Dongfeng Motor : 2020 ANNUAL RESULTS ANNOUNCEMENT

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DONGFENG MOTOR GROUP COMPANY LIMITED*

東風汽車集團股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 489)

2020 ANNUAL RESULTS ANNOUNCEMENT

The Board of Directors (the "Board") of Dongfeng Motor Group Company Limited (the "Company") is pleased to announce the audited consolidated results of the Company and its subsidiaries (the "Group" or the "Dongfeng Motor Group") for the year ended 31 December 2020 together with the comparative figures in 2019.

In this announcement, unless otherwise specified, all references to business, including manufacture, research and development, outputs and sales volume, market share, investment, sales network, employee, motivation, social responsibility, corporate governance include all relating to the Dongfeng Motor Group, subsidiaries, joint ventures and associates (including subsidiaries, joint ventures and associates of the Company in which the members of the Group have direct or indirect equity interests).

DONGFENG MOTOR GROUP COMPANY LIMITED

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

2019
RMB million	RMB million
Revenue	4	107,964	101,087
Cost of sales	(92,304)	(87,596)
Gross profit	15,660	13,491
Other income	5	4,765	2,231
Selling and distribution expenses	(4,940)	(4,349)
Administrative expenses	(4,513)	(5,076)
Net impairment losses on financial assets	8	(1,356)	(1,163)
Other expenses	(8,679)	(5,500)
Finance expenses	7	(1,174)	(575)
Share of profits and losses of:
Joint ventures	9,495	11,633
Associates	2,960	3,913
PROFIT BEFORE INCOME TAX	6	12,218	14,605
Income tax expense	9	(1,618)	(1,759)
PROFIT FOR THE YEAR	10,600	12,846
Profit attributable to:
Equity holders of the Company	10,792	12,858
Non-controlling interests	(192)	(12)
10,600	12,846
Earnings per share attributable to ordinary
equity holders of the Company:	11
Basic for the year	125.26 cents	149.23 cents
Diluted for the year	125.26 cents	149.23 cents
2

Year ended 31 December 2020

Notes

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

Year ended 31 December

2020 RMB million

2019 RMB millionPROFIT FOR THE YEAR

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified subsequently to profit or loss

Share of other comprehensive income of investments accounted for using the equity method Remeasurements of post-employment benefit obligations

Changes in the fair value of financial assets at fair value through other comprehensive income

Items that may be reclassified to profit or loss Currency translation differences

Share of other comprehensive income of investments accounted for using the equity method

Income tax effect

Item that will not be reclassified subsequently to profit or loss

10,600 12,846

(89) 228

(47) 27

2 (28)

(134) 227

516 (47)

(297) (245)

219 (292)

10 1

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX

95 (64)TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Total comprehensive income attributable to:

Equity holders of the Company Non-controlling interests

10,695 12,782

10,902 12,789

(207) (7)

10,695 12,782

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

31 December

2020

2019

Notes	RMB million	RMB million
(Restated)
(Note 3)
ASSETS
Non-current assets
Property, plant and equipment	20,071	17,309
Right-of-use assets	4,231	3,327
Investment properties	148	229
Intangible assets	5,061	5,076
Goodwill	1,733	1,749
Investments in joint ventures	39,596	40,427
Investments in associates	28,774	24,824
Financial assets at fair value through other
comprehensive income	206	205
Other non-current assets	41,295	36,470
Deferred income tax assets	2,928	2,356
Due from joint ventures	395	1,035
Total non-current assets	144,438	133,007
Current assets
Inventories	12,524	12,191
Trade receivables	12	9,988	10,690
Bills receivable	1,427	1,439
Prepayments, deposits and other receivables	62,236	51,550
Financial assets at fair value through other
comprehensive income	18,169	12,121
Due from joint ventures	8,519	12,442
Financial assets at fair value through profit or loss	8,117	6,972
Pledged bank balances and time deposits	3,463	3,317
Cash and cash in bank	47,640	26,768
Assets held for sale	-	1,503
Total current assets	172,083	138,993
TOTAL ASSETS	316,521	272,000

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

AS AT 31 DECEMBER 2020

31 December

2020

2019

Notes	RMB million	RMB million
(Restated)
(Note 3)
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the Company
Issued capital	8,616	8,616
Reserves	20,293	18,336
Retained profits	106,899	100,829
135,808	127,781
Non-controlling interests	5,318	6,187
TOTAL EQUITY	141,126	133,968
Non-current liabilities
Interest-bearing borrowings	22,373	23,923
Lease liabilities	1,984	2,075
Other long term liabilities	3,166	2,733
Government grants	2,309	2,094
Deferred income tax liabilities	2,692	2,275
Provisions	805	750
Total non-current liabilities	33,329	33,850
Current liabilities
Trade payables	13	21,015	19,220
Lease liabilities	138	154
Bills payable	36,882	27,369
Other payables and accruals	17,121	12,796
Contract liabilities	4,111	3,402
Due to joint ventures	21,973	19,970
Interest-bearing borrowings	38,276	19,259
Income tax payable	1,309	1,008
Provisions	1,241	1,004
Total current liabilities	142,066	104,182
TOTAL LIABILITIES	175,395	138,032
TOTAL EQUITY AND LIABILITIES	316,521	272,000

DONGFENG MOTOR GROUP COMPANY LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Company
Issued capital RMB million	Capital reserve RMB million	Statutory reserves RMB million	Retained profits RMB million	Total RMB million	Non-controlling interests RMB millionTotal equity RMB million

Total

Year ended 31 December 2020

As at 1 January 2020	8,616	2,727*	15,609*	100,829	127,781	6,187	133,968
Profit for the year	-	-	-	10,792	10,792	(192)	10,600
Other comprehensive income for the year	-	110	-	-	110	(15)	95
Total comprehensive income for the year	-	110	-	10,792	10,902	(207)	10,695
Transfer to reserves	-	-	1,753	(1,753)	-	-	-
Capital contribution from non-controlling
shareholders	-	4	-	-	4	103	107
Share of capital reserve of investments
accounted for using the equity method	-	161	-	-	161	-	161
Final 2019 and interim 2020 dividend
declared and paid	-	-	-	(3,016)	(3,016)	(828)	(3,844)
Transactions with non-controlling equity
capital	-	(104)	-	-	(104)	104	-
Others	-	33	-	47	80	(41)	39
As at 31 December 2020	8,616	2,931*	17,362*	106,899	135,808	5,318	141,126

*These reserve accounts comprise the consolidated reserves of RMB 20,293 million (2019: RMB 18,336 million) in the consolidated statement of financial position.

6

DONGFENG MOTOR GROUP COMPANY LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the Company
Issued capital RMB million	Capital reserve RMB million	Statutory reserves RMB million	Retained profits RMB million	Non-controlling interestsTotal RMB million RMB million	Total equity RMB million

Total

Year ended 31 December 2019

As at 31 December 2018	8,616	2,939*	13,473*	93,328	118,356	6,569	124,925
Change in accounting policy - IFRS 16	-	-	-	(187)	(187)	(85)	(272)
As at 1 January 2019	8,616	2,939	13,473	93,141	118,169	6,484	124,653
Profit for the year	-	-	-	12,858	12,858	(12)	12,846
Other comprehensive income for the year	-	(69)	-	-	(69)	5	(64)
Total comprehensive income for the year	-	(69)	-	12,858	12,789	(7)	12,782
Transfer to reserves	-	-	2,136	(2,136)	-	-	-
Capital contribution from non-controlling
shareholders	-	-	-	-	-	59	59
Share of capital reserve of investments
accounted for using the equity method	-	(127)	-	-	(127)	-	(127)
Final 2018 and interim 2019 dividend
declared and paid	-	-	-	(3,016)	(3,016)	(351)	(3,367)
Transactions with non-controlling equity
capital	-	(16)	-	-	(16)	16	-
Others	-	-	-	(18)	(18)	(14)	(32)
As at 31 December 2019	8,616	2,727*	15,609*	100,829	127,781	6,187	133,968

*These reserve accounts comprise the consolidated reserves of RMB 18,336 million (2018: RMB 16,412 million) in the consolidated statement of financial position.

7

1.

General information

Dongfeng Motor Group Company Limited is a joint stock limited liability company incorporated in the People's Republic of China (the "PRC"). The registered office of the Company is located at Special No. 1 Dongfeng Road, Wuhan Economic and Technology Development Zone, Wuhan, Hubei, the PRC.

During the year, the Group was principally engaged in the manufacture and sale of automobiles, engines and other automotive parts and rendering of financing services.

In the opinion of the directors, the holding company and the ultimate holding company of the Company is Dongfeng Motor Corporation ("DMC"), a state-owned enterprise established in the PRC.

2.1

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with all applicable International Financial Reporting Standards ("IFRS") and the disclosure requirements of the Hong Kong Companies Ordinance Cap. 622. The consolidated financial statements have been prepared under the historical cost convention, except for certain financial assets and liabilities measured at fair value. These financial statements are presented in Renminbi ("RMB") and all values are rounded to the nearest million except when otherwise indicated.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

2.1

Basis of preparation (Continued)

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2020. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.

The results of the subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described in the accounting policy for subsidiaries below. A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) cumulative translation differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group's share of components previously recognized in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets on liabilities.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

2.2

Change in accounting policies and disclosures

(i)

New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:

Effective for annual

periods beginning

on or after

Amendments to IFRS 1 and	Definition of Material	1 January 2020
IFRS 8
Amendments to IFRS 3	Definition of a Business	1 January 2020
Amendments to IFRS9, IFRS	Interest Rate Benchmark Reform	1 January 2020
39 and IFRS 7
Revised Conceptual	Revised Conceptual Framework for	1 January 2020
Framework	Financial Reporting
Effective for annual
periods beginning
on or after
1 June 2020

The group also elected to adopt the following amendments early.

Amendments to IFRS 16

Covid-19-Related Rent ConcessionsThe amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods, except for the Amendment to IFRS 16 set out above. As for the rent concessions which are Covid-19 related, the Group chose to early adopt the practical expedient and the concessed rent was recorded in the profit or loss during the current period which the amount is immaterial.

10

2.2

Change in accounting policies and disclosures (Continued)

(ii)

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Effective for annual

periods beginning

on or after

Amendments to IFRS 9, IAS 39,	Interest rate benchmark reform	1 January 2021
IFRS 4 and IFRS 16	- Phase 2
Amendments to IFRS 3	Update reference to the	1 January 2022
conceptual framework
Amendments to IAS 16	Property, Plant and Equipment:	1 January 2022
Proceeds before intended use
Amendments to IAS 37	Onerous contracts - costs of	1 January 2022
fulfilling a contract
Annual Improvements	Annual Improvements to IFRS	1 January 2022
Standards 2018-2020
IFRS 17	Insurance contracts	1 January 2023
Amendments to IAS 1 and IFRS	Disclosure of Accounting	1 January 2023
Practice Statement 2	Policies
Amendments to IAS 8	Definition of Accounting	1 January 2023
Estimates
Amendments to IAS 1	Classification of liabilities as	1 January 2023
current or Non-current
Amendments to IFRS 10 and	Sale or contribution of assets	To be determined
IAS 28	between an investor and its
associate or joint venture
11

3

Restatement of the opening balance - assets held for sale

On 18 December 2019, the Group signed a stock repurchase agreement with PSA Peugeot Citroën Group (an associate of the Group, "PSA"), and both parties agreed to sell 30.7 million PSA shares held by the Group to PSA or a third party. According to the agreement, the sale of the shares is expected to be completed within one year after the signing of the stock repurchase agreement. Persuant to this arrangement, the 30.7 million PSA shares held for sale met the classification condition of assets held for sale, thus presented as assets held for sale in the statement of financial position as of 31 December 2019 in curriculum with the accounting standards.

In September 2020, the Group disposed 10 million PSA shares to a third party according to the agreement and signed a revised stock repurchase agreement with PSA on 25 September 2020 to extend the period of disposal of the remaining shares in circumstances of the economic condition, market environment and future business outlook. Persuant to this revised agreement, the Group agreed to dispose the unsold shares (including the unsold 20.7 million PSA shares, or the shares of the combined entity held by the Group according to the relevant agreement after completion of merger between PSA and Fiat Chrysler Group ("FCA")) to one or multiple third parties through one or multiple transactions on or before 31 December 2022. As a consequence, the 20.7 million PSA shares no longer met the classification condition of assets held for sale and have to be accounted for as investments in associates or joint ventures accounted for using the equity method on a retrospective basis. Accordingly, the Group has restated the comparative information in the consolidated financial statements as follows:

31 December 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As per originally	Retrospective
reported	adjustments	As restated
RMB	RMB	RMB
million	million	million
Assets held for sale	4,614	(3,111)	1,503
Investments in associates	21,713	3,111	24,824

The above adjustments has no effect on the consolidated statement of profit or loss in 2019.

12

4.

REVENUE AND SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

Revenue on sale of goods represents the invoiced value of goods sold, net of value added tax, consumption tax and other sales taxes, after allowances for goods returns and trade discounts, and after eliminations of all significant intra-group transactions.

For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows:

• - The commercial vehicles segment mainly manufactures and sales of commercial vehicles, and its related engines and other automotive parts

• - The passenger vehicles segment mainly manufactures and sales of passenger vehicles, and its related engines and other automotive parts

• - The financing service segment mainly provides financing services to external customers and companies within the Group, revenue from financing service is mainly interest revenue from loan.

• - The corporate and others segment mainly manufactures and sales of other automobile related products

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating segment profit or loss and is measured consistently with profit or loss in the consolidated financial statements. However, Group financing (including finance costs) and income taxes are managed on a Group basis and are not allocated to operating segments.

As the chief operating decision maker of the Group considers that most of the Group's consolidated revenue and results are attributable to the market in the PRC, the Group's consolidated assets are mainly located inside the PRC, no geographical information is presented.

During the year ended 31 December 2020, no revenue from transactions with a single external customer amounted to 10% or more of the Group's total revenue.

13

DONGFENG MOTOR GROUP COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

REVENUE AND SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2020

Commercial vehicles RMB millionPassenger vehicles RMB millionFinancing service RMB millionCorporate and others RMB million

Segment revenue

Sales to external customers Sales to internal customers

Elimination RMB million

83,514 38

Total RMB million

16,123 417

7,558 62

769 9

- (526)

107,964 -

83,552

16,540

7,620

778

(526) 107,964

Results Segment results

2,501

(4,267)

2,929

(3,152)

1,928 (61)

Interest income

795

218

4

1,628

(1,647) 998

Finance expenses (1,174) Share of profits and losses of:

Joint ventures Associates

221 10

9,379 1,939

155 926

(260) - 9,495

85 - 2,960

Profit before income tax 12,218

Income tax expense

(1,618)

Profit for the year

The Group derives revenue from the transfer of goods are mainly recognized at a point in time.

10,600

14

DONGFENG MOTOR GROUP COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

REVENUE AND SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2020

Commercial

vehicles

RMB million

Other segment information

Capital expenditure:

Passenger	Financing	Corporate
vehicles	service	and others	Elimination	Total
RMB million	RMB million	RMB million	RMB million	RMB million
- Property, plant and equipment	1,353	1,865	107	714	-	4,039
- Intangible assets	411	542	23	42	-	1,018
- Right-of-use assets and other
non-current assets	54	23	394	2	-	473
Depreciation of property, plant
and equipment	1,128	700	5	234	-	2,067
Amortisation of intangible assets	697	35	10	150	-	892
Depreciation of right-of-use assets	126	102	5	5	-	238
Provision against inventories	180	42	-	23	-	245
Impairment losses of financial
assets	84	56	1,402	147	(333)	1,356
Impairment losses of non-current
assets	18	1,546	-	125	-	1,689
Warranty provisions	871	78	-	11	-	960
15

DONGFENG MOTOR GROUP COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

REVENUE AND SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2019

Commercial vehicles RMB millionPassenger vehicles RMB millionFinancing service RMB millionCorporate and others RMB million

Segment revenue

Sales to external customers Sales to internal customersElimination RMB million

68,872 21

Total RMB million

26,372 366

5,281 106

562 3

- (496)

101,087 -

68,893

26,738

5,387

565

(496)

101,087

Results Segment results

2,804

(3,914)

2,287

(3,175)

920

(1,078)Interest income

504

262

7

974

(1,035) 712

Finance expenses (575) Share of profits and losses of:

Joint ventures Associates

374 -11,512 3,079

241 756

(494) - 11,633

78 - 3,913

Profit before income tax 14,605

Income tax expense

(1,759)

Profit for the year

The Group derives revenue from the transfer of goods are mainly recognized at a point in time.

12,846

16

DONGFENG MOTOR GROUP COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

REVENUE AND SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2019

Commercial

vehicles

RMB million

Other segment information

Capital expenditure:

Passenger	Financing	Corporate
vehicles	service	and others	Elimination	Total
RMB million	RMB million	RMB million	RMB million	RMB million
- Property, plant and equipment	1,607	2,459	142	92	-	4,300
- Intangible assets	670	182	20	26	-	898
- Right-of-use assets and other
non-current assets	82	20	505	2	-	609
Depreciation of property, plant
and equipment	883	907	5	196	-	1,991
Amortisation of intangible assets	570	68	8	123	-	769
Depreciation of right-of-use assets	112	87	4	18	-	221
Provision against inventories	71	41	-	11	-	123
Impairment losses of financial
assets	(12)	136	989	50	-	1,163
Impairment losses of non-current
assets	4	132	2	36	-	174
Warranty provisions	521	81	-	1	-	603
17

5.

(a)

6.

Net income from disposal of other materials

Government grants and subsidies

Interest income

Management dispatch fee received from joint

ventures

Gain on debt restruction

Others

An analysis of the Group's other income is as follows:

OTHER INCOME

2020	2019
RMB	RMB
Note	million	million
38	107
509	505
998	712
271	302
1,520	-
1,429	605
4,765	2,231

(a)

On May 2020, the Group acquired 50% shares of Dongfeng Renault Automotive Co., Ltd. ("DRAC") held by Renault Co., Ltd.. After the acquisition, the percentage of holding shares to DRAC was 100%. During June to December 2020, DRAC obtained the debt forgiveness through negotiation with the creditors and recognised gain on restruction of RMB 1,520 million.

PROFIT BEFORE INCOME TAX

The Group's profit before income tax is arrived at after charging/(crediting):

2020 2019

RMB million RMB million

Cost of inventories recognized as expense	86,114	81,917
Interest expense for financing services
(included in cost of sales)	541	330
Provision against inventories	245	123
Depreciation of property, plant and
equipment	2,067	1,991
Amortization of intangible assets	892	769
Depreciation of right-of-use assets	238	221
Auditors' remuneration	19	19
Net impairment losses on financial assets	1,356	1,163
18

• 7. FINANCE EXPENSES

  2020

  2019

  RMB million

  RMB millionInterest expenses on bank loans and other borrowings Interest expenses on lease liabilities

  Exchange net losses/(gains) of financing activities Less: Amount capitalized

  Finance expenses

• 8. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS

1,174

2020

RMB million

894 495

100 109

180 (28)

- (1)

575

2019 RMB millionImpairment losses of trade receivables Impairment losses of other receivables Impairment losses of loans and receivables from financing services

222 153

52 13

957 907

Others

125 90

1,356 1,163

9.

INCOME TAX EXPENSE AND DEFERRED INCOME TAX

2020 RMB million

2019 RMB million

(a)

Current income tax	1,763	1,490
Deferred income tax	(145)	269
Income tax expense for the year	1,618	1,759
Corporate income tax

Under the PRC Corporate Income Tax Law and the respective regulations, the corporate income tax for the Company and its subsidiaries and joint ventures is calculated at rates 15% or 25%, on their estimated assessable profits for the year based on the existing legislation, interpretations and practices in respect thereof.

(b)

Hong Kong profits tax

No provision for Hong Kong profits tax (tax rate: 16.5%) has been made as the Group had no assessable profits arising in Hong Kong during the year.

(c)

Deferred income tax

Deferred tax assets are mainly recognized in respect of temporary differences relating to certain future deductible expenses for the purpose of corporate income tax.

According to IAS 12 Income Taxes, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are realized or the liabilities are settled.

10.

DIVIDEND

2020	2019
RMB	RMB
million	million
Proposed final - Nil (2019: RMB 0.25) per
ordinary share	-	2,154

The total dividends paid in 2020 amounted to RMB 3,016 million, being RMB 0.35 per share (2019: RMB 3,016 million, being RMB 0.35 per share).

EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of basic earnings per share is based on the profit for the year attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares in issue during the year.

The calculation of basic earnings per share is based on:

2020 2019

RMB million RMB millionEarnings:

Profit for the year attributable to ordinary equity holders of the Company

10,792

12,858

Number of shares million million

Shares:

Weighted average number of ordinary shares in issue during the year

8,616

Earnings per share

125.26 cents

8,616 149.23 cents

The Group had no potentially dilutive ordinary shares in issue during these years, so the diluted earnings per share equals the basic earnings per share.

TRADE RECEIVABLES

Sales of the Group's commercial and passenger vehicles are normally settled on an advance receipt basis, whereby the dealers are required to pay in advance either in cash or by bank acceptance drafts. However, in the case of long-standing customers with bulk purchases and a good repayment history, the Group may offer these customers credit terms that are generally between 30 and 180 days. For sales of engines and other automotive parts, the Group generally offers its customers credit terms that are generally between 30 and 180 days. Trade receivables are non-interest-bearing.

An aging analysis of the trade receivables, net of provision for impairment, of the Group, based on the invoice date, is as follows:

31 December

2020

2019

RMB million	RMB million
Within three months	5,859	6,910
More than three months but within one year	1,961	2,204
More than one year	2,168	1,576
9,988	10,690
Fair values of trade receivables

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

Impairment and risk exposure

The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. This resulted in an increase of the loss allowance for trade receivables, and a further increase in the allowance by RMB 222 million in the current periods.

13.

TRADE PAYABLES

An aging analysis of the trade payables of the Group, based on the invoice date, is as follows:

2019
RMB million	RMB million
Within three months	18,714	17,536
More than three months but within one year	1,654	1,094
More than one year	647	590
21,015	19,220

31 December 2020

Chairman's Statement

Dear Shareholders,

On behalf of the Board of Directors, I hereby present the annual report of Dongfeng Motor Group for 2020 for your review.

In 2020, the unexpected COVID-19 pandemic caused sluggish economic growth around the world, the great downward pressure faced by the domestic economy and the slowdown of global economic growth throughout the year. The automobile industry has been deeply adjusted for the third consecutive year, and the competitive landscape and layout of the industry has undergone profound changes. However, the automobile market has achieved a V-shaped rebound for the year, thanks to the strong and effective prevention and control measures taken by the PRC government and the introduction of relevant policies to promote automobile consumption. In 2020, the sales volumes of vehicles in the PRC automobile industry amounted to approximately 25,310,000 units, representing a year-on-year decrease of 1.9%. The sales volume of passenger vehicles was approximately 20,180,000 units, representing a year-on-year decrease of 5.9%. The sales volume of commercial vehicles was approximately 5,130,000 units, representing a year-on-year increase of 18.7%. The sales volume of new energy vehicles was approximately 1,367,000 units, representing a year-on-year increase of 10.9%. The development of the automobile industry throughout the year showed the following characteristics:

• I. Automobile market sales of the first quarter fell sharply by 42.4% year-on-year due to the impacts of the pandemic; as the automobile industry has taken the lead in resuming work and production since March, the decline in automobile sales gradually narrowed, driving the rapid and comprehensive recovery of the national economy.

• II. The performance of commercial vehicles was apparently better than that of the automobile industry. Under the integrated influence of the phasing out of National III and below models, charging tolls by axle and driven by the infrastructure investment in 2020, the market demand for commercial vehicles increased rapidly.

• III. The decline in sales volume in the passenger vehicle market began to narrow rapidly in the second quarter, which was benefited from the better-than-expected recovery in the macro-economy and export markets; the market share of Japanese and German brands increased; the market share of luxury automobiles increased significantly by 2.4 percentage points.

IV. Due to the gradual decline in the impact of the pandemic, the active support from the consumption policies and the strong drivers of new products, the new energy vehicle has been growing strong against the current throughout the year. With the acceleration of electrification and digital transformation, the private consumption market of new energy vehicles has experienced significant growth, and the market is undergoing a transition from policy-driven to market-driven, showing a rapid development momentum.

It was an extraordinary and challenging year for Dongfeng Motor Group in 2020. Over the past year, the Dongfeng Motor Group has resumed its work and production while working on the prevention and control of the pandemic. In the face of a nearly "suspended" operation in the first quarter, the Company formulated a quarterly management and control strategy and strived to achieve year-on-year growth. The Company achieved year-on-year growth in the last three quarters and partially recovered the losses in the first quarter by the unremitting efforts of all the staff. The Dongfeng Motor Group sold approximately 2,868,000 vehicles for the year, representing a year-on-year decrease of approximately 2.2%, which was only 0.3 percentage point lower than the growth rate of the automobile industry. The sales revenue of the Group was approximately RMB107,964 million, representing an increase of approximately 6.8% as compared with the corresponding period of last year. In 2020, profit attributable to shareholders was approximately RMB10,792 million, representing a decrease of approximately 16.1% as compared with

the corresponding period of last year. The impact loss of the Group's profit attributable to shareholders reached more than RMB3.8 billion due to COVID-19.

In 2020, the operation of Dongfeng Motor Group mainly showed the following characteristics:

• I. Since April, the Company tried to recover the losses caused by COVID-19, and its operation steadily rebounded, and sales had been growing steadily for 9 consecutive months.

• II. Continue to build new leading advantages of commercial vehicles. The sales volume of commercial vehicles for the year was 555,000 with a year-on-year growth of 18.5%, and market share was 10.8%, which remained stable with last year. Dongfeng Commercial Vehicle Co., Ltd. further optimized its medium and heavy truck products, accelerated the construction of the intact rate center, and strengthened post-market development; the sales volume of Dongfeng light truck won the market, and strategic commodities were upgraded; the sales volume of Dongfeng Liuzhou Motor Chenglong brand performed better than its peers, making breakthroughs in key areas and channels; Dongfeng Special Commercial Vehicle Huashen brand released a new commodity platform, and the operation

is overall positive.

• III. Accelerate construction of high-end brand of self-owned new energy vehicles, and promote the development of the brand. In 2020, high-end new energy vehicle brand Voyah of Dongfeng Motor Group and its first new energy vehicle were launched. In the whole year, the Company completed the construction of three "urban spaces", completed the layout strategy of outlets in 2021, creating a new sales model and digital operation platform.

• IV. Promote high-level and open cooperation to enhance healthy and stable development of joint ventures. In 2020, the Company was committed to optimize layout of joint ventures, restructuring

  Dongfeng Renault and Dongfeng Getrag, and promoting reform and revitalization of Dongfeng Peugeot Citroën Automobile Co., Ltd. Since September, the sales volume of Dongfeng Peugeot

  Citroën Automobile Co., Ltd. achieved positive growth for four consecutive months; Dongfeng Nissan achieved annual sales volume of more than one million for six consecutive years, and its market share increased steadily; Dongfeng Honda overcame the impact of pandemic, and its sales volume exceeded 850,000 units, bucking the trend with a positive growth of 6.3%.

• V. Actively control key core technologies and accelerate improvement of technological strength. In 2020, Dongfeng Motor Group focused on "five modernizations", enhancing efforts to tackle key

  technical problems, and accelerated digital transformation to enable business development. Sharing-VAN, 5G-enabled autonomous vehicle with L4 applications, achieved commercial delivery;

  Robotaxi, L4 autonomous vehicle, was in demonstration operation; 5G unmanned truck of port was in operation. Construction of intelligent network platform, big data platform of Dongfeng Travel and Nandou Six Star new energy monitoring platform was further developed.

At present and in the future, China's development is still in the critical period of strategic opportunities, but both opportunities and challenges have undergone new development changes, the development environment and ecology of the automobile industry are also undergoing remarkable changes. 2021 marks the first year of the "14th Five-Year Plan" and an important year for building an excellent Dongfeng and a world-class enterprise. Facing new challenges and opportunities in the post-pandemic period, Dongfeng Motor Group will focus on the following work:

I. Persistently improve quality and efficiency. Commercial vehicles shall seize market opportunities to e xpand the market in an all-round manner, while passenger vehicles shall seize the policy opportunities of expanding automobile consumption to actively develop new energy vehicles and other markets.

II. Adhere to innovation-driven development and accelerate self-development. Accelerate the research of key and core technologies and enhance the autonomous and controllable capacity of the industry and supply chains. Strive to achieve breakthroughs in sales volume, market share, revenue and core capabilities of self-owned passenger and commercial vehicles, and accelerate digital transformation, facilitating the coordinated development of the self-owned brand business.

III. Adhere to open development and enhance the level of cooperation. Promote business units such as Dongfeng Nissan and Dongfeng Honda to accelerate the implementation of the electrification strategy, accelerate the implementation of the revitalization plan of Dongfeng Peugeot Citroën, consolidate and deepen the strategic cooperation with automobile, energy, telecommunications, finance and internet

enterprises and strive to achieve cross-border integration of "five modernizations, one vehicle and four networks."

IV. Persist in deepening reforms and build an excellent Dongfeng system and mechanism. Stimulate vitality and be market-oriented to accelerate the implementation of the three-year action plan for reform.

Actively promote incentives for core talents of key positions in an orderly manner, flexibly launch medium-term and long-term incentives in various forms, and continuously promote and deepen incentive mechanisms such as excess profit sharing, dividend right incentives and options incentives.

V. Adhere to strengthening basic management and continuously upgrading system capability. Carry out the benchmarking of full value chain management and promote the improvement of management in the areas of strategy, organization, operation, finance, technology, risk, human resources and information to continue building a modernized management system.

The new journey calls for new achievements and a new layout manifests new responsibility. As the "14th Five-Year Plan" has been introduced, Dongfeng Motor Group will further enhance the dual circulation layout of open cooperation and building new development, continue to promote high-quality development and unswervingly create value for its shareholders.

Zhu Yanfeng

Chairman

29 March 2021

BUSINESS OVERVIEW

I. Business Operations during the Year under Review

1. Sales volume and market share for whole vehicles of Dongfeng Motor Group in 2020

For the year ended 31 December 2020, the sales volume for whole vehicles of Dongfeng Motor Group were approximately 2,868,000 units. According to the statistics published by China Association of Automobile Manufacturers, Dongfeng Motor Group had a market share of approximately 11.3% in terms of total sales volume of commercial and passenger vehicles made by domestic manufacturers in 2020. The following table sets out the market shares in terms of sales volume of commercial vehicles and passenger vehicles of Dongfeng Motor Group in 2020:

Market share in terms of sales volume

Sales Volume (Units)	(%)1
Commercial Vehicles	554,812	10.8
Trucks	531,274	11.3
Buses	23,538	5.3
Passenger Vehicles	2,313,497	11.5
Basic passenger cars	1,198,971	12.9
MPV	106,481	10.1
SUV	1,008,045	10.7
Total	2,868,309	11.3

1

Calculated based on the statistics published by the China Association of Automobile Manufacturers.

2. Sales revenue of Dongfeng Motor Group in 2020

The sales revenue of Dongfeng Motor Group for the year ended 31 December 2020:

Contribution to the Group's

Business	Sales revenue	sales revenue
(RMB millions)	(%)
Passenger vehicles	16,540	15.3
Commercial vehicles	83,552	77.4
Financing service	7,620	7.1
Corporate and others	778	0.7
Elimination	(526)	(0.5)
Total	107,964	100.0

3. Sales and service networks

Dongfeng Motor Group has always placed importance on the interest of customers and keeps improving its products and services for speedy, efficient, accurate and quality service support for distributors and customers. With the motor industry entering into the era of stock competition, certain business units of the Company have shown in varying degrees presented as unreasonable network layout and weak marketing and service capabilities in 2020. In order to adapt to the new development trend and raise marketing competitiveness, Dongfeng Motor Group will continue to optimise the marketing system, innovate the marketing mechanism, optimize the market network and continuously improve the sales and service capacity of the marketing network.

As at the end of 2020, the sales and after-sales services of motor vehicles of Dongfeng Motor Group were mainly provided through 13 sales and service networks in China. Each of these 13 sales and service networks provided sales and after-sales services of vehicles of a particular whole vehicle manufacturing unit and was independently managed by the relevant whole vehicle manufacturing units, which were not connected with any other members of Dongfeng Motor Group.

Distribution and after-sales services of commercial vehicles are mainly provided through 5 major sales and service networks.

No. of

Dongfeng Commercial

Vehicle Co., Ltd. Dongfeng Liuzhou Motor

Co., Ltd.

Dongfeng Automobile

Motor Co., Ltd.

Zhengzhou Nissan MotorBrand names Dongfeng (heavy and medium truck) Chenglong (heavy and medium truck) Dongfeng (high-end light truck, light truck, mini truck, pickup) Dongfeng

No. of sales outlets

after-sales service outlets

No. of provinces covered

303 378

897 31

874 31

Co., Ltd.

632 237

1,285 31

413 31

Dongfeng Special

Dongfeng

Commercial Vehicle Co., Ltd.

195

760 27

Sales and after-sales services of passenger vehicles are mainly provided through 8 major sales and service networks.

Brand namesNo. of sales outletsNo. of after-sales service outletsNo. of provinces covered

Dongfeng Motor Co., Ltd. Dongfeng Nissan

(Dongfeng Nissan

Passenger Vehicle Sales

Co., Ltd.)

837

837 31

Dongfeng Motor Co., Ltd. Dongfeng Infiniti

(Dongfeng Infiniti Motor

Co., Ltd.)

118

121 29

Dongfeng Motor Co., Ltd. Venucia

(Dongfeng Venucia

Automobile Sales Co.,

Ltd.)

Dongfeng Honda

Dongfeng Honda

Automobile Co., Ltd.

Dongfeng Peugeot Citroën Dongfeng Citroën

Automobile Co., Ltd.

Dongfeng Peugeot Citroën Dongfeng Peugeot

Automobile Co., Ltd.

Dongfeng PassengerDongfeng Fengshen

Vehicle Company Dongfeng Liuzhou Motor

Dongfeng Future

Co., Ltd.

247 575 194 241 264 353

218 28

703 31

305 31

338 30

266 31

425 31

4. Production capacity, production capacity distribution and future expansion plans

As at 31 December 2020, the total whole vehicle production capacity of Dongfeng Motor Group was approximately 3,570,000 units, among which the production capacity of commercial vehicles and passenger vehicles was approximately 710,000 units and 2,860,000 units, respectively.

The following table shows the production capacity distribution of vehicles of Dongfeng Motor Group as at 31 December 2020.

(1). Production capacity of the whole commercial vehicles

Company	Production capacity
(0'000 units)
Dongfeng Commercial Vehicle Co., Ltd.	18
Dongfeng Liuzhou Motor Co., Ltd.	7.5
Dongfeng Automobile Co., Ltd.	27
Zhengzhou Nissan Motor Co., Ltd.	16
Dongfeng Special Commercial Vehicle Co., Ltd.	3
(2). Production capacity of the whole passenger vehicles
29

Company	Production capacity
(0'000 units)
Dongfeng Motor Co., Ltd.	128
Dongfeng Honda Automobile Co., Ltd.	79
Dongfeng Peugeot Citroën Automobile Co., Ltd.	36
Dongfeng Passenger Vehicle Company	12
Dongfeng Liuzhou Motor Co., Ltd.	16

Dongfeng Motor Group will expand its production capacity with reasonable utility to meet the demand of its products gradually based on automobile market forecast and its business plan. By the end of 2021, it is expected that the production capacity of whole vehicles will be 3,810,000 units.

5. Capital expenditure

In 2020, Dongfeng Motor Group adhered to its strategic leading, market-driven, lean and efficient investment strategies, and completed a total investment in fixed assets of RMB11,736 million for the year, with focus on work such as the construction of core R&D capacities, upgrading of manufacturing capacity, strategic commodity layout and control of core resources for new businesses.

• I. Focus on the construction of core R&D capabilities. Targeting at new product functions and new requirements of customers, the Group further improved its commodity development verification system to empower the enhancement of its commodity strength. The Group grasped the technological development trend of the industry, and promoted the construction of technology development and verification platform, hydrogen cell electrochemical laboratory and fuel cell testing system in combination with the technological plans of the Group.

• II. Reasonably arrange investment in new products and strengthen the collaborative development and launch of new products. Introduction of new products was reasonably arranged according to the requirements of relevant regulations and policies of the country and market demand. The Group intensified the construction of new product platform, combined advantageous resources for the development of common technology and the establishment of common resource, and reduced repeated investment of resources so as to enhance market competitiveness.

• III. Implement the concept of high-quality development and promote the intelligent upgrade of existing manufacturing capacity. The Group has completed the layout of production capacity to meet the requirements of the 14th Five-Year Plan and the commodity plan. Since 2020, the Group has started to pool its advantageous resources to carry out the lean, digital, intelligent and green transformation of the Group's existing production capacity on an ongoing basis, promoting management improvement and manufacturing technology upgrade.

• IV. Continue investing in core technologies and resources in the industry chain to provide new momentum for the transformation and upgrading of the Group. The Group promoted the construction of modular structure platform for new energy vehicles, improved the design and development system for new energy vehicles and strengthened core technology reserves. The Group made advance in the constructions of automatic packaging and testing line for

automotive grading IGBT modules, as well as the trial-production and production line of three power core components. The Group also conducted strategic research and investment in intelligent networking and travel services.

In the next two years, Dongfeng Motor Group will optimize its resource allocation, focus on the development of its own business, enhance core innovation capability, deepen efforts in joint venture and cooperation, seize the commanding heights of new energy vehicles, and build the comprehensive competitive advantages under the new situation according to its development plan.

Business Outlook

In 2021, the Group's overall sales volume targets an increase of 14.8% year-on-year, among which the sales volume of commercial vehicles targets an increase of 12.3% and that of passenger vehicles targets an increase of 15.4%. In respect of commercial vehicles, the Group will seize the opportunities in the National VI markets by making arrangements for six new models of vehicle models including the Kingland Flagship (天龍旗艦) in advance. Benefiting from the oversizing and overloading control policy, sales of new vehicles as well as post-market transformation, the competitiveness of commercial vehicles of Dongfeng will be greatly enhanced. The increase in sales volume was mainly from Dongfeng Commercial Vehicles Co., Ltd., Dongfeng Liuzhou Motor Co., Ltd. and Dongfeng Automobile Co.Ltd(A.60006). In terms of passenger vehicles, 17 new models will be launched in 2021, including 6 own brands and 11 joint venture brands, bringing a strong momentum for sales growth. The increase in sales volume was mainly from Dongfeng Nissan, Dongfeng Honda, Dongfeng Peugeot Citroën Automobiles Co., Ltd. and proprietary brands.

Management Discussion and AnalysisI.

OPERATING ENVIRONMENT

In 2020, the overall situation of China economy remained a steady rise of the momentum when the COVID-19 epidemic brought a serious impact on the global economy. China's GDP exceeded RMB100 trillion with growth rate increasing by 2.3% year on year. The growth rate decreased by 6.8% year on year in the first quarter, increased by 3.2% year on year in the second quarter, increased by 4.9% year on year in the third quarter and increased 6.5% year on year in the fourth quarter. China's economy has gradually overcome the adverse effect of the epidemic, showing a trend of recovery growth and steady recovery and seeing more resilient and vital in its development. Major economic indicators also showed recovery growth.

In 2020, despite the serious and complicated domestic and oversea environment, especially the severe impact of COVID-19 epidemic, the whole automobile production and sales volume in China still remained steady, achieving the volume of 25,225,200 units and 25,311,100 units, and representing a year-on-year decrease of 2.0% and 1.9% respectively. The overall performance was better than expected and China is still the biggest producer and distributor of the world.

In 2020, the passenger vehicles market ran at a low level with a sales volume of 20,177,700 units, representing a year-on-year decrease of 5.9%. Among which, the sales volume of SUV increased by 1.0% year on year; the sales volume of MPV recorded a significant decrease of 23.8% year on year; the sales volume of basic vehicles decreased by 9.9% year on year. From the aspect of market structure, the structure is severely diversified, and the sale volume of passenger vehicles of Chinese brands recorded a year-on-year decrease by 0.8 percentage point while the sale volume of Japanese and German joint venture brands increased. The trend of consumption upgrading was obvious, and the proportion of luxury models in the passenger vehicles market increased by 2.4 percentage points to 12.9%. The new energy passenger vehicles market went up against the trend, and the annual sales volume increased by 14.6%. Electrification and digital transformation accelerated.

In 2020, the overall production and sales volumes of the commercial vehicle market outperformed the passenger vehicle market. Commercial vehicle sales maintained sustained growth. Through the year, the production and sales volumes of commercial vehicles were

5,231,200 units and 5,133,300 units, representing a year-on-year increase of 20.0% and 18.7% respectively. In terms of different models, the production and sales volumes of buses representing a year-on-year decrease of 4.2% and 5.5% respectively and the production and sales volumes of trucks represented a year-on-year increase of 22.9% and 21.7% respectively.

II.

OPERATION ANALYSIS

Facing the tremendous impact of the COVID-19 pandemic, the Group responded actively, made every effort to recover the losses to promote operation recovery and rebound. In 2020, the Group achieved sales volume of approximately 2,868,000 vehicles, sales revenue of approximately RMB107,964 million, and profit attributed to shareholders of approximately RMB 10,792 million.

The Group promptly seized the opportunity of the recovery of the automobile industry after the epidemic. The sales volume of vehicles was 362,600 in the first quarter representing a year-on-year decrease of 46.4%, and the sales volume of vehicles from the second quarter to the fourth quarter was 2,505,700 representing a year-on-year increase of 11.1%, achieving positive sales growth over nine consecutive months.

In 2020, the sales volume of the passenger vehicle of the Company was 2,313,400 units, representing a year-on-year decrease of 6.1%, which was basically the same as the industry. Among which, the sales volume of passenger vehicle business of joint ventures was 2,057,000 units, representing a year-on-year decrease of 3.8% and outperforming the market.

Dongfeng brand is one of the most favorite and preferred brands of commercial vehicles in China. In 2020, the sales volume of commercial vehicles of Dongfeng brand were 555,000 units, with a year-on-year growth of 18.5%.

III. INFLUENCE OF THE COVID-19 EPIDEMIC

In 2020, confronting the impact of the COVID-19 epidemic and the complex and changeable market environment, the Group actively responded and took immediate measures. By planning the layout in advance, the Group actively reduced costs and increased efficiency, strictly controlled fixed expenses and various expenses, and actively communicated and cooperated closely with upstream suppliers and downstream distributors of the industry, striving to reversethe unfavorable situation caused by the epidemic and promote the recovery of production, operation and the results growth.

The epidemic in the first half of 2020 caused various impacts on all links of the whole value chain of the automobile industry. Especially during February to April, employees returned to work late due to the pandemic, construction progress of new projects was delayed, and related costs increased, leading to the cost increase of the Company and throwing great impact on the Group's profits in the first half of the year. During May to June, with the gradual ease of the epidemic, the automobile market boom improved significantly, and the Group's production and sales gradually recovered and then returned to normal level at the end of June.

In 2020, the impact loss of the Group's profit attributable to the equity holders reached more than RMB3.8 billion due to COVID-19.

IV. FINANCIAL ANALYSIS

1. Revenue

The revenue of the Group for 2020 was approximately RMB107,964 million, representing an increase of approximately RMB6,877 million, or approximately 6.8%, as compared with approximately RMB101,087 million for the corresponding period of last year. The increase in revenue was mainly caused by the increase in sales revenue of Dongfeng Commercial Vehicle Co., Ltd. and Dongfeng Liuzhou Motor Co., Ltd.. The Group has achieved continuous improvement in its product structure. Although the sales volume included in the consolidated revenue fell by 2.9% year on year, the revenue increased by 6.8%. The average revenue per unit increased from approximately RMB202,000 per unit in 2019 to approximately RMB222,000 per unit in 2020.

2020	2019
Sales Revenue	Sales Revenue
RMB million	RMB million
Passenger vehicles	16,540	26,738
Commercial vehicles	83,552	68,893
Financing service	7,620	5,387
Corporate and others	778	565
Elimination	(526)	(496)
Total	107,964	101,087
1.1 Passenger Vehicle Business

The sales revenue of passenger vehicles of the Group for 2020 decreased by approximately RMB10,198 million, or approximately 38.1%, to approximately RMB16,540 million from approximately RMB26,738 million for the corresponding period of last year. The decrease in revenue was mainly from the decrease of RMB 5,879million from Dongfeng Peugeot Citroën Automobile Sales Co., Ltd., that of RMB1,913 million from Dongfeng Passenger Vehicle Company and that of RMB2,180 million from the passenger vehicle business of Dongfeng Liuzhou Motor Co., Ltd.

1.2 Commercial Vehicle Business

Commercial vehicle business of the Group remained a strong rise momentum. For the year 2020, the sales revenue of commercial vehicle business increased by approximately RMB14,659 million, or approximately 21.3%, to approximately RMB83,552 million from approximately RMB68,893 million for the corresponding period of last year. The increase in revenue was mainly from the increase of RMB7,301 million from Dongfeng Commercial Vehicle Co., Ltd. and that of RMB6,386 million from the commercial vehicle business of Dongfeng Liuzhou Motor Co., Ltd..

1.3 Auto Financing Service Business

Finance company and leasing company of the Group coordinated development, carried out financial business transformation, extended the value exploration of the automotive aftermarket, and improved the sales support for the automobiles business.

The revenue of auto financing service of the Group for 2020 increased by approximately RMB2,233 million, or approximately 41.5%, to approximately RMB7,620 million from approximately RMB5,387 million for the corresponding period of last year. The Group's financing service business maintained its steady growth.

2. Cost of Sales and Gross Profit

The total cost of sales of the Group for 2020 was approximately RMB92,304 million, representing an increase of approximately RMB4,708 million, or approximately 5.4%, as compared with approximately RMB87,596 million of the corresponding period of last year. The total gross profit was approximately RMB15,660 million, representing an increase of approximately RMB2,169 million, or approximately 16.1%, as compared with approximately RMB13,491 million of the corresponding period of last year. The comprehensive gross profit margin was approximately 14.5%, representing an increase of 1.2 percentage points as compared with the corresponding period of last year. Such increase in gross profit margin is mainly due to the impact of cost reduction and changes in sales structure. Among them, the gross profit of commercial vehicle business increased by RMB1,380 million, the gross profit of financial business increased by RMB1,353 million, and the gross profit of passenger vehicle business decreased compared to last year.

3. Other Income

The total other income of the Group for 2020 amounted to approximately RMB4,765 million, representing an increase of approximately RMB2,534 million compared with approximately RMB2,231 million of the corresponding period of last year.

The increase in other income was mainly due to the income from debt reorganization of Dongfeng Motor (Wuhan) Co., Ltd., and the disposal of joint ventures of China Dongfeng Motor Industry Import and Export Co., Ltd. and the disposal of subsidiaries of Dongfeng SpecialCommercial Vehicle Co., Ltd..

4. Selling and Distribution Expenses

The selling and distribution expenses of the Group for 2020 increased by approximately RMB591 million to approximately RMB4,940 million from approximately RMB4,349 million of the corresponding period of last year.

The increase in selling and distribution expenses was mainly due to the expenses rising from increase in the sales volume of Dongfeng Commercial Vehicle Co., Ltd. and Dongfeng Liuzhou Motor Co., Ltd..

5. Administrative Expenses

The administrative expenses of the Group for 2020 decreased by approximately RMB563 million to approximately RMB4,513 million from approximately RMB5,076 million of the corresponding period of last year.

The decrease in administrative expenses was mainly due to the Company's strict control over all kinds of costs in its active response to the COVID-19.

6. Net Impairment Losses on Financial Assets

The net impairment losses on financial assets of the Group for 2020 increased by approximately RMB193 million to approximately RMB1,356 million from approximately RMB1,163 million of the corresponding period of last year.

The increase in net impairment losses on financial assets was mainly due to the impairment loss of trade receivables caused by changes in aging and the scale expansion of financial business of Dongfeng Motor Finance Co., Ltd..

7. Other Expenses

The other expenses of the Group for 2020 amounted to approximately RMB8,679 million, representing an increase of approximately RMB3,179 million as compared with approximately RMB5,500 million of the corresponding period of last year.

The increase in other expenses for the year 2020 was mainly due to the year-on-year increase of RMB356 million in R&D expenses as the Group intensified its investment in R&D; and the provision of impairment losses of assets such as Dongfeng Getrag Transmission Co., Ltd. and Dongfeng Motor (Wuhan) Co., Ltd. of RMB1,689 million as the Group actively disposed the non-performing and inefficient assets.

8. Finance Expenses

The finance expenses of the Group for 2020 amounted to approximately RMB1,174 million, representing an increase of approximately RMB599 million as compared with approximately RMB575 million of the corresponding period of last year.

The increase in financial expenses was mainly due to the interest expense of RMB267 million generated by issuing RMB bonds, and the financial expense of RMB208 million caused by the rise of Euro to RMB exchange rate.

9. Share of Profits and Losses of Joint Ventures

Share of profits and losses of joint ventures of the Group for 2020 decreased by approximately RMB2,138 million to approximately RMB9,495 million from approximately RMB11,633 million of the corresponding period of last year. The main reasons are the year-on-year decrease of sales volume by 3.8% due to the epidemic situation despite of the passenger vehicle business of joint ventures outperforming the market, and the decrease in profit with the rise of additional expenses under the influence of the epidemic.

10. Share of Profits and Losses of Associates

Share of profits and losses of associates of the Group for 2020 amounted to approximately RMB2,960 million, representing a decrease of approximately RMB953 million as compared with that of approximately RMB3,913 million of the corresponding period of last year, which mainly due to the decrease in investment income from PSA Group by RMB1,100 million under the influence of overseas epidemic.

11. Income Tax

The income tax expense of the Group for 2020 decreased by approximately RMB141 million toapproximately RMB1,618 million from approximately RMB1,759 million in the corresponding period of last year. The effective tax rate for the period was approximately 13.24%, representing an increase of approximately 1.20 percentage points as compared with approximately 12.04% in the corresponding period of last year.

12. Profit Attributable to Equity Holders of the Company for the Year

The profit attributable to the equity holders of the Group for 2020 was approximately RMB10,792 million, representing a decrease of approximately RMB2,066 million, or approximately 16.1% as compared with that of approximately RMB12,858 million of the corresponding period of last year. The net profit margin (a percentage of profit attributable to the equity holders of the Company to total revenue) was approximately 10.0%, representing a decrease of approximately 2.7 percentage points as compared with approximately 12.7% of the corresponding period of last year. The return on net assets (a percentage of profit attributable to equity holders of the Company to average equity attributable to equity holders of the Company) was approximately 8.2%, representing a decrease of approximately 2.2 percentage points as compared with approximately 10.4% of the corresponding period of last year.

13. Total Assets

Total assets of the Group as at the end of 2020 amounted to approximately RMB316,521 million, representing an increase of approximately RMB44,521million, or 16.4%, as compared with approximately RMB272,000 million as at the end of last year. The increase was mainly due to the increase in investments in associates, fixed assets and loans generated from financial business.

14. Total Liabilities

Total liabilities of the Group as at the end of 2020 amounted to approximately RMB175,395 million, representing an increase of approximately RMB37,363 million, or 27.1%, as compared with approximately RMB138,032 million as at the end of last year. The increase was mainly due to the increase in long-term and short-term interest-bearing borrowings, trade payables and bills payable, among which long-term and short-term interest-bearing borrowings increased by approximately RMB17,467 million, trade payables and bills payable increased by RMB11,308 million and due to joint ventures increased by RMB2,003 million.

15. Total Equity

Total equity of the Group as at the end of 2020 amounted to approximately RMB141,126 million, representing an increase of approximately RMB7,158 million or 5.3% as compared with approximately RMB133,968 million as at the end of last year. Equity attributable to equity holders of the Company amounted to approximately RMB135,808 million, representing an increase of approximately RMB8,027 million as compared with approximately RMB127,781 million as at the end of last year.

16. Liquidity and Sources of Capital

Twelve months	Twelve months
ended	ended
31 December 2020	31 December 2019
(RMB million)	(RMB million)
Net cash flows used in operating activities	1,228	(11,555)
Net cash flows generated from investment activities	11,434	1,472
Net cash flows generated from financing activities	7,582	11,241
Net decrease in cash and cash equivalents	20,244	1,158

The Group's net cash flows generated from operating activities was approximately RMB1,228 million. The amount mainly consisted of: (1) profit before taxation amounted to approximately RMB6,756 million, net of depreciation, impairment and other non-cash items; (2) increase of net cash flow by approximately RMB12,865 million with the rising balance of trade payables, other payables and accruals; (3) increase of approximately RMB19,067 million in loans generated from financial business; (4) decrease of income tax payment by approximately RMB1,014 million;

The Group's net cash flows generated from investment activities was approximately RMB11,434 million. The amount mainly consisted of: (1) receipt of dividend from joint ventures and associates, representing cash inflow of approximately RMB12,462 million; (2) receipt of government grants, representing cash inflow of approximately RMB405 million；(3) receipt of cash from disposal of certain equity of subsidiaries and joint ventures, representing cash inflow of RMB1,494 million.

The Group's net cash flows generated from financing activities was approximately RMB7,582 million. This amount mainly reflected: (1) increase of bank borrowings resulting in a cash inflow of approximately RMB17,203 million; (2) issuance of bonds, resulting in a cash inflow of approximately RMB9,140 million; (3) repayment of bank borrowings and bonds and payment of dividends, resulting in a cash outflow of approximately RMB18,675 million. The increase in financing was mainly to supplement the rapidly growing funding needs of financial business.

As a result of the above, the Group's cash and cash equivalents (excluding non-pledged time deposits with original maturity of three months or more when acquired) amounted to approximately RMB46,377 million as at 31 December 2020, representing an increase of approximately RMB20,244 million as compared with approximately RMB26,133 million as at 31 December 2019. Cash and bank balances (including non-pledged time deposits with original maturity of three months or more when acquired) amounted to approximately RMB47,640 million, representing an increase of approximately RMB20,872 million as compared with approximately RMB26,768 million as at 31 December 2019.

As at 31 December 2020, the Group's equity ratio (a percentage of total borrowings to equity attributable to equity holders of the Company) was approximately 44.7%, representing an increase of approximately 11.0 percentage points as compared with approximately 33.8% as at

31 December 2019. The Group's liquidity ratio was approximately 1.21 times, representing a decrease of 0.12 times compared to approximately 1.33 times as at 31 December 2019. The

Group's quick ratio was approximately 1.12 times, representing a decrease of 0.10 times from approximately 1.22 times as at 31 December 2019.

The inventory turnover days of the Group decreased by approximately 1 day to approximately 50 days as at 31 December 2020 from approximately 51 days as at 31 December 2019. The turnover days of receivables decreased by approximately 5 days to approximately 34 days from approximately 39 days as at 31 December 2019.

17. Major Financial Figures Based on Proportionate Consolidation

Based on proportionate consolidation, the revenue of the Group for 2020 was approximately RMB260,666 million, representing an increase of approximately RMB6,625 million, or approximately 2.6%, as compared with approximately RMB254,041 million of the corresponding period of last year. Profit before income tax for 2020 was approximately RMB17,137 million, representing a decrease of approximately RMB4,063 million, or 19.2%, as compared with approximately RMB21,200 million of the corresponding period of last year. Total assets for 2020 were RMB401,051 million, representing an increase of approximately RMB50,922 million, or approximately 14.5%, as compared with approximately RMB350,129 million of last year.

PROPOSED FINAL DIVIDENDS

Pursuant to Rule 18 of "Measures for the Administration of Securities Issuance and Underwriting

（《證券發行與承銷管理辦法》）" of CSRC and related regulatory Q&A requirements, for securities issued domestically, a company that has profit distribution proposal(s), or conversion of capital reserve into share capital proposal(s) which are yet to be submitted to general meeting for voting, or when such proposal has already been approved by general meeting but yet to be implemented, the domestic issuance of securities can only be proceeded after such proposal has been implemented.

According to the above regulations, the Company has considered the steadily advancing work related to the issuance and listing of A Shares of Dongfeng Group. In order to avoid further uncertainty as a result of the annual dividends to the listing schedule, dividends shall be distributed in a timely manner, depending on the listing progress of the A Share, in accordance with the relevant regulatory requirements of the SFC and the Stock Exchange, with the consideration of the Company's long-term development and maintenance of the interests of shareholders. A board meeting and a general meeting of the Company will be convened for consideration and execution of the relevant disclosure process in due course.

MATERIAL LEGAL PROCEEDINGS

As at 31 December 2020, Dongfeng Motor Group was not involved in any material litigation or arbitration and no material litigation or claim was pending or threatened or made against Dongfeng Motor Group as far as Dongfeng Motor Group was aware.

PURCHASE, SALE OR REDEMPTION OF SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the period.

CORPORATE GOVERNANCE

During the year, the Company had been in compliance with all Code provisions of the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), except for the circumstances as stated below:

According to Code Provision A.4.2, every director should be subject to retirement by rotation at least once every three years. The term of office of the fourth session of the Board of Directors (including Mr Zhu Yanfeng who was appointed on 19 June 2015) should end on 9 October 2016 and the directors should be subject to retirement by rotation. The Company has not yet completed the above process until the extraordinary general meeting (the "EGM") held on 25 September 2020, upon the approval of the election of the fifth session of the Board. The appointment of the fifth session of the Board shall become effective from the date being approved by the EGM of the Company with a term of three years. After the election of the fifth session of the Board of the Company, the Company meets the requirements of Code Provision A.4.2.

Meanwhile, following the passing away of an independent non-executive director of the

Company, Mr. Zhang Xiaotie on 25 May 2020, the Company has failed to meet the requirement under Rules 3.10(1) and 3.10(2) of the Listing Rules. On the EGM held on 25 August 2020, Mr.

Leung Wai Lap, Philip ("Mr. Leung") has been approved as an independent non-executive director of the Company. After Mr. Leung's appointment as an independent non-executive director of the Company, the Company meets the requirements of Rule 3.10(1) and 3.10(2) of the Listing Rules.

SECURITIES TRANSACTION OF THE DIRECTORS

The Company has adopted a code of conduct regarding the directors' securities transactions on terms no less exacting than the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code"). After specific enquiries of all directors by the Company, all directors have confirmed that they have fully complied with the

Model Code throughout the period.

ANNUAL GENERAL MEETING

The Annual General Meeting for the year 2020 of the Company will be held on Friday, 18 June 2021. In order to determine the name list of shareholders who are entitled to attend the annual general meeting, the register of members of the Company will be closed from Tuesday, 15 June 2021 to Friday, 18 June 2021 (both days inclusive). Holders of H shares and domestic shares with their names listed on the register of shareholders on Friday, 18 June 2021 are entitled to attend the 2020 annual general meeting.

In order to be qualified to attend and vote at the annual general meeting, holders of H shares whose transfers have not been registered shall deposit the transfer documents together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong

Investor Services Limited, at Room 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong at or before 4: 30 pm on Friday,11 June 2021 (Hong Kong time),

being the last share registration date.

REVIEW OF THE ACCOUNTS

The audit and risk management committee has reviewed the audited financial reports for the year ended 31 December 2020 of the Company and the Group.

BOARD OF DIRECTORS

As at the date of this announcement, Mr Zhu Yanfeng, Mr Li Shaozhu and Mr You Zheng are the executive directors of the Company, Mr. Yang Qing is the non-executive director of the Company, and Mr Leung Wai Lap, Mr Zong Qingsheng and Mr Hu Yiguang are the independent non-executive directors of the Company.

On behalf of the Board of Directors

Zhu Yanfeng

Chairman

Wuhan, the PRC, 29 March 2021

* For identification only