Great Wall Motor : CHANGES IN ACCOUNTING POLICIES

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GREAT WALL MOTOR COMPANY LIMITED*

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

(Stock Code: 2333)

ANNOUNCEMENT

CHANGES IN ACCOUNTING POLICIES

CHANGES IN ACCOUNTING POLICIES

On 31 March 2017, the Ministry of Finance issued the amendments to three Accounting Standards for Financial Instruments, namely the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets" and "Accounting Standards for Business Enterprises No. 24 - Hedge Accounting; on 2 May 2017, the Ministry of Finance issued the amendment to the "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" (the abovementioned four standards are collectively referred to as the "New Standards for Financial Instruments"). The New Standards for Financial Instruments have come into effect from 1 January 2018 for companies that are listed on both domestic and overseas stock markets.

On 5 July 2017, the Ministry of Finance issued the amended "Accounting Standards for Business Enterprises No. 14 - Revenue" (Cai Kuai [2017] No. 22) (the "New Standards for Revenue"). The New Standards for Revenue have come into effect from 1 January 2018 for companies that are listed on both domestic and overseas stock markets.

Due to the issuance of or amendments to the abovementioned accounting standards, the Company is required to make corresponding changes to the relevant accounting policies and implement them from 1 January 2018 onwards.

The changes in accounting policies will not have a material impact on the total profit and loss, total assets and net assets of the Group.

I.

REASONS FOR THE CHANGES IN ACCOUNTING POLICIES

1.

On 31 March 2017, the Ministry of Finance issued the amendments to three Accounting Standards for Financial Instruments, namely the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets" and "Accounting Standards for Business Enterprises No. 24 - Hedge Accounting"; on 2 May 2017, the Ministry of Finance issued the amendment to the "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" (the abovementioned four standards are collectively referred to as the "New Standards forFinancial Instruments"). The New Standards for Financial Instruments have come into effect from 1 January 2018 for companies that are listed on both domestic and overseas stock markets.

2.

On 5 July 2017, the Ministry of Finance issued the amended "Accounting Standards for Business Enterprises No. 14 - Revenue" (Cai Kuai [2017] No. 22) (the "New Standards for Revenue"). The New Standards for Revenue have come into effect from 1 January 2018 for companies that are listed on both domestic and overseas stock markets.

Due to the issuance of or amendments to the abovementioned accounting standards, the Company is required to make corresponding changes to the relevant accounting policies and implement them from 1 January 2018 onwards.

II.

MAJOR CHANGES AND THEIR IMPACT ON THE GROUP

(I)Major changes in accounting policies in relation to financial instruments and their impact

The amendments contained in the New Standards for Financial Instruments mainly include:

• 1. Financial assets are reclassified into "three categories" (namely financial assets measured at amortized cost, financial assets at fair value through other comprehensive income, and financial assets at fair value through profit or loss) from "four categories" (namely financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets);

• 2. The accounting for impairment of financial assets shall be changed from the "incurred loss approach" to the "expected loss approach" so that provision for impairment of financial assets can be made in a more timely and appropriate manner;

• 3. For investments in non-tradable equity instruments which are designated as financial assets at fair value through other comprehensive income, the portion which is subsequently measured and recognized in other comprehensive income shall not be transferred to profit or loss for the current period upon disposal; and

• 4. The relevant disclosure requirements for financial instruments are required to be adjusted accordingly.

Pursuant to the requirements of the Ministry of Finance, as a company listed on both domestic and overseas stock markets, the Company implemented the abovementioned amended standards for financial instruments from the beginning of 2018 and changed the corresponding accounting policies. Pursuant to the requirements for the transitional period, companies do not need to adjust the figures in the comparative statements for the prior period. The difference between the original carrying amount of financial instruments and the new carrying amount on the implementation date of the New Standards for Financial Instruments will be recognized in the retained earnings or other comprehensive income at the beginning of the period for the year of the implementation date. As such, the Company changed its accounting policy from the beginning of 2018, and decided to make disclosures of accounting statements based on the new standards since the first quarterly report of 2018 without restatement of the figures in the comparative statements for 2017.

The major effects of applying the abovementioned New Standards for Financial Instruments on the financial statements of the Company for the first quarter of 2018 are as follows:

• 1. Where the Company has no control, common control or significant influence over an investee, the investment in its equity instruments which are not quoted in an active market and whose fair value cannot be reliably measured and originally presented as "available-for-sale financial assets" will be presented as "financial assets at fair value and through other comprehensive income" based on the New Standards for Financial Instruments. The details of the effect are set out as follows:

  Unit: RMB
  Effect on the Balance Sheet as at 31 March 2018
  Name of Item	Affected Amount
  Financial assets at fair value through other
  comprehensive income	7,700,000.00
  Available-for-sale financial assets	-7,700,000.00

• 2. The amount of "bills receivables" will be presented as "financial assets at fair value through other comprehensive income" under the New Standards for Financial Instruments. The details of the effect are set out as follows:

3.

The principal guaranteed wealth management products with floating returns of the Company, which are originally presented under "available-for-sale financial assets" will be presented as "financial assets at fair value through profit or loss" under the New Standards for Financial Instruments. The details of the effect are set out as follows:

(II) Major changes in accounting policies in relation to revenue and their impact

The amendments contained in the New Standards for Revenue mainly include:

• 1. Two current standards, namely current revenue and construction contract, are incorporated into one unified revenue recognition model;

• 2. Transfer of control approach is used instead of transfer of risk and reward approach as a criterion for timing the revenue recognition;

• 3. Clearer instructions are provided for the accounting for contracts containing multiple transaction arrangements. Companies are required to conduct an assessment of such contracts on the date they come into effect, identify each performance obligation under such contracts and allocate the transaction price to each performance obligation based on the respective unit price of a good (or service) guaranteed by each performance obligation to recognize corresponding revenue when fulfilling each performance obligation;

• 4. Clear requirements are provided for revenue recognition and measurement of specific transactions (or matters).

Pursuant to the requirements of the Ministry of Finance, as a company listed on both domestic and overseas stock markets, the Company implemented the abovementioned amended standards for revenue from 1 January 2018 and changed the corresponding accounting policies. Pursuant to the requirements for the transitional period, companies should adjust the amount of retained earnings at the beginning of the period and other relevant items in the financial statements based on the cumulative effect of applying the standards for the first time without the need to adjust the information of the comparable period. The major effects of implementing the abovementioned New Standards for Revenue on the financial statements of the Company for the first quarter of 2018 are as follows:

The amount of the free maintenance service provided by the Company to customers was originally presented in "Cost of sales". Pursuant to the requirement of the New Standards for Revenue, the free maintenance service is a separate service provided to customers besides the guarantee that the products to be sold have met the stated standards. This additional service provided by companies should be accounted for separately as a single performance obligation in accordance with the New Standards for Revenue. The details of the effect are set out as follows:

This announcement is published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Shanghai Stock Exchange (www.sse.com.cn) and the official website of the Company (www.gwm.com.cn).

By order of the Board

Great Wall Motor Company Limited

Xu Hui

Company Secretary

Baoding, Hebei Province, the PRC, 24 April 2018

As at the date of this announcement, members of the Board comprise:

Executive Directors: Mr. Wei Jian Jun, Ms. Wang Feng Ying and Ms. Yang Zhi Juan.

Non-executive Director: Mr. He Ping.

Independent Non-executive Directors: Mr. Ma Li Hui, Mr. Li Wan Jun and Mr. Ng Chi Kit.

* For identification purpose only