Chongqing Changan Automobile
Company Limited
Semi-annual Report 2011
Semi-annual Report 2011
I. I m p o r t a n t n o t e s, Explaination and Catalogue
i. Important Notes
The Board of Directors& Supervisors of Chongqing Changan Automobile Co., Ltd.
(hereinafter referred to as “the Company”) , the directors, supervisors and senior
management guarantee that the information contained in the report is free of false
records, misguiding statements or significant omissions, and assume individual and joint
liabilities for the truthfulness, accuracy and integrity of the report.
No director, supervisor or senior management have raised any disagreement with
regard to the truthfulness, accuracy and completeness of the semi-annual report..
All directors attended the Board meeting.
The financial report in this reporting period is unaudited.
Chairman Mr. Xu Liuping, General Manager Mr. Zhang Baolin, Chief Accountant Mr.
Cui Yunjiang, and the Chief of Accountant department, Mr. Hua Zhanbiao, herein
guarantee: the truthfulness and completeness of the financial statements of this
semi-annual report.
ⅱ Contents
I Important notes and contents 1
II General introduction of the Company 2
III Change in shares and information about shareholders 5
Information on directors, supervisors, senior executives
IV 8
and staffs
V Report by Board of Directors 9
VI Important Issues 17
VII Financial Statements 24
VIII Document for future reference 84
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Semi-annual Report 2011
II.General Introduction of the Company
1. T h e C o m pa n y ’s l e g a l C h i n e s e n a m e : 重 庆 长 安 汽 车 股 份 有 限 公 司
The Company’s legal English name: Chongqing Changan Automobile Company
Limited
2. P l a c e o f l i s t i n g : S h e n z h e n St o c k E x c h a n g e
Abbreviated name of the stock: Changan Automobile Changan B
St o c k C o d e : 000625 200625
3. Registered address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing
Post code: 400023
O ff i c e A d d r e s s : N o . 2 6 0 , J i a n X i n E a s t R o a d , J i a n g B e i D i s t r i c t , C h o n g q i n g
Post code: 400023
I n t e r n e t We b s i t e o f t h e C o m pa n y : h t t p : / / w w w. c h a n g a n . c o m . c n
E m a i l A d d r e s s o f t h e C o m pa n y : cazqc@ changan.com.cn
4. L e g a l r e p r e s e n ta t i v e o f t h e C o m pa n y : Mr. Xu Liuping
5. S e c r e ta r i e s o f t h e B o a r d : M r. C u i Yu n j i a n g , M s . L i J u n
Address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing
Te l e p h o n e : ( 0 2 3 ) 6 7 5 9 4009
F a x: (023) 67866055
Email address: cazqc@changan.com.cn
6. P u b l i c a t i o n s f o r i n f o r m a t i o n d i s c l o s u r e o f t h e C o m pa n y : C h i n a S e c u r i t i e s ,
S e c u r i t i e s Ti m e s and H o n g K o n g C o m m e r c i a l D a i l y
We b s i t e f o r i n f o r m a t i o n d i s c l o s u r e o f t h e C o m pa n y : h t t p : / / w w w. c n i n f o . c o m . c n
F i l i n g L o c a t i o n o f S e m i a n n u a l R e p o r t : O ff i c e o f t h e B o a r d o f D i r e c t o r s
7. K e y a c c o u n t i n g d a ta a n d f i n a n c i a l i n d i c a t o r s
Unit： （ RMB） Yuan
This reporting Last reporting
period end as on period end as on Increase/Decrease
30 June 2011 31 December 2010 (%)
Total assets 35,891,069,232.69 30,456,426,127.88 17.84%
Owner’s equity(or
15,123,561,188.97 10,625,542,446.62 42.33%
shareholder’s equity)
Share capital 2,685,823,637.00 2,325,657,615.00 15.49%
Net assets per share 5.63 4.57 23.19%
Reporting period Corresponding Increase/Decrease
(January-June) period of previous (%)
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Semi-annual Report 2011
year
Operation total income 14,537,115,839.90 16,627,454,932.78 -12.57%
Oeration profit 1,014,014,773.28 1,374,742,402.37 -26.24%
Gross profit 1,119,500,684.54 1,371,628,474.32 -18.38%
Net profit attributable to
shareholder of listed 1,040,060,233.01 1,366,565,351.61 -23.89%
Company
Net profit except
non-recurring loss and 953,093,407.91 1,365,347,793.93 -30.19%
profit
Basic earnings per share 0.22 0.28 -21.43%
Diluted earning per share 0.22 0.28 -21.43%
Return rate on net assets 7.42% 14.27% -6.85%
After deducting
non-recurring gains and
6.80% 14.25% -7.45%
losses weighted average
return on equity
Net cash flow from
2,378,405,526.54 2,687,373,910.69 -11.50%
operating activities
Net cash flow from
operating activities per 0.89 1.16 -23.28%
share
Note 1: During the reporting period, the Company has issued additional 360,166,022
A-share in public, by the end of this reporing period, total equity changed to 2,685,823,637
shares.
Note 2: The Company carried out the 2010 annual interest distribution between assets
liabilities date and financial reporting approval date, distribution of stock dividends,
transferred by equity fund totally is 2,148,658,909, total equity changed to 4,834,482,546
shares, according to the stipulation of 《 No.9 rules of Company information disposal audit
which public offering of securities---Calculation and Disposal of ROE and earning per
share》(2010 version, above equity change is not influence the interest rates of the owner,
it will be re-calculate earning per share every compareing period on the basis of
4,834,482,546.
Note 3: deduction from non-recurring profit and loss project and cash.
Unit： （ RMB） Yuan
Amount from the
beginning of the year to
Remarks
Non-recurring profit and loss project the end of the reporting
period
Gain/loss of non-current assets 919,460.27
The mainly income is a
subsidy of 39.4 million
Yuan for new product from
the Finance Bureau of
subsidy income 88,857,908.34 Jiangbei District and a
subsidy of 44.89 million
Yuan for proving ground
from he Finance Bureau of
Dianjiang county.
Other non-business income and expenditures other
than the above 15,188,904.34
Influenced amount of income tax -17,087,610.78
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Semi-annual Report 2011
Influenced amount of miniority shareholders’ equity -911,837.07
Total 86,966,825.10
8. Net asset profit rate and profit index per share
Unit： （ RMB） Yuan
Profit in the reporting period Profit per share (yuan per
share)
Average
Basic profit Diluted profit
per share per share
Net profit attributed to listed
7.42% 0.22 0.22
Companyshareholders
Net profit attributed to listed Company
shareholder except non-recurring loss 6.80% 0.20 0.20
and profit
9. R e c o n c i l i a t i o n o f t h e n e t p r o f i ts p r e s e n t e d u n d e r t h e P R C a c c o u n t i n g s ta n d a r d s
a n d I n t e r n a t i o n a l F i n a n c i a l R e p o r t i n g Sta n d a r d
Unit：（ RMB）Yuan
Net profit attributed listed Attributable to equity shareholders of
to
Companyshareholders the listed company
By the end of At The beginning
This period Last period period period
According to the
international
accountingstandard 1,040,060,233.01 1,366,565,351.61 15,052,277,123.97 10,554,258,381.62
According to
Chinese
accountingstandard 1,040,060,233.01 1,366,565,351.61 15,123,561,188.97 10,625,542,446.62
Subentry and total of the adjustment of according to international accounting rules：
Payment to currency
shareholders of A
share cash opposite
price（ Note ） -71,284,065.00 -71,284,065.00
Total difference
between international
and Chinese
accounting standard -71,284,065.00 -71,284,065.00
Difference between Note: Jiangling Holding Company, the Company’s JV, held by Jiangling
Chinese and stake in listed companies the right to paid circulation on the price in
international cash, according to international norms should be included in the profit
accounting standard and loss.
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Semi-annual Report 2011
Ⅲ . Change in shareholdings and information about main shareholders
1. Change in shareholdings
Balance before Addition and deduction（ +， -） during Balance after
current change change current change
Transferr
Additional Bonus ed from
Quantity Ratio share accumula other subtotal quantity ratio
issued
ted fund
Ⅰ .Non-circulated
207,430,882 8.92% 207,430,882 7.72%
shares
1、 State-owned
shares
2、 State-owned
207,421,301 8.92% 207,421,301 7,72%
legal person shares
3、 Other domestic
holding shares
including:
domestic non-state
legal person shares
Domestic natural
person shares
4、 Foreign-hold
shares
including:
foreign legal
person shares
foreign natural
person shares
5、 share of senior
9,581 9,581
management
Ⅱ .Circulated
2,118,226,733 91.08% 360,166,022 360,166,022 2,478,392,755 92.28%
shares
1、Domestic listed
1,521,791,966 65.43% 360,166,022 360,166,022 1,881,957,988 70.07%
RMB shares
2、Domestic listed
596,434,767 25.65% 596,434,767 22.21%
foreign shares
3、 Oversea listed
foreign shares
4、 Others
Ⅲ .Total shares 2,325,657,615 100.00% 360,166,022 360,166,022 2,685,823,637 100.00%
2. The information on top 10 shareholders
Unit: share
Total shareholders Persons in total 253,647, among of which A shareholders are 213,204, B
number shareholder is 40,443.
The top ten shareholders
Ratio of Total number of Pledged/
Nature of Total number
Name of shareholders total non-circulated Frozen shares
Shareholders of shares
share shares number
CHINA CHANGAN
State-owned legal
AUTOMOBILE GROUP 43.33% 1,163,787,489 207,421,301 0
person
COMPANYLIMITED
Beijing North Jingji State-owned legal
1.53% 41,000,000 0 0
Investment Consultant person
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Semi-annual Report 2011
CompanyLimited
Agricultural Bank of China-
Domestic non-state
Fullgoal Tianrui Strong Area 1.41% 37,826,581 0 0
Hybrid Fund legal person
China South Industries
State-owned legal
Group Finance 1.30% 35,000,000 0 0
person
CompanyLimited
PING AN TRUST CO., Domestic non-state
0.74% 20,000,000 0 0
LTD. legal person
BONJOUR CHINA FUND
Foreign legal person 0.62% 16,568,176 0 0
2
JPMBLSA RE FTIF
TEMPLETON CHINA FUND Foreign legal person 0.61% 16,299,220 0 0
GTI 5497
GUOTAI JUNAN
SECURITIES(HONGKONG) Foreign legal person 0.56% 15,002,796 0 0
LIMITED
FTIF TEMPLETON BRIC
Foreign legal person 0.52% 14,053,640 0 0
FUND
Bank Of China－E Fund Domestic non-state
0.42% 11,406,823 0 0
SSE100ETF Fund legal person
The top 10 holders of circulated shares
Total number of
Name of shareholders circulated Share type
shares
CHINA CHANGAN AUTOMOBILE GROUP
956,366,188 RMB ordinary share
COMPANYLIMITED
Beijing North Jingji Investment Consultant
41,000,000 RMB ordinary share
CompanyLimited
Agricultural Bank of China- Fullgoal Tianrui
37,826,581 RMB ordinary share
Strong Area Hybrid Fund
China South Industries Group Finance
35,000,000 RMB ordinary share
CompanyLimited
PING AN TRUST CO., LTD. 20,000,000 RMB ordinary share
Foreign capital stock listed within
BONJOUR CHINA FUND 2 16,568,176
China
JPMBLSA RE FTIF TEMPLETON CHINA FUND GTI Foreign capital stock listed within
16,299,220
5497 China
Foreign capital stock listed within
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 15,002,796
China
Foreign capital stock listed within
FTIF TEMPLETON BRIC FUND 14,053,640
China
Bank Of China－E Fund SSE100ETF Fund 11,406,823 RMB ordinary share
Among the top ten share holders, China Changan Automobile
Group CompanyLimited, Beijing North Jingji
Investment Consultant CompanyLimited, and
China South Industries Group Finance
CompanyLimited are controlled by one common
actual controller China South Industries Group.
Related partner relationship of the ten largest
The Companydid not know whether there was relationship
shareholders and their consistant act
among the large ten circulated shareholders , and nor knew
whether they were the parties who agreed to act alike as
stipulated in Administrative Measures on Information
Disclosure Concerning Changes in Shareholdings of Listed
Companies.
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Semi-annual Report 2011
3. The top 10 holders of non-circulated shares and condition of limited sale
By the end of the reporting period, the non-circulated shares shareholder, China Changan
Automobile Group Co., Ltd. holds 1,163,787,489 shares, of which 956,366,188 shares are
circulated shares, the remaining 207,421,301 shares are non-circulated shares and will be released
after the implementation of management incentive plan according to the commitment of share
reform.
4. Change of controlling shareholder and actual controllers
During the report period, there’s no change in controlling shareholder and actual controllers.
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Semi-annual Report 2011
Ⅳ Information on Directors, Supervisors and Senior Executives
ⅰ During the report period, there’s no change in shareholding for directors, supervisors and senior
executives.
ⅱ .In the report period, there are new employment or dismiss in directors, supervisors and senior
executives.
In March, 2011, Mr. Shen Mingquan was no longer staff supervisor of the Company because of
the age reason. In accordance with relevant laws and regulations stated in Articles of Association,
the Staff and Workers Congress of the Company elected Mr. Liu Hong as staff supervisor of the
fifth Board of Supervisors; the term will be ended upon the end of the fifth Board of Supervisors.
After taking a vote and passing through the nineteenth meeting of fifth Board of Director on
Apr. 14, 2011, Mr. Gong Bing was elected as vice president of the Company; the term will be ended
upon the end of the fifth Board of Directors.
After taking a vote and passing through the eleventh meeting of fifth Board of Supervisors on
Apr. 14, 2011, Mr. Fu Liping was no longer the supervisor of the Company due to his work change,
Board of Supervisors planed to nominate Mr. Shi Jinggang as the supervisor of the company. After
taking a vote and passing through the annual general meeting of 2010 on May 18, 2011, Mr. Shi
Jinggang was elected as the supervisor of the Company; the term will be ended upon the end of the
fifth Board of Supervisors.
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Semi-annual Report 2011
Ⅴ The Report from Board of Directors
ⅠThe operation of the Company during the reporting period
(I) the overall operation
In the first half of 2011, growth of China's auto market fell sharply, mini-cars and
independent-brand cars were severely affected, anyway, the Company took "quality, fine,
enterprising" as the key, worked hard to create fine management, and actively implemented
measures to answer up the policy change, market overdraft, energy shortages, raw material price
inrease, monetary tightening, Japan earthquake and other unfavorable factors, the operation and
management had been developed stably.
During the reporting period, the Company and its subsidiaries, JVs totally produced 907,245
vehicles, down 5.14 percent year-on-year; sold 925,245 vehicles, down 5.05 percent year-on-year,
among which 361,873 units are mini-cars, down 25% year-on-year, and 116,516 units are
own-brand cars, up 23.80% year-on-year. Production and sales still ranked in the first 4 in Chinese
automotive industry.
ⅡCompany’s operation harvest and finace status during the reporting period
During the reporting period, the Board of Directors and management based on the overall
strategic goals, primarily to promote the completion of the following:
⒈ Promoted the reform and adjustment steadily. Focusing on product, organization,
human resources, remuneration, infrastructure management; the Company adhered to
make active adjustment and advance adjustment. Particularly focusing on improving the
market responsiveness, competitiveness, fighting capability, taking "high efficiency, flat,
fast" as the principle and with performance-oriented, the Company strengthened the
flatness of the marketing agency, achieved management center going downwards and
forwards, business became more focused, respond became more quick.
⒉ Deepened the strategic cooperation. The company has reached the trinity
development strategy with Ford on vehicle, engine and transmission: No.3 plant for
complete vehicle has entered the phase of equipment installation and commissioning,
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Semi-annual Report 2011
production preparation is expected to be completed by the end of this year; engine factory
has already successfully laid a foundation in June; and the Company signed the
transmission project cooperation agreement with Chongqing City in May.
⒊ Advanced new product R & D steadily. Passenger car, commercial vehicle projects
have been accelerated in accordance with the three elements of "progress, cost, quality,"
the management, timing schedule, quality for major projects of new products like sedans
such as C201, R101 and other new mini cars are in good performance. Yue Xiang H15
models has achieved the national third-stage fuel consumption requirements.
⒋ Improved quality process control. The Company took Quality Leading Enterprise as
the goal, paid close attention to design, procurement, manufacturing, marketing and other
aspects of quality improvement, and got great progress in repairing frequency per thousand
vehicles and process quality control. Meanwhile, entirely advanced the implementation of
pre-phase quality control and sign assessment on part&component quality control; built the
whole process logistics quality control mechanisms; in allusion to the market TOP10
problems, restricted the rectification time, achieved certain results in overall level of quality
improvement, the quality satisfaction has increased by 9.5% year on year.
⒌ Construction of major projects has been advanced orderly. Launch signing on vehicle
project for Yuzui base was completed on May 31, and the overall transferring was
completed on June 30; new energy plant in Beijing has basically completed and the fastest
speed of the auto industry plant has been created, other plant construction has been
completed 75% on basic construction of the building, and these can ensure the
development of the North China base car project; Dianjiang Proving Ground project has
completed 40 percent.
⒍ Continued to build fine management. The Company successful completed the
output pilot of the integrated management for Nanjing Changan, and promoted its basic
management level in quality control system, standardized operation, synchronization of
logistics, lean manufacturing and etc, not only played a major role in Nanjing Changan’s
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Semi-annual Report 2011
"accelerating management improvement, activating management blind spots, enhancing the
management shortcuts" , nut also formed a set of output methods, and that enhanced the
company's capability of overall large-scale and rapid replication, and showed a clear
direction for fine management for future operations, standardization, process-orientation
and high efficiency.
ⅡCompany’s operation harvest and finace status during the reporting period
㈠Chart of the industry or main products that account for over 10%
Unit: (RMB) Yuan
Distribution on industries
Turnover Operation cost Gross profit（ %）
On industry or Amount Change Amount Change Proporti Changes
product s to s to on（ %） to prior
prior prior year
year（ %） year（ %）
Vehicle
decrease
1,453,711.58 -12.57% 1,250,113.44 -6.62% 14.01%
manufacturing by 5.48%
Distribution on products
Whole vehicles decrease
1,393,987.40 -13.04% 1,200,636.27 -6.74% 13.87%
by 5.81%
others Increase
59,724.18 -0.13% 49,477.17 -3.65% 17.16%
By 3.03%
㈡ Notes for the significant change in profit components, main business or its structure and
profit in the main business during the report period
During the report period, the proportion of investment income from JVS was going up;
profitability of own brand was going down, the main reasons are the decrease of total sales
and the growing cost of raw materials, and the gross profit droped a lot.
㈢ The share holding corporation whose investment income reach over 10%
(including 10%) of the Company’s net profit
Unit: RMB Ten Thousand Yuan
Corporation name Main product Revenue Net profit
Changan Ford Mazda Mondeo, Focus, Mazda 3, Mazda 2, SMAX
2,410,461 162,038
Corporation and Volvo S40 sedan
Jiangling Holding Landwind MPV, and sedan such as
91,271 36,205
Corporation Landwind Fenghua and Fengshang
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Semi-annual Report 2011
㈣Operation Result and Financial Analysis
By the end of At The beginning
Balance Sheet Items Changes
period period
1 Monetary fund 8,219,955,550.23 4,391,990,049.72 87.16%
2 Notes receivable 5,779,431,464.12 8,821,828,759.39 -34.49%
3 Account receivable 613,655,886.01 404,008,999.71 51.89%
4 Other account receivable 366,491,561.14 117,659,705.04 211.48%
5 Inventories 3,915,638,962.35 2,536,336,767.24 54.38%
6 Construction in process 3,157,242,276.94 1,997,902,631.46 58.03%
7 Intangible assets 1,271,375,280.93 922,184,553.37 37.87%
8 R&D expense 338,274,931.75 204,312,934.30 65.57%
9 Notes payable 7,465,625,110.40 4,887,600,348.93 52.75%
10 Account payable 6,575,927,933.23 7,666,813,508.07 -14.23%
11 Tax payable -143,795,589.68 424,842,866.22 -133.85%
12 Capital reserves 4,635,970,740.41 1,538,178,253.07 201.39%
Income Statement Items This period Last period Changes
13 Sales expense 1,016,579,465.35 1,810,978,661.82 -43.87%
14 Administrative expense -84,132,888.64 -565,730.67 -14771.54%
15 Non business income 119,360,985.64 7,583,973.03 1473.86%
Cash Flow Statement Items This period Last period Changes
Cash flow generated by
16 2,378,405,526.54 2,687,373,910.69 -11.50%
business operation, net
Net cash flow generated by
17 -1,872,927,035.45 -91,724,809.49 -1941.90%
investment
Net cash flow generated by
18 3,321,166,674.81 -142,037,082.08 2438.24%
financing
Net increase of cash and cash
19 3,827,965,500.51 2,453,370,451.52 56.03%
equivalents
By the end of reporting period, the total asset of Company is 35.891 billion Yuan,
comparing with the beginning of this year, up 17.84%. Total liability is 20.815 billion Yuan,
comparing with the beginning of this year, up 4.74%; liability rate is 57.99%, comparing with
the beginning of this year, down 7.26%. Monetary fund and capital surplus are 22.9% and
12.92%, up 8.48% and 7.87% than the beginning of this year due to 3.446 billion Yuan of
raised fund through A share additional issuance, projects in construction occupied 8.8%, up
2.24% comparing with the beginning of this year, maily due to the investment of Yuzui base
and proving ground; immaterial asset is 3.54%, up 0.51% than the beginning of this year,
mainly due to 0.213 billion Yuan of land use right of the proving ground and 0.175 billion
Yuan from Changan Brand transferring.
During the reporting period, due to the decrease in sales of mini cars, marketing
12
Semi-annual Report 2011
expenses, operation taxes and add-ons sharply reduced. Significantly reduce of the
financial cost is mainly attributable to the increase interest income from deposits of the
raised funds. An increase in operating income is mainly due to the increase of the
government subsidies.
During the reporting period, the Company achieved 3.828 billion yuan in cash and cash
equivalents, an increase of 56.03%. Which cash flow from operating activities net 2.378
billion yuan, down 11.50%, mainly due to the drop of car sales volume and sales income;
cash flow from investing activities Net -1.873 billion yuan, a mainly due to new Yuzui base
and Beijing Changan project investment in fixed assets and 1.285 billion yuan of Changan
trademarks purchase; net cash flow generated in financing activities is 3.321 billion yuan,
an increase of 2438.24% year on year, mainly due to the raised money from the additional
share issuance at the beginning of this year.
Ⅲ The problems ,troubles and solutions of operation
㈠The problems, troubles during the operation
1、 The slowdown of automotive industry growing. After the rapid growth of car sales in
the last two years, due to the multiple effects such as the cancellation of state incentive
policy, the restriction of car purchasing in some cities and its won adjustment need, the
automotive industry, in particular, mini cars and own-brand sedans were impacted a lot, and
market competition became increasingly fierce.
2、 Raw material price still high. China's macroeconomic policy has been influenced by
US quantitative easing monetary policy, the domestic raw material price remained high, the
price index continued to rise up, while inflation caused the increase of transportation and
other costs, the cost could not be transferred, the profitability of the product to be
challenged.
3 、 Own brand nurture is in growing stage. Although the Company’s independent
innovation capacity in the auto industry ranks first in China auto industry, and our
technology, product quality have been significantly improved, but the cultivation of the
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Semi-annual Report 2011
brand is a long process, constant striving is needed.
㈡ The main measures taken by the Company
1、 Pay special attention to the sales; try best to lay the marketing battle. First, further
enhance the battle effectiveness of marketing, the management and standardization, and
the consistency between the frontage and rear. Secondly, speed up the adjustment of
product structure. Third, accelerate the market response and reaction speed, carry out
implementation strictly.
2、 Carry out cost reduction strictly. First, further improve the management systems,
processes, methods of cost & expenses during the whole process; enhance the cost control
of the value chain. Secondly, further decrease the cost by using more common parts. Third,
strengthen benchmark and the application of the achievement.
3、 Greatly enhance the competitiveness of the brand. First, create a number of classic
products and launch into market rapidly. Secondly, strengthen the brand research, brand
breeding, promotion, upgrade brand image. Third, actively enter into the middle and
high-end sedan market to enhance the company's brand premium.
Ⅳ Investment of the company during the reporting period
㈠ Usage information on raised funds during the reporting period.
Unit: RMB ten thousand Yuan
Total of raised funds 344,558.69
Total invested raised funds
Change use of the raised funds 118,338.70
0.00 in the reporting period
during the reporting period
Total cumulative change use of
the raised funds during the 0.00 Total cumulative invested
reporting period raised funds in the 118,338.70
Proportion compare to the Total reporting period
0.00%
Sum use of the raised funds
invest achi
If there
project Total eved If the
cumulati ment are
s commi Investme the date bene expec
total ve progre signific
change tment nt when fits ted
Commitment investme investme ss ant
or not invest amount up to projects in benefi
investment nt after nt up to changes
(incudi ment during the achieve the ts has
projects and the adjustme the end in
ng of the end of usable repo been
use of raised fund nt (1) of the project
some raised reporting the condition rting achie
period feasibili
change funds period period perio ved
(2) ty
) (%)(3) d
＝
14
Semi-annual Report 2011
(2)/(1)
Committed
investment
projects
vehicle
production line
technological Not
164,31 31.96
transformation NO 164,319 52,520.75 52,520.75 2011.06.30 0.00 applic NO
9 %
project (increase able
of production
capacity)
Small
Not
displacement 197,91 33.26
NO 197,911 65,817.95 65,817.95 2011.04.30 0.00 applic NO
engine industry 1 %
able
upgrade project
Subtotal of the
commitment 362,23 118,338.7 118,338.7
- 362,230 - - 0.00 - -
investment 0 0 0
projects
Use of the excess
raised funds
Repayment of
bank loans (if - - - - -
any)
Additional
working capital - - - - -
(if any)
subtotal of excess
raised funds - - - - -
investment
362,23 118,338.7 118,338.7
Total - 362,230 - - - -
0 0 0
status and the
reason for
timing schedule
or the expected NO
benefits not been
achieved (for each
project)
explaination for
significant
NO
changes of the
project feasibility
usage and using
progress of the Not applicable
excess raised
funds
change of project
Not applicable
site of the raised
funds investment
adjustment of the
implementation
Not applicable
means for raised
funds investment
projects
Pre-investment applicable
and replacement On February 28, 2011, the Eighteenth Meeting of the Fifth Board of
15
Semi-annual Report 2011
of the raised fund Directors passed the "The proposal of using raised funds to replace of the
investment found for pre-self-financing investment projects", agreed to use raised funds
projects of 608,749,433.60 Yuan to replace pre-self-financing invested fund (see
bulletin No. : 2011-16). The mentioned funding replacement was completed
in March 2011.
Use leave-used
raised funds to
Not applicable
makeup working
capital
temporarily
the amount and
the reason for the
fund balance Not applicable
during raised fund
project
implementation
Use and
Unused balance of raised funds has been deposited in raised fund special account
destination of the
bank, of which 900 million yuan fixed deposits.
unused raised
funds
existing problems
or other
circumstances
NO
during use and
disclosure of
raised funds
㈡ Usage information on non-raised money during the reporting period was as follows (Unit:
RMB ten thousand Yuan) ：
Investment in Expected earnings
Items Invested Projects Projects progress
this year
一 Vehicle Projects under construction
40,999
二 under construction
11,233 Reflected in the
Engine Projects
company's overall
三 In construction
8,458 revenue
TC
四 under construction
52,959
Others
Total
113,649
16
Semi-annual Report 2011
VI. Important Issues
Ⅰ. Corporate Governance
The Company has been strictly complying with the relevant laws and regulations,
including the Company Law, the Securities Law, the Regulations for the Governance of
Listed Companies, the Regulations for Information Disclosure of Listed Companies, the
Regulations for Stock Listing in Shenzhen stock exchange, the Guidelines for Internal
Control Listed Companies’ in Shenzhen stock exchange and continuously improving the
corporate governance structure of the Company, adopting modern best practices and
standardizing the management and operations of the Company.
During the reporting period, in order to address possible future problem with the
competition in the same trade, on February 28, 2011, in eighteenth meeting of fifth
Board of Directors, the proposal of acquisition the equity of Baoding Changan bus and
Changan Kuayue has been aproved, currently related preparatory work is being done,
completion of the acquisition will help to reduce the daily party transactions and avoid
potential problem with the competition in the same trade.
During the reporting period, in order to improve the integrity of Company assets
and reduce the related party transactions, on April 14, 2011, on nineteenth meeting of
fifth Board of Directors, the proposal of trademark transferring contract has been
aproved; the contract determines the total transferring amount is 175 million Yuan.
Currently, the transferring of trademark-related work has been completed.
Corporate governance is in line with the actual "Corporate Governance Guidelines"
and the relevant requirements of China Securities Regulatory Commission. The
Company will continue to improve corporate governance, promote rapid and healthy
development of the Companyto effectively safeguard the interests of all shareholders.
Ⅱ.The implementation situation of the annual distribution of profits in 2010 and the
semi-annual distribution plan of profits in 2011
1.The implementation situation of the annual distribution of profits in 2010
The profit distribution plan of 2010 is made in the company’s 2010 annual
shareholders’ meeting which was held on May 18th, 2011.The plan was as follow: base
on current total capital shares of 2,685,823,637 at the end of 2010, donate 4 bonus
shares and interest of 0.80 RMB (tax included) upon each 10 shares to all shareholders.
Besides, base on current total capital shares of 2,685,823,637 at the end of 2010,
capitalizing of common reserves will be 4 shares upon each 10 shares to all shareholders.
A share interest rights registration date is 6th July 2011, Ex. Right and ex. dividend date
is 7th July 2011. B share final dealing date is 6th July 2011, ex dividend date is 7th July
2011, and registry date is 11th July 2011. After this distribution of profits, the total of
capital shares will increase up to 4,834,482,546 shares
2. The semi-annual distribution plan of profits in 2011: non-distributed and no
transformation from provident fund to stock shares
3. In the report period, the company did not implement the equity incentive
17
Semi-annual Report 2011
program
III. In the report period, the company did not have any significant litigation and
arbitration matters
IV. In the report period, the company did not have any significant matters related of the
acquisitions, sale and restructuring of the asset.
1. Related party transactions execution regarding to the daily operation
In the period, the Company’s transaction issues related to the daily operation such
as, the transaction parties, the transaction content, the pricing basis and the transaction
price etc. has been published in , and on May 19th, 2011, according to the pre-arranged plan approved in
the 2010 annual shareholders’ meeting. Until the end of this report period, related
parties purchasing volume amounted to 4,164,870,000 RMB, sales volume amounted to
2,630,990,000 RMB, general service volume amounted to 162,690,000 RMB,
respectively accounted for 48.55%, 35.86%, and 47.19% of the predicted total volume of
2010.
In the first half year, the transaction content has no significant change compared to
the predicted one.
2. During the reporting period, significant related party transactions issues, see the
financial report noted as transaction parties’ relationship and the transactions.
VI. Major contracts and their fulfillment
㈠In the period, there were no major entrustment, contracting by the Company of
the assets of other companies and there were no major entrustment, contracting of the
Company’s assets by other companies.
㈡There is no major entrustment occurring in the reporting period.
㈢In reporting period, no significant cash assets management issues entrusted to
people.
VII. Commitment
Listed Company and its directors, supervisors and senior management, the
18
Semi-annual Report 2011
shareholders holding more than 5% shares and the actual controller and other ralated
parties during the reporting period have the following commitments:
commit Promisee Contents Fulfillments
ments
1. Comply with laws, regulations and rules, promises to fulfill
the statutory obligations. ⒉ The original non-tradable Up to the end of reporting period, China
shares can not be traded or transfered within at least 24 Changan holds 1,163,787,489 shares,
Share months after getting tradable right; After the expiration of 24 whose 855,666,188 shares is unlimited
reform months, non-tradable shares can be sold through the Stock tradable shares, the remaining
commit Changan China Exchange, the number of total shares in 12 months does 207,421,301 shares are limited condition
ment not exceed five per cent of the company's total shares, and sale shares, according to the share reform
in 24 months does not exceed 10%.⒊ The Companywill management commitment will be lifted
implement management equity incentive plan, according to after the implementation of equity incentive
state related managing regulation and method after share plans Restricted.
reform.
According to the company's business
development needs, on February 28 of
To avoid possible future potential competition in the
2011, the 18th meeting of the fifth Board of
industry, and support Changan Automobile development,
Directors approved the acquisition of
South Group promises "Changan Automobile intend to acquire Baoding
Baoding Changan Bus and Changan
Changan Bus or Changan Kuayue, the Company agreed to
Kuayue’s equity (Announcement No. :
promote the transfer at fair prices."
2011-15). The related transfer work is
ongoing.
On April 14 of 2011, the 19th meeting of
To improve the integrity of the company's assets and reduce
the fifth Board of Directors passed a bill on
Chongqing the related party transactions, Changan industry on June 2,
the trademark transfer contract
2010 issued the commitment about changing CHANGAN
Changan (Announcement No. :2011-20). The
trademark to Chongqing Changan Automobile Co., Ltd. It’s
Industrial contract decided total amount of
Other committed the Companyis the only transferee of related
(Group) Co., trademark transfer is 175 million Yuan.
commitme licensing trademark, and actively consulting trademark
Currently, the related work of trademark
LTD. transfer.
nt transfer has bee n completed.
To avoid possible competition with the industry and better
safeguard the interests of corporate investors, the controlling
shareholder of China's Changan promises: ⒈ in Jiangxi
Changhe Automobile Co., Ltd. and Harbin Hafei Automobile
Industry Group Co., Ltd. are continuous two years of
Performance conditions have not yet
Changan China profitability, with sustained development and management
reached.
capacity has improved significantly in the case, so it’s
proposed the two companies into the Company; ⒉ When
Changan Peugeot Citroen Automobile Co., Ltd. was
completed and put into operation, it’s proposed to transfer all
the joint venture equity to the Company.
VIII. Share status held by the Company in other listed companies, unlisted financial
firms and the companies planning to list
1. By the end of the reporting period, the Company held 5.33% shares of Weaponry
Equipment Group Accounting Ltd, with initial capital cost RMB80 million and book
value RMB80 million.
2. In the end of reporting period, the Company held 17.75 million shares, which
accounted for 0.932% shares of the whole shares of South-western Securities Co., Ltd.,
the sales period is during the 36 months since February 17, 2009. According to the
requirement of Chongqing municipal government on the Southwest Securities’ reform
19
Semi-annual Report 2011
and recombination, the Company signed Share Entrustment Agreement with Chongqing
Yufu Asset Management Co. Ltd that is a state-owned company under the Chongqing
municipal government, entrusting Chongqing Yufu Asset Management Co. Ltd to
manage the shares held by Changan in Southwest Securities.
IX. The independent directors’ special notes and independent advices towards the
funds transaction between the related parties and external security issue
The company’s five independent directors, Mr. Ouyang Gaoming, Mr. Dong Yang,
Mr. Chen Zhong Mr. Wang Zhixiong and Mr. Peng Shaobing have given some special
advices towards the funds transaction between the related parties and external guarantee
as follow issue related to the issues mentioned above according to the specified
regulation made by the China Securities such as, Norms of Financial Transactions and
External Security Notice With Related Parties and Listed Companies ([2003]56); Norms
of Listed Company’s External Security ([2005]120); Advisory Norm of Establishing
Independent Director Regulation in Listed Company and Governance Notice of Listed
Company, their advices are as follow:
1、 The Company has strictly controlled the external security risk and has no
law-violated security matter during the reporting period.
2、During the reporting period, all the transaction funds between the related parties
are related to the normal operational funds. There’s no shareholder or subsidiary that has
occupied the company’s fund.
X. The Semi-Annual financial report of 2011 is unaudited
XI. Other important issues
㈠ During the reporting period, the company and its directors, supervisors, senior
management, the actual controller is not subject to the right authorities or judicial
discipline inspection departments to investigate, or be held criminally responsible by the
china securities regulatory commission for inappropriate candidates, or got punishment
from other administrative departments and stock exchange.
㈡From January 7 to January 11, 2011, the Company issued additional A shares to
the public and the price was 9.74 yuan / share, totally 360,166,022 shares and raised
fund 3,508,017,054.28 yuan, after deducting issuance costs of 62,430,134.80 Yuan, the
net raised fund was 3,445,586,919.48 Yuan. The above raised fund was designated to
special account on January 18, 2011, and signed a tripartite regulatory agreement with
20
Semi-annual Report 2011
the sponsor organization and the commercial bank for raised fund storage. On February
28, 2011, the 18th Meeting of the Fifth Board of Directors passed ""The proposal of
using raised funds to replace of the found for pre-self-financing investment projects",
agreed to use raised funds of 608,749,433.60 Yuan to replace pre-self-financing invested
fund (see announcement No. : 2011-16). On March 2011, the replacement has been
completed.
㈢On February 28 of 2011, the 18th meeting of the fifth Board of Directors has
been held and approved "The propsoal of acquisition of Baoding Changan Bus
Manufacturing Co." and " The propsoal of acquisition of Chongqing Changan Kuayue
Vehicle Co., Ltd.", the Company proposed to acquire 100% equity of Baoding Changan
Bus and the 34.3% equity of Changan Kuayue which both held by Chongqing Changan
Industry (Group) Co., Ltd., The main purpose is to develop light commercial vehicle
business base on Baoding Changan Bus and Changan Kuayue light passenger cars and
light trucks. Presently, the related work is on progress.
㈣On April 14, 2011, the Nineteenth Meeting of the fifth Board has been held, "The
Proposal of Approving of Signing Trademark Transferring Contract with Changan
Industrial” has been reviewed and approved, and the total amount of the trademark
transferring is RMB 175 million yuan. Up to the end of reporting period, the related
trademark transferring job has been completed.
㈤The research and interview reception during the reporting period
During the reporting period, the Company received the research and production line
visit from domestic and overseas fund management company, Securities Company,
investment institute and so on. During the communication with the investors, related
personnel of the Company strictly followed the regulation of Shenzhen Stock and
Exchange’s instruction for Information Fair Release for Listed Companies and Investors
Relationship Management System of the Company, did not selectively or privately
release, reveal or disclose non-published important information to special persons or
companies, guaranteeing the fairness of information release.
Registration form of research, communication and interview reception etc. during
the reporting period
Date Location manner Reception object Content discussed and material offered
Shenzhen International Commerce
2011.1.4 One to one promotion Penghua Fund,Rongtong Fund Company’s Business introduction, analysis report of investment value
Center
Financial Street, Xicheng District,
2011.1.6 Beijing, Shanghai scheduled District One to one promotion Dongfang Fund,Taida Hongli Fund Company’s Business introduction, analysis report of investment value
Xizhimen North Street
Huayuan Shiqiao Road Pudong, Fuguo Fund, Huaan Fund, Huitianfu
2010.1.6 One to one promotion Company’s Business introduction, analysis report of investment value
Shanghai, Pudong South Road Fund, Pacific Assets
Fucheng road, Pudong of Shanghai, International Fund,
2011.1.7 One to one promotion Company’s Business introduction, analysis report of investment value
Yanan East Road Everbright Pramerica Fund
Guoxin Securities,
Meeting Room, Guangzhou Kim Understanding of industry and business conditions
2011.2.21 On-Site Survey
Changan Headquarters Investment Management
Co., Ltd.
Meeting Room, CITIC building Securities
2011.2.23 On-Site Survey Understanding of industry and business conditions
Changan Headquarters Company
Meeting Room, Wide certification
2011.2.24 On-Site Survey Understanding of industry and business conditions
Changan Headquarters Securities AG
2011.2.24 Meeting Room, On-Site Survey Gaohua Securities Understanding of industry and business conditions
21
Semi-annual Report 2011
Changan Headquarters
Meeting Room,
2011.3.16 On-Site Survey Kaiji Securities Understanding of industry and business conditions
Changan Headquarters
Meeting Room, China International
2011.3.22 On-Site Survey Understanding of industry and business conditions
Changan Headquarters Finance Corporation
Meeting Room,
2011.3.23 On-Site Survey Jinying Securities Understanding of industry and business conditions
Changan Headquarters
Meeting Room, High-Ling Capital Understanding of industry and business conditions
2011.3.29 On-Site Survey
Changan Headquarters Management
Meeting Room, Understanding of industry and business conditions
2011.4.20 On-Site Survey Fuda Capital Management
Changan Headquarters
2011.4.26 Chongqing Sovereign Hotel On-Site Survey Institutional Investors Understanding of industry and business conditions
Meeting Room,
2011.5.10 On-Site Survey UBS Securities Co., Ltd. Understanding of industry and business conditions
Changan Headquarters
Meeting Room, Woori Investment
2011.5.16 On-Site Survey Understanding of industry and business conditions
Changan Headquarters Securities
Meeting Room,
2011.5.17 On-Site Survey Deutsche Bank Understanding of industry and business conditions
Changan Headquarters
Meeting Room, Asiana large investment
2011.5.19 On-Site Survey Understanding of industry and business conditions
Changan Headquarters securities Company
Meeting Room, Morgan Stanley
2011.5.19 On-Site Survey Understanding of industry and business conditions
Changan Headquarters investment bank
Meeting Room,
2011.5.25 On-Site Survey CLSA Understanding of industry and business conditions
Changan Headquarters
Meeting Room,
2011.5.30 On-Site Survey UBS Securities Co., Ltd. Understanding of industry and business conditions
Changan Headquarters
Rui Xun-Hua knowledge
Meeting Room,
2011.6.13 On-Site Survey Investment Consulting Understanding of industry and business conditions
Changan Headquarters
(Shanghai) Co., Ltd.
Meeting Room,
2011.6.23 On-Site Survey Macquarie Securities Understanding of industry and business conditions
Changan Headquarters
Meeting Room,
2011.6.24 On-Site Survey Bank of Paris, France Understanding of industry and business conditions
Changan Headquarters
Meeting Room,
2011.6.24 On-Site Survey Changjiang Securites Understanding of industry and business conditions
Changan Headquarters
㈥Other Information Notice Index
The company’s notices are published in China Securities, Securities Times and
Hongkong Commercial Newspaper, the online disclosure address is
http://www.cninfo.com.cn.
⒈ On January 7, 2011, publication of intention abstract on additional public
offering announcement on online issuance of additional A shares, announcement on
issuance of additional A shares under the net, announcement on online roadshow,
announcement number: 2011-1, 2011-2, 2011-3, 2011-4.
⒉On January 11, 2011, publication on the note of additional issuance of A-shares,
production and sales express of December 2010, announcement number: 2011-5, 2011-6.
⒊ On January 14, 2011 announcement on the results of additional issuance of
A-share, announcement No.:2011-7..
⒋On January 25, 2011, announcement on important announcement on the change
of equity division reform sponsor representatives, and laying the foundation of Yuzui
100 billion Yuan auto city, announcement number: 2011-8,2011-9.
⒌ On January 27 of 2011, announcement on 2010 annual earnings forecasts,
announcement on Company share change and listing of the additional issuance of
A-share, announcement No. : 2011-10, 2011-11.
⒍On February 15, 2011, announcement on production and sales express of of
January 2011, signing agreement for tripartite supervising of raised funds,
announcement No. : 2011-12, 2011-13.
⒎On March 1, 2011, publication of the resolutions 18th meeting of fifth BOD, the
22
Semi-annual Report 2011
resolutions of 10th meeting of the fifth Board of Supervisors, the related transactions of
acquiring Baoding Changan Bus and Changan Kuayue Company’s equity, using raised
funds to replace the found for pre-self-financing invested fund, announcement No. :
2011-14, 2011-15, 2011-16, 2011-17.
⒏On March 11, 2011 announcement on production and sales express of February
2011, announcement number: 2011-18.
⒐ On March 25, 2011 announcement on employee supervisors change,
announcement No.:2011-19.
⒑On April 9, 2011, announcement on production and sales express of March 2011,
announcement number: 2011-20.
⒒On April 15, 2011, announcement on temporary trading halts due to Annual
Report publishing, announcement number: 2011-21.
⒓On Apr.16, 2011, publication of resolutions of the 19th meeting of the fifth BOD,
resolutions of the 11th meeting of the fifth supervisor conference, 2010 Annual Report
Abstract, 2011 forecasting daily party transactions, the related transaction of deposit
with China South Industries Group Finance CompanyLimited, the related transaction on
trademark transferring with Changan Industrial, note for holding of 2010 annual general
shareholders meeting, announcement number: 2011-22、2011-23、2011-24、2011-25、
2011-26、2011-27、2011-28、2011-29.
⒔ On April 26, 2011, announcement on the first quarter report of 2011,
announcement on carrying out low-risk financial investment, announcement No. :
2011-30, 2011-31.
⒕On May 12, 2011, announcement on production and sales express of April 2011,
announcement No.: 2011-32.
⒖On May 19, 2011, announcement on 2010 annual general shareholders meeting
resolution, announcement No.: 2011-33.
⒗On June 11, 2011, announcement on production and sales express of May 2011,
announcement No.:2011-34.
⒘On June 30, 2011, announcement on 2010 dividend distribution, announcement
No.:2011-35.
23
VII. Financial Report (Unaudited)
i．Financial statements
Chongqing Changan Automobile Company Limited
ASSETS BALANCE SHEET
30 June, 2011
( Expressed in RMB Yuan )
30 June, 2011 31 December, 2010
Items Note
Consolidated Parent company Consolidated Parent company
Current asset:
Monetary fund （ V） 1 8,219,955,550.23 6,154,655,990.54 4,391,990,049.72 3,087,748,588.31
Settlement provision
Outgoing call loan
Trading financial assets
Notes receivable （ V） 2 5,779,431,464.12 4,742,587,389.77 8,821,828,759.39 6,655,403,907.26
（ V） 3
Account receivable 613,655,886.01 739,102,675.12 404,008,999.71 574,746,914.49
（ VI） 1
Prepayment （ V） 4 309,071,517.61 266,832,345.63 297,803,710.77 268,250,546.15
Insurance receivable
Reinsurance receivable
Provisions of Reinsurance
contracts receivable
Interest receivable
Dividend receivable 450,030.00 450,030.00 450,030.00 450,030.00
（ V） 3
Other account receivable 366,491,561.14 365,632,122.56 117,659,705.04 101,280,817.11
（ VI） 1
Repurchasing of financial
assets
Inventories （ V） 5 3,915,638,962.35 2,578,700,589.20 2,536,336,767.24 1,624,101,164.89
Non-current asset due in 1
year
Other current asset 6,429,293.38
Total of current asset 19,204,694,971.46 14,847,961,142.82 16,576,507,315.25 12,311,981,968.21
Non-current assets
Loans and payment on
other’s behalf disbursed
Disposable financial asset 191,522,500.00 191,522,500.00 176,967,500.00 176,967,500.00
Expired investment in
possess
Long-term receivable
Long-term share equity （ V） 6
6,704,671,115.24 7,677,586,144.64 5,670,022,934.61 6,644,437,964.01
investment （ VI） 2
Property investment 59,730,189.47 62,762,382.76
Fixed assets （ V） 7 4,361,659,782.00 3,890,863,795.21 4,267,885,829.43 3,813,955,308.29
Construction in process （ V） 8 3,157,242,276.94 2,634,469,853.82 1,997,902,631.46 1,562,928,324.61
Engineering material 795,898.75 795,898.75 795,898.75 795,898.75
24
Fixed asset disposal 3,180.57 3,180.57
Production physical assets
Gas & petrol
Intangible assets （ V） 9 1,271,375,280.93 1,142,906,864.58 922,184,553.37 779,656,835.85
R&D expense （ V） 10 338,274,931.75 338,052,489.24 204,312,934.30 204,121,260.99
Goodwill 9,804,394.00 9,804,394.00
Long-term prepaid expenses 4,947,954.69 990,440.00 2,484,457.43 1,080,480.00
Differed income tax asset （ V） 11 472,808,775.89 318,764,914.74 434,792,115.95 262,939,586.62
Other non-current asset 113,537,981.00 113,537,981.00 130,000,000.00 130,000,000.00
Total of non-current assets 16,686,374,261.23 16,309,490,881.98 13,879,918,812.63 13,576,883,159.12
Total of assets 35,891,069,232.69 31,157,452,024.80 30,456,426,127.88 25,888,865,127.33
Current liabilities
Short-term loans （ V） 12 30,000,000.00
Loan from Central Bank
Deposit received and hold
for others
Call loan received
Trade off financial liabilities
Notes payable （ V） 13 7,465,625,110.40 5,613,690,171.08 4,887,600,348.93 4,284,851,347.89
Account payable （ V） 14 6,575,927,933.23 4,591,607,469.01 7,666,813,508.07 4,848,629,265.23
Prepayment received （ V） 15 2,790,587,400.93 2,027,684,576.58 2,600,698,490.62 1,905,053,220.84
Selling of repurchased
financial assets
Fees and commissions
receivable
Employees’ wage payable （ V） 16 185,768,231.00 156,064,725.07 200,359,830.91 149,604,731.81
Tax payable （ V） 17 -143,795,589.68 55,739,803.94 424,842,866.22 351,735,935.41
Interest payable 60,000.00 60,000.00
Dividend payable 79,742.80 79,742.80
Other account payable （ V） 18 1,092,360,112.47 640,759,513.93 1,117,041,448.96 766,343,334.06
Reinsurance fee payable
Insurance contract provision
Entrusted trading of
securities
Entrusted selling of
securities
Non-current liability due in 1
50,000,000.00 50,000,000.00
year
Other current liability 1,445,054,897.77 714,326,746.73 1,541,945,721.07 857,611,927.80
Total of current liability 19,411,607,838.92 13,799,873,006.34 18,519,441,957.58 13,213,889,763.04
Non-current liabilities
Long-term borrowings 76,000,000.00
Bond payable
Long-term payable 18,495,263.09 18,495,263.09 19,167,000.00 19,167,000.00
Special payable 550,761,375.56 531,211,084.56 503,601,091.39 503,601,091.38
Expected liabilities （ V） 19 696,653,899.11 401,791,817.97 619,547,105.86 325,719,615.32
Differed income tax liability （ V） 11 25,296,375.00 25,296,375.00 23,113,125.00 23,113,125.00
Other non-recurring
111,973,000.00 91,970,000.00 111,973,000.00 91,970,000.00
liabilities
25
Total of non-current
1,403,179,912.76 1,068,764,540.62 1,353,401,322.25 963,570,831.70
liabilities
Total of liability 20,814,787,751.68 14,868,637,546.96 19,872,843,279.83 14,177,460,594.74
Owners’ equity (or
shareholders’ equity)
Practical capital collected
2,325,657,615.00 2,325,657,615.00 2,334,022,848.00 2,334,022,848.00
(or share capital)
Capital reserves 1,575,795,664.76 1,705,578,707.86 1,797,604,215.47 1,859,502,088.33
Less: Shares in stock 26,925,731.38 26,925,731.38
Special reserves
Surplus reserves 1,167,011,424.00 1,167,011,424.00 1,167,011,424.00 1,167,011,424.00
Common risk provision
Attributable profit 4,839,457,925.12 5,777,216,214.38 3,623,954,435.60 4,568,826,240.68
Different of foreign currency
translation
Total of owner’s equity
belong to the parent 15,123,561,188.97 16,288,814,477.84 10,625,542,446.62 11,711,404,532.59
company
Minor shareholders’ equity -47,279,707.96 -41,959,598.57
Total of owners’ equity 15,076,281,481.01 16,288,814,477.84 10,583,582,848.05 11,711,404,532.59
Total of liabilities and
35,891,069,232.69 31,157,452,024.80 30,456,426,127.88 25,888,865,127.33
owners’ equity
26
Chongqing Changan Automobile Company Limited
PROFIT STATEMENT
From January to June, 2011
(Expressed in RMB Yuan)
From January to June, 2011 From January to June, 2010
Items Note
Consolidated Parent company Consolidated Parent company
I. Total business income 14,537,115,839.90 11,068,721,114.58 16,627,454,932.78 11,242,504,620.75
（ V） 20
Incl. Business income 14,537,115,839.90 11,068,721,114.58 16,627,454,932.78 11,242,504,620.75
（ VI） 3
Interest income
Insurance fee earned
Fee and commission received
II. Total business cost 14,563,749,247.25 11,010,585,614.47 16,260,772,013.79 10,863,723,696.48
（ V） 20
Incl. Business cost 12,501,134,402.12 9,438,912,603.93 13,387,852,025.12 9,040,356,397.63
（ VI） 3
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Net insurance policy reserves
provided
Insurance policy dividend paid
Reinsurance expenses
（ V） 21
Business tax and surcharge 275,167,193.78 200,828,940.57 357,977,295.97 259,268,103.04
Sales expense 1,016,579,465.35 608,706,396.24 1,810,978,661.82 1,083,721,040.71
Administrative expense 849,054,595.79 840,177,215.73 721,615,349.36 543,393,337.92
Financial expenses （ V） 22 -84,132,888.64 -83,986,020.85 -565,730.67 -35,911,495.01
Asset impairment loss （ V） 23 5,946,478.85 5,946,478.85 -17,085,587.81 -27,103,687.81
Plus: Gains from change of 4,563,744.00
fair value (“-“ for loss)
（ V） 24
Investment gain (“-“ for loss) 1,040,648,180.63 1,029,384,263.96 1,003,495,739.38 992,273,032.91
（ VI） 4
Incl. Investment gains from
affiliates
Gains from currency exchange
(“-“ for loss)
III. Operational profit (“-“ for
1,014,014,773.28 1,087,519,764.07 1,374,742,402.37 1,371,053,957.18
loss)
Plus: Non business income 119,360,985.64 105,446,779.38 7,583,973.03 4,025,336.74
Less: Non-business expenses 13,875,074.38 11,296,243.31 10,697,901.08 6,509,739.05
Incl. Loss from disposal of
1,658,981.64 10,552.97 3,061,777.08
non-current assets
IV. Gross profit (“-“ for loss) 1,119,500,684.54 1,181,670,300.14 1,371,628,474.32 1,368,569,554.87
27
Less: Income tax expenses 84,760,560.93 62,218,864.23 22,650,916.03 9,117,719.08
V. Net profit (“-“ for net loss) 1,034,740,123.61 1,119,451,435.91 1,348,977,558.29 1,359,451,835.79
Net profit attributable to the
1,040,060,233.01 1,119,451,435.91 1,366,565,351.61 1,359,451,835.79
owners of parent company
Minor shareholders’ equity -5,320,109.40 -17,587,793.32
VI. Earnings per share:
(I) Basic earnings per share 0.22 0.28
(II) Diluted earnings per share 0.22 0.28
VII. Other misc. incomes 12,371,750.00 12,371,750.00 -75,863,340.95 -75,863,340.95
VIII. Total of misc. incomes 1,047,111,873.61 1,131,823,185.91 1,273,114,217.34 1,283,588,494.84
Total of misc. incomes
attributable to the owners of 1,052,431,983.01 1,131,823,185.91 1,290,702,010.66 1,283,588,494.84
the parent company
Total misc gains attributable
-5,320,109.40 -17,587,793.32
to the minor shareholders
28
Chongqing Changan Automobile Company Limited
CASH FLOW STATEMENT
From January to June, 2011
(Expressed in RMB Yuan)
From January to June, 2011 From January to June, 2010
Items
Consolidated Parent company Consolidated Parent company
I. Net cash flow from business operation
Cash received from sales of products and
15,049,576,722.73 12,428,465,566.48 12,878,287,105.69 11,422,262,368.36
providing of services
Net increase of customer deposits and capital
kept for brother company
Net increase of loans from central bank
Net increase of inter-bank loans from other
financial bodies
Cash received against original insurance contract
Net cash received from reinsurance business
Net increase of client deposit and investment
Net increase of trade financial asset disposal
Cash received as interest, processing fee, and
commission
Net increase of inter-bank fund received
Net increase of repurchasing business
Tax returned 80,755,109.66 39,404,000.00 25,871,777.12
Other cash received from business operation 281,467,088.44 256,477,663.60 154,597,784.42 50,715,275.98
Sub-total of cash inflow from business activities 15,411,798,920.83 12,724,347,230.08 13,058,756,667.23 11,472,977,644.34
Cash paid for purchasing of merchandise and
9,372,501,842.27 8,243,641,271.81 7,025,953,870.17 6,301,692,529.40
services
Net increase of client trade and advance
Net increase of savings in central bank and
brother company
Cash paid for original contract claim
Cash paid for interest, processing fee and
commission
Cash paid for policy dividend
Cash paid to staffs or paid for staffs 825,972,937.06 670,199,987.44 642,032,020.93 484,525,672.57
Taxes paid 1,019,084,870.77 732,784,268.78 1,128,844,421.45 789,035,660.48
Other cash paid for business activities 1,815,833,744.19 1,614,190,772.91 1,574,552,443.99 1,365,936,628.09
Sub-total of cash outflow from business activities 13,033,393,394.29 11,260,816,300.94 10,371,382,756.54 8,941,190,490.54
Cash flow generated by business operation, net 2,378,405,526.54 1,463,530,929.14 2,687,373,910.69 2,531,787,153.80
II. Cash flow generated by investing
Cash received from investment retrieving 4,900,000.00 4,900,000.00
29
Cash received as investment gains 6,000,000.00 6,000,000.00 827,029,165.91 832,155,290.91
Net cash retrieved from disposal of fixed assets,
3,738,720.05 22,490.62 11,843,177.68 10,750,089.68
intangible assets, and other long-term assets
Net cash received from disposal of subsidiaries or
other operational units
Other investment-related cash received 471,474,054.00 461,360,730.00
Sub-total of cash inflow due to investment
481,212,774.05 467,383,220.62 843,772,343.59 847,805,380.59
activities
Cash paid for construction of fixed assets,
1,859,838,889.50 1,794,209,253.54 767,014,993.08 659,139,599.99
intangible assets and other long-term assets
Cash paid as investment 5,317,720.00 5,317,720.00 168,482,160.00 141,382,160.00
Net increase of loan against pledge
Net cash received from subsidiaries and other
operational units
Other cash paid for investment activities 488,983,200.00 488,983,200.00
Sub-total of cash outflow due to investment
2,354,139,809.50 2,288,510,173.54 935,497,153.08 800,521,759.99
activities
Net cash flow generated by investment -1,872,927,035.45 -1,821,126,952.92 -91,724,809.49 47,283,620.60
III. Cash flow generated by financing
Cash received as investment 3,447,489,389.48 3,445,586,919.48
Incl. Cash received as investment from minor
shareholders
Cash received as loans 488,983,200.00 488,983,200.00 584,203,930.00
Cash received from bond placing
Other financing-related cash received 4,330,100.57 1,933,678.86 1,608,635.34 44,155.76
Subtotal of cash inflow from financing activities 3,940,802,690.05 3,936,503,798.34 585,812,565.34 44,155.76
Cash to repay debts 616,558,000.00 510,558,000.00 555,807,718.50 39,000,000.00
Cash paid as dividend, profit, or interests 1,429,611.10 261,333.33 168,058,219.00 155,122,263.94
Incl. Dividend and profit paid by subsidiaries to
minor shareholders
Other cash paid for financing activities 1,648,404.14 1,181,039.00 3,983,709.92 78,284.65
Subtotal of cash outflow due to financing
619,636,015.24 512,000,372.33 727,849,647.42 194,200,548.59
activities
Net cash flow generated by financing 3,321,166,674.81 3,424,503,426.01 -142,037,082.08 -194,156,392.83
IV. Influence of exchange rate alternation on cash
1,320,334.61 -241,567.60
and cash equivalents
V. Net increase of cash and cash equivalents 3,827,965,500.51 3,066,907,402.23 2,453,370,451.52 2,384,914,381.57
Plus: Balance of cash and cash equivalents at the
4,391,990,049.72 3,087,748,588.31 3,658,380,928.50 1,973,263,003.71
beginning of term
VI. Balance of cash and cash equivalents at the
8,219,955,550.23 6,154,655,990.54 6,111,751,380.02 4,358,177,385.28
end of term
30
Chongqing Changan Automobile Company Limited
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
30 June, 2011
(Expressed in Renminbi Yuan)
Amount of the Current Term Amount of Last Year
Owners’ Equity Attributable to the Parent Company Owners’ Equity Attributable to the Parent Company
Minor Minor
Items Capital Less: Total of Capital Less: Total of
Common sharehol Common sharehol
paid in Capital Shares Special Surplus Retained owners’ paid in (or Capital Shares Special Surplus Retained owners’
risk Others ders’ risk Others ders’
(or share reserves in reserves reserves profit equity share reserves in reserves reserves profit equity
provision equity provision equity
capital) stock capital) stock
I. Balance at the end of last 2,325,657, 1,538,178, 1,167,011, 5,594,695, -41,959,59 10,583,582, 2,334,022,8 1,693,335, 26,925,7 1,167,011, 3,632,676, 94,433,72 8,894,554,
0.00 0.00 0.00 0.00
year 615.00 253.07 424.00 154.55 8.57 848.05 48.00 482.05 31.38 424.00 370.48 2.28 115.43
Plus: Change of accounting 94,816,111 -94,816,11
0.00 0.00
policy .02 1.02
Correcting of previous
0.00 0.00
errors
104,268,7 -8,721,934 48,606,80 144,153,6
Others 0.00
33.42 .88 5.03 03.57
II. Balance at the beginning of 2,325,657, 1,538,178, 1,167,011, 5,594,695, -41,959,59 10,583,582, 2,334,022,8 1,797,604, 26,925,7 1,167,011, 3,718,770, 48,224,41 9,038,707,
0.00 0.00 0.00 0.00 0.00 0.00 0.00
current year 615.00 253.07 424.00 154.55 8.57 848.05 48.00 215.47 31.38 424.00 546.62 6.29 719.00
III. Changed in the current 360,166,0 3,097,792, 1,040,060, -5,320,109 4,492,698,6 -8,365,233.0 -259,425,9 -26,925, 1,875,924, -90,184,01 1,544,875,
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
year (“-“ for decrease) 22.00 487.34 233.01 .40 32.95 0 62.40 731.38 607.93 4.86 129.05
1,040,060, -5,320,109 1,034,740,1 2,026,986, -21,239,32 2,005,747,
(I) Net profit
233.01 .40 23.61 470.02 1.03 148.99
12,371,75 12,371,750. -52,051,87 -52,051,87
(II) Other misc. income
0.00 00 5.00 5.00
12,371,75 1,040,060, -5,320,109 1,047,111,87 -52,051,87 2,026,986, -21,239,32 1,953,695,
Total of (I) and (II) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 233.01 .40 3.61 5.00 470.02 1.03 273.99
(III) Investment or
360,166,0 3,085,420, 3,445,586,7 -8,365,233.0 -60,638,73 -26,925, -64,944,69 -107,022,9
decreasing of capital by 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
22.00 737.34 59.34 0 7.93 731.38 3.83 33.38
owners
1. Capital inputted by 360,166,0 3,085,420, 3,445,586,7 -8,365,233.0 -18,560,49 -26,925,
0.00
owners 22.00 737.34 59.34 0 8.38 731.38
2. Amount of shares paid
and accounted as owners’ 0.00 0.00
equity
-42,078,23 -64,944,69 -107,022,9
3. Others 0.00
9.55 3.83 33.38
-151,061,8 -4,000,000 -155,061,8
(IV) Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
62.09 .00 62.09
1. Providing of surplus
0.00 0.00
reserves
2. Common risk provision 0.00 0.00
3. Allotment to the -151,061,8 -4,000,000 -155,061,8
0.00
owners (or shareholders) 62.09 .00 62.09
4. Others 0.00 0.00
(V) Internal transferring of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -146,735,3 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -146,735,3
31
owners’ equity 49.47 49.47
1. Capitalizing of capital
0.00 0.00
reserves (or to capital shares)
2. Capitalizing of surplus
0.00 0.00
reserves (or to capital shares)
3. Making up losses by
0.00 0.00
surplus reserves
-146,735,3 -146,735,3
4. Others 0.00
49.47 49.47
(VI) Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Provided this year 0.00 0.00
2. Used this term 0.00 0.00
(Ⅶ ) Other 0.00 0.00
IV. Balance at the end of this 2,685,823, 4,635,970, 1,167,011, 6,634,755, -47,279,70 15,076,281, 2,325,657,6 1,538,178, 1,167,011, 5,594,695, -41,959,59 10,583,58
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
term 637.00 740.41 424.00 387.56 7.97 481.00 15.00 253.07 424.00 154.55 8.57 2,848.05
32
Chongqing Changan Automobile Company Limited
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
30 June, 2010
(Expressed in Renminbi Yuan)
Amount of the Current Term Amount of Last Year
Items Capital paid Less: Common Total of Capital paid Less: Common Total of
Capital Special Surplus Retained Capital Special Surplus Retained
in (or share Shares in risk owners’ in (or share Shares in risk owners’
reserves reserves reserves profit reserves reserves reserves profit
capital) stock provision equity capital) stock provision equity
I. Balance at the end of last 2,325,657,615. 1,708,27 1,167,011 6,510,46 11,711,404, 2,334,022,84 1,859,50 26,925,7 1,167,011 4,568,82 9,902,436,
year
0.00 0.00 0.00
00 3,332.86 ,424.00 2,160.73 532.59 8.00 2,088.33 31.38 ,424.00 6,240.68 869.63
Plus: Change of accounting
policy
0.00 0.00
Correcting of previous errors 0.00 0.00
Others 0.00 0.00
II. Balance at the beginning of 2,325,657,615. 1,708,27 1,167,011 6,510,46 11,711,404, 2,334,022,84 1,859,50 26,925,7 1,167,011 4,568,82 9,902,436,
current year
0.00 0.00 0.00 0.00 0.00
00 3,332.86 ,424.00 2,160.73 532.59 8.00 2,088.33 31.38 ,424.00 6,240.68 869.63
III. Changed in the current 360,166,022.0 3,097,79 1,119,451 4,577,409, -8,365,233.0 -151,228, -26,925,7 1,941,63 1,808,967,
year (“-“ for decrease)
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 2,487.34 ,435.91 945.25 0 755.47 31.38 5,920.05 662.96
(I) Net profit
1,119,451 1,119,451, 2,092,69 2,092,697,
,435.91 435.91 7,782.14 782.14
(II) Other misc. income
12,371,7 12,371,750 -52,051,8 -52,051,87
50.00 .00 75.00 5.00
12,371,7 1,119,451 1,131,823, -52,051,8 2,092,69 2,040,645,
Total of (I) and (II) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
50.00 ,435.91 185.91 75.00 7,782.14 907.14
(III) Investment or
360,166,022.0 3,085,42 3,445,586, -8,365,233.0 -18,560,4 -26,925,7
decreasing of capital by 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
owners 0 0,737.34 759.34 0 98.38 31.38
1. Capital inputted by 360,166,022.0 3,085,42 3,445,586, -8,365,233.0 -18,560,4 -26,925,7
owners
0.00
0 0,737.34 759.34 0 98.38 31.38
2. Amount of shares paid
and accounted as owners’ 0.00 0.00
equity
3. Others 0.00 0.00
-151,061, -151,061,8
(IV) Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
862.09 62.09
1. Providing of surplus
reserves
0.00 0.00
2. Common risk provision 0.00 0.00
3. Allotment to the -151,061, -151,061,8
owners (or shareholders)
0.00
862.09 62.09
4. Others 0.00 0.00
(V) Internal transferring of -80,616,3 -80,616,38
owners’ equity
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
82.09 2.09
1. Capitalizing of capital
reserves (or to capital shares)
0.00 0.00
33
2. Capitalizing of surplus
reserves (or to capital shares)
0.00 0.00
3. Making up losses by
surplus reserves 0.00 0.00
-80,616,3 -80,616,38
4. Others 0.00
82.09 2.09
(VI) Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Provided this year 0.00 0.00
2. Used this term 0.00 0.00
(Ⅶ ) Other 0.00 0.00
IV. Balance at the end of this 2,685,823,637. 4,806,06 1,167,011 7,629,91 16,288,814 2,325,657,61 1,708,27 1,167,011 6,510,46 11,711,404,
term 0.00 0.00 0.00 0.00 0.00 0.00
00 5,820.20 ,424.00 3,596.64 ,477.84 5.00 3,332.86 ,424.00 2,160.73 532.59
34
Semi-annual Report 2011
ii. Notes to financial statements
I. Corporate information
Chongqing Changan Automobile Co., Ltd. (hereafter referred to as the “Company”) was
established in the People’s Republic of China (hereafter referred to as the “PRC”) under
the Company Law of the PRC on 31 October, 1996. The Legal Representative’s Operating
License issued by Chongqing Industrial and Commercial Administrative Bureau is Yu-Jing
No. 28546236-3.
Chongqing Changan automobile company limited was established by China Changan Group
as the individual originator. the company was set up using the group’s net asset relating
to the operation of mini cars and engine, the shares its owned in Chongqing Changan
Suzuki company limited (506,190,000 shares) and the fund raising from the issuance of
250,000,000 foreign capital stock (B shares).
With the approval of ‘China securities regulatory commission’, the company initially
floated on share market on 19 May, 1997 by issuing120,000,000 common share(A share) to
the public. The offering increased the total equity to RMB 876,190,000.
On 26 June, 1998, the company issued 4 shares for each 10 shares to existing
shareholders. The issuance was made from capital common reserve and increased the
equity to RMb1,226,666,000.
On 26 May, 2004, the company offered 2 bonus shares for each 10 shares holding by
existing shareholder which increased the total equity from RMB 1,226,666,000 to RMB
1,471,999,200.
On 26 August, 2004, with the approval of China securities regulatory commission, the
company offered 148,850,000 common shares (A share) to the market which increased the
total equity to RMB 1,620,849,200.
As in December of 2005, the ultimate parent company of Chongqing Changan, China South
Industries Group Corporation used the common share (850,399,200) that owned by its
subsidiary, Changan Group, as part of the investment to China South industries Motor
Company. The share occupied 52.466% of the Changan’s total capital. Therefore, South
industries Motor became the parent company of Chongqing Changan. On 30th March of
2006, the transfer of share was registered and confirmed by Shenzhen branch of China
Securities Depository and Clearing Corporation limited.
In May, 2006, South Industries Motor issued 3.2 bonus shares for each 10 shares to the
shareholders at the implementation date of reformation of non-tradable shares for their
non-tradable shares according to the ”Reply of the problems related the reformation of
non-tradable shares of Chongqing Changan Automobile Co., Ltd.” (2006[442] Guo Zi Chan
Quan) issued by the State-owned Assets Supervision and Administration Commission of
State Council and the related shareholder’s meeting. After the reformation of
non-tradable shares, South Industries Motor occupied 45.548% of equity through
738,255,200 common shares.
On 15 May, 2007, the Company issued 2 bonus shares for each 10 shares to existing
shareholders which increased the total equity from RMB1,620,849,200 to RMB
1,945,019,040 .
35
Semi-annual Report 2011
On 30 May, 2008, the company issued 2 shares for each 10 shares owned by existing
shareholders. The total issuance of 389,003,808 shares was made from common reserve in
capital. After this issuance, total equity increased to RMB 2,334,022,848.
On 3 March, 2009, the secondary temporary shareholder meeting was held. The meeting
passed the board resolution about ‘the reacquisition of foreign capital stock listed in
China’. For the buyback period ending on 3rd March, 2010, the company repurchased
8,365,233 shares in total which occupied 0.3584% of total capital. The company cancelled
the share and reduced total shares to RMB2,325,657,615. On November 27th, the company
changed to a new business license for enterprise’s legal person which a registration
number of 5000000005061 1-1-1.
On 1st July of 2009, with the approval of State Administration for Industry and
Commercial, the ultimate parent company, China South industries motor company,
changed its name as China Changan automobile Industry (Group) Co., Ltd. (“China
Changan”).
On January 11, 2011, after being approved by China Securities Regulatory Commission,
the Company issued RMB ordinary share (A share) (360,166,022 shares) to the public,
after the issuance, the total equity increased to RMB 2,685,823,637 yuan.
The group and its subsidiaries mainly focus on the manufacturing and sales of automobile
(include cars), automobile engine, spare parts.
II. Representation regarding the preparation basis and
compliance with the Accounting Standards for Business
Enterprises
1. Basis of accounting and measurement basis
The financial statements have been prepared in accordance with Accounting Standards for
Business Enterprises-Basic Standard and 38 specific standards issued in February, 2006,
and the implementation guidance, interpretations and other relevant provisions issued
subsequently by the MOF (correctly referred to as “Accounting Standards for Business
Enterprises”).
The financial statements are presented on a going concern basis.
The Group maintains its accounting records on an accrual basis. Except for certain
financial instruments, assets are recorded at actual cost when they are acquired
2. Statement of compliance with Accounting Standards for Business
Enterprises
The financial statements present fairly and fully, the financial position of the Company as
on 30 June, 2011 and the financial results and the cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.
36
Semi-annual Report 2011
3. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar
year.
4. Functional currency
The Group’s functional and reporting currency is the Renminbi (“RMB”). Unless
otherwise stated, the unit of the currency is Yuan.
5. Business combinations
A business combination is a transaction or event that brings together two or more
separate entities into one reporting entity. Business combinations are classified into
business combinations involving entities under common control and business combinations
involving entities not under common control.
Business combination involving entities under common control
A business combination involving entities under common control is a business combination
in which all of the combining entities are ultimately controlled by the same party or
parties both before and after the combination, and that control is not transitory. For a
business combination involving entities under common control, the party that, on the
combination date, obtains control of another entity participating in the combination is
the acquiring party, while that other entity participating in the combination is a party
being acquired. Combination date is the date on which the acquiring party effectively
obtains control of the party being acquired.
Assets and liabilities that are obtained by the acquiring party in a business combination
shall be measured at their carrying amounts at the combination date as recorded by the
party being acquired. The difference between the carrying amount of the net assets
obtained and the carrying amount of the consideration paid for the combination (or the
aggregate face value of shares issued as consideration) shall be adjusted to capital
reserve. If the capital reserve is not sufficient to absorb the difference, any excess
shall be adjusted against retained earnings.
Business combination involving entities not under common control
A business combination involving entities not under common control is a business
combination in which all of the combining entities are not ultimately controlled by the
same party or parties both before and after the combination. For a business
combination involving entities not under common control, the party that, on the
acquisition date, obtains control of another entity participating in the combination is the
acquirer, while that other entity participating in the combination is the acquiree.
Acquisition date is the date on which the acquirer effectively obtains control of the
acquiree.
The acquirer shall measure the acquiree’s identifiable assets, liabilities and contingent
liabilities acquired in the business combination at their fair values on the acquisition
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Semi-annual Report 2011
date.
Where the sum of the fair value of the consideration transferred (or the fair value of the
issued equity securities) and the fair value of the acquirer’s previously held equity
interest in the acquiree exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference shall be recognized as goodwill and measured at
cost less any accumulated impairment losses. Where the sum of the fair value of the
consideration transferred (or the fair value of the issued equity securities) and the fair
value of the acquirer’s previously held equity interest in the acquiree is less than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference shall be accounted for according to the following requirements: (i) the
acquirer shall reassess the measurement of the fair values of the acquiree’s identifiable
assets, liabilities and contingent liabilities and measurement of the fair value of the
consideration transferred (or the fair value of the issued equity securities) and the fair
value of the acquirer’s previously held equity interest in the acquiree; (ii) if after that
reassessment, the sum of the fair value of the consideration transferred (or the fair value
of the issued equity securities) and the fair value of the acquirer’s previously held equity
interest in the acquiree is still less than the acquirer’s interest in the fair values of the
acquiree’s identifiable net assets, the acquirer shall recognize the remaining difference
immediately in the income statement for the current period.
6. Consolidated financial statements
The scope of consolidation of consolidated financial statements is determined based on
control, and includes the financial statements of the Company and its subsidiaries for the
year ended 31 December, 2010. A subsidiary is an enterprise or entity that is controlled
by the Group.
Consolidated financial statements are prepared using uniform reporting dates and
accounting policies. All significant intercompany transactions and balances within the
Group are eliminated on consolidation.
When the current loss belong to minorities of the subsidiary exceeds the beginning equity
of the subsidiary belong to minorities, the exceeded part will still deduct the equity
belong to minorities. The changes of the equity belong to minorities without loss of
control is regarded as capital transaction.
With respect to subsidiaries acquired through business combinations involving entities not
under common control, the operating results and cash flows of the acquiree should be
included in the consolidated financial statements, from the day that the Group gains
control, till the Group ceases the control of it. While preparing the consolidated
financial statements, the acquirer should adjust the subsidiary’s financial statements, on
the basis of the fair values of the identifiable assets, liabilities and contingent liabilities
recognized on the acquisition date.
With respect to subsidiaries acquired through business combinations involving entities
under common control, the operating results and cash flows of the acquiree should be
included in the consolidated financial statements from the beginning of the period in
which the combination occurs.
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7. Cash and cash equivalents
Cash comprises cash on hand and bank deposits which can be used for payment at any
time; Cash equivalents are short-term, highly liquid investments held by the Company,
that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
8. Foreign currency translation
The Company translates the amount of foreign currency transactions occurred into
functional currency.
The foreign currency transactions are recorded, on initial recognition in the functional
currency, by applying to the foreign currency amount at the spot exchange rate as at the
transaction dates. Foreign currency monetary items are translated using the spot
exchange rate quoted by the People’s Bank of China at the balance sheet date. The
exchange gains or losses arising from occurrence of transactions and exchange of
currencies, except for those relating to foreign currency borrowings specifically for
construction and acquisition of fixed assets capitalized, are dealt with in the profit and
loss accounts. Non-monetary foreign currency items measured at historical cost remain to
be translated at the spot exchange rate prevailing on the transaction date, and the
amount denominated in the functional currency should not be changed. Non-monetary
foreign currency items measured at fair value should be translated at the spot exchange
rate prevailing on the date when the fair values are determined. The exchange
difference thus resulted should be charged to the current income or capital surplus
account of the current period.
When preparing consolidated financial statements, the financial statements of the
subsidiaries presented in foreign currencies are translated into Renminbi as follows: asset
and liability accounts are translated into Renminbi at exchange rates ruling at the
balance sheet date; shareholders’ equity accounts other than retained profits are
translated into Renminbi at the applicable exchange rates ruling at the transaction dates;
items in income statement other than profit appropriation statement are translated into
Renminbi at spot exchange rates on transaction occurrence; total difference between
translated assets and translated liabilities and shareholders’ equity is separately listed as
“foreign currency exchange differences” below retained profits. The translation
difference arising from the settlement of oversea subsidiaries is charged to the current
liquidation profit and loss in proportion to the settlement ratio of the assets concerned.
Foreign currency cash flows and the cash flows of foreign subsidiaries should be
translated using the average exchange rate prevailing on the transaction month during
which the cash flows occur. The amount of the effect on the cash arising from the
change in the exchange rate should be separately presented as an adjustment item in the
cash flow statement.
9. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity.
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Recognition and derecognition
The Group recognizes a financial asset or a financial liability on its balance sheet, when
the Group becomes a party to the contractual provision of the instrument.
The Group derecognizes a financial asset (or part of a financial asset, or part of a
Company of similar financial assets) when the following conditions are met:
(1) the rights to receive cash flows from the asset have expired;
(2) the Group retains the rights to receive cash flows from the asset, or has assumed
an obligation to pay them in full without material delay to a third party under a
“pass-through” arrangement; or has transferred its rights to receive cash flows
from the asset and either (a) has transferred substantially all the risks and rewards
of the asset, or (b) has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
If the underlying obligation of a financial liability has been discharged or cancelled or has
expired, the financial liability is derecognized. If an existing financial liability is
replaced by the same creditor, with a new financial liability that has substantially
different terms, or if the terms of an existing financial liability are substantially revised,
such replacement or revision is accounted for as the derecognition of the original liability
and the recognition of a new liability, and the difference thus resulted is recognized in
profit or loss for the current period.
When buy or sell financial instruments under a normal way, financial instruments are
recognized or derecognized according to the transaction date accounting. A normal way
to buy or sell financial instruments refers to, according to the contract terms, receive or
deliver financial instruments within the period as required by legal regulation or
generally accepted guidelines. Transaction date refers to the date when the Group
committed to buy or sell financial instruments.
Classification and measurement of financial assets
Financial assets are, on initial recognition, classified into the following categories:
financial assets at fair value through profit or loss, held-to-maturity investments, loans
and receivables, available-for-sale financial assets, and the derivatives designated as
effective hedging instrument. The classification of financial assets is determined on
initial recognition. A financial asset is recognized initially at fair value. In the case of
financial assets at fair value through profit or loss, relevant transaction costs are directly
charged to the profit and loss of the current period; transaction costs relating to
financial assets of other categories are included in the amount initially recognized.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for
trading and those designated upon initial recognition as at fair value through profit or
loss. A financial asset held for trading is the financial asset that meets one of the
following conditions: the financial asset is acquired for the purpose of selling it in a short
term; the financial asset is a part of a group of identifiable financial instruments that are
collectively managed, and there is objective evidence indicating that the enterprise
recently manages this group for the purpose of short-term profits; the financial asset is a
derivative, except for a derivative that is designated as effective hedging instrument, or
a financial guarantee contract, or a derivative that is linked to and must be settled by
delivery of an unquoted equity instrument (without a quoted price from an active market)
whose fair value cannot be reliably measured. For such kind of financial assets, fair
values are adopted for subsequent measurement. All the realized or unrealized gains or
losses on these financial assets are recognized in profit or loss for the current period.
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Semi-annual Report 2011
Dividend or interest income related to financial assets at fair value through profit or loss
is recognized in profit or loss for the current period.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturity that an entity has the positive intention and
ability to hold to maturity. Such kind of financial assets are subsequently measured at
amortized cost using the effective interest method. Gains or losses arising from
derecognition, impairment or amortization are recognized in profit or loss for the current
period.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such kind of financial assets are
subsequently measured at amortized cost using the effective interest method. Gains or
losses arising from derecognition, impairment or amortization are recognized in profit or
loss for the current period.
Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are
designated as available for sale or are not classified as the above financial assets. After
initial recognition, available-for-sale financial assets are measured at fair value. The
premium/discount is amortized using effective interest method and recognized as
interest income or expense. A gain or loss arising from a change in the fair value of an
available-for-sale financial asset is recognized in other comprehensive income as a
component of capital reserve, except for impairment losses and foreign exchange gains
and losses resulted from monetary financial assets, until the financial asset is
derecognized or determined to be impaired, at which time the accumulated gain or loss
previously recognized in capital reserve is removed from capital reserve and recognized
in profit or loss for the current period. Interests and dividends relating to an
available-for-sale financial asset are recognized in profit or loss for the current period.
Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into the following
categories: financial liabilities at fair value through profit or loss, other financial
liabilities, and the derivatives designated as effective hedging instrument. The
classification of financial liabilities is determined on initial recognition. For financial
liabilities at fair value through profit or loss, relevant transaction costs are directly
recognized in profit or loss for the current period, and transaction costs relating to other
financial liabilities are included in the initial recognition amounts.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and those designated as at fair value through profit or loss. A financial liability
held for trading is the financial liability that meets one of the following conditions: the
financial liability is assumed for the purpose of repurchasing it in a short term; the
financial liability is a part of a group of identifiable financial instruments that are
collectively managed, and there is objective evidence indicating that the enterprise
recently manages this group for the purpose of short-term profits; the financial liability
is a derivative, except for a derivative that is designated and effective hedging
instrument, or a financial guarantee contract, or a derivative that is linked to and must
be settled by delivery of an unquoted equity instrument (without a quoted price form an
active market) whose fair value cannot be reliably measured. For such kind of financial
liabilities, fair values are adopted for subsequent measurement. All the realized or
unrealized gains or losses on these financial liabilities are recognized in profit or loss for
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Semi-annual Report 2011
the current period.
Other financial liabilities
After initial recognition, these financial liabilities are measured at amortized cost using
the effective interest method.
Derivative financial instruments
Derivative financial instruments are initially recognized at fair value on the date on
which a derivative contract is entered into and are subsequently revaluated at fair value.
Derivatives are carried as assets when the fair value is positive and as liabilities when the
fair value is negative.
Any gains or losses arising from changes in fair value on derivatives that do not qualify
for hedge accounting are directly recognized in the income statement.
Fair value of financial instruments
If there is an active market for a financial asset or financial liability, the Group
determines the fair value by using the quoted prices. If no active market exits for a
financial instrument, the Group establishes fair value by using a valuation technique.
Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties’ reference to the current fair value of another instrument
that is substantially the same, discounted cash flow analysis and option pricing models.
Impairment of financial assets
The Group assesses the carrying amount of a financial asset, at the balance sheet date. If
there is objective evidence that the financial asset is impaired, the Group makes
provision for the impairment loss. Objective evidence that a financial asset is impaired is
evidence arising from one or more events that occurred after the initial recognition of
the asset and that event has an impact on the estimated future cash flows of the
financial asset which can be reliably estimated.
Financial assets carried at amortized cost
If objective evidence shows that the financial assets carried at amortized cost are
impaired, the carrying amount of the financial asset shall be reduced to the present
value of the estimated future cash flow (excluding future credit losses that have not been
incurred). The amount of reduction is recognized as an impairment loss in the income
statement. Present value of estimated future cash flow is discounted at the financial
asset’s original effective interest rate and includes the value of any related collateral.
If a financial asset is individually significant, the Group assesses the asset individually for
impairment, and recognizes the amount of impairment in the income statement if there is
objective evidence of impairment. For a financial asset that is not individually
significant, the Group can include the asset in a group of financial assets with similar
credit risk characteristics and collectively assess them for impairment [or assess the asset
individually for impairment]. For financial assets that are not impaired upon individual
tests (including financial assets that are individually significant or insignificant),
impairment tests should be conducted on them again by including them in the group of
financial assets. Assets for which an impairment loss is individually recognized will not
be included in a collective assessment of impairment.
If, subsequent to the recognition of an impairment loss on a financial asset carried at
amortized cost, there is objective evidence of a recovery in value of the financial asset
which can be related objectively to an event occurring after the impairment was
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Semi-annual Report 2011
recognized, the previously recognized impairment loss is reversed and recognized in the
income statement. However, the reversal shall not result in a carrying amount of the
financial asset that exceeds what the amortized cost would have been had the
impairment not been recognized at the date the impairment is reversed.
Available-for-sale financial assets
When there is objective evidence that the asset is impaired, the cumulative loss from
declines in fair value that had been recognized directly in capital reserve are removed
from equity and recognized in the income statement. The amount of the cumulative loss
that is removed from capital reserves and recognized in the income statement (net of any
principal repayment and amortization) and current fair value, less any impairment loss on
that financial asset previously recognized in the income statement.
If, in a subsequent period, the fair value of a debt instrument classified as available for
sale increases and the increase can be related objectively to an event occurring after the
impairment was recognized in the income statement, the previously recognized
impairment loss shall be reversed with the amount of the reversal recognized in the
income statement. Impairment losses recognized in the income statement for a debt
instrument investment shall not be reversed through proit or loss.
Financial assets carried at cost
If objective evidence shows that the financial assets carried at cost are impaired, the
difference between the present value discounted at the prevailing rate of return of
similar financial assets and the book value of the financial asset are provided as a
provision. The impairment loss recognized cannot be reversed.
For long-term equity investments, which are accounted for according to the cost method
set out by Accounting Standards for Business Enterprises No. 2 – Long-term Equity
Investments and has no quoted market price in active markets, and whose fair values
cannot be reliably measured, their impairment should also be treated in accordance with
the above principle.
Transfer of financial assets
If the Group transfers substantially all the risks and rewards of ownership of the financial
asset, the Group derecognizes the financial asset; and if the Group retains substantially
all the risks and rewards of the financial asset, the Group does not derecognize the
financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset, the Group determines whether it has retained control of
the financial asset. In this case: (i) it the Group has not retained control, it derecognizes
the financial asset and recognize separately as assets or liabilities any rights and
obligations created not retained in the transfer; (ii) if the Group has retained control, it
continues to recognize the financial asset to the extent of its continuing involvement in
the transferred financial asset and recognizes an associated liability.
10. Accounts receivable
(1) Accounts receivable which is individually significant and analyzed individually for
provision
Criterion for individually The balance larger than 15 million of non-related
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Semi-annual Report 2011
significant items and analyzed parties
individually for provision
Method for individually significant Analyzed individually for provision and recognized as
items and analyzed individually for the difference between recoverable value and book
provision value
(2) Accounts receivable analyzed by group for provision
Criterion for group
Group 1 The balance other than individually significant items of non-related parties
Group 2 The balance of related parties
Method for the provision of group
Group 1 Analyzed for provision according to aging analysis
Group 2 Analyzed individually for provision and recognized as the difference
between recoverable value and book value
Within group, the provision analyzed according to aging analysis:
Accounts receivable Other receivables
Aging
Provision percentage (%) Provision percentage (%)
Within 1 year
Within 6 months 0 0
6 to 12 months 5 5
1 to 2 years 10 10
2 to 3 years 30 30
Above 3 years
3 to 4 years 50 50
4 to 5 years 80 80
Above 5 years 100 100
(3) Accounts receivable which is individually insignificant but analyzed individually for
provision
When there is objective evidence that the receivable is
Criterion for individually
impaired and the future recoverable possibility is little, the
analysis for provision
provision will be analyzed individually.
The provision is recognized as the difference between
Method for provision
recoverable value and book value
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Semi-annual Report 2011
11. Inventory
(1) The classification of inventory
Inventory includes raw materials, goods in transit, work in progress, finished goods,
consigned processing materials, and low-value consumables.
(2) The valuation of issued inventory
Inventory is initially carried at the actual cost. Inventory costs comprise all costs of
purchase, costs of conversion and other costs incurred in bringing the inventory to its
present location and condition.
Weighted average method is assigned to the determination of actual costs of inventories.
One-off writing off method is adopted in amortization of packaging materials and
low-value consumables.
(3) The net realizable value of inventory
At the balance sheet date, the inventory is stated at the lower of cost and net realizable
value. If the cost is higher than the net realizable value, provision for the inventory
should be made through profit or loss. If factors that resulted in the provision for the
inventory have disappeared and made the net realizable value higher than their book
value, the amount of the write-down should be reversed, to the extent of the amount of
the provision for the inventory, and the reversed amount should be recognized in the
income statement for the current period.
Net realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale.
The impairment provision should be made on a basis of each item of finished goods
according to the difference between cost and net realizable value. For large numbers of
inventories at relatively low unit prices, the provision for loss on decline in value of
inventories should be made by category.
(4) The inventory system
The Group applies a perpetual inventory system.
12. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and
associates, and capital investment which the Group does not control of the investee
enterprise, or does not have jointly control or significant influence on the investee
enterprise, the fair value of which cannot be reliably measured due to the fact they are
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Semi-annual Report 2011
not quoted in an active market.
(1) Initial investment cost
The long-term investments are initially recorded at cost on acquisition. It is accounted
for using either the cost method or the equity method as appropriate under the following
circumstances.
Cost method is applied to account for long-term equity investments, when the Group has
control of the investee enterprise, or does not have jointly control or significant
influence on the investee enterprise, the fair value of which cannot be reliably measured
due to the fact they are not quoted in an active market.
Under cost method, the long-term equity investment is valued at the cost of the initial
investment. Profit or cash dividends declared by the invested enterprise are recognized
as investment income for the current period. The amount of investment income
recognized is limited to the amount distributed out of accumulated net profit of the
invested enterprise that arises after the investment is made. The amount of profit or
cash dividends declared by the invested enterprise in excess of the above threshold is
treated as return on investment cost, and netted against the carrying amount of
investments.
The equity method is applied to account for long-term equity investments, when the
Group has jointly control, or significant influence on the investee companies.
Under equity method, when the initial investment cost of a long-term equity investment
exceeds the investing enterprise’s interest in the fair values of the investee’s identifiable
net assets at the acquisition date, the difference between them is accounted for as an
initial cost. As to the initial investment cost is less than the investing enterprise’s
interest in the fair values of the investee’s identifiable net assets at the acquisition date,
the difference shall be charged to the income statement for the current period, and the
cost of the long-term equity investment shall be adjusted accordingly.
(2) Subsequent measurement and recognition of profit or loss
Under equity method, the Group recognizes its share of post-acquisition equity in the
investee enterprise for the current period as a gain or loss on investment, and also
increases or decreases the carrying amount of the investment. When recognizing its share
in the net profit or loss of the investee entities, the Group should, based on the fair
values of the identifiable assets of the investee entity when the investment is acquired,
in accordance with the Group’s accounting policies and periods, after eliminating the
portion of the profits or losses, arising from internal transactions with joint ventures and
associates, attributable to the investing entity according to the share ratio (but losses
arising from internal transactions that belong to losses on the impairment of assets,
should be recognized in full), recognize the net profit of the investee entity after making
appropriate adjustments. The book value of the investment is reduced to the extent that
the Group’s share of the profit or cash dividend declared to be distributed by the
investee enterprise. However, the share of net loss is only recognized to the extent that
the book value of the investment is reduced to zero, except to the extent that the Group
has incurred obligations to assume additional losses. The Group shall adjust the carrying
amount of the long-term equity investment for other changes in owners’ equity of the
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Semi-annual Report 2011
investee enterprise (other than net profits or losses), and include the corresponding
adjustments in equity, which should be realized through profit or loss in subsequent
settlement of the respective long-term investment.
On settlement of a long-term equity investment, the difference between the proceeds
actually received and the carrying amount shall be recognized in the income statement
for the current period.
13. Investment real estates
Investment real estates are the real estates held for generating rent and/or capital
appreciation, including rented right to the use of land, the right to the use of land which
is held and prepared for transfer after appreciation, and the right to the use of rented
building.
The initial measurement of the investment real estate shall be made at its actual cost.
The follow-up expenses pertinent to an investment real estate shall be included in the
cost of the investment real estate, if the economic benefits pertinent to this real estate
are likely to flow into the enterprise, and, the cost of the investment real estate can be
reliably measured. Otherwise, they should be included in the current profits and losses
upon occurrence.
The group adopts the cost pattern to make follow-up measurement to the investment real
estate. The buildings are depreciated under straight-line method. The rights to the use of
land are amortized under straight-line method within its useful life.
14. Fixed assets
(1) Recognition of fixed assets
A fixed asset shall be recognized only when the economic benefits associated with the
asset will flow to the Group and the cost of the asset can be measured reliably.
Subsequent expenditure incurred for a fixed asset that meet the recognition criterial
shall be included in the cost of the fixed asset, and the book value of the component of
the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall
be recognized in the income statement in the period in which they are incurred.
Fixed assets are initially measured at actual cost on acquisition. The cost of a
purchased fixed asset comprises the purchase price, relevant taxes and any directly
attributable expenditure for bringing the asset to working condition for its intended use,
such as delivery and handling costs, installation costs and other surcharges.
Fixed assets are depreciated on straight-line basis. The estimated useful lives,
estimated residual values and annual depreciation rates for each category of fixed assets
are as follows:
(2) Depreciation method of fixed assets
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Semi-annual Report 2011
Yearly deprecation
Category Deprecation period Residual rate (%)
rate (%)
Buildings 20 to 40 years 3% 2.43%-4.85%
Machinery (Note) 10 to 20 years 3% 4.85%-9.7%
Vehicles 5 to 8 years 3% 12.13%-19.4%
Others 5 years 3% 19.4%
Note: the mould tools in machinery should be depreciated in proportionate to the
estimated production.
(3) Others
The Group reviews the useful life and estimated net residual value of a fixed asset and
the depreciation method applied at least at the end of each year and makes adjustments
if necessary.
15. Construction in progress
The cost of construction in progress is determined according to the actual expenditure
for the construction, including all necessary construction expenditure incurred during the
construction period, borrowing costs that should be capitalized before the construction
reaches the condition for intended use and other relevant expenses.
Construction in progress is transferred to fixed assets when the asset is ready for its
intended use.
16. Borrowing costs
Borrowing costs are interest and other costs incurred by the Group in connection with the
borrowing of the funds. Borrowing costs include interest, amortization of discounts or
premiums related to borrowings, ancillary costs incurred in connection with the
arrangement of borrowings, and exchange differences arising from foreign currency
borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized. A qualifying asset is an asset (an item
of property, plant and equipment and inventory etc.) that necessarily takes a substantial
period of time to get ready for its intended use of sale.
The capitalization of borrowing costs are as part of the cost of a qualifying asset shall
commence when:
(a) expenditure for the asset is being incurred;
(b) borrowing costs are being incurred; and
(c) activities that are necessary to prepare the asset for its intended use or sale are in
progress.
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Semi-annual Report 2011
Capitalization of borrowing costs shall cease when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale. And subsequent
borrowing costs are recognized in the income statement.
During the capitalization period, the amount of interest to be capitalized for each
accounting period shall be determined as follows:
(a) where funds are borrowed for a specific-purpose, the amount of interest to be
capitalized is the actual interest expense incurred on that borrowing for the period
less any bank interest earned form depositing the borrowed funds before being used
on the asset or any investment income on the temporary investment of those funds;
(b) where funds are borrowed for a general-purpose, the amount of interest to be
capitalized on such borrowings is determined by applying a weighted average
interest rate to the weighted average of the excess amounts of cumulative
expenditure on the asset over and above the amounts of specific-purpose
borrowings.
During the construction or manufacture of assets that are qualified for capitalization, if
abnormal discontinuance, other than procedures necessary for their reaching the
expected useful conditions, happens, and the duration of the discontinuance is over three
months, the capitalization of the borrowing costs is suspended. Borrowing costs incurred
during the discontinuance are recognized as expense and charged to the income
statement of the current period, till the construction or manufacture of the assets
resumes.
17. Intangible assets
The useful life of the intangible assets shall be assessed according to the estimated
beneficial period expected to generate economic benefits. An intangible asset shall be
regarded as having an indefinite useful life when there is no foreseeable limit to the
period over which the asset is expected to generate economic benefits for the Group.
The useful lives of the intangible assets are as follow:
Useful life
Land use right 25 to 61 years
Software 2 years
Trademark 15 years
Non-patent technology 5 years
Land use rights that are purchased or acquired through the payment of land use fees are
accounted for as intangible assets. With respect to Self-developed properties, the
corresponding land use right and buildings should be recorded as intangible and fixed
assets separately. As to the purchased properties, if encountered the reasonable
allocation of outlays between land and buildings, all assets purchased will be recorded as
fixed assets.
The cost of a finite useful life intangible asset is amortized using the straight-line
method during the estimated useful life. For an intangible asset with a finite useful life,
the Group reviews the estimated useful life and amortization method at least at the end
of each year and adjusts if necessary.
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Semi-annual Report 2011
18. Research and development expenditures
The Group classified the internal research and development expenditures as follows:
research expenditures and development cost.
The expenditures in research stage are charged to the current income on occurrence.
The expenditures in development stage are capitalized that meet all the conditions of (a)
it is feasible technically to finish intangible assets for use or sale; (b) it is intended to
finish and use or sell the intangible assets; (c) the usefulness of methods for intangible
assets to generate economic benefits shall be proved, including being able to prove that
there is a potential market for the products manufactured by applying the intangible
assets or there is a potential market for the intangible assets itself or the intangible
assets will be used internally; (d) it is able to finish the development of the intangible
assets, and able to use or sell the intangible assets, with the support of sufficient
technologies, financial resources and other resources; and The development expenditures
of the intangible assets can be reliably measured. Expenses incurred that don’t meet the
above requirements unanimously should be expensed in the income statement of the
reporting period.
The Company discriminates between research and development stage with the condition
that the project research comes into project-determination stage, in which the relevant
research complete all the fractionalization of products measurements and final product
scheme under final approval of management. The expenditures incurred in and before
project-determination stage is charged to the current income, otherwise it is recorded as
development cost.
19. Contingent liabilities
The Group recognizes an contingent liability when the obligation arising from a
contingency meets the following conditions:
- the obligation is a present obligation of the Group;
- it is probable that an outflow of economic benefits from the Group will be required
to settle the obligation;
- a reliable estimate can be made of the amount of the obligation.
Contingent liabilities are initially measured according to the current best estimate for
the expenditure necessary for the performance of relevant present obligations, with
comprehensive consideration given to factors such as the risks, uncertainty and time
value of money relating to contingencies. The book value of the contingent liabilities
should be reviewed at each balance sheet date. If there is definite evidence showing
that the book value cannot reflect the present best estimate, the book value should be
adjusted according to the best estimate.
20. Buy back of shares
The expenses or consideration paid for buy-back of capital instruments is a deduction of
total owner’s equity. The issue, buy-back, sell or write-off of capital instruments are not
50
Semi-annual Report 2011
recognized as profit or loss.
21. Revenue
Revenue is recognized only when an inflow of economic benefits is probable, the amount
of which can be reliably measured, and all of the following conditions are qualified.
Revenue from the sale of goods
The Group has transferred to the buyer the significant risks and rewards of ownership of
the goods; the Group retains neither continuing management involvement to the degree
usually associated with ownership nor effective control over the goods sold; the amount
of revenue can be measured reliably.
Revenue from the rendering of services
When the outcome of a transaction involving the rendering of services can be estimated
reliably at the balance sheet date, revenue associated with the transaction is recognized
using the percentage of completion method, or otherwise, the revenue is recognized to
the extent of costs incurred that are expected to be recoverable. The outcome of a
transaction involving rendering of services can be estimated reliably when all of the
following conditions are satisfied: the amount of revenue can be measured reliably; it is
probable that the associated economic benefits will flow to the Group; the stage of
completion of the transaction can be measured reliably; the costs incurred and to be
incurred for the transaction can be measured reliably. The Group determines the stage of
completion of a transaction involving the rendering of services by using the proportion of
services performed to date to the total services to be performed.
Interest income
It should be measured based on the length of time for which the Group’s cash is used by
others and the applicable effective interest rate.
Rental income
Rental income from operating leases is recognized by the lesser in the income statement
on a straight-line basis over the lease term.
22. Government grants
A government grant is recognized only when there is reasonable assurance that the entity
will comply with any conditions attached to the grant and the grant will be received.
Monetary grants are accounted for at received or receivable amount.
Non-monetary grants are accounted for at fair value. If there is no reliable fair value
available, the grants are accounted for at nominal amount. A grant relating to income,
which as compensation for future costs, is recognized as deferred income initially, and as
income when the related cost incurs. The grant as compensation for costs already
incurred should be recognized as income for the current period. A grant relating to assets
is recognized as deferred income initially, and as income evenly among the useful life of
the related assets. The grant accounted for at nominal amount is recognized as income
51
Semi-annual Report 2011
for the current period.
23. Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to
ownership of an asset. An operating lease is a lease other than a finance lease.
The Group recording the operating lease as a lessee
Lease payments under an operating lease are recognized by a lessee on a straight-line
basis over the lease term, and either included in the cost of another related asset or
charged to the income statement for the current period.
The Group recording the operating lease as a lesser
Rental income under a finance lease is recognized by a lesser on a straight-line basis over
the lease term, through profit or loss.
24. Employee benefits
Employee benefits are all forms of consideration given and other relevant expenditure
incurred by the Group in exchange for service rendered by employees. During the
accounting period that the employees render services to the Group, the employee
benefits payable is recognized as a liability. When the termination benefits fall due
more than 1 year after the balance sheet date, if the discounted value is material, it is
reflected in present value.
The employees of the Group participate in social insurance, such as pension insurance,
medical insurance, non-employment insurance, etc., and housing accumulation fund,
which is managed by local government and the relevant expenditure, is recognized, when
incurred, in the costs of relevant assets or the profit and loss for the current period.
When the Group terminates the employment relationship with employees before the end
of the employment contracts or provides compensation as an offer to encourage
employees to accept voluntary redundancy, a provision shall be recognized for the
compensation arising from termination of employment relationship with employees, with
a corresponding charge to the income statement for the current period, when both of
the following conditions are satisfied: (a) the Group has a formal plan for termination of
employment relationship, or has made an offer for voluntary redundancy, which will be
implemented immediately; (b) the Group cannot unilaterally withdraw from the
termination plan or the redundancy offer.
The same principle is applied to the early retirement plan, as it is for the
above-mentioned termination benefits. The salaries, social insurance premiums, etc., to
be paid for the early retired employees, during the period from the date when the
employees stop rendering service to the normal retirement date, should be recognized as
employee benefits payable and charged to the income statement of the current period,
when the above conditions for recognizing the termination benefit plan are satisfied.
52
Semi-annual Report 2011
25. Income taxes
Income tax comprises current and deferred tax. Income tax is recognized as an income or
an expense and include in the income statement for the current period, except to the
extent that the tax arises from a business combination or if it relates to a transaction or
event which is recognized directly in equity.
Current income tax liabilities or assets for the current and prior periods, are measured at
the amount expected to be paid (or recovered) according to the requirements of tax
laws.
For temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts, and temporary differences between the carrying
amounts and the tax bases of items, the tax bases of which can be determined for tax
purposes, but which have not been recognized as assets and liabilities, deferred taxes are
provided using the liability method.
A deferred tax liability is recognized for all taxable temporary differences, except:
(1) to the extent that the deferred tax liability arises from the initial recognition of
goodwill or the initial recognition of an asset or liability in a transaction which
contains both of the following characteristics: the transaction is not a business
combination and at the time of the transaction, it affects neither the accounting
profit nor taxable profit or loss.
(2) in respect of taxable temporary differences associated with investments in
subsidiaries, associates and interests in jointly-controlled enterprises, where the
timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
A deferred tax asset is recognized for deductible temporary differences, carry forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized except:
(1) where the deferred tax asset relating to the deductible temporary differences arises
from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
(2) in respect of deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred tax assets are only
recognized to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realized or the liability
is settled, according to the requirements of tax laws. The measurement of deferred tax
assets and deferred tax liabilities reflects the tax consequences that would follow from
the manner in which the Group expects at the balance sheet date, to recover the assets
or settle the liabilities.
At the balance sheet date, the Group reviews the book value of deferred tax assets. If it
is probable that sufficient taxable income cannot be generated to use the tax benefits of
deferred tax assets, the book value of deferred tax assets should be reduced. When it is
probable that sufficient taxable income can be generated, the amount of such reduction
53
Semi-annual Report 2011
should be reversed.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred taxes
related to the same taxable entity and the same taxation authority.
26. Changes in accounting policies and accounting estimates
Within the consolidated financial statements, the current loss belong to minorities of the
subsidiary exceeds the beginning equity of the subsidiary belong to minorities. According
to the articles of association of subsidiaries or agreement, the minorities do not have the
responsibility or do not have the ability to compensate the loss, so the loss deducts the
share of equity belong to minorities. According to the No.4 Interpretation of Accounting
Standards issued on July 2010, when the current loss belong to minorities of the
subsidiary exceeds the beginning equity of the subsidiary belong to minorities, the
exceeded part will still deduct the equity belong to minorities.
27. Impairment of assets
The Group determines the impairment of assets, other than the impairment of inventory,
deferred income taxes, financial assets, and long-term equity investment which is
measured by employing the cost method, for which there is no offer in the active market
and of which the fair value cannot be reliably measured, using the following methods:
The Group assesses at the balance sheet date whether there is any indication that an
asset may be impaired. If any indication exists that an asset may be impaired, the Group
estimates the recoverable amount of the asset and performs impairment tests. Goodwill
arising from a business combination and an intangible asset with an indefinite useful life
are tested for impairment at least at the end of every year, irrespective of whether there
is any indication that the asset may be impaired.
The recoverable amount of an asset is the higher of its fair value less costs to sell and
the present value of the future cash flow expected to be derived from the asset. The
Group estimates the recoverable amount on an individual basis. If it is not possible to
estimate the recoverable amount of the individual asset, the Group determines the
recoverable amount of the asset group to which the asset belongs. Identification of an
asset group is based on whether major cash flows generated by the asset group are
largely independent of the cash flows from other assets or asset groups.
When the recoverable amount of an asset or asset group is less than its carrying amount,
the carrying amount is reduced to the recoverable amount. The impairment of asset is
provided for and the impairment loss is recognized in the income statement for the
current period.
For the purpose of impairment testing, the carrying amount of goodwill acquired in a
business combination is allocated, on a reasonable basis, to related asset groups; if it is
impossible to allocate to the related asset groups, it is allocated to each of the related
sets of asset groups. Each of the related asset groups or related sets of asset groups is an
group or set of asset group that is able to benefit from the synergies of the business
combination and shall not be larger than a reportable segment determined by the Group.
54
Semi-annual Report 2011
When an impairment test is conducted on an asset group or a set of asset groups that
contains goodwill, if there is any indication of impairment, the Group firstly tests the
asset group or the set of asset groups excluding the amount of goodwill allocated for
impairment, i.e., it determines and compares the recoverable amount with the related
carrying amount and then recognize impairment loss if any. Thereafter, the Group tests
the asset group or set of asset groups including goodwill for impairment, the carrying
amount (including the portion of the carrying amount of goodwill allocated) of the
related asset group or set of asset groups is compared to its recoverable amount. If the
carrying amount of the asset group or set of asset groups is higher than its recoverable
amount, the amount of the impairment loss is firstly eliminated by and amortized to the
book value of the goodwill included in the asset group or set of asset groups, and then
eliminated by the book value of other assets according to the proportion of the book
values of assets other than the goodwill in the asset group or set of asset groups.
Once the above impairment loss is recognized, it cannot be reversed in subsequent
periods.
28. Profit Distribution
The cash dividend of the Group is recognized as liabilities after the approval of general
meeting of stockholders.
29. Significant accounting judgments and estimates
The preparation of the Company's financial statements requires management to make
judgments, estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the disclosure of contingent liabilities, at the
balance sheet date. However, uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amounts of
the assets or liabilities affected in the future.
Judgments
When applying the accounting policies of the Group, except for accounting estimates,
management will make accounting judgments which have significant effects on the
financial statements:
The Group makes a judgment on whether there is any sign of possible assets impairment
on the day of balance sheet date at least. If there is any sign of possible assets
impairment, the assets concerned should be subject to impairment test based on the
estimated recoverable amount. The recoverable amount shall be determined in light of
the higher one of the net amount of the fair value of the assets minus the disposal
expenses and the current value of the expected future cash flow of the assets. When
making an estimate of the present value of the future cash flow of an asset, the Group
should estimate the future cash flows of the asset or the relevant assets group, with the
appropriate discount rate selected to reflect the present value of the future cash flows.
Uncertainty of accounting estimates
55
Semi-annual Report 2011
The crucial assumptions of significant accounting estimates in future and other crucial
sources of estimated uncertainty, which may result in the significant adjustments to the
book value of the subsequent accounting period, are as the following:
Impairment of goodwill
Goodwill is subject to the impairment test yearly at least, which brings the estimates of
the use value of the assets group that is allocated in goodwill. When making an estimate
of the use value of the assets concerning goodwill, the Group should estimate the future
cash flows of the assets group concerned, with the appropriate discount rate to reflect
the present value of the cash flows.
Bad Debt Provisions
Provisions are made under the allowance method. For each individually significant
receivable, the impairment test should be conducted individually. Where there is
evidence that indicates impairment, the loss should be recognized with the respective
provision accrued, equaling to the difference between the present value of the future
cash flows and the book value of receivables. For other receivables concerned,
management should accrue the general provisions, along with the receivables individually
tested while no impairment incurred, taking in account the collectability.
Development Expenditures
When determining the capitalization amount, management should make assumptions such
as the expected cash flows of the assets related, the applicable discount rate and
expected benefit period.
Deferred Tax Assets
The Group should recognize the deferred income tax assets arising from all the existing
unutilized tax deficits and deductible temporary differences to the extent of the amount
of the taxable income which it is most likely to obtain and which can be deducted from
the deductible temporary differences. Enormous accounting judgments, as well as the tax
planning are compulsory for management to estimate the time and amount of prospective
taxable profits and thus determine the appropriate amount of the deferred tax assets
concerned.
III. Taxes
Categories of taxes and
Basis of tax Tax rate
surcharges
The invoiced value of sales of goods and 17%
rendering of services, and is payable by
the purchaser. The Group is required
Value added tax (“VAT”)
to pay the VAT it collects to the tax
authority, but may deduct the VAT it has
paid on eligible purchases.
Business tax Relevant revenue 1%-5%
Consumption tax Relevant revenue 5%
City maintenance and 7%
The turnover taxes paid
construction surcharge
Educational surcharge The turnover taxes paid 3%
Corporate income tax Taxable income 15% or 25%
56
Semi-annual Report 2011
IV. Consolidation scope
On June 30, 2011, the main subsidiaries of the Group are as follows:
Investment Total proportion Total
Registered of shareholders
Name of Registered Scope of by the proportion
capital (%) Code
Subsidiaries place business group of voting
(0,000)
(0,000) rights (%)
Direct Indirect
Manufacture
Nanjing Changan
and selling
Automobile Co., Nanjing 60,181 47,628 82.47 - 83.75 75410659-X
cars and
Ltd
spare parts
Manufacture
Hebei Changan
and selling
Automobile Co., Dingzhou 46,469 42,109 92.97 - 95.62 73872432-0
cars and
Ltd
spare parts
Seller and
agent of
Chongqing
import /
Changan
export
International Chongqing 1,376 1,307 95.00 - 95.00 20282099-8
services of
Automobile Sales
commodities
Co., Ltd
and
techniques
Chongqing
Seller of
Changan
Chongqing 4,850 cars and 4,850 100.00 - 100.00 20289809-0
Automobile Sales
spare parts
Co., Ltd
Chongqing
Seller of
Changan Special
Chongqing 500 cars and 250 50.00 - 50.00 74534852-X
Automobile sales
spare parts
Co., Ltd
Chongqing
Changan Seller of
Automobile Chongqing 3,000 cars and 3,000 100.00 - 100.00 75308943-3
supporting spare parts
service Co., Ltd.
Developer,
Chongqing
Manufacture
Changan new
r and seller
Engergy Chongqing 2,900 1,885 65.00 - 65.00 67613816-5
of
Automobile Co.
new-energy
Ltd
cars
Chongqing Research
Changan Europe and
Turin, Italy EUR 10 97 100.00 - 100.00 09372440017
Design Academy developmen
Co., Ltd. t of vehicles
Engine
project
planning,
project
Changan United management
Nottingha
Kingdom R&D , feasibility
m, United GDP 10 98 100.00 - 100.00
Center Co., studies,
Kingdom
Ltd. preliminary
research
and other
cutting-edge
technology
Although the Group owns more than half of the voting power of the following investees, it
57
Semi-annual Report 2011
does not have control over the investees as:
Investment Total proportion Total
Registered of shareholders
Name of Registered Scope of by the proportion
capital (%) Code
Subsidiaries place business group of voting
(0,000)
(0,000) rights (%)
Direct Indirect
Changan Ford Manufacturer
Mazda Auto- Chongqing USD35,144 and seller of 139,510 50.00 - 50.00 70937510-9
Mobile Co., Ltd cars
Manufacturer
Changan Ford and seller of
Mazda Engine Co., Nanjing USD 13,920 automobile 70,767 50.00 - 50.00 71785962-1
Ltd enegine and
spare parts
Manufacturer
Chongqing Changan
and seller of
Suziki Automobile Chongqing USD19,000 23,991 51.00 - 51.00 62190016-7
cars and spare
Co., Ltd.
parts
Manufacturers
Jiangling Holding and seller of
Nanchang 200,000 100,000 50.00 - 50.00 76703230-7
Co., Ltd. cars and spare
parts
The company does not have control over the four joint-ventures above, and their main finance
and management decision were controlled by the company and other shareholders. Therefore, it is
not included in scope of consolidated financial statements, and the retrospective adjustments have
been made.
V. Notes to the consolidated financial statements
1. Monetary capital
30 June, 2011 31 December, 2010
Cash 15,661.30 16,704.99
Deposit in bank 7,825,576,127.76 4,200,981,437.12
Other monetary capital 394,363,761.1 190,991,907.61
Total 8,219,955,550.23 4,391,990,049.72
2. Note Notes receivable
30 June, 2011 31 December, 2010
Trade acceptance 1,851,121,239.00 2,021,806,933.00
Bank acceptance 3,928,310,225.12 6,800,021,826.39
5,779,431,464.12 8,821,828,759.39
3. Accounts receivable and others
⑴ Accounts receivable
An aged analysis of the accounts receivable as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Within 1 year 585,087,773.59 383,161,327.97
1 to 2 years 13,040,343.53 18,282,977.62
2 to 3 years 8,628,019.59 3,926,131.36
58
Semi-annual Report 2011
Over 3 years 82,352,253.47 71,695,353.78
Less:Bad debt Provision 75,452,504.17 73,056,791.02
613,655,886.01 404,008,999.71
A type analysis of the accounts receivable as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Balance Provision Balance Provision
Item
Percen Percen Percen Percen
Amount tage Amount tage Amount tage Amount tage
(%) (%) (%) (%)
Individually
significant
items and
150,283,120.74 21.81% 21,410,982.64 14.25% 140,520,527.81 29.46% 21,574,276.53 15.35%
analyzed
individually for
provision
Accounts receivable analyzed as groups for provision
Group 1.
Accounts
receivable
analyzed for 114,400,307.31 16.60% 38,457,383.83 33.62% 102,280,303.05 21.44% 36,143,432.14 35.34%
provision
according to
aging analysis
Group 2.
Accounts
receivable 408,840,824.43 59.33% 0.00 0.00% 218,925,877.52 45.89% 0.00 0.00%
from related
parties
Group subtotal 523,241,131.74 75.93% 38,457,383.83 7.35% 321,206,180.57 67.33% 36,143,432.14 11.25%
individually
insignificant
items but
15,584,137.70 2.26% 15,584,137.70 100% 15,339,082.35 3.22% 15,339,082.35 100%
analyzed
individually for
provision
Total 689,108,390.18 --- 75,452,504.17 --- 477,065,790.73 --- 73,056,791.02 ---
Within Groups, Accounts receivable analyzed for provision according to aging analysis:
30 June, 2011 31 December, 2010
Aging Balance Balance
Provision Provision
Amount Percentage Amount Percentage
Within
67,664,406.75 59.15% 1,577,788.12 61,778,899.34 60.40% 254,979.17
1 year
1 to 2
7,575,292.93 6.62% 722,305.81 2,497,245.62 2.44% 249,724.56
years
2 to 3
1,817,519.64 1.59% 303,982.11 3,222,163.19 3.15% 966,648.96
years
59
Semi-annual Report 2011
Over
37,343,087.99 32.64% 35,853,307.79 34,781,994.90 34.01% 34,672,079.45
3years
3 to 4
2,670,905.30 2.33% 1,343,818.15 76,170.50 0.07% 38,085.25
years
4 to 5
434,711.50 0.38% 407,614.20 359,151.00 0.35% 287,320.80
years
Over 5
34,237,471.19 29.93% 34,101,875.44 34,346,673.40 33.58% 34,346,673.40
years
Total 114,400,307.31 100.00% 38,457,383.83 102,280,303.05 100.00% 36,143,432.14
(2) Other receivables
An aged analysis of the other receivables as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Within 1 year 330,930,268.98 116,467,029.73
1 to 2 years 34,333,245.38 1,330,536.60
2 to 3 years 1,204,634.79 8,500.00
Over 3 years 33,405,938.20 33,410,287.90
Less:Bad debt Provision 33,382,526.21 33,556,649.19
366,491,561.14 117,659,705.04
A type analysis of the other receivables as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Balance Provision Balance Provision
Item
Percen Percen Perce Percen
Amount tage Amount tage Amount ntage Amount tage
(%) (%) (%) (%)
Individually
significant
items and 49.96
249,485,480.89 62.39% 17,454,254.35 7.00% 75,555,042.96 24,199,000.00 32.03%
analyzed %
individually for
provision
Other receivables analyzed as groups for provision
Group 1. Other
receivables
analyzed for 45.57
143,643,860.81 35.92% 9,183,526.21 6.39% 68,916,565.62 2,612,903.54 3.79%
provision %
according to
aging analysis
45.57
Group subtotal 143,643,860.81 35.92% 9,183,526.21 6.39% 68,916,565.62 2,612,903.54 3.79%
%
individually
insignificant
items but
6,744,745.65 1.69% 6,744,745.65 100% 6,744,745.65 4.46% 6,744,745.65 100%
analyzed
individually for
provision
151,216,354.2
Total 399,874,087.35 --- 33,382,526.21 --- --- 33,556,649.19 ---
3
60
Semi-annual Report 2011
Within Groups, other receivables analyzed for provision according to aging analysis:
30 June, 2011 31 December, 2010
Aging Balance Balance
Provision Provision
Amount Percentage Amount Percentage
Within
98,899,042.44 68.85% 236,569.54 65,110,986.77 94.48% 389,804.96
1 year
1 to 2
29,720,238.25 20.69% 127,664.06 1,330,536.60 1.93% 133,053.66
years
2 to 3
1,204,634.79 0.84% 56,849.70 8,500.00 0.01% 2,550.00
years
Over
13,819,945.33 9.62% 8,762,442.91 2,466,542.25 3.58% 2,087,494.92
3years
3 to 4
11,738,495.49 8.17% 7,011,547.65 543,604.00 0.79% 271,802.00
years
4 to 5
6,773.44 0.00% 5,418.75 536,226.64 0.78% 428,981.31
years
Over 5
2,074,676.40 1.44% 1,745,476.51 1,386,711.61 2.01% 1,386,711.61
years
Total 143,643,860.81 100.00% 9,183,526.21 68,916,565.62 100.00% 2,612,903.54
4. Prepaments
An aged analysis of the prepayments as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Aging
Amount Percentage (%) Amount Percentage (%)
Within 1 year 308,200,705.48 99.72 258,849,412.56 86.92
1 to 2 years 781,743.03 0.25 38,954,298.21 13.08
2 to 3 years 89,069.10 0.03 -
Over 3 years -
Total 309,071,517.61 100.00 297,803,710.77 100.00
5. Inventory
30 June, 2011 31 December, 2010
Raw materials 474,239,056.95 510,295,091.65
Materials in transit 56,080,129.75 79,328,480.78
Work in progress 514,101,335.31 243,373,666.35
Commodity stock 2,865,144,364.43 1,748,106,396.08
Consigned processed material 0.00 13,305,561.35
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Semi-annual Report 2011
Low-value Consumables 121,003,201.57 62,533,756.92
Less: provision for value decline of inventory 114,929,125.66 120,606,185.89
Inventory net value 3,915,638,962.35 2,536,336,767.24
Changes in provision for value decline of inventory:
Item 31 December, 2010 Increase Decrease 30 June, 2011
Raw materials 97,549,059.58 0.00 3,978,340.67 93,570,718.91
Work in progress 2,723,235.02 156,674.84 0.00 2,879,909.86
Commodity stock 20,333,891.29 7,546,554.51 9,401,948.91 18,478,496.89
Low-value Consumables
Total 120,606,185.89 7,703,229.35 13,380,289.58 114,929,125.66
6. Long-term equity investments
31 December, 2010 Increase Decrease 30 June, 201 1
Cost method 105,809,274.00 105,809,274.00
Equity method 5,564,213,660.61 1,034,648,180.63 6,598,861,841.24
Less: impairment for
long-term equity
investments
Net value for long-term
5,670,022,934.61 1,034,648,180.63 6,704,671,115.24
equity investments
On 30 June, 2011, the long-term investments details with cost method are as follow:
31 December, 2010 Increase Decrease 30 June, 2011
China South Industry
Group Finance Co., 80,000,000 80,000,000
Ltd
Sichuan Glass Co.,
1,809,274 1,809,274
Ltd
Chongqing Ante
Import and Export 3,000,000 3,000,000
Co., Ltd
Zhong Fa Lian
21,000,000 21,000,000
Investment Co., Ltd
Total 105,809,274 105,809,274
On 30 June, 2011, the long-term investments details under equity method are as follow:
31 December, 2010 Increase Decrease 30 June, 2011
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Semi-annual Report 2011
Joint ventures：
Chongqing Changan
Suzuki Automobile Co., 1,278,115,624.71 37,703,351.31 1,315,818,976.02
Ltd
Jiangling Holding Co.,
1,206,654,839.34 180,715,161.29 1,387,370,000.63
Ltd
Changan Ford Mazda
2,707,612,398.70 806,626,269.62 3,514,238,668.32
Automobile Co., Ltd
Changan Ford Mazda
353,568,055.95 9,292,810.27 362,860,866.22
Engine Co., Ltd
Associates
Chongqing HelpGo
Information Technology 11,444,603.12 -234,166.99 11,210,436.13
Co., Ltd
Chongqing Xiyi
Automobile Linkage Rod 6,818,138.79 544,755.13 7,362,893.92
Co., Ltd
Total 5,564,213,660.61 1,034,648,180.63 6,598,861,841.24
7. Fixed assets
Item 31 December, 2010 Increase Decrease 30 June, 2011
I. Original price 7,463,422,405.93 362,825,877.59 145,606,820.00 7,680,641,463.52
Buildings 1,321,068,476.11 139,488,562.76 23,320,742.13 1,437,236,296.74
Machinery 4,217,675,770.71 115,789,845.72 39,057,361.19 4,294,408,255.24
Vehicles 55,822,631.95 8,071,097.44 229,476.50 63,664,252.89
Other Equipments 1,868,855,527.16 99,476,371.68 82,999,240.18 1,885,332,658.66
II. Accumulated
2,784,601,530.39 246,154,968.45 22,992,185.01 3,007,764,313.83
depreciation
Buildings 324,783,770.56 26,150,441.22 9,408,806.24 341,525,405.54
Machinery 1,783,495,137.72 120,513,720.85 11,137,833.63 1,892,871,024.94
Vehicles 22,653,696.40 2,877,448.60 614,888.09 24,916,256.91
Other Equipments 653,668,925.71 96,613,357.78 1,830,657.05 748,451,626.44
III. Net Value 4,678,820,875.54 116,670,909.14 122,614,634.99 4,672,877,149.69
Buildings 996,284,705.55 113,338,121.53 13,911,935.89 1,095,710,891.19
Machinery 2,434,180,632.99 -4,723,875.13 27,919,527.56 2,401,537,230.30
Vehicles 33,168,935.55 5,193,648.84 -385,411.59 38,747,995.98
Other Equipments 1,215,186,601.45 2,863,013.90 81,168,583.13 1,136,881,032.22
IV. Impairment
410,935,046.11 0.00 99,717,678.42 311,217,367.69
Provision
Buildings 0.00 0.00 0.00 0.00
Machinery 404,106,163.75 0.00 99,717,678.42 304,388,485.33
Vehicles 0.00 0.00 0.00 0.00
63
Semi-annual Report 2011
Other Equipments 6,828,882.36 0.00 0.00 6,828,882.36
V. Book Value 4,267,885,829.43 116,670,909.14 22,896,956.57 4,361,659,782.00
Buildings 996,284,705.55 113,338,121.53 13,911,935.89 1,095,710,891.19
Machinery 2,030,074,469.24 -4,723,875.13 -71,798,150.86 2,097,148,744.97
Vehicles 33,168,935.55 5,193,648.84 -385,411.59 38,747,995.98
Other Equipments 1,208,357,719.09 2,863,013.90 81,168,583.13 1,130,052,149.86
8. Construction in progress
31 December, Transfer to Other
Increase Decrease 30 June, 2011
2010 fixed assets deduction
Mini-bus
production 40,346,251.80 17,105,229.88 31,195,155.24 31,195,155.24 0.00 26,256,326.44
equipment
Yuzui motor
433,465,059.39 354,038,885.89 57,708,501.42 57,563,501.42 145,000.00 729,795,443.86
city project
Changan
industrial
178,508,889.22 83,739,322.17 126,807,650.64 126,250,657.64 556,993.00 135,440,560.75
garden
project
Sedan
production 32,759,619.50 41,668,793.12 16,487,933.08 16,487,933.08 0.00 57,940,479.54
equipment
Engine
653,499,793.89 360,833,669.31 86,804,264.86 86,804,264.86 0.00 927,529,198.34
production
Vehicle
research 126,705,592.30 66,489,295.28 12,472,275.07 12,472,275.07 0.00 180,722,612.51
institution
Car moulds 75,941,499.46 58,704,493.00 22,333,054.75 22,333,054.75 0.00 112,312,937.71
Hebei
Changan
new district 328,334,765.82 235,015,016.38 174,031,823.51 14,356,812.58 159,675,010.93 389,317,958.69
constructio
n project
Others 128,341,160.08 557,575,194.55 87,989,595.53 87,989,595.53 597,926,759.10
Total 1,997,902,631.46 1,775,169,899.58 615,830,254.10 455,453,250.17 160,377,003.93 3,157,242,276.94
9. Intangible assets
Item 31 December, 2010 Increase Decrease 30 June, 2011
I. Original price 1,140,936,345.06 446,615,255.52 0.00 1,587,551,600.58
Land use rights 593,637,192.27 206,374,062.36 0.00 800,011,254.63
Software use rights 85,918,260.48 38,328,434.81 0.00 124,246,695.29
Trademark use rights 36,770,000.00 175,000,000.00 0.00 211,770,000.00
Non-patent
424,610,892.31 26,912,758.35 0.00 451,523,650.66
technology
II. Accumulated
212,051,791.69 97,424,527.96 0.00 309,476,319.65
amortization
64
Semi-annual Report 2011
Land use rights 28,530,830.55 21,194,697.09 0.00 49,725,527.64
Software use rights 51,244,794.98 17,139,851.65 0.00 68,384,646.63
Trademark use rights 25,943,278.51 3,167,206.68 0.00 29,110,485.19
Non-patent
106,332,887.65 55,922,772.54 0.00 162,255,660.19
technology
III. Net Value 928,884,553.37 349,190,727.56 0.00 1,278,075,280.93
Land use rights 565,106,361.72 185,179,365.27 0.00 750,285,726.99
Software use rights 34,673,465.50 21,188,583.16 0.00 55,862,048.66
Trademark use rights 10,826,721.49 171,832,793.32 0.00 182,659,514.81
Non-patent
318,278,004.66 -29,010,014.19 0.00 289,267,990.47
technology
IV. Impairment
6,700,000.00 0.00 0.00 6,700,000.00
Provision
Land use rights 6,700,000.00 0.00 0.00 6,700,000.00
Software use rights 0.00 0.00 0.00 0.00
Trademark use rights 0.00 0.00 0.00 0.00
Non-patent
0.00 0.00 0.00 0.00
technology
V. Book Value 922,184,553.37 349,190,727.56 0.00 1,271,375,280.93
Land use rights 558,406,361.72 185,179,365.27 0.00 743,585,726.99
Software use rights 34,673,465.50 21,188,583.16 0.00 55,862,048.66
Trademark use rights 10,826,721.49 171,832,793.32 0.00 182,659,514.81
Non-patent
318,278,004.66 -29,010,014.19 0.00 289,267,990.47
technology
10. Development expenditure
Decrease
Item 31 December, 2010 Increase Charged to income Recognized as 30 June, 2011
Statement of the intangible
Current period assets
Automobile
204,312,934.30 465,552,480.92 330,843,526.42 746,957.05 338,274,931.75
Development
11. Deferred tax assets and liabilities
Recognized deferred tax assets and liabilities:
31 December, 2010 30 June, 2011
Item
Deferred tax assets
Provision for the impairment of assets 70,994,366.66 57,446,228.28
Accrued expenses and contingent
liabilities 215,336,190.19 305,778,983.80
Unpaid tech development expense and
advertisement expense 27,390,068.43 4,422,250.50
65
Semi-annual Report 2011
Other current liabilities – deferred income 94,236,500.00 81,886,500.00
Unpaid salary and bonus and others 26,834,990.67 23,274,813.31
Subtotal 434,792,115.95 472,808,775.89
Deferred tax liabilities
Available-for-sale financial assets on the
changes in fair value 23,113,125.00 25,296,375.00
12. Short-term loans
Item 31 December, 2010 30 June, 2011
Pledge loans 30,000,000.00 -
Mortgage loans - -
Bill discounting - -
Credit loans - -
13. Notes payable
Item 31 December, 2010 30 June, 2011
Commercial acceptance bill - -
Bank acceptance bill 4,887,600,348.93 7,465,625,110.40
Total 4,887,600,348.93 7,465,625,110.40
14. Accounts payable
On 30 June, 2011, there is no provision for the impairment of construction in
progress(On 31 December, 2010: nil).
On 30 June, 2011, there is no significant accounts payable whose aging is over one
year.
15. Advances receipts
On 30 June, 2011, within the aforesaid balance, there is no amount due to
shareholders that hold 5% or more of the Company’s voting shares. (31 December 2010:
nil)
On 30 June, 2011 and 31 December 2010, there are no significant advances receipts
of over one year.
16. Payroll payable
Item 31 December, 2010 Increase Payments 30 June, 2011
66
Semi-annual Report 2011
Salary, bonus, allowance 643,798,727.6 660,248,219.8 120,831,538.8
137,281,031.02
and subsidy 5 4 3
Employee benefit 779,016.84 19,192,036.17 20,487,989.17 -516,936.16
Labor fund and employee
59,423,746.48 17,320,305.12 16,990,127.06 59,753,924.54
education fund
162,833,548.0 160,043,622.5
Social insurance premium -1,899,123.37 890,802.13
7 7
Housing accumulation fund 4,775,159.94 30,097,667.25 30,063,925.53 4,808,901.66
873,242,284.2 887,833,884.1 185,768,231.0
Total 200,359,830.91
6 7 0
17. Taxes payable
Item 31 December, 2010 30 June, 2011
Value-added tax 115,160,508.25 -397,341,200.32
Consumption tax 165,546,213.07 121,421,957.39
Business tax 328,471.46 551,317.65
Corporate income tax 123,392,495.93 143,883,311.12
Individual Income tax 317,325.18 1,098,425.50
City maintenance and construction
13,069,232.82 -8,824,292.74
tax
Education additional expenses 6,682,989.93 -3,175,437.85
Others 345,629.58 -1,409,670.44
Total 424,842,866.22 -143,795,589.68
67
Semi-annual Report 2011
18. Other payables
Item 31 December, 2010 30 June, 2011
Dealer earnest money 121,304,098.70 52,614,934.88
Warranty 114,422,660.48 12,976,084.88
Repair fees 73,710,948.43 116,079,017.15
Advertisement fees 91,678,699.30 23,022,863.02
Sales bonus 4,156,564.00 0.00
Warehousing and transport fees 239,834,462.06 116,556,960.77
Loans temporarily 9,746,970.52 141,856,011.52
Information technology expense 13,865,545.18 150,366,121.18
Project funds and Project earnest money 210,546,243.18 105,930,539.23
Others 85,620,257.11 372,957,579.84
Relocation compensation 100,005,000.00 0.00
Other intercourse funds 52,150,000.00 0.00
Total 1,117,041,448.96 1,092,360,112.47
19. Contingent liabilities
Reasons for
Categoris of 31 December,
Increase 30 June, 2011 year-end cash in
Decrease
Expenses 2010
hand
maintenance
611,679,913.9 291,414,026.0 212,649,890.8 690,444,049.0
Products warranty expense drew
7 0 9 8
beforehand
Others 7,867,191.89 1,657,341.86 6,209,850.03
619,547,105.8 291,414,026.0 214,307,232.7 696,653,899.1
Total
6 0 5 1
20. Operating revenue and cost
From January to June, 2011 From January to June, 2010
Operating Operating
Operating cost Operating cost
revenue revenue
Main Business 13,939,874,001.11 12,006,362,704.54 16,029,407,679.42 12,874,313,867.46
Other Business 597,241,838.79 494,771,697.58 598,047,253.36 513,538,157.66
Total 14,537,115,839.90 12,501,134,402.12 16,627,454,932.78 13,387,852,025.12
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Semi-annual Report 2011
21. Business tax and surcharges
Item From January to June, 2011 From January to June, 2010
Business tax 2,122,961.34 1,118,313.18
Consumption tax 232,776,464.55 281,176,249.35
City maintenance and
construction tax 26,742,631.84 51,129,939.77
Education additional
expenses 13,525,136.05 24,547,851.28
Others 0.00 4,942.39
Total 275,167,193.78 357,977,295.97
22. Financial expenses
Item From January to June, 2011 From January to June, 2010
Interest expense 2,256,874.40 42,819,868.65
Less: interest income 88,634,175.28 50,578,770.32
capitalized interest 0.00 527,918.23
Exchange gain or loss 1,430,800.30 5,138,099.24
Others 813,611.94 2,582,989.99
Total -84,132,888.64 -565,730.67
23. Impairment loss on assets
Item From January to June, 2011 From January to June, 2010
Bad debt loss 2,221,590.17 6,728,663.67
Impairment provision of
3,724,888.68 -28,644,429.48
obsolete inventory
Impairment provision of
long-term equity 4,830,178.00
investments
Total 5,946,478.85 -17,085,587.81
24. Investment income
From January to June, 2011 From January to June, 2010
Long-term equity investment
1,034,648,180.63 975,094,449.15
income under cost method
Long-term equity investment
6,000,000.00 6,245,999.32
income under equity method
Long-term equity investment 22,155,290.91
69
Semi-annual Report 2011
income through disposal
Total 1,040,648,180.63 1,003,495,739.38
VI. Notes to the Company’s financial statements
1. Accounts receivable and others
⑴ Accounts receivable
An aged analysis of the accounts receivable as at the balance sheet date is as follows:
30 June, 2011 31 December, 20100
Within 1 year 711,840,548.82 528,418,488.90
1 to 2 years 12,688,108.72 18,722,977.62
2 to 3 years 7,300,124.44 12,773,329.46
Over 3 years 68,125,901.23 73,288,413.45
Less:Bad debt Provision 60,852,008.09 58,456,294.94
739,102,675.12 574,746,914.49
A type analysis of the accounts receivable as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Balance Provision Balance Provision
Item
Percen Percen Perce Percen
Amount tage Amount tage Amount ntage Amount tage
(%) (%) (%) (%)
Individually
significant
items and 15.23
94,043,677.08 11.76% 21,410,982.64 22.77% 96,465,198.81 21,574,276.54 22.36%
analyzed %
individually for
provision
Accounts receivable analyzed as groups for provision
Group 1.
Accounts
receivable
11.77
analyzed for 83,724,398.83 10.47% 38,457,383.83 45.93% 74,528,087.13 35,898,376.78 48.17%
%
provision
according to
aging analysis
Group 2.
Accounts
461,226,281.8 72.84
receivable 621,202,965.68 77.65%
7 %
from related
parties
535,754,369.0 84.61
Group subtotal 704,927,364.51 88.12% 38,457,383.83 5.46% 35,898,376.78 6.70%
0 %
individually
insignificant
983,641.62 0.12% 983,641.62 100% 983,641.62 0.16% 983,641.62 100%
items but
analyzed
70
Semi-annual Report 2011
individually for
provision
633,203,209.4
Total --- --- --- ---
799,954,683.21 60,852,008.09 3 58,456,294.94
Within Groups, Accounts receivable analyzed for provision according to aging analysis:
30 June, 2011 31 December, 2010
Aging Balance Balance
Provision Provision
Amount Percentage Amount Percentage
Within 1
year 38,286,574.78 45.73% 1,577,788.12 34,271,738.78 45.98% 254,979.17
1 to 2
years 7,223,058.12 8.63% 722,305.81 2,497,245.62 3.35% 249,724.56
2 to 3
years 1,013,273.69 1.21% 303,982.11 3,222,163.19 4.32% 966,648.96
Over
3years 37,201,492.24 44.43% 35,853,307.79 34,536,939.54 46.34% 34,427,024.09
3 to 4
years 2,664,905.30 3.18% 1,343,818.15 76,170.50 0.10% 38,085.25
4 to 5
years 434,711.50 0.52% 407,614.20 359,151.00 0.48% 287,320.80
Over 5
years 34,101,875.44 40.73% 34,101,875.44 34,101,618.04 45.76% 34,101,618.04
Total 83,724,398.83 100% 38,457,383.83 74,528,087.13 100.00 35,898,376.78
(2) Other receivables
An aged analysis of the other receivables as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Within 1 year 335,297,674.86 100,570,393.40
1 to 2 years 29,646,299.60 734,321.60
2 to 3 years 505,525.12 8,500.00
Over 3 years 2,621,403.54 2,580,505.65
Less:Bad debt Provision 2,438,780.56 2,612,903.54
365,632,122.56 101,280,817.11
A type analysis of the other receivables as at the balance sheet date is as follows:
30 June, 2011 31 December, 2010
Balance Provision Balance Provision
Item
Percen Percen Perce Percen
Amount tage Amount tage Amount ntage Amount tage
(%) (%) (%) (%)
71
Semi-annual Report 2011
Individually
significant
items and 25.25
258,738,160.11 70.30 26,234,000.00
analyzed %
individually for
provision
Other receivables analyzed as groups for provision
Group 1. Other
receivables
analyzed for 74.75
109,332,743.01 29.70 2,438,780.56 2.23% 77,659,720.65 2,612,903.54 3.36%
provision %
according to
aging analysis
74.75
Group subtotal 109,332,743.01 29.70 2,438,780.56 2.23% 77,659,720.65 2,612,903.54 3.36%
%
individually
insignificant
items but
analyzed
individually for
provision
103,893,720.6
Total 368,070,903.12 --- 2,438,780.56 --- --- 2,612,903.54 ---
5
Within Groups, other receivables analyzed for provision according to aging analysis:
30 June, 2011 31 December, 2010
Aging Balance Balance
Provision Provision
Amount Percentage Amount Percentage
Within
1 year 76,559,514.75 70.02% 236,569.54 73,854,141.80 94.48% 389,804.96
1 to 2
years 29,646,299.60 27.12% 127,664.06 1,330,536.60 1.93% 133,053.66
2 to 3
years 505,525.12 0.46% 39,000.00 8,500.00 0.01% 2,550.00
Over
3years 2,621,403.54 2.40% 2,035,546.96 2,466,542.25 3.58% 2,087,494.92
3 to 4
years 543,604.00 0.50% 271,802.00 543,604.00 0.79% 271,802.00
4 to 5
years 6,773.44 0.01% 5,418.75 536,226.64 0.78% 428,981.31
Over 5
years 2,071,026.10 1.89% 1,758,326.21 1,386,711.61 2.01% 1,386,711.61
Total 109,332,743.01 100% 2,438,780.56 77,659,720.65 100% 2,612,903.54
2. Long-term equity investments
31 December, 2010 Increase Decrease 30 June, 2011
Cost method 1,080,224,303.40 4,000,000.00 5,500,000.00 1,078,724,303.40
Equity method 5,564,213,660.61 1,034,648,180.63 6,598,861,841.24
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Semi-annual Report 2011
Net value for long-term
6,644,437,964.01 1,038,648,180.63 5,500,000.00 7,677,586,144.64
equity investments
On 30 June, 2011, the long-term investments details under cost method are as follow:
Investee 31 December, 2010 Increase Decrease 30 June, 2011
Nanjing Changan
413,805,259.00 413,805,259.00
Automobile Co., Ltd
Hebei Changan
432,485,236.00 4,000,000.00 436,485,236.00
Automobile Co., Ltd
Chongqing Changan
Automobil
13,068,580.00 13,068,580.00
International Sales
Service Co., Ltd
Chongqing Changan
Automobile Service 29,700,000.00 29,700,000.00
Co., Ltd
Chongqing Changan
Automobile Sales Co., 48,500,000.00 48,500,000.00
Ltd
Chongqing Changan
Automobile Sales 13,550,000.00 5,500,000.00 8,050,000.00
Subsidiary Company
Chongqing Changan
Special Automobile 2,500,000.00 2,500,000.00
Sales Co., Ltd
Changan Europe R&D
974,020.00 974,020.00
Center Co., Ltd.
Chongqing Changan
new Engergy 18,850,000.00 18,850,000.00
Automobile Co. Ltd
China South Industry
Group Finance Co., 80,000,000.00 80,000,000.00
Ltd
Chongqing Ante
Import and Export 3,000,000.00 3,000,000.00
Co., Ltd
Sichuan Glass Co.,
1,809,274.00 1,809,274.00
Ltd
Zhong Fa Lian
6,000,000.00 6,000,000.00
Investment Co., Ltd
Total 1,080,224,303.40 4,000,000.00 5,500,000.00 1,078,724,303.40
On 30 June, 2011, the long-term investments details under equity method are as follow:
Investee 31 December, 2010 Increase Decrease 30 June, 2011
Joint ventures：
Chongqing Changan
1,278,115,624.71 37,703,351.31 18,850,000.00
Suzuki Automobile
73
Semi-annual Report 2011
Co., Ltd
Jiangling Holding Co.,
1,206,654,839.34 180,715,161.29 1,387,370,000.63
Ltd
Changan Ford Mazda
2,707,612,398.70 806,626,269.62
Automobile Co., Ltd
Changan Ford Mazda
353,568,055.95 9,292,810.27 362,860,866.22
Engine Co., Ltd
Associates
Chongqing HelpGo
Information 7,589,983.84 63,321.76 7,653,305.60
Technology Co., Ltd
Chongqing Xiyi
Automobile Linkage 6,818,138.79 544,755.13 7,362,893.92
Rod Co., Ltd
Total 5,564,213,660.61 1,034,648,180.63 6,598,861,841.24
3. Operating revenue and cost
From January to June, 2011 From January to June, 2010
Item
Operating revenue Operating cost Operating revenue Operating cost
Main business 10,379,906,091.86 8,873,678,049.50 10,647,826,495.36 8,488,995,509.05
Other business 688,815,022.72 565,234,554.43 594,678,125.39 551,360,888.58
Total 11,068,721,114.58 9,438,912,603.93 11,242,504,620.75 9,040,356,397.63
4. Investment Income
From January to June, 2011 From January to June, 2010
Long-term equity investment
-5,263,916.67 10,000,000.00
income under cost method
Long-term equity investment
1,034,648,180.63 975,094,449.15
income under equity method
Long-term equity investment
7,178,583.76
income through disposal
Total 1,029,384,263.96 992,273,032.91
VII. Related party relationships and transactions
1. Criteria for the identification of related parties
If a party has the power to control, jointly control or exercise significant influence over
another party, they are regarded as related parties. Two or more parties are also
74
Semi-annual Report 2011
regarded as related parties if they are subject to control, joint control or significant
influence from the same party.
The following are related parties of the Group:
(1) parents of the Group;
(2) subsidiaries of the Group;
(3) other enterprises that are controlled by the same parent as the Group;
(4) investors who have joint control over the Group;
(5) investors who can exercise significant influence over the Group;
(6) joint ventures in which the Group is a investor;
(7) associates of the Group;
(8) principal individual investors of the Group, and close family members of such individuals;
(9) key management personnel of the Group or its parent, and close family members of such
individuals;
(10) other enterprises that are controlled, jointly controlled, or significantly influenced by the
Group’s principal individual investors, key management personnel, or close family members of
such individuals.
Enterprises are not regarded as related parties simply because they are under the
common control from the State, if no other related party relationships exist between
them.
2. Parent and subsidiaries
Place of Proportion of
Nature of the Corporate Legal
Parent registratio shares in the
business type representative
n Company
China Manufacture and
Changan sale of Company
Automobile Beijing automobiles, 45.71% limited by Xu liu ping
Group engine, and shares
Co ,Ltd components
The registered capital and paid-up capital is unchanged in 2010.
Refer to Note IV “Scope of consolidation for consolidated financial statements” for
details of the Group’s subsidiaries.
3. Other related parties
Related parties Relationship
China South Industries Group Corporation Ultimate holding company
Changan Ford Mazda Engine Co., Ltd Joint venture
Changan Ford Mazda Automobile Co., Ltd Joint venture
Chongqing Changan Suzuki Automobile Co., Ltd Joint venture
Jiangling Holding Co., Ltd Joint venture
Chongqing HelpGo Information Technology Co.,
Associate
Ltd
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Semi-annual Report 2011
Related parties Relationship
China Changan Automobile Co., Ltd - Jian'an
Automobile Bridge Branch (hereafter referred to Branch of parent
as “Jian'an Automobile Bridge Branch”)
China Changan Automobile Co., Ltd – Chongqing
Tsingshan Transmission Branch (hereafter
Branch of parent
referred to as “Chongqing Tsingshan Transmission
Branch”)
South Tianhe Chassis System Co., Ltd Controlled by the same parent company
South Yingte Air-conditioner Co, .Ltd Controlled by the same parent company
Chongqing Changfeng Jiquan Machinery Co., Ltd Controlled by the same parent company
Chongqing Changrong Machinery Co., Ltd Controlled by the same parent company
Chongqing Automobile Air-conditioner Co., Ltd Controlled by the same parent company
Hafei Motor Co., Ltd. Controlled by the same parent company
Dongan Auto Engine Co., Ltd. Controlled by the same parent company
Harbin Dongan Automotive Engine Manufacturing
Controlled by the same parent company
Co., Ltd.
Jiangxi Changhe Automobile Co., Ltd. Controlled by the same parent company
Jiangxi Changhe Suzuki Automobile Co., Ltd. Controlled by the same parent company
Chongqing Anfu Automobile Co., Ltd Controlled by the same parent company
Chongqing Xiyi Automobile Linkage Rod Co., Ltd Associate of the parent company
Sichuan Ningjiang Shanchuan Machinery Co, Ltd Controlled by the same ultimate holding company
Baoding Changan Car Manufacturing Co., Ltd Controlled by the same ultimate holding company
Chongqing Changan Construction Co., Ltd Controlled by the same ultimate holding company
Chongqing Changan Min Sheng Logistics Co., Ltd. Controlled by the same ultimate holding company
Chongqing Jiangling Construction Co., Ltd Controlled by the same ultimate holding company
Sichuan Hongguang Machinery and Electrics Co.,
Controlled by the same ultimate holding company
Ltd
Chongqing Changan Kuayue Automobile Co., Ltd Controlled by the same ultimate holding company
Beijing Beiji Mechanical and Electrical Industry
Controlled by the same ultimate holding company
Co., Ltd
Chongqing Changan Real Estate Development Co.,
Controlled by the same ultimate holding company
Ltd
China South Industry Group Finance Co., Ltd Controlled by the same ultimate holding company
Changan Industries Group Co. Ltd Controlled by the same ultimate holding company
Chengdu Lingchuan Vehicle Oil Tank Co., Ltd Controlled by the same ultimate holding company
Chengdu Lingchuan Special Industry Co., Ltd Controlled by the same ultimate holding company
Chengdu Wanyou Economic Technological
Controlled by the same ultimate holding company
Development Co., Ltd
Chengdu Wanyou Filter Co., Ltd Controlled by the same ultimate holding company
Hubei Xiaogan Huazhong Automobile Light Co.,
Controlled by the same ultimate holding company
Ltd
Southwest Industries Corporation Controlled by the same ultimate holding company
Yunnan Xiyi Industries Co., Ltd Controlled by the same ultimate holding company
Chongqing Dajiang Millison Die-Casting Co., Ltd Controlled by the same ultimate holding company
Chongqing Dajiang Xinda Vehicles Shares Co., Ltd Controlled by the same ultimate holding company
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Semi-annual Report 2011
Related parties Relationship
Chongqing Dajiang Yuqiang Plastic Co., Ltd Controlled by the same ultimate holding company
Chongqing Jianshe Automobile Air-conditioner
Controlled by the same ultimate holding company
Co., Ltd
Chongqing Jiangda Aluminum Alloy Wheel Co., Ltd Controlled by the same ultimate holding company
Chongqing Qingshan Sales Co., Ltd Controlled by the same ultimate holding company
Chongqing Shangfang Automobile Fittings Co., Ltd
Controlled by the same ultimate holding company
Chongqing Wanbing Material Co., Ltd Controlled by the same ultimate holding company
Chongqing Wanyou Economic Development Co.,
Controlled by the same ultimate holding company
Ltd
Chongqing Wanyou Auto Sales and Service
Controlled by the same ultimate holding company
Corporation
Chongqing Yihong Engineering Plastic Products
Controlled by the same ultimate holding company
Co., Ltd
Guangxi Wanyou Auto Sales and Service Co., Ltd Controlled by the same ultimate holding company
Guizhou Wanyou Auto Sales and Service Co., Ltd Controlled by the same ultimate holding company
Jieyang Wanyou Auto Sales and Service Co., Ltd Controlled by the same ultimate holding company
Yunnan Wanyou Auto Sales and Service Co., Ltd Controlled by the same ultimate holding company
Foshan Wangyou Auto Sales and Service Co ,Ltd Controlled by the same ultimate holding company
Liuzhou Wangyou Auto Sales and Service Co ,Ltd Controlled by the same ultimate holding company
China Changan Automobile Co., Ltd – Chongqing
Controlled by the same ultimate holding company
Gunangda Sales Co ,Ltd
Longchang Shanchuan Shock-absorbing Vehicles
Controlled by the same ultimate holding company
Parts Co., Ltd
4. Major transactions between the Group and its related parties
(1) Sales of goods and services to related parties (the transactions below not
including tax).
From January to June, 2011 From January to June, 2010
Total 2,540,747,163.24 2,630,985,740.67
(2) Purchases of goods and services to related parties.
From January to June, 2011 From January to June, 2010
Total 3,789,171,334.10 3,625,914,468.79
(3) Other major related-party transactions.
Expenses of integrated service charges
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Semi-annual Report 2011
Content of From January to From January to
Related parties
transaction June, 2011 June, 2010
Changan Industries Group Payment of
11,724,300.00
Co., Ltd trademark royalties
Changan Industries Group Payment of land
7,824,102.51 7,841,346.00
Co., Ltd rental fees
Changan Industries Group Payment of building
16,401,668.90 14,630,384.00
Co., Ltd rental fees
Changan Industries Group Payment of water,
111,879,937.35 121,935,914.00
Co., Ltd electricity and gas fees
Changan Industries Group Payment of fire
5,576,032.98 5,509,971.00
Co., Ltd fighting fees
Changan Industries Group
Others 6,333,551.38 4,756,124.00
Co., Ltd
Chongqing Changan Real Estate Payment of building
2,367,364.00 3,029,108.00
Development Co., Ltd rental fee
Hafei Motor Co., Ltd Payment of utilities 11,819,900.00 2,451,175.00
Jiangxi Changhe
Payment of utilities 488,158.74 81,359.79
Automobile Co., Ltd
Total 162,690,715.86 171,959,681.79
Purchases of the trademark
Content of From January to From January to
Related parties
transaction June, 2011 June, 2010
Changan Industries Group Purchases of the
175,000,000.00
Co., Ltd trademark
Purchase of project materials
From January to From January to
Related parties
June, 2011 June, 2010
Chongqing Changan Construction Co., Ltd 362,877,228.45 63,898,527.00
Chongqing HelpGo Information Technology Co.,
4,511,350.33 6,239.00
Ltd
Chongqing Changan Min Sheng Logistics Co., Ltd. 7,888,695.29 0
Changan Industries Group Co. Ltd 304,476.00 1,226,000.00
Total 375,581,750.07 65,130,766.00
Interest Income
From January to From January to
Related parties
June, 2011 June, 2010
China South Industry Group Finance Co., Ltd 5,946,343.60 2,781,358.00
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Semi-annual Report 2011
(4) Amounts due from/to related parties.
Notes receivable
30 June, 2011 31 December, 2010
Total 1,083,207,122.00 1,788,410,000.00
Accounts receivable
30 June, 2011 31 December, 2010
Total 420,883,352.83 218,925,877.52
Prepayments
30 June, 2011 31 December, 2010
Total 6,980,129.44 6,055,927.00
Notes payable
30 June, 2011 31 December, 2010
Total 527,461,562.53 534,538,251.96
Accounts payable
30 June, 2011 31 December, 2010
Total 1,014,671,004.65 652,496,559.29
Advances from customers
30 June, 2011 31 December, 2010
Total 182,165,916.54 92,329,348.99
Other payables
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Semi-annual Report 2011
30 June, 2011 31 December, 2010
Total 291,088,549.26 254,977,593.41
(5) Cash deposited in related parties
Related parties 30 June, 2011 31 December, 2010
China South Industry Group
671,001,196.86 496,480,766.89
Finance Co., Ltd
(6) Loans from related parties
Short-term loans
Related parties 30 June, 2011 31 December, 2010
China South Industry Group
0 30,000,000.00
Finance Co., Ltd
Long-term loans
Related parties 30 June, 2011 31 December, 2010
China South Industry Group
0 76,000,000.00
Finance Co., Ltd
VIII. Contingencies
As on 30 June, 2010, there are no contingencies that need to be disclosed.
IX. Events after the balance sheet date
The profit distribution plan of 2010 is made in the company’s 2010 annual shareholders’
meeting which was held on May 18th, 2011.The plan was as follow: base on current total
capital shares of 2,685,823,637 at the end of 2010, donate 4 bonus shares and interest of
0.80 RMB (tax included) upon each 10 shares to all shareholders. Besides, base on current
total capital shares of 2,685,823,637 at the end of 2010, capitalizing of common reserves
will be 4 shares upon each 10 shares to all shareholders. A share interest rights
registration date is 6th July 2011, Ex. Right and ex. dividend date is 7th July 2011. B
share final dealing date is 6th July 2011, ex dividend date is 7th July 2011, and registry
date is 11th July 2011. After this distribution of profits, the total of capital shares will
increase up to 4,834,482,546 shares
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Semi-annual Report 2011
X. Provision for the impairment loss of assets
Opening balance Deductions Closing balance
Items on 31 December, Provision
on 30 June,201
2010 Reversal Write-off
1.Bad debt provision 106,613,440.21 2,221,590.17 108,835,030.38
2.Provision for obsolete
120,606,185.89 7,703,229.35 3,9 78, 34 0. 67 9,401,948.91 114,929,125.66
inventory
3. Provision for the impairment
of available-for-sale financial
assets
4.Provision for the impairment
of held-to-maturity investments
5.Provision for the impairment
of long-term equity investments
6.Provision for the impairment
of investmental realty
7.Provision for the impairment
410,935,046.11 99,717,678.42 311,217,367.69
of fixed assets
8.Provision for the impairment
of constructional materials
9.Provision for the impairment
of Construction in progress
10.Provision for the impairment
of productive assets
11.Provision for the impairment
of oil gas assets
12.Provision for the impairment
6,700,000.00 6,700,000.00
of intangible assets
13.Provision for the impairment
73,465,335.00 73,465,335.00
of goodwill
14.others
Total 718,320,007.21 9,924,819.52 3,9 78, 34 0. 67 109,119,627.33 615,146,858.73
XI. Net profit except non-recurring profit and loss
Amount from
Item January to Explanation
June, 2011
The mainly income is a subsidy of
39.4 million Yuan for new product
from the Finance Bureau of
Profit and loss arising from disposal of
919,460.27 Jiangbei District and a subsidy of
non-current assets
44.89 million Yuan for proving
ground from he Finance Bureau of
Dianjiang county.
Government grants 88,857,908.34
Other non-operating income and 15,188,904.34
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Semi-annual Report 2011
expenses
Effect on income tax -17,087,610.78
Effect on minority shareholders -911,837.07
Total 86,966,825.10
XII. Reconciliation of the net profits presented under the PRC
accounting standards and International Financial Reporting
Standards (“IFRS”)
From January to
30 June,2011
Item June,2011
Net assets Net profits
Account report according to the enterprise accounting
15,123,561,188.97 1,040,060,233.01
rule and system under the PRC.
Adjustment of according to international accounting rules：
Payment to currency shareholders of A share cash
-71,284,065.00
opposite price.
Account report according to the international finance
15,052,277,123.97 1,040,060,233.01
report rules.
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Semi-annual Report 2011
VIII Documents for Future Reference
1. semi-annual report with the signature of chairman
2. Financial reports with signatures and stamps of the legal representative, the chief
accountant and the chief of accounting organization.
3. All the original documents and manuscripts of the Company which has been disclosed
in the reporting period in the newspapers designated by China Securities Regulatory
Commission
4. Article of Association
5. Semi-annual reports disclosed in other securities markets.
6. Other relevant document.
Chairman of BOD: Xu Liuping General Manager: Zhang Baolin
Chongqing Changan Automobile Co., Ltd
Aug.30, 2011
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