 0 No all-feeding unchanged while way combine of input changed harvester Self-propelled 4980 The project remained 0 No all-feeding unchanged while way combine of input changed harvester Self-propelled 15000 The project remained 7530.36 0 No semi-feeding unchanged while way combine of input changed harvester Total 24970 - 13440.36 - Explanation on 1.Changchai Combine Harvesters Co., Ltd. (hereinafter referred to as Changlian Company), which projects’not was in charge of the projects of Back-carried all-feeding combine harvester and Self-propelled all- reaching feeding combine harvester, implemented equity transfer on Aug. 30, 2002. planned 2.Jiangnan Transport Machinery Co., Ltd. (hereinafter referred to as Jiangnan Company), which was progress and in charge of the project of Self-propelled semi-feeding combine harvester, has been in bankrupt earnings (in procedure on Jun.14, 2003. The Company has received notice from the bankrupt clearing team of detailed Jiangnan Company. The Company acquired the mortgage creditor’s right RMB 6,848,382.48 that is projects) preferential repaid. The amount of repayment of other creditor’s right is RMB 3,559,837.49, totally up RM B 10,408,219.97. Explanation on In 2000, the market of harvest machinery changed a lot (For details, please refer to Annual Report change reasons 2001 of the Company). In order to reduce the investing risks and protect shareholders’equity, after and change considered by the 12th Meeting of the 3rd Board of Directors and approved by Annual Shareholders’ procedures (in General Meeting 2001, the Company changed the way of input of three investing projects committed detailed in the shares allotment. For details, please refer to the application of the raised proceeds in Annual projects) Report 2002 of the Company. Particulars about the changed projects √Applicable □Inapplicable Total amount of capital in project of 4330 changed investment Project after the Corresponding Planned amount Actual Accrued Compliance with change project of of input of amount of amount of planned progress committed change project input earning and estimated originally earning or not Complementing 4330 4330 circulating funds Total - 4330 4330 - Explanation on not reaching planned progress and earnings (in detailed projects) 6.13 Application of the proceeds not raised through shares offering □Applicable √Inapplicable 6.14 Explanation of the Board of Directors on the “Qualified Opinion”made by the Certified Public Accountants □Applicable √Inapplicable 6.15 Business plan as of the next year of the Board of Directors (If it has) □Applicable √Inapplicable Profit estimation of the next year (If it has) □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors Audited by domestic and oversea auditors as per Chinese Accounting Standards and International Accounting Standards respectively, the net profit of the Company in 2003 was RMB 61,447,089.30 and RMB 49,732,000 respectively. The total profit available for distribution in the consolidated statement as of the year was RMB 102,773,765.01 and the profit available for distribution of the parent company was RMB 37,797,422.03. The Board of Directors decided neither to distribute profit nor convert capital public reserve into share capital in 2003. The aforesaid distribution preplan should be submitted to 2003 Shareholders’General Meeting for examination. §7. Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets √Applicable □Inapplicable Other party of the transaction and Date of sale Sales price Net profit of the Gains/losses Correlative assets sold sold assets arising from transaction or contributed to the the sale not (if yes, listed company explaining the from year- pricing rule) beginning to the date of sale Assigee: Oct. 30, 2003 RMB 1 million 0 0 No Changzhou Xinzhaofeng Agro- vehicle Co., Ltd. Assets sold: Changchai Jintan Diesel Co., Ltd. Assignee: Dec. 30, 2003 RMB 5 million 0 0 No Ningxia Agro-machine Corporation Assets sold: 60% equity of Changchai Yinchuan Diesel Co., Ltd. and 5% equity of Lanzhou Changchai Northwest Vehicle Co., Ltd. Assignee: Jan. 15, 2004 RMB 900,000 0 0 No Changzhou Roller Plant Co., Ltd. Assets sold: 15% equity of Changzhou Vehicle Co., Ltd. The influence of the sold assets on the continuity of business and the stability of the Management of the Company: Changchai Jintan Diesel Co., Ltd., Changchai Yinchuan Diesel Co., Ltd. and Changzhou Vehicle Co., Ltd., controlling subsidiaries of the Company, are all in deficiency status. After the transfer, the scope of the Company’ s consolidated statements changed, which impacted no influence on the business continuity of the parent company. 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 Date of happening Complete Guarantee for Name of guaranteed Amount of Term of (date of Type of guarantees Implementation related parties or objects guarantees guarantees agreement or not not (yes or no) signing) Changzhou Tractor Credit Aug.21, 1998- Remaining RMB Aug. 21, 1998 No Plant Nov.30, 2006 7,700 Changzhou Gear Plant Credit Mar.26, 2003- Mar. 26, 2003 No Yes Mar.26, 2004 Changzhou Gear Plant Credit Jun.17, 2003- Jun. 17, 2003 No Yes Jun.17, 2004 Total amount of guarantee 7343 Total balance of guarantee 18439 Including: total balance of related guarantees 1360 Total guarantees provided by the listed company for 2480 controlling subsidiaries Total illegal guarantees 1360 Proportion of total guarantees in net assets of the 23.29% Company 7.4 Current related credits and liabilities √Applicable □Inapplicable Unit: RMB Related parties Providing capital to related parties Providing capital to the listed company by related parties Amount Balance Amount Balance Changchai Group Co., 24,841,990.00 83,232,120.39 Ltd. Changchai Group Import -12,031,106.38 75,645,320.05 and Export Company Changchai Industrial 688,744.02 12,888,744.02 Corporation Changchai Qifu Diesel 0 12,081,628.20 Co., Ltd. Fushi Changchai Luobin 8,573.12 8,573.12 Gas Engine Co., Ltd. Total 13,499,627.64 171,766,184.46 8,573.12 12,090,201.32 7.5 Entrusted assets management □Applicable √Inapplicable 7.6 Implementation of commitments □Applicable √Inapplicable 7.7 Significant lawsuits and arbitrations √Applicable □Inapplicable Ended as of the report period, the accumulative amount of the lawsuits and arbitrations interfered by the Company is RMB 69,881,700. The detail was published on Securities Times and Ta Kung Pao dated Jan. 28, 2003. Progress of lawsuits in report period, (1) Wuwei Yongyu Commercial Co., Ltd. has paid off all arrearage that owned the Company through arbitration. (2) On Nov. 3, 2003 and Nov. 20, 2003, Changzhou Intermediate People’s Court made the verdict that Shangdong Guangming Machine Plant should sell its 12,936,891 legal shares of Zhongtai Kaima Co., Ltd. to the Company at the price of RMB 1.18 per share to cancel out its arrearage. (3) Other lawsuits are all in implementation by the court. 7.8 Particulars about duties performance of Independent Directors In the report period, Qian Shufa, He Yihua and Lu Gang were elected as independent directors of the Company in Annual Shareholders’General Meeting 2002. Three independent directors are professionals in the aspects of management, finance and law respectively and play an important role to the science and validity of the decision- making of the Board of Directors. All the said three independent directors can attend all Board meetings normally and express independent opinions on the considered significant events. §8. Report of the Supervisory Committee The Supervisory Committee considered that the Company could operate according to laws with normal financial position and the use of the raised proceeds, acquisition, sales of assets and related transactions could be all implemented according to the legal procedures. §9. Financial Report 9.1 Auditing opinion Horwath Hong Kong CPA Limited produced Auditors’Report with qualified opinion for the Company. (attached Auditors’Report) REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF CHANGCHAI COMPANY LIMITED (Incorporated in the People’s Republic of China with limited liability) We have audited the financial statements on pages 3 to 31 which have been prepared in accordance with International Accounting Standards, other than as set out below. Respective responsibilities of Directors and Auditors The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Basis of opinion We conducted our audit in accordance with International Standards on Auditing. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned our audit in accordance with International Standards on Auditing so as to obtain all the information and explanations which was considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion. Qualified opinion arising from disagreement over accounting treatment and limitation in audit scope As set out in more details in note 2 to the consolidated financial statements, two of the Group’s subsidiaries (the “Unconsolidated Subsidiaries”) ceased operations in 2002 and no reliable financial information of the Unconsolidated Subsidiaries is available. As of 31 December 2003, the Group accounted for its interest in the Unconsolidated Subsidiaries using the cost method of accounting. Provision for impairment loss has been made at 31 December 2003 to write down the Group’s interests in the Unconsolidated Subsidiaries to their expected net realisable value of Nil. In our opinion, the financial statements of the Unconsolidated Subsidiaries should have been consolidated into the Group’s consolidated financial statements in accordance with International Accounting Standard IAS 27 “Consolidated financial statements and accounting for investments in subsidiaries”. However, there were no practical audit procedures that we could perform to obtain reliable financial information of the Unconsolidated Subsidiaries and report on the amounts which should have been consolidated. Except for any adjustments that might have been found to be necessary had the above disagreement over accounting treatment not existed, in our opinion the financial statements give a true and fair view of the state of affairs of the Group as at 31 December 2003 and of its profit and cash flows for the year then ended. HORWATH HONG KONG CPA LIMITED 2001 Central Plaza Certified Public Accountants 18 Harbour Road Wanchai 15 March 2004 Hong Kong Chan Kam Wing, Clement Practising Certificate number P02038 9.2 Financial statements of comparative consolidation and parent company (Appendix) 9.3 Compared with the latest annual report, there was no change in accounting policy, accounting estimate and calculation method. 9.4 In the report period, on Oct. 30, 2003, the Company signed equity transfer agreement with Changzhou Xinzhaofeng Agro- vehicle Co., Ltd. (hereinafter referred to as Xinzhaofeng Agro-vehicle Company) and agreed to transfer 71.28% equity of Changchai Jintan Diesel Co., Ltd. to Xinzhaofeng Agro-vehicle Company at the price of RMB 1,000,000. Changchai Jintan Diesel Co., Ltd., which was originally controlling subsidiary of the Company and was in the consolidated statements, would not be listed into the scope after the transfer in the report year. Board of Directors of Changchai Company, Limited Mar. 18, 2004 11 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2003 (Amounts expressed in thousands of RMB, except earnings per share) 2003 2002 Note RMB’000 RMB’000 Turnover 4 1,542,780 1,655,562 Cost of sales (1,321,041) (1,472,787) Gross profit 221,739 182,775 Other operating income 25,147 28,257 Selling expenses (75,307) (114,642) General and administrative expenses (93,269) (571,273) Other operating expenses (14,452) (15,147) Profit/(loss) from operations 63,858 (490,030) Finance costs, net 6 (16,992) (35,085) Share of losses from associates (1,294) (3,018) Other investment income/(loss) 1,170 (2,853) Gain/(loss) on disposal of leasehold land, property, plant and equipment 290 (743) Impairment loss on property, plant and equipment reversed/(made) 1,241 (34,760) Gain on disposal of a subsidiary 6,732 23,472 Other expenses, net (8,028) (3,642) Profit/(loss) from ordinary activities 5 46,977 (546,659) Income tax expense 7 (395) (27) Net profit/(loss) after taxation 46,582 (546,686) Minority interests 3,150 31,350 Net profit/(loss) after taxation and minority interests 49,732 (515,336) Profit/(loss) per share –Basic 8 RMB0.13 RMB(1.38) ………………………………………….. ………………………………………….. Zhang Jun Yuan Xue Guo Jun Chairman Director & General Manager 12 CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2003 (Amounts expressed in thousands of RMB) 2003 2002 Note RMB’000 RMB’000 Assets and liabilities Non-current assets Land use rights 9 78,874 78,874 Property, plant and equipment 9 486,778 574,157 Construction in progress 10 74,881 90,693 Investments in associates 11 9,751 66,695 Other long-term investments 12 116,876 101,887 767,160 912,306 Current assets Inventories 14 245,480 287,733 Value-added tax recoverable 13,556 31,922 Due from CGC 15 96,121 35,820 Due from associates and related parties 16 87,745 140,311 Trade and other receivables 356,995 436,373 Prepayments 24,027 12,047 Short-term investment 13 - 130 Pledged bank deposits 36,804 10,793 Cash and cash equivalents 339,633 360,561 1,200,361 1,315,690 Total assets 1,967,521 2,227,996 ………………………………………….. ………………………………………….. Zhang Jun Yuan Xue Guo Jun Chairman Director & General Manager 13 CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT DECEMBER 31, 2003 (Amounts expressed in thousands of RMB) 2003 2002 Note RMB’000 RMB’000 Capital and reserves Share capital 18 374,250 374,250 Reserves 19 399,566 349,834 773,816 724,084 Minority interests 9,876 14,663 Non-current liabilities Borrowings –long term portion 17 37,500 60,000 Current liabilities Borrowings 17 433,675 591,370 Other payables, advances from customers and accruals 217,279 242,932 Tax payable 3,413 5,018 Dividends payable 3,040 3,040 Due to associates and related parties 16 12,082 26,151 Notes and trade payables 476,840 560,738 1,146,329 1,429,249 Total equity and liabilities 1,967,521 2,227,996 ………………………………………….. ………………………………………….. Zhang Jun Yuan Xue Guo Jun Chairman Director & General Manager 14 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY FOR THE YEAR ENDED DECEMBER 31, 2003 (Amounts expressed in thousands of RMB) Reserves Statutory Statutory Discretionary Retained surplus public surplus earnings/ Unrecognised Share Capital reserve welfare reserve(accumulated Total investment Total capital reserve fund fund fund losses) reserves losses equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 31 December 2001 374,250 858,179 89,427 89,427 58,162 (222,161) 873,034 (7,864) 1,239,420 Net loss for the year - - - - - (515,336) (515,336) - (515,336) Profit appropriations - statutory surplus reserve fund - - 41 - - (41) - - - - statutory public welfare fund - - - 41 - (41) - - - Transfer from reserve - (163,997) (1) (1) (58,162) 222,161 - - - Realisation of unrecognised investment loss - - - - - (7,864) (7,864) 7,864 - Balance at 31 December 2002 374,250 694,182 89,467 89,467 - (523,282) 349,834 - 724,084 Net profit for the year - - - - - 49,732 49,732 - 49,732 Profit appropriations - statutory surplus reserve fund - - 4,725 - - (4,725) - - - - statutory public welfare fund - - - 4,725 - (4,725) - - - Transfer from reserve - (529,317) (396) (396) - 530,109 - - - Balance at 31 December 2003 374,250 164,865 93,796 93,796 - 47,109 399,566 - 773,816 ………………………………………….. … … … … … … … … … … … … … … … ….. Zhang Jun Yuan Xue Guo Jun Chairman Director & General Manager 15 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2003 (Amounts expressed in thousands of RMB) Note 2003 2002 RMB’000 RMB’000 Cash inflow from operating activities Cash generated from operations 20(a) 121,706 142,924 Interest paid (26,181) (44,414) Income tax paid (1,213) (1,776) Net cash generated from operating activities 94,312 96,734 Cash flows from investing activities Disposal of Jiangsu Changchai United Harvest Machinery Co., Ltd., net of cash disposed - (41,568) Disposal of Changchai Jin Tan Diesel Engines Co., Ltd., net of cash disposed 20(b)(i) (719) - Acquisition of property, plant and equipment (6,072) (5,925) Expenditures for construction in progress (7,195) (26,449) Acquisition of other long term investments - (767) Decrease/(increase) in amounts due from associates 55,650 (12,273) (Increase)/decrease in pledged bank deposits (26,011) 3,156 Proceeds from disposal of investments in associates - 15,202 Proceeds from disposal of property, plant, equipment and leasehold land 7,800 14,366 Proceeds from disposal of other long term investments - 111 Interest received 1,452 3,440 Cash outflow of subsidiaries not consolidated - (240) Net cash generated from/(used in) investing activities 24,905 (50,947) Cash flows from financing activities Proceeds from bank loans 615,920 512,510 Repayment of bank loans (756,065) (505,890) Dividends paid - (1,770) Net cash (used in)/generated from financing activities (140,145) 4,850 Net (decrease)/increase in cash and cash equivalents (20,928) 50,637 Cash and cash equivalents, beginning of year 360,561 309,924 Cash and cash equivalents, end of year $ 339,633 $ 360,561 ………………………………………….. ………………………………………….. Zhang Jun Yuan Xue Guo Jun Chairman Director & General Manager 16