CONTENTS 2 Highlights 3 Definitions 6 Corporate Information 7 Organisation Structure 8 The Group 10 Chairman’s Statement 13 Management Discussion and Analysis 31 Directors and Senior Management 38 Corporate Governance Report 52 Report of the Directors 77 Independent Auditor’s Report 83 Consolidated Statement of Profit or Loss 84 Consolidated Statement of Comprehensive Income 85 Consolidated Statement of Financial Position 87 Consolidated Statement of Changes in Equity 89 Consolidated Statement of Cash Flows 91 Notes to the Consolidated Financial Statements 190 Five Years Financial Summary 2 Sinotruk (Hong Kong) Limited •Annual Report 2016 HIGHLIGHTS 2016 2015 Increase/(Decrease) % Operating results (RMB million) Revenue 32,959 28,305 4,654 16.4 Gross profit 5,818 5,028 790 15.7 Operating profit 1,113 772 341 44.2 Profit attributable to owners of the Company 532 206 326 158.3 Profitability and Liquidity Gross profit ratio (%) 17.7 17.8 (0.1) (0.6) Operating profit ratio (%) 3.4 2.7 0.7 25.9 Net profit ratio (%) 2.0 1.1 0.9 81.8 Current ratio (time) 1.3 1.5 (0.2) (13.3) Trade receivable turnover (days) 115.5 137.6 (22.1) (16.1) Sales volume (units) HDTs — Domestic 66,507 54,959 11,548 21.0 — Export (including affiliated export) 25,004 27,000 (1,996) (7.4) Total 91,511 81,959 9,552 11.7 LDTs 77,961 54,906 23,055 42.0 Buses 2,844 1,968 876 44.5 Trucks sold under consumer credit 10,073 4,699 5,374 114.4 Per share data Earnings per share - basic (RMB) 0.19 0.07 0.12 171.4 Dividend per share (HKD) 0.08 0.03 0.05 166.7 Share information (as at 31 December) Number of issued shares (million) 2,761 2,761 —— Market capitalisation (RMB million) 13,658 7,101 6,557 92.3 3 Sinotruk (Hong Kong) Limited •Annual Report 2016 DEFINITIONS In this annual report, the following expressions shall have the following meanings unless the context indicates otherwise: “AGM” the annual general meeting of the Company or any adjournment thereof “Articles” the articles of association of the Company, as amended, supplemented, modified or otherwise adopted from time to time “Audit Committee” the audit committee of the Company “Board” the board of Directors “CAAM” China Association of Automobile Manufacturers “China” or “PRC” the People’s Republic of China, and for the purpose of this annual report, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “CNHTC” or “Parent Company” 中國重型汽車集團有限公司(China National Heavy Duty Truck Group Company Limited), a state-owned enterprise organized under the laws of the PRC with limited liability, being the ultimate holding company of the Company and the controlling shareholder (as defined in the Listing Rules) of the Company “CNHTC Group” CNHTC and its subsidiaries other than the Group “Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) “Company”or “Sinotruk” Sinotruk (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability, and the securities of which are listed on the Main Board of the Stock Exchange “Director(s)” the director(s) of the Company “ED(s)” the executive Director(s) “Executive Committee” the executive committee of the Company “Ferdinand Porsche” Ferdinand Porsche Familien-Privatstiftung, a corporation incorporated under the laws of Austria, being the beneficiary owner of 25% of the entired issued share capital of the Company plus 1 Share “Ferdinand Porsche Group” Ferdinand Porsche and its subsidiaries including Volkswagen AG and MAN SE “Group” the Company and its subsidiaries “HDT(s)” heavy duty truck(s) and medium-heavy duty truck(s) “HKD” Hong Kong dollars, the lawful currency of Hong Kong 4 Sinotruk (Hong Kong) Limited •Annual Report 2016 DEFINITIONS “Hong Kong” the Hong Kong Special Administrative Region of the PRC “HOWO Auto Finance Company” 山東豪沃汽車金融有限公司 (ShanDong HOWO Auto Finance Co., Ltd.), a company incorporated under the laws of the PRC with limited liability, being a non-wholly owned subsidiary of the Company “INED(s)” the independent non-executive Director(s) “Ji’nan Truck Company” 中國重汽集團濟南卡車股份有限公司(Sinotruk Ji’nan Truck Co., Ltd.), a joint stock company incorporated under the laws of the PRC with limited liability, being a non-wholly owned subsidiary of the Company and the shares of which are listed on the Shenzhen Stock Exchange (stock code: 000951) “LDT(s)” light duty truck(s) “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “MAN Group” MAN SE and its subsidiaries “MAN SE” MAN SE, a company incorporated under the laws of Germany, being a non-wholly owned subsidiary of Ferdinand Porsche and the shares of which are listed on the German Stock Exchange in Germany (stock code: ISIN DE 0005937007, WKN 593700) “NED(s)” the non-executive Director(s) “PBOC” The Peoples’ Bank of China “Period” the year ended 31 December 2016 “Remuneration Committee” the remuneration committee of the Company “RMB” Renminbi, the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shanghai Stock Exchange” Shanghai Stock Exchange in the PRC “Share(s)” the ordinary share(s) in the share capital of the Company “Shareholder(s)” holder(s) of the Share(s) from time to time “Shenzhen Stock Exchange” Shenzhen Stock Exchange in the PRC 5 Sinotruk (Hong Kong) Limited •Annual Report 2016 DEFINITIONS “Sinotruk Finance Company” 中國重汽財務有限公司(Sinotruk Finance Co., Ltd.), a company incorporated under the laws of the PRC with limited liability, being a non- wholly owned subsidiary of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Strategy and Investment Committee” the strategy and investment committee of the Company “Subsidiary” a subsidiary for the time being of the Company within the meaning of the Companies Ordinance whether incorporated in Hong Kong or elsewhere and “Subsidiaries” shall be construed accordingly “Volkswagen AG” Volkswagen AG, a company incorporated under the laws of Germany, being a non-wholly owned subsidiary of Ferdinand Porsche and an intermediate holding company of MAN SE and the shares of which are listed on German Stock Exchange (stock code: ISIN DE0007664005, WKN 766400) “Volkswagen Group” Volkswagen AG and its subsidiaries, including MAN Group “YOY” year-over-year “%” per cent 6 Sinotruk (Hong Kong) Limited •Annual Report 2016 CORPORATE INFORMATION BOARD OF DIRECTORS REMUNERATION LEGAL ADVISERS COMMITTEE Executive Directors: Mr. Chen Zheng (Chairman) Hong Kong Mr. Ma Chunji (Chairman) Dr. Lin Zhijun Ropes & Gray Mr. Cai Dong (President) Mr. Yang Weicheng Mr. Tong Jingen Mr. Liang Qing PRC Mr. Wang Shanpo Mr. Tong Jingen DeHeng Law Offices Mr. Kong Xiangquan Mr. Liu Wei Mr. Liu Wei AUDITOR Mr. Liu Peimin AUDIT COMMITTEE PricewaterhouseCoopers Mr. Franz Neundlinger Dr. Lin Zhijun (Chairman) Mr. Chen Zheng SHARE REGISTRAR Non-executive Directors: Dr. Wang Dengfeng Computershare Hong Kong Investor Services Limited Mr. Andreas Hermann Renschler HEADQUARTERS Mr. Joachim Gerhard Drees COMPANY WEBSITE Mr. Matthias Gründler Sinotruk Science and Technology Building www.sinotruk.com Independent Non-executive No. 777 Huaao Road SECURITIES CODE Gaoxin District Directors: Equity: 3808.hk Ji’nan City Dr. Lin Zhijun Shandong Province Mr. Chen Zheng INVESTOR RELATIONS PRC Mr. Yang Weicheng Securities Department Postal code: 250101 Dr. Wang Dengfeng PRC: Tel (86) 531 5806 2545 Fax (86) 531 5806 2545 Mr. Zhao Hang REGISTERED OFFICE IN Mr. Liang Qing Hong Kong: Tel (852) 3102 3808 HONG KONG Fax (852) 3102 3812 EXECUTIVE COMMITTEE Units 2102-2103 Email: [email protected] Mr. Ma Chunji (Chairman) China Merchants Tower Mr. Cai Dong Shun Tak Centre, 168-200 PUBLIC RELATIONS Mr. Tong Jingen Connaught Road Central CONSULTANT Mr. Wang Shanpo Hong Kong Christensen China Limited Tel: (852) 2117 0861 Mr. Kong Xiangquan COMPANY SECRETARIES Email: [email protected] Mr. Liu Wei AND AUTHORIZED Mr. Liu Peimin REPRESENTATIVES Mr. Franz Neundlinger Mr. Tong Jingen STRATEGY AND Mr. Kwok Ka Yiu INVESTMENT PRINCIPAL BANKERS COMMITTEE Industrial and Commercial Bank of Mr. Ma Chunji (Chairman) China - Ji’nan Branch, Tianqiao Mr. Cai Dong Sub-branch Mr. Wang Shanpo Bank of China - Ji’nan Branch Mr. Franz Neundlinger Agricultural Bank of China - Ji’nan Mr. Zhao Hang Branch, Huaiyin Sub-branch China Construction Bank - Ji’nan Branch, Tianqiao Sub-branch Organisation Structure As at 31 December 2016 63.78% Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Ji’nan Factory Sinotruk Ji’nan (Hong Kong) Sinotruk Ji’nan Ji’nan Import & Ganghua Power Design Commercial International Import & Institute Truck Truck Investment Export Co., Ltd. Co., Ltd. Co., Ltd. Export Co., Ltd. Co., Ltd. Limited Co., Ltd. 57.98% 28.32% 5% 50% 51% 49% Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Shan Dong Ji’nan Ji’nan Ji’nan Ji’nan Hangzhou Sinotruk Ji’nan Xinjiang (Hong Kong) Chongqing Howo Auto Global Rubber & Ganghao Ganghao Engines Finance Axle & Commercial Capital Fuel System Finance Electronic Plastic Bonded Development Sales Co., Ltd. Transmission Truck Holding Co., Ltd. Co., Ltd. Business Components Logistics Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Limited 51% 49%51% 49% 80% 80% 75% 25% 60% 35% 25%98% 2% ORGANISATION STRUCTURE Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Sinotruk Chengdu Hubei SINOTRUK Ji’nan Fujian Ji’nan Liuzhou Mianyang Ji’ning Sinotruk Hangzhou Wangpai Huawei RUS Limited Fuqiang Haixi HOWO Yunli Special Special Commercial South Africa Engines Commercial Special Liability Power Vehicles Bus Vehicles Vehicles Truck (Pty) Ltd. Co., Ltd. Vehicles Vehicles Company Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Sinotruk (HongKong)Limited 51% Sichuan Chengdu Sinotruk Sinotruk Sinotruk Hangzhou Hangzhou Hangzhou Sinotruk Sinotruk liuzhou Kazakhstan Nanchong Ganghao Automobile Ganghang Wangpai Wangpai Yunli Limited Haile Power Engines Power Xingcheng Automobile Kodiak Liability Mechanics System Foundry System Hydraulic Testing Machinery Partnership Co., Ltd Co., Ltd.