Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chongqing Changan Automobile Company Limited 2020 Semi-annual Report August 2020 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 1 Important Notice, Contents, and Definitions The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Executives of the company hereby guarantee that no false or misleading statement or major omission was made to the materials in this report and that they will assume all the responsibilities, individually and jointly, for the trueness, accuracy and completeness of the contents of this report. All the directors attended the board meeting for reviewing the semi-annual report. For the first half of 2020, the Company has no plans of cash dividend, no bonus shares and no share converted from capital reserve. The Chairman of the Board Zhu Huarong, the Chief Financial Officer Zhang Deyong and the responsible person of the accounting institution (Accountant in charge) Chen Jianfeng hereby declare that the Financial Statements enclosed in this annual report are true, accurate and complete. The prospective description regarding future business plan and development strategy in this report does not constitute virtual commitment. The investors shall pay attention to the risk. The report shall be presented in both Chinese and English, and should there be any conflicting understanding of the text, the Chinese version shall prevail. 1 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report CONTENTS Chapter 1 Important Notice, Contents, and Definitions ............................................. 1 Chapter 2 Company Profile & Main Financial Indexes ............................................. 4 Chapter 3 Analysis of Main Business ........................................................................ 8 Chapter 4 Business Discussion and Analysis ........................................................... 10 Chapter 5 Important Matters .................................................................................... 22 Chapter 6 Changes in the shareholding of the company and shareholders.............. 31 Chapter 7 Information about Directors, Supervisors, Senior Management ............. 36 Chapter 8 Corporate Bonds ...................................................................................... 37 Chapter 9 The Financial Statements......................................................................... 38 Chapter 10 Documents for Future Reference ......................................................... 159 2 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Definitions Items Definitions Changan Auto., the Refers to Chongqing Changan Automobile Company Limited Company South Industries Refers to China South Industries Group Co., Ltd., the Company’s actual controller China Changan Automobile Group Co., Ltd., old name: China South China Changan Refers to Industries automobile Co., Ltd., a subsidiary company of South Industries Chongqing Changan Industry (Group) Co., Ltd., old name: Changan Changan Industry Refers to Automobile (Group) Co., Ltd., a subsidiary company of South Industries Nanjing Changan Automobile Co., Ltd., a subsidiary company of the Nanjing Changan Refers to Company Hebei Changan Automobile Co., Ltd., a subsidiary company of the Hebei Changan Refers to Company Hefei Changan Automobile Co., Ltd., a subsidiary company of the Hefei Changan Refers to Company Changan Bus Refers to Baoding Changan Bus Co., Ltd., a subsidiary company of the Company Chongqing Changan Automobile International Sale Service Co., Ltd., a International Company Refers to subsidiary company of the Company Chongqing Changan Suzuki Automobile Co., Ltd., a subsidiary company Changan Suzuki Refers to of the Company Changan Ford Refers to Changan Ford Automobile Co., Ltd., a JV of the Company Changan Mazda Refers to Changan Mazda Automobile Co., Ltd., a JV of the Company CME Refers to Changan Mazda Engine Co., Ltd., a JV of the Company Jiangling Holding Refers to Jiangling Holding Co., Ltd., an associate of the Company Changan Finance Refers to Changan Automobile Finacing Co., Ltd., an associate of the Company China South Industries Group Finance Co., Ltd., a subsidiary company of South Industries Finance Refers to South Industries United Prosperity (Hong Kong)Investment Co., Ltd., a subsidiary UPI Refers to company of China Changan Harbin Hafei Automobile Industry Group Co., Ltd., a subsidiary company Hafei Group Refers to of China Changan Chongqing Changan Minsheng APLL Logistics Co., Ltd., an associate of CMAL Refers to China Changan 3 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 2 Company Profile & Main Financial Indexes I. Basic Information Stock abbreviation Changan Automobile 、Changan B Stock Code 000625、200625 Listed on Shenzhen Stock Exchange Company in Chinese 重庆长安汽车股份有限公司 name Company abbreviation in 长安汽车 Chinese name Company name in Chongqing Changan Automobile Company Limited English Legal representative Zhu Huarong II. Contact Information Secretary of the Board of Directors Securities affairs representative Name Li Jun No. 260, East Jianxin Road, Jiangbei District, Contact address Chongqing Telephone 023-67594008 Fax 023-67866055 E-mail address cazqc@changan.com.cn III. Others 1. Way of contact Whether registration address, office address and its post code as well as website and email of the Company changed in the reporting period or not □ Applicable √ Not applicable The registration address, office address and post code as well as website and email of the Company did not change in the reporting period. See more details in Annual Report 2019. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 4 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report The newspaper appointed for information disclosure, the website for the publishment of the semi-annual report appointed by CSRC and the preparation place for semi-annual report did not change in the reporting period. See more details in Annual Report 2019. 3. Other relevant information Whether other relevant information changed in the reporting period or not □ Applicable √ Not applicable IV. Summary of Accounting Data and Financial Indexes Does the company conduct the retrospective adjustment or restatement over previous years accounting data due to changes of accounting policies or accounting errors? □ Yes √ No Increase/decrease Report period Same period of last year y-o-y (%) Operating revenue (Yuan) 32,781,657,479.10 29,875,780,096.84 9.73% Net profit belonging to shareholders of 2,602,166,402.68 -2,240,039,761.11 216.17% the listed company (Yuan) Net profit belonging to shareholders of the listed company after deduction of -2,616,888,301.47 -2,911,767,596.44 10.13% non-recurring profit and loss (Yuan) Net cash flow arising from operating 6,912,586,693.60 4,220,263,630.95 63.80% activities (Yuan) Basic earnings per share (Yuan/Share) 0.54 -0.47 215.28% Diluted earnings per share (Yuan/Share) Not applicable Not applicable Not applicable Return on equity (ROE) (%) 5.74% -4.97% Up 10.71 points Increase/decrease Report period Same period of last year y-o-y (%) Total assets (RMB) 102,801,758,302.93 97,617,053,590.38 5.31% Net assets attributable to shareholder of 46,668,569,340.78 44,028,312,743.66 6.00% the listed company(RMB) V. The differences between domestic and international accounting standards 1. Simultaneously pursuant to both Chinese accounting standards and international accounting standards disclosed in the financial reports of differences in net income and net assets. □ Applicable √ Not applicable No difference 5 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable √ Not applicable No difference 3. Explanation of the differences in accounting data under domestic and overseas accounting standards □ Applicable √ Not applicable VI. Non-recurring items and amounts √ Applicable □ Not applicable In RMB Yuan Item Amount Illustration Non-recurring items and amounts(including accrued reversal assets 3,547,727,244.56 impairment part) Government subsidies included in the profit and loss of the current period (Except closely related to business operations, in accordance with the 215,977,955.28 national unified standard quota or quantitative enjoyment of government subsidies) Current net profit from beginning to combined date of business combination under common control In addition to the effective hedging business related to the normal business of the company, the gains and losses from changes in fair value arising from the holding of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and disposal of 1,753,674,697.00 transactional financial assets, derivative finance Investment income from assets, trading financial liabilities, derivative financial liabilities and other debt investments Gains and losses from entrusted loans 6,884,080.21 Other non-business income and expenditures other than the above items -20,172,785.69 Interest on deferred payment of funds received by non-financial enterprises 21,549,119.75 Subtract: Influenced amount of income tax 293,310,943.88 Influenced amount of miniority shareholders’ equity (after tax) 13,274,663.08 Total 5,219,054,704.15 -- According to “Public offering of securities information disclosure of the company's information disclosure announcement No. 1 – non-recurring gains and losses” defined non-recurring items ,and“Public offering of securities information disclosure of the company's information disclosure announcement No. 1 - non-recurring gains and losses”The items, defined as recurring items, are listed in the announcement No. 1 and shall be explained. 6 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report □ Applicable √ Not applicable The company in the reporting period does not base on the definition and listing of “Public offering of securities information disclosure of the company's information disclosure announcement No. 1 – non-recurring gains and losses” about non-recurring gains and losses to define a case of recurring profit or loss. 7 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 3 Analysis of Main Business I. The main business of the Company in the reporting period Does the Company need to comply with the disclosure requirements of special industry □ Yes √ No During the reporting period, the company's main business is the R&D, manufacturing and sale of cars, the R&D and production of automobile engine products. Besides, the company integrates advantageous resources to actively develop travel services, new retail and carry out multi-dimensional industrial layout. Changan automobile always adheres to the mission of "leading the car civilization for the benefit of human life", and the concept of "energy conservation, environmental protection, scientific and technological intelligence", vigorously develops new energy and smart cars, guides the automobile civilization by the use of scientific and technological innovation, and provides customers with high quality products and services. After years of development, the company's vehicle segment mainly includes Changan Passenger car, Changan Oushang, Changan Kaicheng, and joint ventures/joint companies Changan Ford and Changan Mazda. Up to now, the company has successfully launched a series of classic brands such as CS series, Eado series, UNI sequence, Oushang series and Shenqi Series; a series of famous JV products such as all new Focus, Escort, Escape, Edge, Explorer, Corsair, Axela, CX-5, CX-8, CX-30 and so on. At the same time, we have launched new energy vehicles such as CS55 E-Rock, Eado EV, new Benben EV and CS15EV, which are admired by the market and loved by the consumers. II. Major changes in assets 1. Major changes in assets No significant changes in major assets during the reporting period 2. Main Overseas Assets □ Applicable √ Not applicable III. Core Competence Analysis The Company sticks to the principle of innovation and technology-led development, and the Company has built up a world-class R&D capability, backed by the industry-leading Global R&D system. With the creation of classic products as its core, the Company accelerated the "Beidou Tianshu" and "Shangrila" projects to transform into smart travel technology company. As the core of the intelligent strategy, the global software center of Chang'an automobile is located in Xiantao Data Valley. The center is dedicated to building the largest, world-leading, autonomous, safe and controllable software technology and mobile intelligent platform in China. The company has 16 fields including vibration and noise, collision safety, braking performance, chassis test, drive system, 194 international advanced laboratories and the world's leading data center with cloud technology. As of June 2020, a total of 14,411 patent applications have been filed at home and abroad, including 4,449 for invention patents. Continue to build classic products. The first new car UNI-T from Passenger car high-end product series "UNI" was officially launched; the sales number of Eado PLUS amounted to more than 10,000 three months in a row; the 2020 new CS75, Benben E-star, Keshang EV and other models were successfully launched. The Chang'an Oushang X5 was officially unveiled, and the first prototype of the 2.0 T vertical engine was successfully fired. CS55 pure electric version was launched in July, the NEDC range was up to 605 8 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report km with the fast charge up to 30% ~ 80% in 35 minutes. The sales number of CS75 Plus came to more than 150,000 units since its launch of last September, overtaking many joint-venture brands and leading the pack in the same category. Innovative Technology accelerates. The L3 class autopilot uses UNI-T to achieve the first domestic mass production, including 40 km/h under the congestion of automatic driving function and 40 km/h above high-speed automatic driving auxiliary function, freeing hands, feet and eyes; blue whale power platform NE15 with UNI-T, fuel consumption as low as 6.3 l/100km, comparable to the first-class joint venture brand. "PM0.1" composite anti-bacterial and anti-toxic high-efficiency filter passed the Certification Center "CATARC CN95" certification issued by China Automotive Technology Research Center, carrying with the Eado PLUS. Ultraviolet lamp sterilization system was carried with UNI-T debut. Breakthroughs have been made in such advanced technologies as load distribution and structural optimization of carbon fiber body, integrated design of carbon fiber body and aluminum alloy frame, connection technology of various lightweight materials, etc. , to achieve carbon fiber, aluminum alloy and other lightweight materials integrated applications. The brand is poised to rise. The group business brands develop separately, and the revision consummates the group brand management principle, and two business brands positioning of Oushang and the Kaicheng is conducted; the Company formulates the goal and the policy for the passenger brand upward, advances the key match weight to fall on the ground, achieves the continuous innovation in brand communication forms, conducts the planning live events, builds the direct links with customers, achieves double growth in traffic and value, and accelerates the brand image upgrade; the Company optimizes the public opinion monitoring and maintenance system, continues to build design, intelligence, service, power, health and other positive public opinion label image, and raises the brand attention steadily. 9 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 4 Business Discussion and Analysis I. Overview At the beginning of the New Year in 2020, the sudden spread of the new coronavirus epidemic in China and many countries around the world has not only brought about a "grey Rhinoceros" in China's economy, but also a shock to the global economy, that shut down global economic activity and disrupted normal social life. China's auto industry has been on a downward trend in recent years, the epidemic situation further exacerbated the decline of the auto market, and the normal operation of the entire industrial chain. The sales number of auto industry came to 3.672 million vehicles in the first quarter of 2020, down 42.4 % from the same period of last year. In the face of the epidemic, under the strong leadership of the Central Committee of the Communist Party of China with Comrade Xi Jinping at its core, the Chinese people have worked together with one heart and one mind to overcome difficulties and given full play to the advantages of the socialist system with Chinese characteristics, to rally the troops against the epidemic. With the joint efforts of the whole country and the broad masses of the people, the situation of epidemic prevention and control throughout the country has continued to improve, and the situation of accelerating the restoration of order in production and life has continued to consolidate and expand. The car market has also gradually shaken off the impact of the epidemic and began to gradually pick up. In the first half of 2020, China's auto market recorded cumulative production and sales of 10.112 million vehicles and 10.257 million vehicles respectively, down 16.8 percent and 16.9 percent respectively from the same period of last year. Passenger car sales fell by 22.4% to 7.873 million units, with passenger car sales down by 26.0% and SUV sales down by 14.9%. The production and sales number of new energy passenger cars amounted to 267,000, down by 40.8% from the same period of last year. The outbreak has also accelerated the reshuffle of the industry, with sales of 9.139 million vehicles by the top 10 groups in the first half of the year, down by 16.5% from the same period of last year, a slightly smaller decline than the industry and accounting for 89.1% of total vehicle sales, 0.4 percentage points higher than a year earlier. (The above data from China automobile industry production and Marketing News by China Automobile Industry Association and its industry information release) In the first half of 2020, in the face of the sudden new coronavirus epidemic situation, the company took solid steps to prevent and control the epidemic situation, and quickly organized the resumption of work and production, ensuring that both the epidemic situation prevention and control and the production and operation work moved forward in a strong and orderly manner. In the first half of 2020, the company effectively seized the opportunity of market recovery after the outbreak of the disease. The total sales reached 831,000 units, a year-on-year increase of 1.3%, ranking the fifth in the Chinese automobile industry in terms of sales volume. During the reporting period, the main work is as follows: 1. Fully guard against the new coronavirus epidemic, "pull, grab, force" to fully promote the resumption of work and production, In the face of the epidemic, the Company resolutely implemented the decisions and plans of the Party Central Committee, regarded the disease prevention and control as a priority task, established the emergency work leading group for the first time, clarified the responsibilities and working mechanisms for epidemic prevention and control, provided comprehensive guidance for specific work such as epidemic prevention and control, supplies, security, and resumption of work and production, and ensured the rapid implementation of various measures. While firmly winning the battle of preventing and controlling the epidemic, the Company has always put the safety and health of its workers and staff at the top of its agenda, and has made full use of various channels to spread knowledge of epidemic prevention to its employees, arranged a special person to collect the health condition of each unit every day and sent several batches of emergency materials to each unit, and set up a mask production line to ensure the safety of the employees. In order to effectively ensure the resumption of work and production, the Company quickly responded to production demand, coordinated production materials, and carried forward three major actions (supporting suppliers to resume work, seizing inventory 10 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report materials, and rationalizing logistics and transportation) , implement the three key points (key areas, key materials, key risk suppliers) , set up 10 major resource coordination groups, seize resources, pull inventory, spare materials, and fully coordinate the supply of materials. In the National Epidemic Prevention and control situation, the Company promoted the entire industrial chain back to work through "pull, grab, force", and achieved a year-on-year outperformance of the industry, 303,000 units sold in the first quarter with year-on-year decline less than the industry; In the first half of 2020, sales volume of the Company increased by 1.5% year-on-year, which showed a good momentum of development. 2. Strengthen the implementation of the strategy, and steadily advance the reform and adjustment The Company fully advanced the "third pioneering plan for Innovation and entrepreneurship" , focus on the strategic main line of "strengthening the main business, steadily transforming, expanding the market, building the ecology, and grasping the guarantee" , focus on "customer-oriented, firmly reform, innovative marketing, ultimate efficiency" , focus on the implementation of key work to ensure the strategic landing. Major reform projects have made steady progress, completing the reform of Chang'an Oushang and Kaicheng. The Company will actively promote organizational change, complete organizational changes such as the Liangjiang factory, and carry out functional adjustments. The Company will set up software and technology companies and other organizations, and constantly push for the implementation of "small headquarters+ enterprise clusters + shared platforms + incubation centers." The Company will push forward the reform of the talent pool, continue to optimize the personnel structure, make solid progress in matching talents and posts, and make the talent pool more stable. 3. Adhere to the bottom line thinking, and improve the quality of operation While fighting the new coronavirus epidemic, the Company continued to make overall efforts to improve the quality of operation based on the "16 words" policy. The work of "increasing revenue, reducing cost, cutting expenditure, controlling investment, lowering storage, financing, cashing out and reforming" has been thoroughly carried out. The average price of autonomous brand cars has been continuously raised, and significant results have been achieved in reducing costs and expenditures, and the scale of aged vehicles has been reduced significantly, and the overall quality of operations has picked up in an orderly manner. In the face of the impact of the epidemic on the entire industry, the Company has followed the general strategy of "fast contraction, save expenditure, scramble resources, sustainable, change direction, build ecology, stabilize the team and ensure safety" based on the general idea of "resource protection, group heating, steady cost reduction", the strategy of cost reduction is steadily introduced to enhance the company's plan reserve to deal with market changes. The Company will continue to push forward the action plan of "fast contraction and low expenditure", and continue to reduce manufacturing costs and interim costs. The Company formulated the short, medium and long-term supply guarantee program to effectively deal with the risk of supply guarantee. The Company further strengthened the lean labor, increased the level of personnel between the bases, reduced human resources waste, and saved recruitment and labor costs. 4. The remarkable effect of the product structure adjustment, the innovative dissemination pushing up the brand The new products performed well in the market one after another, the pre-sale order of Eado PLUS for 16 days breaks ten thousand and its sales breaks ten thousand for three months in a row since the official launch by the online direct broadcast on March 27. The first new car UNI-T from the new high-end product series of "UNI" officially launched, and the pre-sale order for 32 days exceeded more than 16,000; as a future technology mass producer, UNI-T endowed with a new design language, a new intelligent vehicle system, a new blue whale power, a new platform architecture, "four new" blessing for consumers to bring unprecedented control quality. Lincoln adventurer smoothly took off the line, which fully reflected the determination of Lincoln brand deeply rooted in the Chinese market. Changan Ford has launched a large, high-end flagship SUV, dubbed as the new sixth-generation Ford Explorer, the first in the $400,000 series to adopt a new generation of luxury performance longitudinal rear-drive layout and set a new standard in the market segment. Innovative brand communication will promote the battlefield from offline to online, and the passenger cars build the online communication of "Chang'an live studio", and have the direct access to the new generation of consumers; the live coverage of UNI-T debut broadcast across 38 regions around the world, Eado PLUS "cloud listing" becomes a counter-trend explosion. Through the "thermal imaging anti-epidemic vehicle" public events, the first car brand pro-poor live broadcast events with goods and other events, 11 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report the Company aimed to build a good brand image. UNI-T achieved the new crowd expansion, face-to-face joint venture brand competition, its new product design and technology concept to further strengthen the brand positioning of Chang'an passenger car, "Technology Chang'an, smart partner". 5. Accelerating the implementation of the "Beidou Tianshu" and "shangri-la" programs, and the application of innovative technologies The Company advanced the "Beidou Tianshu" and "Shangri-la" programs; "intelligent cockpit domain control system" has been selected by the Ministry of Industry and Information Technology (miit) as one of the "new generation of key tasks for artificial intelligence industry innovation"; The Company held the event with the L3 production system, and UNI-T can easily handle all kinds of road conditions under the condition of public open road, which proves the strength of Chang'an's L3 self-driving technology. The core of the intelligent strategy of "Beidou Tianshu" ——global software center has been set up in Xiantao Data Valley, dedicated to building the largest software technology and mobile intelligent platform in China. With NEDC's 301 km long range and 30 minutes DC fast charging speed, Benben E-star has truly freed users from range anxiety and charging anxiety; the first pure electric car with a carbon fiber body has come off the line smoothly, which marks the important achievement of the new energy vehicle project, and the national key research and development plan of the 13th five-year plan undertaken by the Company, and the successful ignition of the first prototype of the Chang'an blue whale 2.0 t longitudinal engine at the Global R & D Center, further speeding up the use of blue whale power in light vehicles. To speed up the application of innovative technologies to the ground, CS75 PLUS conducted a parade in densely populated areas with an AI intelligent thermal imaging temperature measurement system, and covered more than 10,000 people for six days; the "PM0.1" grade composite anti-bacterial and anti-toxic high-efficiency air-conditioning filter with Eado PLUS listed on the market, with plasma generator, custom fresh air system and other configurations to achieve better than the "N95 mask" level of protection; UV sterilization system with UNI-T debut helped to defend the epidemic through science and technology. Core Product CS75PLUS acquired 6 outstanding (G) results in "Zhongbaoyan" collision test, showing strong safety strength. 6. Strengthen the marketing, and enhance the customer experience The Company strengthened the marketing, and the overall trend of the Company business continues to improve. The Chang'an passenger car brands bucked the trend, with 308,000 units sold in the first half, up by 1.2% year-on-year, while the sales volume and prices of Oushang both rose with 72,000 units, up by 7.7% on the year-on-year basis and an average unit price increase of more than 20%. Key products have performed admirably with the CS75 series breaking 20,000 and the Eado PLUS breaking 10,000 for three months in a row. In the first half of the year, the CS35 PLUS ranked first in the segment of the autonomous small SUV market (retail) . In June, the wholesale of Eado PLUS amounted to more than 16,000 vehicles, retail number ranking first among Chinese brands of the Compact car. The Company continued to promote the quality and efficiency of marketing channels, maintain the scale of traditional channels, exhibit the new retail channels through the full scene layout, and continue to expand the coverage. Oushang automobile continued to promote the process of producing passenger cars with the significant increase of the proportion with Yunying standard product, and the average price increased significantly, and the channel coverage continued to increase. In the new energy area, the Company launched the country's first "car to the countryside", and stimulated the rural areas of new energy car consumption. Focus on the improvement of customer experience, build customer service system, improve customer satisfaction; resolutely implement the "double project" in products, customers, and marketing and other resources. Strong focus on customer service TOP problem solving, and customer satisfaction indicators continue to improve. The first 5G + Ar Remote Service Center was set up in China to solve the problems of vehicle owners and service stations by 5G + AR technology, and provide users with the ultimate service experience. Driven by user demand as the origin of the product refresh, and the main core product design two-year renovation, the Company ensured the user's voice feedback to the full development process to achieve a solid foundation for the launch of UNI-T, and PLUS series. 7. The joint venture has risen to the challenge and steadily improved its quality of operation The joint ventures continued to deepen communication and exchanges with its partners around key projects such as Lincoln's 12 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report and electric vehicles. The company has also steadfastly advanced the "revitalization plan" of Chang'an Ford, with 97,000 units sold in the first half of 2020, up by 29.7% year-on-year. Ford Edge, Lincoln Adventurer, Ford Explorer and many other brand-new models were listed on the market. Among them, the Lincoln adventurer has months of better than expected end retail sales. Changan Mazda continued to implement product planning and conducted the on-line and off-line linkage of the new product CX-30 with the audience of more than 60 million people; Changan Mazda continued to pay close attention to improving the quality of business, cost reduction and efficiency. 8. Actively fulfill the social responsibility of listed companies and exhibit the responsibility of the state-owned enterprise While doing a good job in the prevention and control of the epidemic, the Company also jumped into the front line of the epidemic and worked together with the people of the whole country to tide over the difficulties and help each other, and actively fulfilled corporate social responsibility. During the outbreak, the Company and its affiliated enterprises donated 10 million yuan to fully support the epidemic prevention and control work, and over 10,000 party members donated 1.22 million yuan. The Company started the production of ambulances, and delivered more than 1500 negative pressure ambulances. The Chang 'an new energy technology enterprise joined hands with T3 travel and Chelai travel to provide free commuting, official and emergency mission travel services for medical staff. The Company also took the advantage of the Global Research and Development Center Network "six countries and nine places" as well as overseas bases to actively purchase anti-epidemic masks and protective clothing, and timely offered the assistance to the domestic anti-epidemic front. In order to protect the rights and interests of customers, the Company takes the initiative to provide care and protection to customers from two aspects: Vehicle Care and humanistic care. The service includes delay of maintenance, pick-up and delivery of vehicles, national road rescue, epidemic situation care reminder, vehicle maintenance reminder and other intimate services. II. Analysis of Main Business 1. Overview Are they identical with those disclosed in the "I. Overview" in the Chapter of Business Discussion and Analysis? √ Yes □ No Please refer to the content of "I. Overview" in the Chapter of Business Discussion and Analysis. 2. Y-o-y changes of main financial data In RMB Yuan Same period of last Y-o-y Current period Reasons for changes year(restated) increase/decrease Operating 32,781,657,479.10 29,875,780,096.84 9.73% revenue Operating cost 29,734,615,697.63 27,419,410,626.92 8.44% Operating 1,270,717,082.07 1,443,216,541.30 -11.95% expenses General and Mainly due to changes in organization and prepaid administrative 1,164,152,772.91 843,160,552.62 38.07% wages expenses R&D expenses 1,464,554,423.42 1,720,159,658.88 -14.86% 13 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Financial -98,053,545.38 -96,832,709.15 -1.26% expenses Mainly due to changes in the fair value of Income tax 189,931,296.64 116,567,696.08 62.94% transactional financial assets leading to an increase expense in deferred income tax liabilities Subtotal of cash Mainly due to the significant decrease in "cash paid inflow from 6,912,586,693.60 4,220,263,630.95 63.80% for purchasing goods and receiving labor services" operating compared with the previous year activities Mainly because the "cash paid for the purchase Subtotal of cash and construction of fixed assets, intangible assets inflow from -1,252,707,158.77 -3,684,509,162.66 66.00% and other long-term assets" and "cash paid for investment investment" decreased compared with the previo activities us year Subtotal of cash inflow from Mainly due to the increase in "cash received from 1,809,378,548.18 -65,487,944.32 2862.92% financing borrowings" compared with the previous year activity Net increase in Mainly due to the net cash inflow from operating cash and cash 7,460,644,506.35 499,453,398.49 1393.76% activities and financing activities during the current equivalents period Major changes on profit composition or profit resources in reporting period √ Applicable □ Not applicable The company's profit during the reporting period was greatly affected by non-recurring gains and losses. For details, please refer to Chapter 2 " VI. Non-recurring items and amounts" in this report. 3. Composition of Main Business In RMB Yuan Increase or Increase or decrease of Gross decrease of Increase or decrease Operating revenue Operating cost operating profit operating of gross profit y-o-y revenue cost y-o-y y-o-y According to industries Automobile 32,781,657,479.10 29,734,615,697.63 9.29% 9.73% 8.44% Up 1.07% Production According to products Vehicles 32,049,653,469.63 28,965,284,746.97 9.62% 7.50% 5.97% Up 1.30% According to region China 31,119,150,931.79 28,129,352,859.96 9.61% 9.51% 8.27% Up 1.03% 14 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report III. Analysis of non principal business □ Applicable √ Not applicable IV. Assets and liability 1. The significant changes of the assets and liability In RMB Yuan Current period Same period of last year Increase/ Ratio in Ratio in Item decrease YoY change (%) Amount total Amount total (%) assets(%) assets(%) Mainly due to the net cash inflow from operating Monetary capital 17,326,421,237.43 16.85% 10,066,171,353.48 10.31% 6.54% activities and financing activities during the current period Mainly due to the changes in the scope of consolidation in the current period, the Accounts accounts receivable in the 2,299,982,425.41 2.24% 838,314,076.82 0.86% 1.38% receivable original consolidation scope were turned into accounts receivable outside the consolidation scope Inventory 4,040,392,469.99 3.93% 3,375,441,488.37 3.46% 0.47% Investment 6,989,493.94 0.01% 7,102,849.72 0.01% 0.00% property Long-term equity 12,808,010,205.56 12.46% 11,008,336,989.09 11.28% 1.18% investment Fixed assets 25,896,056,062.39 25.19% 27.60% -2.41% 26,939,490,554.19 Construction in 1,793,015,326.03 1.74% 1,729,803,028.43 1.77% -0.03% progress Due to new loans from the Short-term loan 365,525,472.30 0.36% 229,580,000.00 0.24% 0.12% company's subsidiaries Due to the company's new Long-term loan 1,555,300,000.00 1.51% 55,300,000.00 0.06% 1.46% special loan this year 15 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 2. Assets and liabilities measured by fair value √ Applicable □ Not applicable In RMB Yuan Amount Profit and loss from Accumulated fair Impairment Amount purchased Amount at year sold in the Amount at year changes in fair value value changes provisions in the in the current Item beginning current end in the current period included in equity reporting period period period Financial assets Transactional financial 2,419,476,200.00 1,753,674,697.00 4,173,150,897.00 assets Equity instrument 734,506,100.00 734,506,100.00 investment Subtotal of financial 3,153,982,300.00 1,753,674,697.00 4,907,656,997.00 assets Others Total 3,153,982,300.00 1,753,674,697.00 4,907,656,997.00 Financial - - - - - - liabilities Whether the measurement attributes of main assets in the reporting period have significantly changed □ Yes √ No 3. Property rights limits by the end of report period In RMB Yuan book value at the end of this Item Limited Reason year Monetary fund 505,302,056.19 Mainly acceptance bond Notes receivable 6,153,373,909.00 Pledge for issuing bills payable Intangible assets 17,870,990.16 Bank mortgage Fixed assets 23,577,247.06 Collateral to obtain working capital Total 6,700,124,202.41 16 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report V. Analysis of Investment 1. General information √ Applicable □ Not applicable External investment Investment Amount in the Investment Amount in the same period of last year(Yuan) Variance rate report period(Yuan) 2,290,000,000 1,800,000,000 27.22% Particulars of investees Proportion in the Company Name Principal business investees’ equity (% Licensed items: technology import and export; import and export agency; import and export of goods (items that are subject to approval in accordance with the law can only be carried out after the approval of the relevant departments, and the specific business items are subject to the approval results) General projects: technical services, technology development, technical consultation, technical exchanges, technology transfer, technology promotion; industrial design services; software development; industrial automatic control system device manufacturing; industrial automatic control Zhongqi Chuangzhi system device sales; mechanical parts and components sales; electric power 3.125% Technology Co., Ltd. Sales of electronic components; sales of electronic products; research and development of auto parts; retail of auto parts; wholesale of auto parts; sales of new energy vehicle production and testing equipment; sales of new energy vehicles; motor vehicle modification services; integrated circuit manufacturing; electronic components Device manufacturing; engineering and technical research and experimental development; electrical signal equipment manufacturing; sales of new catalytic materials and additives; research and development of electronic special materials; battery sales; battery manufacturing (except for items subject to approval according to law, independent of business license Carry out business activities) Licensed items: car rental, technology import and export, import and export of goods (items that are subject to approval in accordance with the law can only be carried out after the approval of the relevant departments, and the specific business projects are subject to the approval documents or licenses of Chongqing Changan the relevant departments) Kaicheng Automobile 83.64% General items: new automobile sales, automobile parts wholesale, automobile Technology Co., Ltd. parts and accessories manufacturing, new energy automobile sales, new energy automobile electrical accessories sales, automobile parts research and development, technical services, technical development, technical consultation, technical exchanges, Technology transfer, technology 17 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report promotion, engineering and technology research and experimental development, software development, information consulting services (not including licensing information consulting services), mold manufacturing, mold sales, domestic cargo transportation agency, energy saving management services, energy recovery system research and development, New energy prime mover equipment manufacturing, emerging energy technology research and development, Internet sales (except for the sale of commodities that require licenses), old automobile sales, automobile spare parts retail, motor vehicle repair and maintenance (except for items subject to legal approval, business operations License to carry out business activities independently according to law) Note: The above are investment projects approved by the board of directors during the reporting period. For specific information, please refer to the "Announcement on Related Party Transactions of T3 Technology Platform Companies" (Announcement Number: 2020-06) and "Announcement on Resolutions of the First Meeting of the Eighth Board of Directors" (Announcement Number: 2020-56). 2. Major equity investment in the reporting period □ Applicable √ Not applicable 3. Major non-equity investment in the reporting period Please refer to Notes 7 Item 13 “Construction in progress” in the Financial Statement. 4. Investment of Financial Assets (1)Equity-holdings in financial enterprises √ Applicable □ Not applicable Number of Percentage Percentage Number of Book value at Securiti Securities Initial shares held at of shares of shares Reporting period Securities shares held at the end of the Accounting Source of es short investment cost the beginning held at the held at the profit and loss code the end of the period account shares variety name (Yuan) of the period beginning of end of the (Yuan) period(Share) (Yuan) (Share) the period period Southwest Transactional Initial Stock 600369 50,000,000 35,500,000 0.63% 35,500,000 0.63% 162,945,000 -18,459,709.66 Securities financial assets investment Transactional Initial Stock 300750 CATL 1,000,000,821 22,999,575 1.06% 22,999,575 1.04% 4,010,205,897 1,780,037,549.74 financial assets investment Total 1,050,000,821 58,499,575 -- 58,499,575 -- 4,173,150,897 1,761,577,840.08 -- -- (2) Derivative Investments □ Applicable √ Not applicable 18 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 5. Use of raised funds □ Applicable √ Not applicable VI. Selling of major assets and major equity 1. Selling of major assets □ Applicable √ Not applicable There is no selling of major assets. 2. Selling of Equity √ Applicable □Not applicable On December 3, 2019, Chongqing Changan New Energy Vehicle Technology Co., Ltd. (hereinafter referred to as "new energy technology company"), a wholly-owned subsidiary of Changan Automobile, introduced four strategic investors. After the capital increase is completed, the company's share of the new energy technology company's equity has dropped from 100% to 48.9546%, losing control of the new energy technology company. For details, please refer to the “Announcement on the Public Investment Increase of the Wholly-owned Subsidiary Subsidiary Company and the Company’s Abandonment of Priority Subscription of Capital Contributions to Capital Increase and Capital Increase” ( Announcement number: 2019-67). On January 13, 2020, the matter was reviewed and approved by the first extraordinary general meeting of shareholders in 2020 (Announcement No. 2020-04). On January 20, 2020, new energy technology company completed the industrial and commercial change registration. For details, please refer to the "Announcement on the Progress of the Wholly-owned Subsidiary Subsidiary's Capital Increase by Public Listing and the Company's Abandonment of Capital Increase and Share Priority Subscription of Investment Rights" (Announcement Number : 2020-04). On December 30, 2019, Changan Automobile and Shenzhen Qianhai Ruizhi Investment Co., Ltd. (hereinafter referred to as "Qianhai Ruizhi") signed the "Equity Transfer Agreement" and transferred all the 50% equity of Changan PSA to Qianhai Ruizhi. For details, please refer to the "Announcement on the Sale of Equity Interests in Joint Ventures" (Announcement No. 2020-02). On January 13, 2020, the matter was reviewed and approved by the first extraordinary general meeting of shareholders in 2020 (Announcement No. 2020-04). On May 21, 2020, the company completed the industrial and commercial change registration. For details, please refer to the "Announcement on the Progress of the Sale of Equity in Joint Ventures" (Announcement Number: 2020-42). VII. Analysis of main holding companies and equity companies √ Applicable □ Not applicable Basic information of main subsidiary companies and shareholding companies which have an impact on over 10% of net profits Unit: Ten Thousand Yuan Main Registered Equity Name Main businesses Total assets operating Net profit capital held income Zhenjiang Demao Hairun Equity Engaged in non-securities 150,001 100% 401,021 0 151,379 Investment Fund Partnership (Limited equity investment activities and 19 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Partnership) related consulting business Changan Mazda Automobile Co. Ltd 11,097USD 50% Produce and sell auto and parts 1,257,352 694,057 65,911 Changan Ford Automobile Co., Ltd 24,100USD 50% Produce and sell auto and parts 4,721,117 1,650,111 -114,048 Subsidiaries acquired and sold in the reporting period √ Applicable □ Not applicable During the reporting period, Changan Automobile established a wholly-owned subsidiary, Chongqing Changan Automobile Software Technology Co., Ltd., and acquired Changan Weilai New Energy Automobile Technology Co., Ltd., and the two companies were included in the scope of the consolidated statement. Chongqing Changan New Energy Automobile Technology Co., Ltd. introduced strategic investors. The company lost control and its shareholding ratio was reduced to 48.96%. It was no longer included in the scope of consolidation, and subsequent measurement was carried out according to the equity method. Acquisition and disposal of subsidiaries On the overall production and operation Name during the reporting period and performance impact Chongqing Changan Automobile Software Newly established No major influence Technology Co., Ltd. Changan Weilai New Energy Automobile Business combination not under No major influence Technology Co., Ltd. common control Chongqing Changan New Energy Automobile Dilution of equity and loss of control Major influence Technology Co., Ltd. VIII. Structural main business under the company control □ Applicable √ Not applicable IX. Forecast for the operating performance of Jan.-Sep. 2020 The accumulated net profit forecast for the beginning of the year to the end of the next reporting period may be a loss or a warning and explanation of a significant change compared with the same period of the previous year □ Applicable √ Not applicable X. Possible risks and coresponding measures The overseas epidemic situation continues to spread with the emergence of the long tail effect, and the epidemic is still difficult to control effectively before the vaccine is released on a large scale. It is expected that by the middle of next year, the prevention and control of the epidemic situation in major global economies and economic repair will become normal, economic growth is still struggling to return to normal levels before the outbreak. Combined with the intensification of international trade disputes, the China's exports and imports will be faced with a significant negative impact. The global economy will shrink by more than 5% this year, according to projections by the IMF and other international groups, and China's economy will grow only modestly. At present, with the economy facing downward pressure and increasing uncertainties in the external environment, residents' consumer confidence is obviously insufficient, while the short-term demand for automobiles, as an optional consumption, is obviously restrained. The decline in the auto market led to the company's current operating pressure. 20 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Countermeasures: On the one hand, the company will continue to increase market expansion efforts, reduce the impact of external factors to the minimum, maintain the basic stability of business scale, on the other hand, strengthen the sense of hardship, continue to carry out internal potential, improve quality, reduce costs, increase efficiency, improve the quality and efficiency of business operations to ensure the achievement of strategic objectives. XI. Interviews and visits in the reporting period √ Applicable □ Not applicable Date Manner Object Content discussed and material offered For details, see the January 16, 2020 Shenzhen stock exchange interactive 2020.01.14 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: January 14, 2020 investor relations activities record sheet For details, see the January 21, 2020 Shenzhen stock exchange interactive 2020.01.21 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: January 21, 2020 investor relations activities record sheet For details, see the May 6, 2020 Shenzhen stock exchange interactive "PanoramaRoadsh 2020.04.30 All investors (http://irm.cninfo.com.cn) on the Changan Automobile: April 30, 2020 investor ow World" Webcast relations activities record sheet For details, see the May 9, 2020 Shenzhen stock exchange interactive 2020.05.07 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: May 7, 2020 investor relations activities record sheet For details, see the May 9, 2020 Shenzhen stock exchange interactive 2020.05.08 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: May 8, 2020 investor relations activities record sheet For details, see the May 14, 2020 Shenzhen stock exchange interactive 2020.05.12 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: May 12, 2020 investor relations activities record sheet(1) For details, see the May 14, 2020 Shenzhen stock exchange interactive 2020.05.12 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: May 12, 2020 investor relations activities record sheet(2) For details, see the June 28, 2020 Shenzhen stock exchange interactive 2020.06.24 On-Site Survey Institution (http://irm.cninfo.com.cn) on the Changan Automobile: June 24, 2020 investor relations activities record sheet 21 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 5 Important Matters I. Annual shareholders meeting and interim shareholders meeting during the reporting period 1. Shareholders meeting during the reporting period Investors' Meeting Session Type participatio Holding Date Disclosure Date Disclosure Index n ratio 2020 The First http//www.cninfo.com.cn Interim 2020 The First Interim Shareholders Meeting Interim 44.572% January 13, 2020 January 14, 2020 Shareholders Resolution Announcement(Announcement Number: Meeting 2020-04) 2019 Annual http//www.cninfo.com.cn Shareholders Annual 59.488% May 22, 2020 May 23, 2020 2019 Annual Shareholders Meeting Resolution Meeting Announcement(Announcement Number: 2020-44) 2020 The http//www.cninfo.com.cn Second Interim 2020 The Second Interim Shareholders Meeting Interim 46.695% June 22, 2020 June 23, 2020 Shareholders Resolution Announcement(Announcement Number: Meeting 2020-55) 2. Preferred shareholders’ request to hold the interim shareholders meeting with restoration of voting rights □ Applicable √ Non-applicable II. Preplan for Company common stock profit distribution and capital reserves converting into share capital in the reporting period □ Applicable √ Non-applicable The company plans not to distribute cash dividends, not to send bonus shares, not to increase equity by provident fund in the first half of the year. 22 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report III. Commitments finished in implementation by the Company, shareholders, actual controller,acquirer, directors, supervisors, senior executives or other related parties in the reporting period and commitments unfinished in implementation at the end of the reporting period □ Applicable √ Non-applicable IV. The appointment and dismissal of accounting firms Is the semi-annual financial report audited? □ Yes √ No V. The board of directors, and supervisors explaining the "non standard audit report" from the accounting firm during the reporting period □ Applicable √ Not-applicable VI. The board of directors explaining the "non standard audit report" of last year □ Applicable √ Not-applicable VII. Bankruptcy restructuring related matters □ Applicable √ Not-applicable During the report period, no matters related to bankruptcy restructuring occur. VIII. Crucial litigation events Crucial litigation and arbitration events □ Applicable √ Not-applicable During the report period, the company has no crucial litigation or arbitration events. Other litigation events □ Applicable √ Not-applicable IX. Punishment and rectification □ Applicable √ Not-applicable During the reporting period, there’s no punishment and rectification. X. The integrity of company and its controlling shareholder, actual controller □ Applicable √ Not-applicable 23 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report XI. Company equity incentive plan, the implementation of the employee stock ownership plan or other staff incentives. √ Applicable □ Not-applicable On April 28, 2020, the 65th meeting of the seventh board of directors of Chongqing Changan Automobile Co., Ltd. deliberated and approved the "Proposal on Cancellation of Certain Stock Options of the Company", and planned to cancel 8.81 million stock options. For details, please refer to "Announcement on the Cancellation of Part of the Company’s Stock Options" (Announcement Number: 2020-31) disclosed by the company on April 30. On June 4, 2020, the company disclosed the "Announcement on Completion of Cancellation of Stock Options" (Announcement Number: 2020-46). According to relevant regulations, the company has completed the cancellation of stock options in China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. XII. Significant related party transactions 1. Related transactions related to day-to-day operation For details, please refer to Note 12 "Related Party Relationships and Transactions" in the Financial Statements. 2. Assets or equity acquisition, sales related transactions √ Applicable □ Not-applicable For details, please refer to Note 12 "Related Party Relationships and Transactions" in the Financial Statements. 3. Related transactions of common investment √ Applicable □ Not-applicable On January 17, 2020, Changan Automobile signed an agreement with China First Automobile Co., Ltd., Dongfeng Motor Group Co., Ltd., China North Industries Group Co., Ltd., and Nanjing Jiangning Economic Development Technology Development Co., Ltd. to jointly initiate the establishment of China Automobile Chuangzhi Technology Co., Ltd., with a registered capital of 16 billion yuan, of which Changan Automobile invested 500 million yuan, holding 3.125% of the shares. For details, please refer to the "Announcement on Related Party Transactions of T3 Technology Platform Companies" (Announcement No.: 2020-06). 4. Related rights and debt relations √ Applicable □ Not-applicable For details, please refer to Note 12 "Related Party Relationships and Transactions" in the Financial Statements. Whether there is any non-business related credits and debts □ Applicable √ Not-applicable There is no non-operating associated credits and debts during the reporting period. 5. Other significant related transactions √ applicable □ not applicable Related queries in disclosure website of temporary announcement of related transactions 24 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Temporary Name of temporary announcements Temporary announcement site name announcement date Announcement on related party transactions regarding the April 28, 2020 http://www.cninfo.com.cn subscription of non-publicly issued A shares by related parties Announcement about increasing estimated amount of 2020 daily April 30, 2020 http://www.cninfo.com.cn related transaction Announcement on related party transactions concerning the June 23, 2020 http://www.cninfo.com.cn extension of entrusted loans to Jiangling Holdings for one year XIII. The non-operating occupation for the capital by the controlling shareholder of the listed company and its related parties □ Applicable √ Not-applicable XIV. Major contract and its performance 1. Trusteeship, contracting, leasing matters (1) Trusteeship □ Applicable √ Not-applicable Information about Trusteeship There is no Trusteeship during the reporting period. (2) Contracting □ Applicable √ Not-applicable Information about contracting There is no contracting during the reporting period. (3) Leasing √ Applicable □ Not-applicable Information about leasing Related party rental situation can be found in the note 12 of financial statements 4 (3) related party relationships and transactions. Projects whose profit and loss to the company during the reporting period is more than 10% of total profits □ Applicable √ Not-applicable Projects whose profit and loss to the company during the reporting period can’t be more than 10% of total profits 2. Major guarantee □ Applicable √ Not-applicable There’s no major guarantee during the report period. 25 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 3. Other major contract □ Applicable √ Not-applicable There’s no other major contract during the reporting period. XV. Social responsibility 1. Significant environmental protection Whether the listed companies and their subsidiaries belong to the key pollutant discharge units announced by the environmental protection department √ Yes □ No Basic status Changan Automobile mainly produces engines and automobiles. The main pollutants are chemical oxygen demand, ammonia nitrogen, total nickel, toluene, xylene and non-methane hydrocarbon, etc. Wastewater mainly comes from pre-treatment wastewater, paint spray wastewater and oily wastewater from engine manufacturing machines. The wastewater is discharged to the urban sewage pipe network after physical and biochemical treatment at the wastewater treatment station of each production base, and discharged to the standard after being treated by the urban sewage treatment plant. The exhaust gas is mainly paint spraying waste gas and oven waste gas. The paint spraying waste gas is concentrated by adsorption and incineration, and the waste gas from the oven is discharged after incineration. Sulfur dioxide and nitrogen oxides mainly come from the exhaust gas from the combustion of clean energy natural gas, and they are all discharged in an organized manner. The company's headquarters and branch companies have a sound environmental management system, all of which have passed tripartite audits and obtained environmental management system certification. Pollution discharge information During the reporting period, there were 412 pollutant outlets and 17 water pollutant outlets. The emission standards were strictly implemented according to the national sewage comprehensive discharge standard, the water pollutant discharge standard in Beijing, the national standard for the comprehensive emission of air pollutants, the standard for the emission of air pollutants on the surface of automobile manufacturing in Chongqing, the standard for the comprehensive emission of air pollutants, and the vehicle Manufacturing industry (painting process) air pollutant emission standard in Beijing, national industrial enterprise boundary environmental noise emission standard and so on. The total emission of major pollutants: 641.11 tons of chemical oxygen, 58.33 tons of ammonia nitrogen, 26.98 tons of sulfur dioxide, 163.45 tons of nitrogen oxides and quantitative volatile organic compounds 2245.02 tons. All the pollutants in the company are discharged, and there is no excess total emission. Solid wastes are separately collected and stored. Main dangerous wastes are wastewater and sludge treatment, paint slag, phosphated residue and waste solvent, etc. The units with hazardous waste business qualification are entrusted to dispose hazardous wastes. The general industrial solid wastes and household garbage are disposed by the units with qualification according to the requirement of the local government. The waste electrical and electronic products are disassembled by the units with qualification and are safely disposed by the units with hazardous waste business qualification. During the reporting period, we entrusted the disposal of 3,500 tons of hazardous waste and the use of 42,300 tons of general industrial solid waste. Construction and operation of pollution prevention facilities During the reporting period, the main waste gas prevention and control facilities include foundry dust removal and deodorization facilities in engine factories, welding dust removal facilities in vehicle factories and treatment facilities for coating volatile organic waste gas; together with wastewater treatment facilities, they are included in preventive maintenance management of equipment, with account books, operation instructions, preventive maintenance rules, preventive maintenance plans and 26 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report implementation records, and equipment inspection, dosing, slag removal, filter bag replacement, etc. The facilities are running normally. The key pollutant discharge units are all equipped with automatic wastewater monitoring facilities and entrusted the tripartite company to operate and maintain the facilities. Administrative licensing of environmental impact assessment and other environmental protection for construction projects In accordance with the "Environmental Impact Assessment Law of the People's Republic of China", "Construction Project Environmental Protection Management Regulations", "Chongqing Municipal Environmental Protection Regulations", "Interim Measures for Environmental Protection Acceptance of Construction Projects" and other laws and regulations, the company develops environmental impacts of new, renovated and expanded projects Evaluation and completion of environmental protection acceptance work, strictly implement the environmental impact assessment system and the "three simultaneous" system. During the reporting period, we have obtained the solid waste acceptance approval of the global R&D center project and the NE1 phase I project, and completed the environmental protection acceptance of the construction project. Emergency preparedness and exercise of emergency environmental events Continue to carry out environmental protection emergency drills to improve the emergency response capabilities of environmental emergencies. During the reporting period, all bases had environmental risk assessment reports and emergency response plans for environmental emergencies. The Mould Division, General Automobile Research Institute and Power Research Institute of Chongqing headquarters are revising emergency plans for environmental emergencies. All bases formulate emergency drill plans in accordance with the requirements of laws and regulations, and carry out emergency drills according to the plan to continuously improve the practicability of emergency plans and the emergency response capabilities of employees. During the reporting period, no environmental emergencies occurred. Programming and implementation of self-monitoring of the environment During the reporting period, Changan Automobile’s key pollutants were: Liangjiang Plant, Jiangbei Engine Factory, Yubei Factory, Beijing Changan, Hefei Changan. All the key sewage made self-monitoring schemes, and self-monitoring has been carried out, and information disclosure has been carried out according to the requirements of the local ecological environment department. Others During the reporting period, Liangjiang Factory, Jiangbei Engine Factory, Yubei Factory, and Mould Division carried out the 2019 environmental credit evaluation work in accordance with the requirements of the local ecological environment authority. 2. Fulfill social responsibility of targeted poverty alleviation √ Applicable □ Not applicable The year 2020 will be a decisive year in the fight against poverty. By implementing General Secretary Xi Jinping's important statement on poverty alleviation, the Company will fulfill its political responsibility in the fight against poverty in accordance with the decisions and plans of the CPC Central Committee, the State Council and the overall arrangements of the group companies. The Company will continue to pursue the basic strategy of precision poverty reduction and eradication, and make overall progress in poverty alleviation and reduction so as to make new and greater contributions to building the well-off society in all respects and achieving the first centenary goal. (1)Targeted poverty alleviation in 2020 4.5 million RMB donated to Luxi County for poverty alleviation On the Education Poverty Alleviation Project: Firstly, invest 1.5 million funds to improve the facilities of Zhuma primary school in Xiangyang Township, Luxi County. The construction content: Teaching building, school road hardening, basketball court, etc. Secondly, a new type of vocational skills training program for rural farmers in Luxi County with 500,000 funds invested to provide skills training to 100 farmers with the intention and ability to find employment (no less than 50 poor households with file-sharing cards), and the training content includes welder, electrician skills-based. Through the “one helps each other” approach to training, 27 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report they could master a skill, and increase income through the transfer of labor. On Health and poverty alleviation projects: the Company supported the allocation project of negative-pressure ambulances in Luxi County with a total investment of 390,000 yuan. According to relevant procurement requirements, the Company centralized the procurement of two negative-pressure ambulances. The vehicles will be used by the Luxi County People's Hospital and the Luxi County Hospital of traditional Chinese medicine. Through the deployment of negative pressure ambulance, the prevention and treatment capacity of infectious disease in Luxi County improved, and the emergency response capacity of the infectious disease enhanced. On the people's livelihood poverty alleviation project: Firstly, the Luxi County Fund for Dynamic Monitoring the prevention and control of poverty with 1.51 million yuan. The fund is mainly used for poverty-stricken households, marginal households, monitoring households and other disadvantaged groups. The implementation of the project will consolidate Luxi County's achievements in poverty alleviation, improve the quality of poverty alleviation, and prevent the returning to poverty and the emergence of new poor people. Secondly, the Company invested 600,000 in the emergency rescue vehicle configuration project in Luxi County for the procurement of fire engines. In accordance with the relevant procurement requirements, the Company procured four small emergency water tanker vehicles for fire fighting operations with their property rights to the Luxi County fire rescue brigade. The implementation of the project can effectively avoid the occurrence of poverty due to disaster. 6 million RMB donated to Yanshan County for poverty alleviation On Industrial Development and poverty alleviation projects: the Company invested 2.36 million yuan in the project for the purchase of heat removal equipment for black-feathered chick-rearing houses in Panlong Township, and the project was organized and implemented by the People's Government of Panlong Township. The Company adopted the cooperative development model of "government + co-operatives + industries + posts (poor households) " , the government will help fund the project of purchasing temperature-removing equipment for black-feathered chick-rearing in breeding cooperative in Yanshan County. A Project Cooperation Agreement was operated and managed by the cooperative itself for a period of 60 months. The cooperative shall voluntarily pledge the farm and its property as collateral for the venture capital of the cooperative, and shall pay 180,000 yuan of the cooperative income every 12 months, and the cooperative income funds are mainly used for labor remuneration of public welfare posts and public welfare undertakings, so as to consolidate the achievements of poverty eradication. On the education and poverty alleviation projects: firstly, all the universities and primary schools in the town of AMeng carried out school affiliated projects with an investment of 1.1 million yuan and built 200 meters of fences, 900 meters of retaining walls and 1,200 ㎡ of hardened playing fields, 90 ㎡ of new Bathroom,18 ㎡ of duty room and a gate. In this way, the county improved the conditions of running schools so that schools can meet the requirements of compulsory education balanced development. Secondly, the Yanshan County, the Campus Love Bathhouse Construction Project, invested 2 million for the implementation of 15 love bathhouses (a total of 540 square meters) , and supporting solar energy and shower equipment. The implementation of the project has met the needs of 15 rural schools, improved school conditions, and promoted the healthy growth of rural students. On Health Poverty Alleviation Projects: the Yanshan County, Negative Pressure Ambulance Project, invested 540,000 funds to purchase two Chang'an Ruixing M90 negative pressure ambulances. On the basis of standard configuration, the ambulances were equipped with transshipment suction machine and defibrillator. The current lack of negative pressure ambulances in Yanshan County is not conducive to the transfer of infectious disease cases, in particular the current epidemic of pneumonia with novel coronavirus infection prevention and control work. 0.3 million RMB donated to Pengshui County for poverty alleviation In accordance with the spirit of the circular of the Office of the Leading Group of the Poverty Alleviation Group of the Chongqing Development and Reform Commission on the publication of the 2020 work for counterpart assistance to Pengshui County (No.1 [2020] of the Chongqing Development and Reform Commission) ,the Company has invested 300,000 yuan in Chongqing Pengshui County. (2)Poverty alleviation through consumption in 2020 28 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report The Company together with People's Daily has completed the first-ever online public welfare live broadcast with the theme of "poverty alleviation, love and innovation" in Luxi and Yanshan counties of Yunnan Province. The total number of viewers reached 34.1 million, the number of likes broke 10 million, and the consumption sales of helping the poor live broadcast amounted to 1.133493 million yuan. Changan Automobile Statistics on Poverty Alleviation in the first half of 2020 Indicator Unit Quantity / Details Ⅰ. Total —— —— 1.funds 10 thousand RMB 1080 2. Material 10 thousand RMB 0 Ⅱ. Subdivision —— —— 1. Industrial poverty alleviation —— 236 1) The project for the purchase of heat removal 1.1 Industrial poverty alleviation project type —— equipment for black-feathered chick-rearing houses in Panlong Township; 236 2. Education poverty alleviation —— 510 1) School affiliated project of all universities and primary schools in Ameng town, Yanshan County; 110 2) Construction project of love Bath Hall in 2.1 Funding for poor students 10 thousand RMB Yanshan County; 200 3) Upgrading Project of Zhuma Primary School in Xiangyang Township, Luxi County; 150 4) skills training project of new type professional farmers in Luxi County; 50 3. Medical and health poverty alleviation —— 93 1) Luxi County Negative Pressure Ambulance Project; 39 3.1 Medical and health resources invested in poverty areas 10 thousand RMB 2)Yanshan County, Negative Pressure Ambulance Project; 54 4. Other projects - people's livelihood poverty alleviation —— 241 1) Luxi County Dynamic Monitoring Anti-poverty Fund; 151 4.1 Amount of investment 10 thousand RMB 2) Luxi County, Yunnan Emergency Vehicle Allocation Project; 60 3) Pengshui County; 30 (3)Follow-up precision poverty alleviation plan According to the document "on the 2020 Jiangbei Youyang Tujia and Miao Autonomous County counterpart Assistance Work Program Notice" (No. 2[2020] of the District counterpart Assistance Work Leading Group Office of Chongqing Municipality) , the counterpart assistance work for Chongqing Youyang Tujia and Miao Autonomous County County will be completed by the Company. The Company will continue to help the poor through consumption, disseminate the concept of "love the world", and build up the image of the Company as an excellent enterprise. 29 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report XVI. Other important matters √Applicable □Not-applicable For details, please refer to "2、Selling of major equity" in Section IV "VI. Selling of major assets and major equity" of this report. XVII. Important matters of company subsidiaries √Applicable □Not-applicable For details, please refer to "2、Selling of major equity" in Section IV "VI. Selling of major assets and major equity" of this report. 30 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 6 Changes in the shareholding of the company and shareholders I. Change in shareholdings 1. Change in shareholdings Unit: one share Balance before current Balance after current Addition and deduction(+,-) during change change change Provident Ratio Additional Stock Ratio Quantity fund other Quantity Quantity (%) issued dividend (%) transfer Non-circulated shares 18,900 0.00% - - - - - 18,900 0.00% 1. State-owned legal 0 0.00% - - - - - 0 0.00% person shares 2. Senior management 18,900 0.00% - - - - - 18,900 0.00% personnel shares Circulated shares 4,802,629,611 100.00% - - - - - 4,802,629,611 100.00% 1. Domestic listed 3,900,643,469 81.22% - - - - - 3,900,643,469 81.22% RMB shares 2. Domestic listed 901,986,142 18.78% - - - - - 901,986,142 18.78% foreign shares Total shares 4,802,648,511 100.00% - - - - - 4,802,648,511 100.00% Reason of stock changes □ Applicable √ Not-applicable Approval of stock changes □ Applicable √ Not-applicable Ownership transfer of stock change □ Applicable √ Not-applicable Progress of Share Repurchase □ Applicable √ Not-applicable Implementation Progress of Reducing Holdings of Repurchase Shares by Centralized Bidding □ Applicable √ Not-applicable 31 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report The influence of share changes on financial indicators, such as the latest year and the latest basic earnings per share and diluted earnings per share, the net assets per share belonging to the common shareholder of the company □ Applicable √ Not-applicable Other contents which the company regards necessary and securities supervising institution requires the Company to disclose □ Applicable √ Not-applicable 2. Change in Non-circulated shares √ Available □ Not-available Unit: one share Non-circulated Non-circulated Name of Decrease during the Increase during the Reason for non-circulated Date for the shares held at the shares held at the shareholders reporting period reporting period shares circulated shares year-beginning year-end 6 months after Zhu Huarong 18,900 - - 18,900 Executive lock stocks the retirement Total 18,900 - - 18,900 -- -- II. Issuing and listing of securities 1. Securities issuance (excluding preferred stocks) during the reporting period √Applicable □Not-applicable On April 27, 2020, the company held the 64th meeting of the seventh board of directors, at which 13 proposals including the "Proposal on the Company's Non-public Issuance of A Shares" were reviewed and approved, and the company plans to issue non-public shares to specific targets. The total amount of raised funds does not exceed 6 billion yuan (including this figure). For details, please refer to the relevant announcement disclosed by the company on the http://www.cninfo.com.cn on April 28, 2020. On May 22, 2020, this matter was approved by the 2019 Annual General Meeting of Shareholders (Announcement No.: 2020-44). 2. Changes in the total number of shares of the Company and changes in the structure of the shareholders and in the structure of the Company's assets and liabilities √Applicable □Not-applicable On April 18, 2020, the company disclosed the "Indicative Announcement Concerning the Gratuitous Transfer of 0.71% Equity of the Company by the Actual Controller" (Announcement No.: 2020-18). The company’s actual controller, China South Industries Group has signed a free transfer agreement with China Power Technology Investment Holdings Co., Ltd. (hereinafter referred to as “China Power Technology Investment Holdings”) to transfer 34,232,588 shares of Changan Automobile for free., which accounts for 0.71% of the company’s total issued shares. On May 29, 2020, the company disclosed the "Announcement on Obtaining the Approval of the State-owned Assets Supervision and Administration Commission of the State Council for the Gratuitous Transfer of the Company's Equity by the Actual Controller" (Announcement No.: 2020-45). On June 19, 2020, the company disclosed the "Announcement on the Completion of Transfer 32 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Registration for the Gratuitous Transfer of State-owned Equity of the Actual Controller" (Announcement No.: 2020-54), confirming that the transfer and registration procedures of the above-mentioned freely transferred shares was completed, and the transfer date was June 18, 2020. 3. Existing internal staff shares □ Applicable √ Not-applicable III. Shareholding and shareholders of the company Unit: one share Number of preferred At the end of the report period, the total number of shareholders with resumed 136,260 0 shareholders voting rights at the period-end Holding more than 5% of the shareholders, or top 10 shareholders situation Percentage Increases and Pledged/ Frozen Non-circulated Circulated Nature of of total Shares held at decreases cases Name of shareholders shares held at shares held at Shareholders shares the year-end during the Share the year-end the year-end amount (%) report period status China South Industries State-owned legal No pledge 20.84% 1,001,080,085 -34,232,588 - - Group Co., Ltd. person shares or freeze China Changan State-owned legal No pledge 19.32% 928,044,946 - - - Automobile Co., Ltd. person shares or freeze domestic general China securities No pledge legal person 4.88% 234,265,333 - - - finance Co, Ltd or freeze shares Hong Kong Central foreign legal 4.05% 194,470,755 76,774,027 Settlement Co., Ltd. person shares. United Prosperity foreign legal No pledge Investment Co., 3.21% 154,120,237 - - - person shares or freeze Limited domestic general Central Huijin No pledge legal person 1.15% 55,393,100 - - - Investment Ltd. or freeze shares DRAGON BILLION foreign legal No pledge SELECT MASTER 0.76% 36,547,305 -1,459,431 - - person shares or freeze FUND GIC PRIVATE foreign legal No pledge 0.73% 35,283,393 - - - LIMITED person shares or freeze 33 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report China Power State-owned legal No pledge Investment Holdings 0.71% 34,232,588 34,232,588 - - person shares or freeze Co., Ltd. CAPE ANN GLOBAL foreign legal No pledge DEVELOPING 0.51% 24,423,660 2,572,535 - - person shares or freeze MARKETS FUND Among the top 10 shareholders, China South Industries Group Co., Ltd., the actual controller; China Changan Explanation on the relationship and the Automobile Group Co., Ltd., the controlling shareholder, and its wholly owned subsidiary United Prosperity action alike of above shareholders (Hong Kong) Investment Co., Limited. belong to the concerted actor regulated by “Disclosure Administration of Shares Change Information of The Listed Company”. The ten largest circulated shareholders Shares type Name of shareholders Shares at the year end Type Amount China South Industries Group Co., Ltd. 1,001,080,085 RMB ordinary shares 1,001,080,085 China Changan Automobile Co., Ltd. 928,044,946 RMB ordinary shares 928,044,946 China securities finance Co, Ltd 234,265,333 RMB ordinary shares 234,265,333 Hong Kong Central Settlement Co., Ltd. 194,470,755 RMB ordinary shares 194,470,755 Domestic listed foreign United Prosperity Investment Co., Limited 154,120,237 154,120,237 shares Central Huijin Investment Ltd. 55,393,100 RMB ordinary shares 55,393,100 Domestic listed foreign DRAGON BILLION SELECT MASTER FUND 36,547,305 36,547,305 shares Domestic listed foreign GIC PRIVATE LIMITED 35,283,393 35,283,393 shares China Power Investment Holdings Co., Ltd. 34,232,588 RMB ordinary shares 34,232,588 CAPE ANN GLOBAL DEVELOPING MARKETS Domestic listed foreign 24,423,660 24,423,660 FUND shares Among the top 10 shareholders, China South Industries Group Co., Ltd., the actual The top 10 shareholders to sell circulated shares, and the controller; China Changan Automobile Group Co., Ltd., the controlling shareholder, and its infinite tradable relationship between shareholders and wholly owned subsidiary United Prosperity (Hong Kong) Investment Co., Limited belong top 10 shareholders or concerted action to the concerted actor regulated by “Disclosure Administration of Shares Change Information of The Listed Company”. Whether the company top 10 shareholders of ordinary shares, and the top 10 circulated shareholders agreed on the repurchase transactions during the report period □ Available √ Not- available The company top 10 shareholders of ordinary shares, and the top 10 circulated shareholders did not agree on the repurchase transactions during the reporting period 34 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report IV. The change of the controlling shareholders and theactual controllers During the reporting period the change of controlling shareholders □ Available √ Not- available No changes in controlling shareholders during the reporting period. The change of the actual controllers during the reporting period □ Available √ Not- available No changes in the actual controllers during the reporting period. 35 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 7 Information about Directors, Supervisors, Senior Management I. Share ownership of directors, supervisors and senior managers □ Available √ Not- available The share ownership of the directors, supervisors and senior managers has no change during the reporting period. For details, plaese refer to 2019 annual report. II. Departure and Hiring information of the directors, supervisors and senior manager √ Available □ Not-available Name Duties Type Date Reason Zhu Huarong Director ,Chairman Election June 22th, 2020 Appointment due to work Tan Xiaogang Director Election June 22th, 2020 Appointment due to work Lv Laisheng Director Election June 22th, 2020 Appointment due to work Zhou Zhiping Director Election June 22th, 2020 Appointment due to work Wang Jun Director Election June 22th, 2020 Appointment due to work Zhang Deyong Director Election June 22th, 2020 Appointment due to work Liu Jipeng independent director Election June 22th, 2020 Appointment due to work Li Qingwen independent director Election June 22th, 2020 Appointment due to work Chen Quanshi independent director Election June 22th, 2020 Appointment due to work Ren Xiaochang independent director Election June 22th, 2020 Appointment due to work Pang Yong independent director Election June 22th, 2020 Appointment due to work Tan Xiaosheng independent director Election June 22th, 2020 Appointment due to work Wei Xinjiang independent director Election June 22th, 2020 Appointment due to work Cao Xingquan independent director Election June 22th, 2020 Appointment due to work Yan Ming Supervisory board chairman Election June 22th, 2020 Appointment due to work Sun Dahong Supervisor Election June 22th, 2020 Appointment due to work Zhao Jun Supervisor Election June 22th, 2020 Appointment due to work Wang Yanhui Employee Supervisor Election June 19th, 2020 Appointment due to work Luo Yan Employee Supervisor Election June 19th, 2020 Appointment due to work Zhu Huarong President, Party Secretary recruitment July 13th, 2020 Appointment due to work Deputy Secretary of the Party Wang Jun Committee (Identified as a senior recruitment July 13th, 2020 Appointment due to work manager) Yuan Mingxue Executive Vice President recruitment July 13th, 2020 Appointment due to work 36 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Liu Bo Deputy Vice Director recruitment July 13th, 2020 Appointment due to work He Chaobing Deputy Vice Director recruitment July 13th, 2020 Appointment due to work Li Wei Deputy Vice Director recruitment July 13th, 2020 Appointment due to work Secretary of the Commission for Hua Zhanbiao Discipline Inspection (identified as a recruitment July 13th, 2020 Appointment due to work senior manager) Tan Benhong Deputy Vice Director recruitment July 13th, 2020 Appointment due to work Liu Zhengjun Deputy Vice Director recruitment July 13th, 2020 Appointment due to work Zhang Deyong The chief accountant recruitment July 13th, 2020 Appointment due to work Ye Pei Vice President recruitment July 13th, 2020 Appointment due to work Zhao Fei Vice President recruitment July 13th, 2020 Appointment due to work Chen Wei Vice President recruitment July 13th, 2020 Appointment due to work Li Mingcai Vice President recruitment July 13th, 2020 Appointment due to work Li Jun Board Sectary recruitment July 13th, 2020 Appointment due to work Zhang Baolin Chairman Departure June 5th, 2020 Job change Zhang Dongjun Director Departure June 22th, 2020 General election Zhao Huixia Supervisor Departure June 22th, 2020 General election Zhang Jingjing Deputy Vice Director Departure July 13th, 2020 General election Chapter 8 Corporate Bonds Is there a corporate bond that is publicly issued and listed on the stock exchange and fails to be fully paid up or not due on maturity until the approval of the semi-annual report □ Yes √ No 37 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 9 The Financial Statements I. Auditing Report Semi-annual report is audited □ Yes √ No No audit on the semi-annual financial report. II. Financial statement ment Financial in notes to the statements of the unit is: RMB yuan 1. Consolidated Balance Sheet In RMB Yuan Account June 30, 2020 December 31, 2019 Current assets: Cash 17,326,421,237.43 10,066,171,353.48 Transactional financial assets 4,173,150,897.00 2,419,476,200.00 Notes receivable 21,629,277,146.93 26,805,635,587.19 Accounts receivable 2,299,982,425.41 838,314,076.82 Prepayments 636,088,225.27 623,801,896.07 Other receivables 1,042,027,106.65 3,731,755,992.46 Inventories 4,040,392,469.99 3,375,441,488.37 Contract assets 2,055,476,727.43 Other current assets 1,100,242,219.66 1,746,120,128.04 Total current assets 54,303,058,455.77 49,606,716,722.43 Non-current assets: Long-term receivables 12,808,010,205.56 11,008,336,989.09 Other equity investment 734,506,100.00 734,506,100.00 Investment properties 6,989,493.94 7,102,849.72 Fixed assets 25,896,056,062.39 26,939,490,554.19 38 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Construction in progress 1,793,015,326.03 1,729,803,028.43 Intangible assets 5,048,286,334.37 5,209,619,313.49 Devlopment expenditure 516,943,366.86 814,745,464.20 Goodwill 42,586,584.41 9,804,394.00 Long-term deferred expenses 11,768,576.59 14,327,639.90 Deferred tax assets 1,640,537,797.01 1,542,600,534.93 Total non-current assets 48,498,699,847.16 48,010,336,867.95 Total assets 102,801,758,302.93 97,617,053,590.38 Current liabilities: Short-term loans 365,525,472.30 229,580,000.00 Notes payable 17,021,001,941.49 13,430,543,294.23 Accounts payable 18,206,448,534.41 18,905,725,271.50 Advances from customers 2,315,641,685.78 Contract liabilities 2,162,739,729.94 Payroll payable 899,656,704.69 1,046,335,781.91 Taxes payable 448,654,660.12 889,092,442.80 Other payables 3,074,351,444.31 4,809,918,141.45 Interest payables 1,167,776.43 40,384.93 Other current liabilities 4,569,806,449.83 4,253,942,761.77 Total current liabilities 46,748,184,937.09 45,880,779,379.44 Non-current liabilities: Long-term loans 1,555,300,000.00 55,300,000.00 Long-term payable 702,461,540.35 857,356,423.71 Long term payroll payable 43,359,523.52 45,932,000.00 Estimated liabilities 3,169,800,842.14 3,352,580,839.28 Deferred earnings 3,450,963,103.29 3,194,291,079.21 Deferred tax liabilities 557,904,374.46 296,742,890.29 Total non-current liabilities 9,479,789,383.76 7,802,203,232.49 Total liabilities 56,227,974,320.85 53,682,982,611.93 Owners’ equity: Share capital 4,802,648,511.00 4,802,648,511.00 Capital reserves 5,366,097,594.66 5,366,097,594.66 39 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Other Comprehensive Income 146,761,519.56 139,994,580.19 Special reserves 78,399,497.78 47,076,242.71 Surplus reserves 2,401,324,255.50 2,401,324,255.50 Retained earnings 33,873,337,962.28 31,271,171,559.60 Equity attributable to owners 46,668,569,340.78 44,028,312,743.66 Minority interests -94,785,358.70 -94,241,765.21 Total equity 46,573,783,982.08 43,934,070,978.45 Total liabilities and owener’s equity 102,801,758,302.93 97,617,053,590.38 Legal person: Zhu Huarong Chief financial officer: Zhang Deyong The head of accounting department: Chen Jianfeng 2. Balance sheet In RMB Yuan Account June 30, 2020 December 31, 2019 Current assets: Cash 13,159,786,888.55 6,563,020,335.56 Transactional financial assets 162,945,000.00 184,245,000.00 Notes receivable 20,639,888,071.96 25,837,326,483.09 Accounts receivable 5,793,044,421.21 5,094,270,365.72 Prepayments 477,501,198.01 403,105,316.24 Other receivables 2,087,736,557.44 2,597,314,344.40 Inventories 2,692,995,183.22 1,735,570,691.28 Contract assets 1,412,177,092.60 Other current assets 413,864,092.40 798,430,035.62 Total current assets 46,839,938,505.39 43,213,282,571.91 Non-current assets: Long-term equity investments 15,927,040,641.38 16,052,319,271.82 Other equity investment 724,309,400.00 724,309,400.00 Fixed assets 19,696,145,485.76 20,301,231,002.41 Construction in progress 1,630,762,467.34 1,545,211,000.22 Intangible assets 3,851,090,092.12 4,030,438,649.57 Development expenditure 436,066,340.39 431,774,377.27 Long-term deferred expenses 7,742,327.63 9,719,259.84 40 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Deferred tax assets 1,401,475,134.44 1,318,884,054.48 Total non-current assets 43,674,631,889.06 44,413,887,015.61 Total assets 90,514,570,394.45 87,627,169,587.52 Current liabilities: Short-term loans 29,580,000.00 29,580,000.00 Notes payable 15,032,991,305.12 11,983,445,725.06 Accounts payable 15,706,279,887.99 15,601,432,751.74 Advances from customers 1,870,992,349.08 Contract liabilities 1,807,709,690.50 Payroll payable 597,737,081.03 641,340,149.30 Taxes payable 307,533,461.81 453,619,905.66 Other payables 2,664,677,248.88 4,301,257,819.04 Interest payables 1,167,776.43 40,384.93 Other current liabilities 3,747,004,808.36 3,400,065,879.02 Total current liabilities 39,893,513,483.69 38,281,734,578.90 Non-current liabilities: Long-term loans 1,555,300,000.00 55,300,000.00 Long-term payable 130,720,735.03 285,768,478.89 Long term payroll payable 20,430,629.02 22,747,000.00 Estimated liabilities 2,330,116,808.17 2,413,434,397.36 Deferred earnings 2,169,871,239.55 2,135,615,106.85 Deferred tax liabilities 78,580,341.60 81,775,341.60 Total non-current liabilities 6,285,019,753.37 4,994,640,324.70 Total liabilities 46,178,533,237.06 43,276,374,903.60 Owners' equity: Share capital 4,802,648,511.00 4,802,648,511.00 Capital reserves 5,014,772,792.87 5,014,772,792.87 Other comprehensive income 259,380,413.58 259,380,413.58 Special reserves 21,702,787.13 19,917,658.63 Surplus reserves 2,401,324,255.50 2,401,324,255.50 Retained earnings 31,836,208,397.31 31,852,751,052.34 Total owners' equity 44,336,037,157.39 44,350,794,683.92 41 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Total liabilities and owners’ equity 90,514,570,394.45 87,627,169,587.52 3. Consolidated Income Statement In RMB Yuan Account Current Period Prior Period 1.Total operating revenue 32,781,657,479.10 29,875,780,096.84 Less:Operating cost 29,734,615,697.63 27,419,410,626.92 Tax and surcharges 1,206,286,383.45 1,080,270,474.78 Operating expenses 1,270,717,082.07 1,443,216,541.30 General and administrative expenses 1,164,152,772.91 843,160,552.62 Research and development expenses 1,464,554,423.42 1,720,159,658.88 Financial expenses -98,053,545.38 -96,832,709.15 Interest expense 20,373,153.36 28,216,059.24 Interest income 131,048,028.86 128,484,820.10 Add: Other income 215,977,955.28 620,733,074.11 Investment income 3,000,803,663.99 -108,336,709.94 Including: Investment income from associates and joint -528,282,156.89 -108,336,709.94 venture Gains from changes in fair value 1,753,674,697.00 40,337,151.27 Credit impairment loss -23,300,119.01 -9,529,733.66 Asset impairment loss -208,242,617.71 -152,676,538.06 Gain on disposal of assets 33,428,646.97 9,392,459.28 3.Operating profit 2,811,726,891.52 -2,133,685,345.51 Add: Non-operating income 31,178,860.44 18,836,680.44 Less: Non-operating expenses 51,351,646.13 12,645,067.20 4.Total profit 2,791,554,105.83 -2,127,493,732.27 Less: Income tax expense 189,931,296.64 116,567,696.08 5.Net profit 2,601,622,809.19 -2,244,061,428.35 Classification by going concern Net profit from continuing operations 2,601,622,809.19 -2,244,061,428.35 Net profit from discontinued operations Classification by ownership attribution Net profit attributable to owners 2,602,166,402.68 -2,240,039,761.11 Minority interests -543,593.49 -4,021,667.24 42 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 6.Other comprehensive income, net of tax 6,766,939.37 22,567,848.13 Net after-tax net of other comprehensive income 6,766,939.37 22,567,848.13 attributable to the parent company owner Other comprehensive income that will be reclassified 6,766,939.37 22,567,848.13 into profit or loss Foreign currency financial statement translation 6,766,939.37 22,567,848.13 difference 7.Total comprehensive income 2,608,389,748.56 -2,221,493,580.22 Total comprehensive income attributable to owners 2,608,933,342.05 -2,217,471,912.98 Total comprehensive income attributable to minority -543,593.49 -4,021,667.24 interest 8.Earnings per share Basic earnings per share 0.54 -0.47 Diluted earnings per share Not applicable Not applicable 4. Income Statement In RMB Yuan Account Current Period Prior Period 1.Operating revenue 29,758,919,897.37 26,805,108,322.22 Less: Operating cost 27,911,858,903.03 24,637,906,770.95 Tax and surcharges 762,021,502.79 855,166,897.03 Operating expenses 961,039,656.72 902,216,576.48 General and administrative expenses 726,483,524.17 307,874,508.68 Research and development expenses 1,380,814,145.22 1,710,222,941.73 Financial expenses -97,970,764.79 -88,753,361.46 Interest expense 4,888,747.72 14,997,114.41 Interest income 110,304,548.86 109,584,194.58 Add: Other income 57,884,810.14 406,839,978.09 Investment income 2,317,139,772.66 -73,898,822.33 Including: Investment income from associates and joint -430,245,711.08 -78,048,193.41 venture Gains from changes in fair value -21,300,000.00 51,830,000.00 Credit impairment loss -21,114,561.28 -4,381,254.25 Asset impairment loss -162,746,163.89 -141,818,001.51 43 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Gain on disposal of assets -10,976,304.75 6,747,426.61 2.Operating profit 273,560,483.11 -1,274,206,684.58 Add: Non-operating income 22,925,521.70 14,232,341.29 Less: Non-operating expenses 43,916,807.17 8,718,726.38 3.Total profit 252,569,197.64 -1,268,693,069.67 Less: Income tax expense -85,786,079.95 99,788,296.30 4.Net profit 338,355,277.59 -1,368,481,365.97 Net profit from continuing operations 338,355,277.59 -1,368,481,365.97 Net profit from discontinued operations 5.Other comprehensive income, net of tax 6.Total comprehensive income 338,355,277.59 -1,368,481,365.97 7.Earnings per share Basic earnings per share 0.07 -0.28 Diluted earnings per share 不适用 不适用 5. Consolidated cash flow statement In RMB Yuan Account Current Period Prior Period 1.Cash flows from operating activities: Cash received from sale of goods or rendering of services 39,547,166,284.75 37,501,789,702.13 Refunds of taxes 212,875,606.35 305,232,064.00 Cash received relating to other operating activities 1,460,594,720.28 3,464,749,370.24 Subtotal of cash inflows 41,220,636,611.38 41,271,771,136.37 Cash paid for goods and services 26,823,061,336.77 29,029,097,098.22 Cash paid to and on behalf of employees 2,602,751,432.93 2,984,764,831.32 Cash paid for all types of taxes 1,774,453,965.05 1,743,016,544.47 Cash paid relating to other operating activities 3,107,783,183.03 3,294,629,031.41 Subtotal of cash outflows 34,308,049,917.78 37,051,507,505.42 Net cash flows from operating activities 6,912,586,693.60 4,220,263,630.95 2.Cashflows from investing activities: Cash received from investment income 52,200,268.08 Net cash received from disposal of fixed assets, intangible assets 50,925,772.51 5,214,056.34 44 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report and other long-term assets Cash received relating to other investing activities 2,401,804.55 1,478,695.29 Subtotal of cash inflows 105,527,845.14 6,692,751.63 Cash paid for acquisition of fixed assets, intangible assets and 1,240,508,778.71 2,438,475,206.69 other long-term assets Cash paid for acquisition of investments 13,494,996.00 936,788,517.00 Cash paid relating to other investing activities 104,231,229.20 315,938,190.60 Subtotal of cash outflows 1,358,235,003.91 3,691,201,914.29 Net cash flows from investing activities -1,252,707,158.77 -3,684,509,162.66 3.Cash flows from financing activities: Absorb cash received from investment Cash received relating to other financing activities 1,661,945,472.30 41,000,000.00 Cash received relating to other financing activities 330,073,299.87 37,159,887.74 Subtotal of cash inflows 1,992,018,772.17 78,159,887.74 Cash repayments of borrowings 26,000,000.00 27,708,100.00 Cash paid for distribution of dividends or profits and interest 14,711,837.52 23,367,744.44 expenses Cash paid relating to other financing activities 141,928,386.47 92,571,987.62 Subtotal of cash outflows 182,640,223.99 143,647,832.06 Net cash flows from financing activities 1,809,378,548.18 -65,487,944.32 4.Effect of changes in exchange rate on cash -8,613,576.66 29,186,874.52 5.Net increase in cash and cash equivalents 7,460,644,506.35 499,453,398.49 Add: Opening balance of cash and cash equivalents 9,360,474,674.89 9,648,153,614.80 6.Closing balance of cash and cash equivalents 16,821,119,181.24 10,147,607,013.29 6. Cash flow statement In RMB Yuan Account Current Period Prior Period 1.Cash flows from operating activities: Cash received from sale of goods or rendering of services 35,373,943,984.62 34,665,878,858.45 45 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Cash received relating to other operating activities 307,884,774.24 2,199,853,209.77 Subtotal of cash inflows 35,681,828,758.86 36,865,732,068.22 Cash paid for goods and services 24,853,008,533.51 26,688,730,896.99 Cash paid to and on behalf of employees 1,869,061,222.17 2,093,118,245.08 Cash paid for all types of taxes 745,408,673.77 1,228,855,624.27 Cash paid relating to other operating activities 1,991,778,401.18 3,878,425,262.91 Subtotal of cash outflows 29,459,256,830.63 33,889,130,029.25 Net cash flows from operating activities 6,222,571,928.23 2,976,602,038.97 2.Cashflows from investing activities: Cash received from return on investments 56,622,717.45 4,398,333.33 Net cash received from disposal of fixed assets, intangible assets 93,034.76 and other long-term assets Subtotal of cash inflows 56,715,752.21 4,398,333.33 Cash paid for acquisition of fixed assets, intangible assets and 992,736,013.34 2,281,259,200.99 other long-term assets Cash paid for acquisition of investments 186,108,581.00 997,294,972.55 Cash paid relating to other investing activities 300,000,000.00 Subtotal of cash outflows 1,178,844,594.34 3,578,554,173.54 Net cash flows from investing activities -1,122,128,842.13 -3,574,155,840.21 3.Cash flows from financing activities: Cash received from borrowings 1,500,000,000.00 Subtotal of cash inflows 1,500,000,000.00 Cash paid for distribution of dividends or profits and interest 3,676,533.11 14,997,114.41 expenses Subtotal of cash outflows 3,676,533.11 14,997,114.41 Net cash flows from financing activities 1,496,323,466.89 -14,997,114.41 4.Effect of changes in exchange rate on cash 5.Net increase in cash and cash equivalents 6,596,766,552.99 -612,550,915.65 Add: Opening balance of cash and cash equivalents 6,563,020,335.56 7,310,973,018.99 6.Closing balance of cash and cash equivalents 13,159,786,888.55 6,698,422,103.34 46 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 7. Consolidated statement of changes in shareholders’ equity In RMB Yuan Current period Equity attributable to owners Items Less: Other Special General Minority interest Total equity Share capital Capital reserves Treasury Surplus reserves Retained earnings comprehensive reserves reserves shares income I. At end of last year 4,802,648,511.00 5,366,097,594.66 47,076,242.712,401,324,255.50 31,271,171,559.60 139,994,580.19 -94,241,765.21 43,934,070,978.45 II. At beginning of year 4,802,648,511.00 5,366,097,594.66 47,076,242.712,401,324,255.50 31,271,171,559.60 139,994,580.19 -94,241,765.21 43,934,070,978.45 III. Changes during the year 31,323,255.07 2,602,166,402.68 6,766,939.37 -543,593.49 2,639,713,003.63 1.Total comprehensive 2,602,166,402.68 6,766,939.37 -543,593.49 2,608,389,748.56 income 2. Capital contributed by owners and capital decreases 3. Distribution of profit Distribution to owners 4. Special reserves 31,323,255.07 31,323,255.07 (1) Pick-up in current 58,125,436.05 58,125,436.05 period (2) Used in current period -26,802,180.98 -26,802,180.98 IV. At end of current period 4,802,648,511.00 5,366,097,594.66 78,399,497.78 2,401,324,255.50 33,873,337,962.28 146,761,519.56 -94,785,358.70 46,573,783,982.08 47 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Prior period In RMB Yuan Prior period Equity attributable to owners Items Less: Other Special General Minority interest Total equity Share capital Capital reserves Treasury Surplus reserves Retained earnings comprehensive reserves reserves shares income I. At end of last year 4,802,648,511.00 5,057,242,440.17 41,222,369.10 2,401,324,255.50 33,707,011,170.31 235,509,930.44 -92,036,723.19 46,152,921,953.33 II. At beginning of year 4,802,648,511.00 5,057,242,440.17 - 41,222,369.10 2,401,324,255.50 33,707,011,170.31 235,509,930.44 -92,036,723.19 46,152,921,953.33 III. Changes during the year - - - 31,431,730.08 - -2,326,487,434.31 22,567,848.13 -4,021,667.24 -2,276,509,523.34 1.Total comprehensive -2,240,039,761.11 22,567,848.13 -4,021,667.24 -2,221,493,580.22 income 2. Capital contributed by - owners and capital decreases 3. Distribution of profit -86,447,673.20 -86,447,673.20 Distribution to owners -86,447,673.20 -86,447,673.20 4. Special reserves 31,431,730.08 31,431,730.08 (1) Pick-up in current 36,229,412.78 36,229,412.78 period (2) Used in current period -4,797,682.70 -4,797,682.70 IV. At end of current period 4,802,648,511.00 5,057,242,440.17 - 72,654,099.18 2,401,324,255.50 - 31,380,523,736.00 258,077,778.57 -96,058,390.43 43,876,412,429.99 48 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 8. Statement of changes in shareholders’ equity In RMB Yuan Current period Less: Other Items Special Share capital Capital reserves Treasury Surplus reserves Retained earnings comprehensive Total equity reserves shares income I. At end of last year 4,802,648,511.00 5,014,772,792.87 19,917,658.63 2,401,324,255.50 31,852,751,052.34 259,380,413.58 44,350,794,683.92 Add: others -354,897,932.62 -354,897,932.62 II. At beginning of year 4,802,648,511.00 5,014,772,792.87 19,917,658.63 2,401,324,255.50 31,497,853,119.72 259,380,413.58 43,995,896,751.30 III. Changes during the year 1,785,128.50 338,355,277.59 340,140,406.09 1.Total comprehensive income 338,355,277.59 338,355,277.59 2. Capital contributed by owners and capital decreases The amount of shares paid into the owner's equity 3. Distribution of profit Distribution to owners 4. Special reserves 1,785,128.50 1,785,128.50 (1) Pick-up in current period 23,380,155.36 23,380,155.36 (2) Used in current period -21,595,026.86 -21,595,026.86 IV. At end of current period 4,802,648,511.00 5,014,772,792.87 21,702,787.13 2,401,324,255.50 31,836,208,397.31 259,380,413.58 44,336,037,157.39 49 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Prior period In RMB Yuan Prior period Less: Other Items Special Share capital Capital reserves Treasury Surplus reserves Retained earnings comprehensive Total equity reserves shares income I. At end of last year 4,802,648,511.00 4,705,917,638.38 19,835,367.61 2,401,324,255.50 34,682,279,143.32 149,525,803.58 46,761,530,719.39 II. At beginning of year 4,802,648,511.00 4,705,917,638.38 - 19,835,367.61 2,401,324,255.50 34,682,279,143.32 149,525,803.58 46,761,530,719.39 III. Changes during the year - - - 6,116,128.10 - -1,454,929,039.17 - -1,448,812,911.07 1.Total comprehensive income -1,368,481,365.97 - -1,368,481,365.97 2. Capital contributed by owners and - capital decreases The amount of shares paid into the owner's equity 3. Distribution of profit -86,447,673.20 -86,447,673.20 Distribution to owners -86,447,673.20 -86,447,673.20 4. Special reserves 6,116,128.10 6,116,128.10 (1) Pick-up in current period 23,037,668.82 23,037,668.82 (2) Used in current period -16,921,540.72 -16,921,540.72 IV. At end of current period 4,802,648,511.00 4,705,917,638.38 - 25,951,495.71 2,401,324,255.50 33,227,350,104.15 149,525,803.58 45,312,717,808.32 50 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report III. CORPORATE INFORMATION Chongqing Changan Automobile Company Limited (hereafter referred to as the “Company”) is a company limited by shares registered in Chongqing, People’s Republic of China. It was establish on 31 October 1996 with an indefinite business period. The ordinary A shares of Renminbi issued by the company and the B shares of domestically listed foreign shares have been listed on the Shenzhen Stock Exchange. Changan Group is headquartered at 260 Jianxin East Road, Jiangbei District, Chongqing, China. After the establishment of the company, the share capital and shareholding structure have undergone several changes. As of June 30, 2020, the company’s controlling shareholder China Changan Automobile Group Company Limited (hereinafter referred to as “China Changan”) and its wholly-owned subsidiary Zhonghui Futong (Hong Kong) Investment Company Limited held a total of ordinary shares of the company 1,082,165,183 shares with an equity ratio of 22.53%. China South Industries Group Co., Ltd. (hereinafter referred to as “China South Group”), the parent company of China Changan, and its wholly-owned subsidiary, South Industries International Holdings (Hong Kong) Company Limited, hold 1,003,625,399 ordinary shares of the company, with a 20.90% shareholding ratio. China Changan and W China South Group holds ordinary shares 2,085,790,582 in total with a shareholding ratio of 43.43%. The Company and its subsidiaries collectively refer to as the Group, and its main business activities are: the manufacturing and sales of automobiles (including cars), automobile engine products, and supporting parts. The holding company and ultimate holding company of the Company are China Changan and China South Group respectively. The scope of consolidation in the consolidated financial statement is determined based on control. For the consolidation scope of this year, please refer to Note VIII. IV. BASIS OF PREPERATION The financial statements have been prepared in accordance with Accounting Standards for Business Enterprises-Basic Standard and the specific standards issued and modified subsequently, 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 financial statements have been prepared under the historical cost convention, except for certain financial instruments. If the assets are impaired, the corresponding provisions should be made accordingly. 51 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report V. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES According to the actual production and operation characteristics, the group formulated the specific accounting policies and accounting estimates, mainly reflected in provision of accounts receivables (note 5 (9)), inventory valuation (Note 5 (10)), depreciation of fixed assets, intangible assets amortization (Note 5 (15) (18)), condition of capitalization of research and development expense (Note 5 (18)) and revenue recognition and measurement (Note 5 (24)). 1. Statement of compliance with Accounting Standards for Business Enterprises The financial statements present fairly and fully, the financial position of the Company as at 30 June 2020 and the financial results and the cash flows for the half year then ended in accordance with Accounting Standards for Business Enterprises. 2. Accounting year The accounting year of the Group is from 1 January to 31 December of each calendar year. 3. Functional currency The Group’s functional and reporting currency is the Renminbi (“RMB”). Unless otherwise stated, the unit of the currency is Yuan. Each entity in the Group determines its own functional currency in accordance with the operating circumstances. At the end of the reporting period, the foreign currency financial statements are translated into the reporting currency of the Company of RMB. 4. Business combination 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 which, 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 involving entities under common control 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 52 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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 date. Goodwill is initially recognised and measured at cost, being the excess of the aggregate of the fair value of the consideration transferred (or the fair value of the equity securities issued) and any fair value of the Group’s previously held equity interest in the acquiree over the Group’s interest in the fair value of the acquiree’s net identifiable assets. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Where the aggregate of the fair value of the consideration transferred (or the fair value of the equity securities issued) and any fair value of the Group’s previously held equity interest in the acquiree is lower than the Group’s interest in the fair value of the acquiree’s net identifiable assets, the Group reassesses the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities and the fair value of the consideration transferred (or the fair value of the equity securities issued), together with the fair value of the Group’s previously held equity interest in the acquiree. If after that reassessment, the aggregate of the fair value of the consideration transferred (or the fair value of the equity securities issued) and the Group’s previously held equity interest in the acquiree is still lower than the Group’s interest in the fair value of the acquiree’s net identifiable assets, the Group recognise the remaining difference in profit or loss. 5. Consolidated financial statements The scope of the consolidated financial statements, which include the financial statements of the Company and all of its subsidiaries, is determined on the basis of control. A subsidiary is an entity that is controlled by the Company (such as an enterprise, a deemed separate entity, or a structured entity controlled by the Company). In the preparation of the consolidated financial statements, the financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 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. 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. 53 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report If the changes of relevant facts and circumstances will result in the changes of one or more control elements, then the Group should reassess whether it has taken control of the investee. 6. Joint venture arrangement classification and joint operation Joint venture arrangements are classified into joint operation and joint venture. Joint operation refers to those joint venture arrangements, relevant assets and liabilities of which are enjoyed and assumed by the joint venturers. Joint ventures refer to those joint venture arrangements, only the right to net assets of which is enjoyed by the joint venturers. Any joint venturer shall recognize the following items related to its share of benefits in the joint operation and conduct accounting treatment in accordance with relevant accounting standards for business enterprises: assets it solely holds and its share of jointly-held assets based on its percentage; liabilities it solely assumes and its share of jointly-assumed liabilities based on its percentage; incomes from sale of output enjoyed by it from the joint operation; incomes from sale of output from the joint operation based on its percentage; and separate costs and costs for the joint operation based on its percentage. 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 Group, 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 Group 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 on 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 other comprehensive income 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; income and expense in income 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 54 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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. Recognition and derecognition The Group recognizes a financial asset or a financial liability, when the Group becomes a party to the contractual provision of the instrument. A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated balance sheet) when: 1) the rights to receive cash flows from the financial asset have expired; 2) the Group has transferred its rights to receive cash flows from the financial asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) has transferred substantially all the risks and rewards of the financial asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the financial asset. A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in profit or loss. Regular way purchases and sales of financial assets are recognized and derecognized using trade date accounting. Regular way purchases or sales are purchases or sales of financial assets that require delivery within the period generally established by regulation or convention in the marketplace. The trade date is the date that the Group committed to purchase or sell a financial asset. Classification and measurement of financial assets The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them: financial assets at fair value through profit or loss, financial assets at amortized cost and financial assets at fair value through other comprehensive income. All affected related financial assets will be reclassified only if the Group changes its business model for managing financial assets. 55 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Financial assets are measured at fair value on initial recognition, but accounts receivable or notes receivable arising from the sale of goods or rendering of services that do not contain significant financing components or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component due within one year, are initially measured at the transaction price. For financial assets at fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss, and transaction costs relating to other financial assets are included in the initial recognition amounts. The subsequent measurement of financial assets depends on their classification as follows: Debt investments measured at amortized cost The Group measures financial assets at amortized cost if both of the following conditions are met: the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortized cost are subsequently measured using the effective interest method. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. Debt investments at fair value through other comprehensive income The Group measures debt investments at fair value through other comprehensive income if both of the following conditions are met: the financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income is recognized using the effective interest method. The interest income, impairment losses and foreign exchange revaluation are recognized in profit or loss. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to profit or loss. Equity investments at fair value through other comprehensive income The Group can elect to classify irrevocably its equity investments which are not held for trading as equity investments designated at fair value through other comprehensive income. Only the relevant dividend income (excluding the dividend income explicitly recovered as part of the investment cost) is recognized in profit or loss. Subsequent changes in the fair value are included in other comprehensive income, and no provision for impairment is made. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income to retained earnings. Financial assets at fair value through profit or loss The financial assets other than the above financial assets measured at amortized cost and financial assets at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Such financial assets are subsequently measured at fair value with net changes in fair value recognized in profit or loss. Classification and measurement of financial liabilities 56 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, other financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. For financial liabilities at fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss, and transaction costs relating to other financial assets are included in the initial recognition amounts. The subsequent measurement of financial liabilities depends on their classification as follows: 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 financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading are subsequently measured at fair value with net changes in fair value recognized in profit or loss. Gains or losses on liabilities designated at fair value through profit or loss are recognised in profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to profit or loss. Other financial liabilities Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Impairment of financial assets On the basis of expected credit losses, the Group performs impairment treatment on financial assets measured at amortized cost and equity instrument investments measured at fair value and whose changes are included in other comprehensive income, and reserves for loss are recognized. For receivables and contract assets that do not contain significant financing components, the Group uses a simplified measurement method to measure the loss provision vased on the expected credit loss amount for the entire duration. For financial assets other than the simplified measurement method mentioned above, the Group assesses on each balance sheet date whether its credit risk has not increased significantly since initial recognition, it is in the first stage. The Group measures the loss provision based on the amount equivalent to the expected credit loss in the next 12 months, and calculates the interest income based on the book balance and the actual interest rate; if the credit risk has increased significantly since initial recognition but has not yet suffered credit impairment, it is in the second at this stage, the Group measures the loss provision based on the amount equivalent to the expected credit loss for the entire duration, and calculates the interest income based on the book balance and the actual interest rate; If credit impairment occurs after initial recognition, it is in the third stage. The amount of expected credit losses is measured over the entire duration of the loss allowance, and interest income is calculated based on amortized cost and effective interest rate. For financial instruments with low credit risk on the balance sheet date, the Group assumes that their credit risk has not increased significantly since initial recognition. The Group assesses the expected credit losses of financial instruments based on individual items and portfolios. The Group has considered the credit risk characteristics of different customers and evaluated the expected credit losses of accounts receivable and other receivables based on the ageing combination. 57 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Please refer to Note X.3 for the disclosure of the Group’s judgment criteria for significant increase in credit risk, the definition of credit impairment assets that have occurred, and assumptions about the expected credit loss measurement. When the Group no longer reasonably expects to be able to fully or partially recover the contractual cash flows of financial assets, the Group directly writes down the book balance of the financial asset. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts; and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 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) if 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. Inventories Inventory includes raw materials, goods in transit, work in progress, finished goods, consigned processing materials, low-value consumables and spare parts. 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 low-value consumables. The Group applies a perpetual counting method 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. 58 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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 inventories 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. 11. Contract assets and contract liabilities The Group lists contract assets or contract liabilities in the balance sheet based on the relationship between performance obligations and customer payments. The group offsets the contract assets and contract liabilities under the same contract as net amount. Contract assets Contract assets refer to the right to receive consideration for the transfer of goods or services to customers, and this right depends on factors other than the passage of time. For the determination method and accounting treatment method of the expected credit loss of the contract assets of the Group, please refer to the notes V.9. Contract liabilities Contract liabilities refer to the obligation to transfer goods or services to customers for the consideration received or receivable from customers, such as the payment received before the transfer of promised goods or services. 12. Assets related to contract costs The Group’s assets related to contract costs include contract acquisition costs and contract performance costs. According to their liquidity, they are separately listed in inventory, other current assets and other non-current assets. If the incremental cost incurred by the Group for obtaining the contract is expected to be recovered, it shall be recognized as an asset as the cost of obtaining the contract, unless the asset amortization period does not exceed one year. The cost incurred by the Group for the performance of the contract that does not apply to the scope of relevant standards such as inventory, fixed assets or intangible assets, and meets the following conditions at the same time, is recognized as an asset as the contract performance cost: (1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), clearly borne by the customer, and other costs incurred solely due to the contract; (2) This cost increases the company's future resources for fulfilling contract performance obligations; (3) The cost is expected to be recovered. The Group amortizes the assets related to the contract cost on the same basis as the income recognition related to the assets, and is included in the current profit and loss. 59 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report If the book value of assets related to contract costs is higher than the difference between the following two items, the Group will make provision for impairment of the excess part and recognize it as an asset impairment loss: (1) The remaining consideration that the enterprise is expected to obtain due to the transfer of goods or services related to the asset; (2) Estimate the costs that will be incurred for the transfer of the relevant goods or services. If the depreciation factors of the previous period have changed, and the difference of (1) minus (2) is higher than the book value of the asset, the original provision for asset depreciation should be reversed and included in the current profit and loss, but reversed The subsequent book value of the asset should not exceed the book value of the asset on the date of reversal under the assumption that no impairment provision is made. 13. Long-term equity investments Long-term equity investments include investments in subsidiaries, joint ventures and associates. The long-term investments are initially recorded at costs on acquisition. Long-term investments acquired from business combination under common control shall be initially measured at the carrying value of the held interest of the party being acquired; The difference between the initial measured amounts and the book value of consideration, adjust the capital reserves (if the capital reserve is insufficient to be offset, retained earnings should be adjusted); Long-term investments acquired from business combination not under common control shall be initially measured at the cost (or, the sum of the cost and the carrying value of the previously held equity interest in the acquire for the business combination achieved by stages), which include the fair value of the consideration paid, the liabilities beard and the fair value of issued equity instrument; the other comprehensive income produced from the investment before the acquisition should be transferred into the current year investment income on disposal.Long-term investments acquired not from business combination are initially measured at 1)the consideration together with the cost necessary incurred; 2) the fair value of the equity instruments; and 3) the consideration agreed in the investment agreement by the investors, otherwise the agreed consideration were not fair. The Company adopted cost method to account for long-term investments in the subsidiaries in the separate financial statements of the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Under cost method, the long-term equity investment is valued at the cost of the initial investment. The cost of long-term equity investment should be adjusted in case of additional investment or disinvestments. When cash dividends or profits are declared by the invested enterprise is recognized as investment income in current period. The equity method is applied to account for long-term equity investments, when the Group has jointly control, or significant influence on the investee enterprise. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers). Significant influence is the power to participate in the financial and operating policy decisions of an economic activity but is not control or joint control over those policies. Under equity method, when the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in 60 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report the fair values of the investee’s identifiable net assets at the acquisition date, the difference 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. 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 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. As to other comprehensive income recognized based on measurement of the original equity investment by employing the equity method, accounting treatment shall be made on the same basis as would be required if the invested entity had directly disposed of the assets or liabilities related thereto when measurement by employing the equity method is terminated. As to any change in owners' equity of the invested entity other than net profit or loss, other comprehensive income and profit distribution, the investing party shall be transferred to the income statement for the current period. If the remaining equities still be measured under the equity method, accumulative change previously recorded in other comprehensive income shall be transferred to current profit or loss, in measurement on the same basis as the invested entity had directly disposed of the assets or liabilities related thereto. The income or loss recorded in the equity directly should been transferred to the current income statement on settlement of the equity investment on the disposal proportion. 14. Investment property Investment property are properties held to earn rentals or for capital appreciation, or both, including rented land use right, land use right which is held and prepared for transfer after appreciation, and rented building. The initial measurement of the investment property shall be measured at its actual cost. The follow-up expenses pertinent to an investment property shall be included in the cost of the investment property, if the economic benefits pertinent to this real estate are likely to flow into the enterprise, and, the cost of the investment property can be reliably measured. Otherwise, they should be included in the current profits and losses upon occurrence. The group adopts the cost method to make follow-up measurement to the investment property. The buildings are depreciated under straight-line method. 61 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 15. Fixed assets A fixed asset probably 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 criteria 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 during 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: Category Deprecation period Residual rate (%) Yearly deprecation rate (%) Buildings 20 to 35 years 3% 2.77%-4.85% Machinery (Note) 5 to 20 years 3% 4.85%-19.40% Vehicles 4 to 10 years 3% 9.70%-24.25% Others 3 to 21 years 3% 4.62%-32.33% Note: the molds in machinery should be depreciated in units-of-production method. 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. 16. 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. 17. 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, otherwise the borrowing costs are expensed in the period during which they are incurred. A qualifying asset is an asset (an item of 62 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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 is as part of the cost of a qualifying asset shall commence when: 1) expenditure for the asset is being incurred; 2) borrowing costs are being incurred; and 3) activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs shall be ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale have been done. 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: 1) 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; 2) 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. 18. Intangible assets An intangible asset probably 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. Intangible assets are initially measured at cost. The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition, if the fair value can be reliably measured. 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 43 to 50 years Software 2 years Trademark 10 years 63 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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 the reasonable allocation of outlays cannot be made 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. The Group should test an intangible asset with an indefinite useful life for impairment by comparing its recoverable amount with its carrying amount annually, whenever there is an indication that the intangible asset may be impaired. An intangible asset with an indefinite useful life shall not be amortized. The useful life of an intangible asset that is not being amortised shall be reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If there are indicators that the intangible asset has finite useful life, the accounting treatment would be in accordance with the intangible asset with finite useful life. 19. 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 should meet all the conditions of (a) it is technically feasible 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 (e) 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 Group discriminates between research and development stage with the condition that the project research has been determined, in which the relevant research complete all the fractionalization of products measurements and final product scheme under final approval of management. The expenditures incurred before project-determination stage is charged to the current income, otherwise it is recorded as development cost. 20. Impairment of assets The Group determines the impairment of assets, other than the impairment of inventory, deferred income taxes, and financial assets, using the following methods: 64 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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. An intangible asset which is not ready for its intended use is tested for impairment at least at the end of every year. 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 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 a 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. 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. 21. Long-term deferred expenses The long-term deferred expenses represent the payment for the improvement on buildings and other expenses, which have been paid and should be deferred in the following years. Long-term deferred expenses are amortized on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortization. 22. Employee benefits Employee benefits refer to all kinds of remunerations or compensation made by enterprises to their employees in exchange for 65 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report services provided by the employees or termination of labor relation. Employee compensation includes short-term compensation and post-employment benefits. The benefits offered by enterprises to the spouse, children, the dependents of the employee, the family member of deceased employee and other beneficiaries are also employee compensation. Short-term employee salaries During the accounting period of employee rendering service, the actural employees salaries and are charged to the statement of profit or loss as they become payable in balance sheet. Post-employment benefits (Defined contribution plans) The employees of the Group participate in pension insurance, 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. Post-employment benefits (Defined benefit plan) The Group operates a defined benefit pension plan which requires contributions to be made to a separately administered fund. The benefits are unfunded. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial valuation method. Remeasurements arising from defined benefit pension plans are recognised immediately in the consolidated statement of financial position with a corresponding debit or credit to retained profits through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in profit or loss at the earlier of: the date of the plan amendment or curtailment; and the date that the Group recognises restructuring-related costs. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under administrative expenses in the consolidated statement of profit or loss by function: service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements;net interest expense or income. Termination benefits Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises restructuring costs involving the payment of termination benefits. 23. Provisions An obligation related to a contingency shall be recognised by the Group as a provision when all of the following conditions are satisfied, except for contingent considerations and contingent liabilities assumed in a business combination not involving entities 66 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report under common control: 1) the obligation is a present obligation of the Group; 2) it is probable that an outflow of economic benefits from the Group will be required to settle the obligation; 3) 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 objective evidence showing that the book value cannot reflect the present best estimate, the book value should be adjusted according to the best estimate. The contingent liabilities of the acquiree acquired in the business combination involving entities not under common control are measured at fair value upon initial recognition. After initial recognition, the balance of the amount recognized according to the estimated liabilities and the amount initially recognized after deducting the accumulated amortization determined by the revenue recognition principle is subsequently measured at the higher of the two. 24. Share-based payments The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. The term "equity-settled share-based payment" refers to a transaction in which an enterprise grants shares or other equity instruments as a consideration in return for services. The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees. As to an equity-settled share-based payment in return for services of employees, if the right may be exercised immediately after the grant, the fair value of the equity instruments shall, on the date of the grant, be included in the relevant cost or expense and the capital reserves shall be increased accordingly. As to a equity-settled share-based payment in return for employee services, if the right cannot be exercised until the vesting period comes to an end or until the prescribed performance conditions are met, then on each balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the number of vested equity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the date of the grant. The fair value is determined using Black-Scholes model (Note 13). Within the vesting period or before the prescribed performance conditons are met, the relevant costs or expenses and capital reserves shall be determined and increased based on the best estimate of the number of vested equity instruments on each balance sheet date. For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total 67 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. 25. Revenue generated from contracts with customers The Group has fulfilled its performance obligations in the contract, that is, revenue is recognized when the customer obtains control of the relevant goods or services. Obtaining control of related goods or services means being able to lead the use of the goods or the provision of the services and obtain almost all of the economic benefits from it. Sales contract Commodity sales contracts between the Group and customers are usually based on contracts, and performance obligations should include transfer of goods, transportation services, and free maintenance. The Group generally considers the following factors and recognizes revenue at the xx time point: the current right to receive payment for the product, the transfer of major risks and rewards in the ownership of the product, the transfer of the legal ownership of the product, the transfer of the physical asset of the product Transfer, the customer accepts the product. Provide service contract The performance obligations of the service provision contract between the Group and its customers are due to the fact that the customers obtain and consume the economic benefits brought by the Group’s performance at the same time as the Group’s performance, and the Group has the right to accumulate Part of the revenue from the completed performance so far, the Group regards it as a performance obligation performed within a certain period of time, and recognizes the revenue according to the performance progress, unless the performance progress cannot be reasonably determined. The Group determines the performance progress of the services provided in accordance with the output method. When the performance progress cannot be reasonably determined, if the cost incurred by the Group is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. Variable consideration Some of the contracts between the Group and customers have sales rebates and other arrangements that lead to changes in the agreed amount of consideration, forming variable consideration. The Group determines the best estimate of the variable consideration based on the expected value or the most likely amount, but the transaction price including the variable consideration does not exceed the amount that the accumulated recognized revenue will most likely not be materially reversed when the relevant uncertainty is eliminated Amount. Warranty obligations In accordance with contractual agreements and legal provisions, the Group provides quality assurance for the products sold. For guarantee quality assurance to ensure that the products sold meet the established standards, the Group conducts accounting treatment in accordance with Notes XII, 29. For the service quality assurance that provides a separate service in addition to the established 68 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report standards to ensure that the goods sold meet the established standards, the Group regards it as a single performance obligation, based on the stand-alone selling price of the goods and services provided. In a relative proportion, part of the transaction price is allocated to service quality assurance, and revenue is recognized when the customer obtains control of the service. When assessing whether the quality assurance provides a separate service in addition to ensuring that the products sold meet the established standards, the Group considers whether the quality assurance is a legal requirement, the quality assurance period, and the nature of the group's commitment to perform tasks. Reward Points Program The Group grants customers reward points when selling goods or providing services, and customers can exchange reward points for free or discounted goods or services. The reward points program provides customers with a major right. The Group regards it as a single performance obligation, and allocates part of the transaction price to reward points in proportion to the stand-alone selling price of the goods or services provided and the reward points. Revenue is recognized when the points are exchanged for control of goods or services or when the points expire. Principal/agent For the Group to lead a third party to provide services to customers on behalf of the Group, the Group has the right to independently determine the price of the goods or services traded, that is, the Group can control the relevant goods before transferring the goods to the customers, so the Group is the main responsible person , And recognize revenue based on the total consideration received or receivable. Otherwise, the Group acts as an agent and recognizes revenue based on the amount of commission or handling fee expected to be entitled to receive. This amount shall be the net amount of the total consideration received or receivable minus the price payable to other related parties, or based on The established commission amount or ratio is determined. 26. 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 a nominal amount. A government grant which is specified by the government documents to be used to purchase and construct the long-term assets shall be recognized as the government grant related to assets. A government grant which is not specified by the government documents shall be judged based on the basic conditions to obtain the government grant. The one whose basic condition was to purchase and construct the long-term assets shall be recognized as the government grant related to assets. The Group uses the gross method to account for government grants. Government grants related to income to be used as compensation for future expenses or losses shall be recognized as deferred income and shall be charged to the current profit or loss or be used to write down the relevant loss, during the recognition of the relevant cost expenses or losses; or used as compensation for relevant expenses or losses already incurred by enterprises shall be directly charged to the profit and loss account in the current period or used to write down the relevant cost. The government grants related to assets shall be used to write down the book value of the relevant assets or be recognized as deferred income. The government grants related to assets, recognized as deferred income, shall be charged to the profit and loss reasonably and systematically in stages over the useful lives of the relevant assets. The government grants measured at nominal amount shall be 69 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report directly charged to the current profit and loss. The remaining book value of the government grants related to assets should be charged to the profit and loss account in the current period when the relative assets sold, transferred, disposed or damaged. 27. 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 70 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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 should be reversed. When it is probable that sufficient taxable income can be generated, the amount of such reduction should be reversed. When the following conditions are met at the same time, the deferred tax assets and deferred tax liabilities are listed at the net amount after offset: the legal right to settle the current income tax assets and current income tax liabilities at the net amount; the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same tax collection and management department on the same taxable subject or different taxpaying subjects However, in the future, during each period when the significant deferred tax assets and deferred tax liabilities are reversed, the tax payer involved intends to settle the current income tax assets and current income tax liabilities with net amount or obtain assets and pay off debts at the same time. 28. 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 contingent rents shall be recorded in the profits and losses of the period in which they actually arise. The Group recording the operating lease as a lessor Rental income from operating leases is recognized by the lesser in the income statement on a straight-line basis over the lease term. The contingent rents shall be recorded in the profits and losses of the period in which they actually arise. 29. Profit distribution The cash dividend of the Group is recognized as liabilities after the approval of general meeting of stockholders. 30. Safety fund The safety fund extracted by the Group shall be recognized as the cost of the related products or income statement, while be recognized as special reserve. When using safety fund, it shall be distinguished whether it will form fixed assets or not. The expenditure shall write down the special reserve; the capital expenditure shall be recognized as fixed assets when meet the expected conditions for use, and write down the special reserve while recognizing accumulated depreciation with the same amount. 71 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 31. Fair value measurement The Group measures its equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly; Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 32. Significant accounting judgments and estimates The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the amounts and disclosures 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 In the process of applying the Group’s accounting policies, management has made the following judgments which have significant effect on the financial statements: Operating leases - as lessor The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases. Business model The classification of financial assets at initial recognition depends on the business model of the Group’s management of financial 72 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report assets. When judging the business model, the Group considers the methods including enterprise evaluation and reporting of financial asset performance to key management personnel, risks affecting financial asset performance and its anagement method and the way in which related business managers get paid. When evaluating whether to take contract cash flow as the goal, the Group needs to analyze and judge the reasons, time, frequency and value of the sale of financial assets before the due date. Contract cash flow characteristics The classification of financial assets at initial recognitions depends on the contractual cash flow characteristics of the financial assets. Ite is necessary to determine whether the contractual cash flow is only for the payment of principal and interest based on outstanding principal, including correction of the time value of money during the evaluation, it is necessary to determine whether there is a significant difference compared to the benchmark cash flow. For financial assets that include prepayment characteristics, it is necessary to determine whether the fair value of the prepayment characteristics is very small, etc. Uncertainty of accounting estimates 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 financial instruments The Group uses the expected credit loss model to assess the impairment of financial instruments. The application of the expected credit loss model requires significant judgments and estimates. All reasonable and valid information must be considered, including forward-looking information. In making these judgments and estimates, the Group infers the expected changes in the credit risk of the debtor based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors. Different estimates may affect the provision for impairment losses. The provision for impairment losses may not be equal to the actual amount of future impairment losses. Impairment of non-current assets other than financial assets (goodwill excluded) The Group assesses at each reporting date whether there is an indication that non-current assets other than financial assets may be impaired. If there is any sign of possible assets impairment, the assets concerned should be subject to impairment test. When the carrying amount of an asset or the relevant assets group exceeds its recoverable amount which is the higher one of the net amount of the fair value of the asset minus the disposal expenses and the present value of the expected future cash flow of the asset, the asset is considered impaired. The fair value minus the disposal expenses is determined by reference to the recent market transactions price or observed market price less any directly attributable expenditure for disposing. 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. Fair value of unlisted equity investments For unlisted equity instrument investments, several valuation models are used to estimate the fair value. This requires the Group to make estimates of unobservable market parameters such as price-to-book ration, discount rate, sustainable growth rate, asset price index, etc., and is therefore uncertain. Development expenditures 73 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 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. Warranty The Group provides warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Factors that influence estimation of related warranty claim include: 1) renewal of laws and regulations; 2) quality promotion of Group products; 3) change of parts and labour cost. In general, the Group records warranty based on selling volume and estimated compensatory unit warranty cost, deduction multi-agreed compensation from suppliers. As at balance sheet day, the Group launches retrospective analysis on warranty carrying amount in consideration of accrual warranty payment during relative warranty period, and recent trends of product renovation and replacement, and further adjustment if necessary. Any increase or decrease in the provision would affect profit or loss in future years. Depreciation and amortization The Group’s management determines the estimated useful lives and residual value of fixed assets and intangible assets. This estimate is based on the historical experience of actual useful lives of fixed assets and intangible assets of similar nature and functions. Management will increase the depreciation and amortization charges where useful lives are less than previously estimated. 74 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 33. Changes in accounting policies and estimates In 2017, the Ministry of Finance issued the revised "Accounting Standards for Business Enterprises No. 14-Revenue" (referred to as the "New Revenue Standards"). Since January 1, 2020, the Group will conduct accounting treatment in accordance with the newly revised standards. According to the convergence regulations, the comparable period information will not be adjusted. The difference between the implementation of the new standards and the current standards on the first day will be retrospectively adjusted for retained earnings at the beginning of the reporting period . According to the time set by the Ministry of Finance, the company will implement the new revenue standards from January 1, 2020. According to the convergence regulations, no adjustment will be made to the comparable period information. The new revenue standard establishes a new revenue recognition model for regulating revenue generated from contracts with customers. According to the new revenue standards, the method of revenue recognition should reflect the entity's transfer of goods or services to customers, and the amount of revenue should reflect the amount of consideration that the entity expects to be entitled to because of the transfer of these goods or services to customers. At the same time, the new revenue standard also regulates the judgments and estimates required for each link of revenue recognition. The Group only adjusts the cumulative impact of contracts that have not been completed on January 1, 2020. For contract changes or changes that occurred before January 1, 2020, the Group adopts a simplified approach to all contracts that are subject to contract changes. The final arrangement is to identify the fulfilled and unfulfilled performance obligations, determine the transaction price, and allocate the transaction price between the fulfilled and unfulfilled performance obligations. The impact of the implementation of the new revenue standard on the 2020 financial statements is as follows: Consolidated balance sheet In RMB Yuan Account December 31, 2019 January 01, 2020 Adjustment Current assets: Cash 10,066,171,353.48 10,066,171,353.48 Transactional financial assets 2,419,476,200.00 2,419,476,200.00 Notes receivable 26,805,635,587.19 26,805,635,587.19 Accounts receivable 838,314,076.82 838,314,076.82 Prepayments 623,801,896.07 623,801,896.07 Other receivables 3,731,755,992.46 269,534,090.37 -3,462,221,902.09 Inventories 3,375,441,488.37 3,375,441,488.37 Contract assets 3,462,221,902.09 3,462,221,902.09 Other current assets 1,746,120,128.04 1,746,120,128.04 Total current assets 49,606,716,722.43 49,606,716,722.43 Non-current assets: Long-term receivables 11,008,336,989.09 11,008,336,989.09 75 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Other equity investment 734,506,100.00 734,506,100.00 Investment properties 7,102,849.72 7,102,849.72 Fixed assets 26,939,490,554.19 26,939,490,554.19 Construction in progress 1,729,803,028.43 1,729,803,028.43 Intangible assets 5,209,619,313.49 5,209,619,313.49 Devlopment expenditure 814,745,464.20 814,745,464.20 Goodwill 9,804,394.00 9,804,394.00 Long-term deferred expenses 14,327,639.90 14,327,639.90 Deferred tax assets 1,542,600,534.93 1,542,600,534.93 Total non-current assets 48,010,336,867.95 48,010,336,867.95 Total assets 97,617,053,590.38 97,617,053,590.38 Current liabilities: Short-term loans 229,580,000.00 229,580,000.00 Notes payable 13,430,543,294.23 13,430,543,294.23 Accounts payable 18,905,725,271.50 18,905,725,271.50 Advances from customers 2,315,641,685.78 -2,315,641,685.78 Contract liabilities 2,315,641,685.78 2,315,641,685.78 Payroll payable 1,046,335,781.91 1,046,335,781.91 Taxes payable 889,092,442.80 889,092,442.80 Other payables 4,809,918,141.45 4,809,918,141.45 Other current liabilities 4,253,942,761.77 4,253,942,761.77 Total current liabilities 45,880,779,379.44 45,880,779,379.44 Non-current liabilities: Long-term loans 55,300,000.00 55,300,000.00 Long-term payable 857,356,423.71 857,356,423.71 Long term payroll payable 45,932,000.00 45,932,000.00 Estimated liabilities 3,352,580,839.28 3,352,580,839.28 Deferred earnings 3,194,291,079.21 3,194,291,079.21 Deferred tax liabilities 296,742,890.29 296,742,890.29 Total non-current liabilities 7,802,203,232.49 7,802,203,232.49 Total liabilities 53,682,982,611.93 53,682,982,611.93 Owners’ equity: Share capital 4,802,648,511.00 4,802,648,511.00 Capital reserves 5,366,097,594.66 5,366,097,594.66 76 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Other Comprehensive Income 139,994,580.19 139,994,580.19 Special reserves 47,076,242.71 47,076,242.71 Surplus reserves 2,401,324,255.50 2,401,324,255.50 Retained earnings 31,271,171,559.60 31,271,171,559.60 Equity attributable to owners 44,028,312,743.66 44,028,312,743.66 Minority interests -94,241,765.21 -94,241,765.21 Total equity 43,934,070,978.45 43,934,070,978.45 Total liabilities and owener’s equity 97,617,053,590.38 97,617,053,590.38 Balance sheet 单位:元 Account December 31, 2019 January 01, 2020 Adjustment Current assets: Cash 6,563,020,335.56 6,563,020,335.56 Transactional financial assets 184,245,000.00 184,245,000.00 Notes receivable 25,837,326,483.09 25,837,326,483.09 Accounts receivable 5,094,270,365.72 5,094,270,365.72 Prepayments 403,105,316.24 403,105,316.24 Other receivables 2,597,314,344.40 941,161,145.80 -1,656,153,198.60 Inventories 1,735,570,691.28 1,735,570,691.28 Contract assets 1,656,153,198.60 1,656,153,198.60 Other current assets 798,430,035.62 798,430,035.62 Total current assets 43,213,282,571.91 43,213,282,571.91 Non-current assets: Long-term equity investments 16,052,319,271.82 16,052,319,271.82 Other equity investment 724,309,400.00 724,309,400.00 Fixed assets 20,301,231,002.41 20,301,231,002.41 Construction in progress 1,545,211,000.22 1,545,211,000.22 Intangible assets 4,030,438,649.57 4,030,438,649.57 Development expenditure 431,774,377.27 431,774,377.27 Long-term deferred expenses 9,719,259.84 9,719,259.84 Deferred tax assets 1,318,884,054.48 1,318,884,054.48 Total non-current assets 44,413,887,015.61 44,413,887,015.61 Total assets 87,627,169,587.52 87,627,169,587.52 77 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Current liabilities: Short-term loans 29,580,000.00 29,580,000.00 Notes payable 11,983,445,725.06 11,983,445,725.06 Accounts payable 15,601,432,751.74 15,601,432,751.74 Advances from customers 1,870,992,349.08 -1,870,992,349.08 Contract liabilities 1,870,992,349.08 1,870,992,349.08 Payroll payable 641,340,149.30 641,340,149.30 Taxes payable 453,619,905.66 453,619,905.66 Other payables 4,301,257,819.04 4,301,257,819.04 Other current liabilities 3,400,065,879.02 3,400,065,879.02 Total current liabilities 38,281,734,578.90 38,281,734,578.90 Non-current liabilities: Long-term loans 55,300,000.00 55,300,000.00 Long-term payable 285,768,478.89 285,768,478.89 Long term payroll payable 22,747,000.00 22,747,000.00 Estimated liabilities 2,413,434,397.36 2,413,434,397.36 Deferred earnings 2,135,615,106.85 2,135,615,106.85 Deferred tax liabilities 81,775,341.60 81,775,341.60 Total non-current liabilities 4,994,640,324.70 4,994,640,324.70 Total liabilities 43,276,374,903.60 43,276,374,903.60 Owners' equity: Share capital 4,802,648,511.00 4,802,648,511.00 Capital reserves 5,014,772,792.87 5,014,772,792.87 Other comprehensive income 259,380,413.58 259,380,413.58 Special reserves 19,917,658.63 19,917,658.63 Surplus reserves 2,401,324,255.50 2,401,324,255.50 Retained earnings 31,852,751,052.34 31,852,751,052.34 Total owners' equity 44,350,794,683.92 44,350,794,683.92 Total liabilities and owners’ equity 87,627,169,587.52 87,627,169,587.52 VI. Taxes 1. Main taxes and tax rates Value added tax (“VAT”) - VAT payable is the difference between VAT output and less deductible VAT input for the current year. 78 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report VAT output of sales of products has been calculated by applying a rate of 13% to the taxable value since 1 April 2019 (16% before 1 April 2019). And VAT output of income from providing labor services has been calculated by applying a rate of 6% to the taxable value during this year. Consumption tax - Consumption tax is calculated at 1%, 3% or 5% of taxable income. City maintenance and construction 7% of the turnover tax paid is calculated and paid. - tax Educational surcharge - 3% of the actual turnover tax paid is calculated and paid. Local educational surcharge - 2% of the turnover tax actually paid is calculated and paid. Corporate income tax - Corporate income tax is paid at 15% or 25% of taxable income. 2. Tax benefits According to the relevant provisions of the national high-tech identification and relevant tax preferential policies, the following companies of the group are identified as high-tech enterprises and are subjected to the preferential corporate income tax rate of 15% within the prescribed period: the company (2018-2020), and the Company’s subsidiaries including Hefei Changan Automobile Company Limited (2019-2021), Hebei Changan Automobile Company Limited (2017-2019), Baoding Changan Bus Manufacturing Company Limited (2017-2019), Chongqing Changan Connected Car Technology Co., Ltd. (2019-2021) and Beijing Changan Automotive Engineering Technology Company Limited (2018-2020). In accordance to Circular for Further Implementation of Tax Incentives In the Development of Western Regions (Cai Shui [2011] No. 58) collectively issued by the ministry of Finance, the Customs General Administration and the National Taxation Bureau of PRC, from 1 January 2011 to 31 December 2020, enterprises located in the Western Region and engaged in encouraged business would be entitled to a preferential CIT rate of 15%. The Company’s subsidiaries, including Chongqing Changan Special Automobile Co., Ltd, Chongqing Changan Automobile Supporting Service Co., Ltd. and Chongqing Changan Suzuki Automobile Co., Ltd. are qualified to the requirement and are subjected to the preferential tax rate of 15%. VII. Notes to the consolidated financial statements 1. Cash In RMB Yuan Item Ending Beginning Cash 14,977.41 18,280.08 Cash at bank 16,821,104,203.83 9,360,456,394.81 Other cash 505,302,056.19 705,696,678.59 Total 17,326,421,237.43 10,066,171,353.48 79 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report As at 30 June 2020, the book value of restricted cash and cash equivalents is RMB 505,302,056.19, which was mainly restricted for the issuance of acceptance bill. As at 30 June 2020, the cash at bank oversea is equivalent to RMB 219,602,378.35. 2. Transactional financial assets Item Ending Beginning Financial assets measured at fair value and whose changes are included in the current profit and loss-equity 4,173,150,897.00 2,419,476,200.00 instrument investment Total 4,173,150,897.00 2,419,476,200.00 3. Notes receivable (1) Classification of notes receivable In RMB Yuan Type Ending Beginning Commercial acceptance bill 2,109,965,475.65 7,475,629,607.72 Bank acceptance bill 19,519,311,671.28 19,330,005,979.47 Total 21,629,277,146.93 26,805,635,587.19 (2) The notes receivable pledged as follows: Type 30 June 2019 31 December 2018 Commercial acceptance bill 361,829,675.00 365,040,070.00 Bank acceptance bill 5,791,544,234.00 2,760,059,280.00 Total 6,153,373,909.00 3,125,099,350.00 The bank acceptance bill of the above amount has been pledged for the notereceivable on 30 June 2020 and 31 December 2019. (3) Endorsed or discounted but unexpired notes receivable as at the end of reporting period are as follows: In RMB Yuan Ending Beginning Type Derecognition Un-derecognition Derecognition Un-derecognition Commercial acceptance bill 662,937,930.00 Bank acceptance bill 993,166,843.10 1,937,078,894.54 Total 993,166,843.10 - 2,600,016,824.54 - 4. Accounts receivable (1)Aging analysis of the accounts receivable is as follows: In RMB Yuan 80 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Aging Ending Beginning Within 1 year 2,129,247,041.33 678,737,828.90 1 to 2 years 124,986,062.13 141,612,978.25 2 to 3 years 49,822,288.08 33,700,863.10 Over 3 years 98,670,214.99 68,414,880.58 Total 2,402,725,606.53 922,466,550.83 Less: Provision - 102,743,181.12 -84,152,474.01 Total 2,299,982,425.41 838,314,076.82 (2)The movements in provision for impairment of accounts receivable are as follows: Addition Deduction Beginning balance Ending balance Provision Other Reversal Write-off 2020 84,152,474.01 19,762,832.77 1,172,125.66 102,743,181.12 2019 90,614,319.90 13,362,617.00 6,450,000.00 13,374,462.89 84,152,474.01 (3)Analysis of accounts receivable by category is as follows: Ending Item Balance Provision Amount (%) Amount (%) Individually analyzed for provision 1,644,201,932.79 68.43 64,203,085.58 3.90 Accounts receivable analyzed as groups for provision 758,523,673.74 31.57 38,540,095.54 5.08 Total 2,402,725,606.53 100.00 102,743,181.12 4.28 Beginning Item Balance Provision Amount (%) Amount (%) Individually analyzed for provision 216,876,810.50 23.51 49,267,460.68 22.72 Accounts receivable analyzed as groups for provision 705,589,740.33 76.49 34,885,013.33 4.94 Total 922,466,550.83 100.00 84,152,474.01 9.12 (4)The Group’s accounts receivable was analyzed for provision by expected credit loss model 81 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Ending Beginning Estimated face Expected credit Expected credit loss Provision Provision for Face balance value for default loss rate (%) for the entire duration ratio (%) bad debt Within 1 year 659,634,029.05 1.11 7,354,250.99 601,963,326.69 0.80 4,799,025.50 1 to 2 years 54,905,522.87 7.04 3,866,061.16 56,368,999.03 7.54 4,250,219.24 2 to 3 years 11,522,151.00 33.80 3,894,643.60 20,043,284.25 31.23 6,258,614.71 3 to 4 years 14,417,151.43 43.31 6,243,620.13 10,355,210.70 42.66 4,417,566.60 4 to 5 years 1,531,440.86 46.89 718,141.13 2,411,538.03 45.52 1,097,691.19 Over 5 years 16,513,378.53 99.70 16,463,378.53 14,447,381.63 97.33 14,061,896.09 Total 758,523,673.74 5.08 38,540,095.54 705,589,740.33 4.94 34,885,013.33 (5)As at June 30, 2020, accounts receivable from Top 5 clients amounted to RMB1,526,610,729.58, accounted for 63.54% of the total accounts receivable (December 31, 2019:RMB191,520,443.31,accounted for 20.76% of the total amount). (6) As of June 30, 2020, the Group has no accounts receivable that are derecognized as the transfer of financial assets (2018: Nil). 5. Prepayments (1) An aged analysis of the prepayments is as follows: In RMB Yuan Ending Beginning Aging Amount % Amount % Within 1 year 516,320,018.74 81.17 427,508,750.42 68.53 1 to 2 years 110,947,847.63 17.44 190,277,683.92 30.50 2 to 3 years 7,818,383.63 1.23 4,480,529.56 0.72 Over 3 years 1,001,975.27 0.16 1,534,932.17 0.25 Total 636,088,225.27 100.00 623,801,896.07 100.00 (2)As at 30 June 2020, the total amount of the top five prepayments was RMB 371,147,084.34, accounting for 58.35% of the total amount of prepayments (2019: RMB 465,836,148.17, accounting for 74.68%). 6. Other receivables (1)Aging analysis of other receivables is as follows: Ending Beginning Within 1 year 960,768,073.61 130,092,224.20 82 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 1 to 2 years 51,044,853.03 133,414,975.39 2 to 3 years 24,464,905.99 1,265,977.01 Over 3 years 18,827,421.03 17,715,984.88 Total 1,055,105,253.66 282,489,161.48 Provision -13,078,147.01 - 12,955,071.11 Total 1,042,027,106.65 269,534,090.37 (2)Other receivables are classified by nature as follows: Nature Ending Beginning New energy subsidy 96,341,496.10 5,401,842.90 Reserve 32,179,103.25 41,810,604.18 Equity transfer receivable 798,700,000.00 Other 114,806,507.30 222,321,643.29 Total 1,042,027,106.65 269,534,090.37 (3)In 2020, the changes in the provision for bad debts for other receivables based on the 12-month expected credit losses and the expected credit losses for the entire duration are as follows: Stage 1 Stage 2 Stage 3 Total 12-month ECLs Lifetime ECLs Credit-impaired financial assets (Lifetime ECLs) Balance at the end of the previous year 291,182.01 111,686,526.12 13,616,375.98 125,594,084.11 Changes in accounting policies 0.00 -111,066,213.00 -1,572,800.00 -112,639,013.00 Opening balance 291,182.01 620,313.12 12,043,575.98 12,955,071.11 Changes due to the opening balance - Transfer to Stage 2 -274,825.18 274,825.18 - Transfer to Stage 3 -826,113.91 826,113.91 - Turn back Stage 2 - Turn back Stage 1 Provision 81,146.21 57,668.33 138,814.54 Reversal -15,738.64 -15,738.64 83 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Ending balance 81,764.40 126,692.72 12,869,689.89 13,078,147.01 Movement of other account receivable balance as follow: Stage 1 Stage 2 Stage 3 Total 12-month ECLs Lifetime ECLs Credit-impaired financial assets (Lifetime ECLs) Balance at the end of the previous year 2,205,778,389.26 1,637,955,311.33 13,616,375.98 3,857,350,076.57 Changes in accounting policies -1,940,287,730.49 -1,633,000,384.60 -1,572,800.00 -3,574,860,915.09 Opening balance 265,490,658.77 4,954,926.73 12,043,575.98 282,489,161.48 Changes due to the opening balance - Transfer to Stage 2 -2,700,041.57 2,700,041.57 - Transfer to Stage 3 -826,113.91 826,113.91 - Turn back Stage 2 - Turn back Stage 1 Addition 876,669,396.33 222,877.06 876,892,273.39 Derecognition -102,971,320.63 -4,918.00 -102,976,238.63 Write-off -1,299,942.58 -1,299,942.58 Ending balance 1,035,188,750.32 7,046,813.45 12,869,689.89 1,055,105,253.66 (4)In 2019, the changes in the provision for bad debts for other receivables based on the 12-month expected credit losses and the expected credit losses for the entire duration are as follows: Stage 1 Stage 2 Stage 3 Total 12-month ECLs Lifetime ECLs Credit-impaired financial assets (Lifetime ECLs) Opening balance 688,784.69 473,328.51 6,686,050.38 7,848,163.58 Changes due to the opening balance - Transfer to Stage 2 - - - - - Transfer to Stage 3 -150,000.00 -348,425.91 498,425.91 - - Turn back Stage 2 - - - - - Turn back Stage 1 - - - - Provision 135,958.46 111,637,659.12 7,431,094.18 119,204,711.76 Reversal -383,561.14 -76,035.60 - -459,596.74 Transfer - - - - Write-off - - -999,194.49 -999,194.49 84 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Closing balance 291,182.01 111,686,526.12 13,616,375.98 125,594,084.11 Movement of other account receivable balance as follow: Stage 1 Stage 2 Stage 3 Total 12-month ECLs Lifetime ECLs Credit-impaired financial assets (Lifetime ECLs) Opening balance 3,228,443,949.91 5,738,281.45 6,686,050.38 3,240,868,281.74 Changes due to the opening balance - Transfer to Stage 2 -2,203,754,203.78 2,203,754,203.78 - - - Transfer to Stage 3 -5,079,519.22) -2,850,000.87 7,929,520.09 - - Turn back Stage 2 - - - - - Turn back Stage 1 - - - - Addition 1,603,831,056.07 667,724.40 - 1,604,498,780.47 Derecognition -417,662,893.72 -569,354,897.43 - -987,017,791.15 Write-off - - -999,194.49 -999,194.49 Closing balance 2,205,778,389.26 1,637,955,311.33 13,616,375.98 3,857,350,076.57 (5)As at June 30, 2020, top five debtors of other receivables are as follows: Proportion of total other Debtors Amount Aging receivables (%) First 798,700,000.00 Within 6 months 75.70 Second 124,312,677.99 1-2 years 11.78 Third 76,449,253.20 Within 6 months 7.25 Fourth 10,944,887.98 Within 6 months 1.04 Fifth 8,403,835.35 Within 6 months 0.80 Total 1,018,810,654.52 96.56 As at 31 December 2019, top five debtors of other receivables are as follows: Proportion of total other Debtors Amount Aging receivables (%) First 1,770,677,411.60 0-4 years 45.90 Second 1,071,115,340.00 Within 1year 27.77 Third 430,588,852.51 0-5 years 11.16 Fourth 131,582,160.00 Within 1 year 3.41 85 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Fifth 124,312,677.94 1-2 years 3.22 Total 3,528,276,442.05 91.46 (6) As of June 30, 2020, the Group has no other receivables derecognized as financial asset transfers. (December 31, 2019: Nil). 7. Inventory (1) Classification of inventory In RMB Yuan Ending Beginning Item Balance Provision Net value Balance Provision Net value Raw materials 757,653,010.63 353,832,972.07 403,820,038.56 843,669,443.37 350,525,510.02 493,143,933.35 Work in transit 74,730,000.00 - 74,730,000.00 293,575,861.15 - 293,575,861.15 Work in progress 1,017,286,537.93 91,270,247.87 926,016,290.06 657,730,109.07 28,324,925.14 629,405,183.93 Commodity stock 2,758,195,870.81 156,547,980.65 2,601,647,890.16 1,958,389,227.87 83,956,153.45 1,874,433,074.42 Revolving materials - - - 51,101,639.03 - 51,101,639.03 Spare parts 34,178,251.21 - 34,178,251.21 33,781,796.49 - 33,781,796.49 Total 4,642,043,670.58 601,651,200.59 4,040,392,469.99 3,838,248,076.98 462,806,588.61 3,375,441,488.37 (2) Provision for inventory In RMB Yuan Deduction Type Beginning Provision Ending Reversal Write-off Raw materials 350,525,510.02 13,899,766.91 5,905,198.31 4,687,106.55 - Work in progress 28,324,925.14 71,004,875.39 708,212.46 7,351,340.20 - Commodity stock 83,956,153.45 132,318,652.44 3,372,139.06 28,491,314.07 27,863,372.11 Total 462,806,588.61 217,223,294.74 9,985,549.83 40,529,760.82 27,863,372.11 8. Contract assets (applicable from January 1, 2020) (1) Classification of Contract assets In RMB Yuan Ending Beginning Item Provision for Provision for Balance Net value Balance Net value impairment impairment New energy 2,172,702,076.43 117,225,349.00 2,055,476,727.43 3,574,860,915.09 112,639,013.00 3,462,221,902.09 business Total 2,172,702,076.43 117,225,349.00 2,055,476,727.43 3,574,860,915.09 112,639,013.00 3,462,221,902.09 86 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report (2) Current contract assets provision for impairment In RMB Yuan Balance at the end Changes in Provision for Deduction Ending balance of the previous year accounting policies this year Reversal Write-off 2020 112,639,013.00 4,586,336.00 117,225,349.00 (3) The contract assets with provision for impairment losses using the simplified method are as follows: In RMB Yuan Ending Item Estimated book balance in default Expected credit loss rate Lifetime expected credit loss New energy business 2,172,702,076.43 5.40 117,225,349.00 Total 2,172,702,076.43 5.40 117,225,349.00 9. Other current assets In RMB Yuan Item Ending Beginning Accrual input tax 794,281,653.55 1,428,518,317.99 Entrusted Loan 300,000,000.00 300,000,000.00 Others 5,960,566.11 17,601,810.05 Total 1,100,242,219.66 1,746,120,128.04 10. Other equity instrument investments Accumulative changes Reason for being in fair value included designated Dividends in other Fair value as fair value through Income comprehensive other comprehensive income income Unlisted equity Corun Hybrid Power Technology Co. Ltd 4,820,300.00 204,820,300.00 - instruments Unlisted equity China South Industry Group Finance Co., Ltd. 158,945,000.00 315,965,800.00 - instruments Guoqi (Beijing) Intelligent Network Unlisted equity Association Automotive Research Institute 50,000,000.00 100,000,000.00 - instruments Co., Ltd. Guoqi Automobile Power Cell Research Co., Unlisted equity 12,538,500.00 52,538,500.00 - Ltd. instruments 87 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report China North Industries Group Financial Unlisted equity 3,629,500.00 34,181,500.00 - Leasing Co., Ltd. instruments Unlisted equity Zhong Fa Lian Investment Co., Ltd. - 21,000,000.00 - instruments Unlisted equity Chongqing Ante trading Co., Ltd - 3,000,000.00 - instruments CAERI(Beijing) automobile Lightweight Unlisted equity - 3,000,000.00 - Technology Research Institution Co., Ltd. instruments Unlisted equity Sichuan Glass Co., Ltd. - - - instruments 合计 229,933,300.00 734,506,100.00 88 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 11. Long-term equity investment In RMB Yuan Increase or Investment income under Other equity Cash dividends Provision ending Investee Beginning balance Other Deduction Provision Ending balance decrease equity method variation declared balance Joint Venture Changan Ford Automobile Co., Ltd. 1,782,823,327.91 -570,006,507.40 1,212,816,820.51 Changan Mazda Automobile Co., Ltd. 2,177,010,905.02 323,202,621.60 2,500,213,526.62 Changan Mazda Engine Co., Ltd. 830,272,340.69 11,597,486.28 -37,000,000.00 804,869,826.97 Changan PSA Automobiles Co., Ltd. 346,038,983.87 -114,234,986.00 -231,803,997.87 Changan Weilai New Energy -12,871,719.42 -18,666,611.81 31,538,331.23 Automobile Technology Co., Ltd. Nanchang Jiangling Holding Co., Ltd. 2,081,815,165.31 34,848,792.52 2,116,663,957.83 Associates Chongqing Changan Kuayue 192,005,274.10 27,957,230.96 219,962,505.06 Automobile Co., Ltd. Chongqing Changan Kuayue Automobile Sales Co., Ltd. (note1) Beijing Fang’an cresent taxi Co., Ltd. (note1) Changan Automobile Financing Co.,Ltd 2,195,040,654.44 123,493,951.66 2,318,534,606.10 Hainan Anxinxing Information 3,560,384.10 -795,039.88 2,765,344.22 Technology Co., Ltd. Nanjing Chelai Travel Technology Co., 1,474,945.09 -143,024.65 1,331,920.44 89 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Ltd. Hunan Guoxin Semiconductor 25,152,447.20 -126,648.85 25,025,798.35 Technology Co., Ltd. Nanjing Leading Equity Investment 32.16 935,218,355.48 935,218,323.32 Partnership Nanjing Leading Equity Investment -93,594.67 1,351,821.02 1,445,415.69 Management Co., Ltd. Jiangling Holdings Co., Ltd. 398,992,953.62 -94,049,105.60 304,943,848.02 Chongqing Changan New Energy Automobile Technology Co., Ltd. 2,565,221,040.00 -232,817,307.40 2,332,403,732.60 (Note 2) Anhe (Chongqing) Equity Investment 1,939,605.86 -419,202.42 1,520,403.44 Fund Management Co., Ltd. Hangzhou Chelizi Intelligent 7,527,572.23 1,753,349.94 9,280,922.17 Technology Co., Ltd. Beijing Wutong Chelian Technology 4,094,510.40 -17,183,381.33 -13,088,870.93 Co., Ltd. Pakistan Master Automobile Co., Ltd. 36,795,899.66 -2,600,212.00 34,195,687.66 Total 11,008,336,989.09 2,565,221,040.00 -528,282,156.89 -37,000,000.00 -200,265,666.64 12,808,010,205.56 -- Note1: As at June 30, 2020, the Group is not responsible for extra loss from Chongqing Changan Kuayue Automobile Sales Co., Ltd. and Beijing Fang’an cresent taxi Co., Ltd. Therefore, when excess losses of these two associates occurred, the Group just reduced its correspondent long-term equity investment to zero, and did not recognize contingent liabilities accordingly. Note2: In 2020, Chongqing Changan New Energy Automobile Technology Co., Ltd. introduced a strategic investor. The company lost control over it, and its shareholding ratio was reduced to 48.96%. It will no longer be included in the scope of consolidation and will be followed up by the equity method. Metering. 90 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 12. Investment property According to the cost of the investment real estate In RMB Yuan Item Beginning Addition Deduction Ending I. Original cost 10,050,100.00 10,050,100.00 Buildings 10,050,100.00 10,050,100.00 II. Accumulated depreciationand 2,947,250.28 113,355.78 3,060,606.06 amortization Buildings 2,947,250.28 113,355.78 3,060,606.06 III. Net Value 7,102,849.72 -113,355.78 6,989,493.94 Buildings 7,102,849.72 -113,355.78 6,989,493.94 IV. Impairment Provision 7,102,849.72 -113,355.78 6,989,493.94 Buildings 7,102,849.72 -113,355.78 6,989,493.94 13. Fixed assets Beginning Ending Fixed assets 25,896,056,062.39 26,939,490,554.19 Fixed assets cleanup total 25,896,056,062.39 26,939,490,554.19 Fixed assets In RMB Yuan Item Beginning Addition Deduction Ending I. Original cost 46,410,278,338.13 362,437,404.30 349,430,828.47 46,423,284,913.96 Buildings 11,144,160,050.01 391,688.99 791,082.72 11,143,760,656.28 Machinery 25,623,584,497.53 301,790,428.81 231,669,579.38 25,693,705,346.96 Vehicles 1,355,868,955.84 853,112.65 100,357,287.31 1,256,364,781.18 Other Equipments 8,286,664,834.75 59,402,173.85 16,612,879.06 8,329,454,129.54 II. Accumulated 18,610,392,441.59 1,341,667,160.44 199,611,157.36 19,752,448,444.67 depreciation Buildings 2,515,402,360.27 173,789,227.82 326,755.36 2,688,864,832.73 Machinery 11,496,523,762.29 889,236,401.15 123,506,026.96 12,262,254,136.48 Vehicles 629,232,960.52 86,129,280.66 71,207,725.68 644,154,515.50 Other Equipments 3,969,233,358.51 192,512,250.81 4,570,649.36 4,157,174,959.96 91 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report III. Net Value 27,799,885,896.54 -979,229,756.14 149,819,671.11 26,670,836,469.29 Buildings 8,628,757,689.74 -173,397,538.83 464,327.36 8,454,895,823.55 Machinery 14,127,060,735.24 -587,445,972.34 108,163,552.42 13,431,451,210.48 Vehicles 726,635,995.32 -85,276,168.01 29,149,561.63 612,210,265.68 Other Equipments 4,317,431,476.24 -133,110,076.96 12,042,229.70 4,172,279,169.58 IV.Impairment Provision 860,395,342.35 1,004,872.80 86,619,808.25 774,780,406.90 Buildings 85,592,184.71 - 85,592,184.71 Machinery 631,047,449.99 78,191,258.02 552,856,191.97 Vehicles 36,761,889.19 1,004,872.80 7,970,158.80 29,796,603.19 Other Equipments 106,993,818.46 458,391.43 106,535,427.03 V. Book Value 26,939,490,554.19 -980,234,628.94 63,199,862.86 25,896,056,062.39 Buildings 8,543,165,505.03 -173,397,538.83 464,327.36 8,369,303,638.84 Machinery 13,496,013,285.25 -587,445,972.34 29,972,294.40 12,878,595,018.51 Vehicles 689,874,106.13 -86,281,040.81 21,179,402.83 582,413,662.49 Other Equipments 4,210,437,657.78 -133,110,076.96 11,583,838.27 4,065,743,742.55 The depreciation during the reporting period is RMB 1,341,667,160.44. During the period the construction in progress amounting to RMB 366,499,861.3 is transferred to the fixed asset. 14. Construction in progress (1) Details of construction in progress In RMB Yuan Closing balance Openning balance Item Balance Provision Book value Balance Provision Book value Vehicle production equipment 131,759,496.47 131,759,496.47 163,180,665.02 - 163,180,665.02 Yuzui motor city project 105,456,656.33 105,456,656.33 39,547,629.19 - 39,547,629.19 Engine plant 985,844,453.47 985,844,453.47 880,128,770.64 - 880,128,770.64 Vehicle research institution 56,076,752.30 56,076,752.30 40,087,119.45 - 40,087,119.45 Vehicle moulds 208,172,446.27 208,172,446.27 284,573,714.88 - 284,573,714.88 Light vehicle technical transformation project of 48,832,435.33 48,832,435.33 65,394,282.59 - 65,394,282.59 Baoding Changan bus Beijing vehicle construction 71,002,689.79 71,002,689.79 60,307,306.09 - 60,307,306.09 92 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report project Car production Project Of 4,218,237.16 4,218,237.16 6,491,703.97 - 6,491,703.97 Hefei Changan Others 231,050,886.91 49,398,728.00 181,652,158.91 239,490,564.60 49,398,728.00 190,091,836.60 Total 1,842,414,054.03 49,398,728.00 1,793,015,326.03 1,779,201,756.43 49,398,728.00 1,729,803,028.43 (2) Movement of major construction in progress projects In RMB Yuan Transferred to fixed Item Beginning Addition Deduction Ending assets Vehicle production equipment 163,180,665.02 38,172,278.22 69,593,446.77 131,759,496.47 Yuzui motor city project 39,547,629.19 71,463,192.85 5,554,165.71 105,456,656.33 Engine plant 880,128,770.64 126,482,988.92 20,767,306.09 985,844,453.47 Vehicle research institution 40,087,119.45 35,444,551.49 19,454,918.64 56,076,752.30 Vehicle moulds 284,573,714.88 61,338,065.13 137,739,333.74 208,172,446.27 Light vehicle technical transformation project of 65,394,282.59 57,177,161.14 73,739,008.40 48,832,435.33 Baoding Changan bus Beijing vehicle construction 60,307,306.09 10,834,303.92 138,920.22 71,002,689.79 project Car production Project Of 6,491,703.97 8,206,689.90 10,480,156.71 4,218,237.16 Hefei Changan Others 190,091,836.60 20,753,118.07 29,032,605.02 160,190.74 181,652,158.91 Total 1,729,803,028.43 429,872,349.64 366,499,861.30 160,190.74 1,793,015,326.03 (3) Provision for impairment of construction in progress On June 30, 2020, the balance of impairment provision for construction in progress was RMB 49,398,728.00. There was no accrued or resold amount in the current year. (As of December 31, 2019, the amount of impairment provision for construction in progress was RMB 49,398,728.00). 15. Intangible assets Details of intangible assets In RMB Yuan Item Beginning Addition Deduction Ending I. Original cost 10,490,391,183.90 379,638,618.07 28,911,602.62 10,841,118,199.35 Land use rights 2,753,082,390.28 2,753,082,390.28 Software use rights 705,159,803.48 2,892,485.99 708,052,289.47 Trademark use rights 211,784,400.00 1,536.47 211,782,863.53 Non-patent technology 6,820,364,590.14 376,746,132.08 28,910,066.15 7,168,200,656.07 93 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report II. Accumulated amortization 5,003,686,933.67 514,642,717.04 2,582,722.47 5,515,746,928.24 Land use rights 461,981,506.33 27,980,857.36 489,962,363.69 Software use rights 564,665,067.35 14,506,702.89 579,171,770.24 Trademark use rights 188,453,466.62 8,749,999.98 197,203,466.60 Non-patent technology 3,788,586,893.37 463,405,156.81 2,582,722.47 4,249,409,327.71 III. Net value 5,486,704,250.23 -135,004,098.97 26,328,880.15 5,325,371,271.11 Land use rights 2,291,100,883.95 -27,980,857.36 2,263,120,026.59 Software use rights 140,494,736.13 -11,614,216.90 128,880,519.23 Trademark use rights 23,330,933.38 -8,749,999.98 1,536.47 14,579,396.93 Non-patent technology 3,031,777,696.77 -86,659,024.73 26,327,343.68 2,918,791,328.36 IV. Impairment provision 277,084,936.74 277,084,936.74 Land use rights - Software use rights 23,617,923.17 23,617,923.17 Non-patent technology 253,467,013.57 253,467,013.57 V. Book value 5,209,619,313.49 -135,004,098.97 26,328,880.15 5,048,286,334.37 Land use rights 2,291,100,883.95 -27,980,857.36 2,263,120,026.59 Software use rights 116,876,812.96 -11,614,216.90 105,262,596.06 Trademark use rights 23,330,933.38 -8,749,999.98 1,536.47 14,579,396.93 Non-patent technology 2,778,310,683.20 -86,659,024.73 26,327,343.68 2,665,324,314.79 As at 30 June 2020, the intangible assets from internal research and development account for 52.8% of total intangible assets. 16. Development expenditure In RMB Yuan Deduction Item Beginning Addition Included in current Recognized as Other Ending profit and loss intangible assets reductions Automobile 814,745,464.20 366,481,969.95 22,883,914.03 376,296,822.32 265,103,330.94 516,943,366.86 Development Total 814,745,464.20 366,481,969.95 22,883,914.03 376,296,822.32 265,103,330.94 516,943,366.86 Note: On June 30, 2020, Chongqing Changan New Energy Automobile Technology Co., Ltd. was no longer included in the scope of consolidation, and its development expenditure balance at the beginning of the year was transferred from other reductions. 17. Goodwill In RMB Yuan Impairment Investee Beginning Addition Deduction Ending provision 94 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Hebei Changan Automobile Co., Ltd 9,804,394.00 9,804,394.00 Nanjing Changan Automobile Co., Ltd 73,465,335.00 Changan Weilai New Energy Automobile 32,782,190.41 32,782,190.41 Technology Co., Ltd. Total 9,804,394.00 32,782,190.41 42,586,584.41 73,465,335.00 18. Long-term deferred expenses In RMB Yuan Item Beginning Addition Amortization Ending Long-term deferred expenses 14,327,639.90 166,065.12 2,725,128.43 11,768,576.59 Total 14,327,639.90 166,065.12 2,725,128.43 11,768,576.59 19. Deferred tax assets and liabilities Recognized deferred tax assets and liabilities: In RMB Yuan Item Ending Beginning Deferred tax assets: Provision for the impairment of assets 195,653,594.70 164,441,555.61 Accrued expenses and contingent liabilities 863,580,630.22 868,144,392.63 Unpaid tech development expense and 100,553,896.97 53,515,293.21 advertisement expense Deferred income 412,073,835.87 410,605,039.66 Unpaid salary and bonus and others 68,675,839.25 45,894,253.82 Subtotal 1,640,537,797.01 1,542,600,534.93 Deferred tax liabilities: Changes in fair value of trading financial assets 507,030,506.4 243,979,301.85 Fair value adjustment of business combination not 39,335,008.50 41,224,728.88 under the same control Others 11,538,859.56 11,538,859.56 Subtotal 557,904,374.46 296,742,890.29 20. Provision for the impairment of assets In RMB Yuan Item Beginning Current Deduction Ending 95 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report accrual Other Reversal Write-off reduction I. Bad debt provision 97,107,545.12 19,901,647.31 1,187,864.30 - 115,821,328.13 II. Provision for impairment of contract assets 112,639,013.00 4,586,336.00 117,225,349.00 III. Provision for obsolete inventory 462,806,588.61 217,223,294.74 9,985,549.83 40,529,760.82 27,863,372.11 601,651,200.59 IV. Provision for the impairment of fixed 860,395,342.35 1,004,872.80 86,619,808.25 774,780,406.90 assets V. Provision for the impairment of intangible 277,084,936.74 277,084,936.74 assets VI. Provision for the impairment of goodwill 73,465,335.00 73,465,335.00 VII. Provision for the impairment of 49,398,728.00 49,398,728.00 available-for-sale financial assets Total 1,932,897,488.82 242,716,150.85 11,173,414.13 127,149,569.07 27,863,372.11 2,009,427,284.36 21. Short-term loans In RMB Yuan Item Ending Beginning Pledge loans 50,000,000.00 50,000,000.00 Credit loans 315,525,472.30 179,580,000.00 Total 365,525,472.30 229,580,000.00 22. Notes payable In RMB Yuan Item Ending Beginning Commercial acceptance bill 2,803,761,463.16 2,551,863,471.51 Bank acceptance bill 14,217,240,478.33 10,878,679,822.72 Total 17,021,001,941.49 13,430,543,294.23 23. Accounts payable In RMB Yuan Item Ending Beginning Accounts payable 18,206,448,534.41 18,905,725,271.50 total 18,206,448,534.41 18,905,725,271.50 96 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 24. Contract liabilities (applicable from January 1, 2020) In RMB Yuan Item Ending Beginning Payment 2,162,739,729.94 2,315,641,685.78 total 2,162,739,729.94 2,315,641,685.78 Note: Contract liabilities are mainly the advance receipts collected by the Group from customers before the performance obligations are fulfilled. The related revenue of the contract will be recognized when the Group fulfills its performance obligations. 25. Payroll payable In RMB Yuan Item Beginning Addition Deduction Ending Short term salary benefits 972,606,354.60 2,355,576,601.66 2,567,610,264.06 760,572,692.20 Defined contribution plans 68,484,427.31 165,667,817.43 103,828,904.94 130,323,339.80 Early retirement benefits and 5,245,000.00 22,477,102.71 18,961,430.02 8,760,672.69 others Total 1,046,335,781.91 2,543,721,521.80 2,690,400,599.02 899,656,704.69 Short term salary benefits as follows: In RMB Yuan Item Beginning Addition Deduction Ending Salary, bonus, allowance 777,811,109.08 1,861,583,042.41 2,167,875,073.48 471,519,078.01 and subsidy Employee benefit 11,657,039.54 120,191,337.32 127,527,360.08 4,321,016.78 Social insurance 11,380,417.43 155,106,082.91 95,196,580.81 71,289,919.53 Housing accumulation fund 2,797,302.45 135,252,535.37 124,882,733.53 13,167,104.29 Labor fund and employee 168,960,486.10 83,443,603.65 52,128,516.16 200,275,573.59 education fund Total 972,606,354.60 2,355,576,601.66 2,567,610,264.06 760,572,692.20 Defined contribution plans as follows: In RMB Yuan Item Beginning Addition Deduction Ending Basic retirement 61,036,996.88 160,243,022.88 99,301,280.64 121,978,739.12 security Unemployment 7,447,430.43 5,424,794.55 4,527,624.30 8,344,600.68 insurance Total 68,484,427.31 165,667,817.43 103,828,904.94 130,323,339.80 97 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 26. Taxes payable In RMB Yuan Item Ending Beginning Value-added tax 100,005,350.24 84,852,296.03 Consumption tax 297,692,384.99 629,406,972.37 Corporate income tax 23,178,777.31 120,351,092.86 City maintenance and construction tax, education 13,725,286.76 34,455,756.66 additional expenses Others 14,052,860.82 20,026,324.88 Total 448,654,660.12 889,092,442.80 27. Other payables Item Ending Beginning Dividend payable 1,167,776.43 40,384.93 Other payables 3,073,183,667.88 4,809,877,756.52 合计 3,074,351,444.31 4,809,918,141.45 Dividend payable In RMB Yuan Item Ending Beginning Interest on long-term borrowings with interest 1,138,824.98 8,216.67 payments due Interest payable on short-term loans 28,951.45 32,168.26 Total 1,167,776.43 40,384.93 Other payables In RMB Yuan Item Ending Beginning Deposits of dealer and supplier 152,403,024.39 284,705,119.28 Maintenance fees 71,072,432.97 158,503,895.70 Advertising fees 215,104,111.47 405,752,873.43 Warehousing and transport fees 429,551,017.85 247,969,064.86 Advance receipt of equity transfer - 831,300,000.00 Purchase and construction of fixed assets, 1,225,514,269.65 2,091,437,803.04 intangible assets and project deposits Others 979,538,811.55 790,209,000.21 Total 3,073,183,667.88 4,809,877,756.52 98 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 28. Estimated liabilities In RMB Yuan Item Beginning Addition Deduction Ending product quality assurance 2,762,766,347.50 362,013,019.76 499,183,282.39 2,625,596,084.87 Supplier compensation 589,814,491.78 45,609,734.51 544,204,757.27 Total 3,352,580,839.28 362,013,019.76 544,793,016.90 3,169,800,842.14 Note: The product quality assurance is the maintenance cost of the estimated three-package period of the sold vehicle. 29. Other current liabilities In RMB Yuan Item Ending Beginning Accrued utilities 13,728,982.55 25,777,106.11 Accrued transportation fee 531,631,020.43 501,351,278.96 Accrued maintenance fee 45,276,063.03 39,493,497.48 Accrued technology transfer and development 308,326,480.76 101,005,700.82 fee Accrued commercial discount payable 2,830,265,407.90 3,028,296,317.93 Accrued market development expense 482,066,300.72 355,903,653.68 Accrued rental fee 79,555,300.00 83,111,810.66 Others 278,956,894.44 119,003,396.13 Total 4,569,806,449.83 4,253,942,761.77 30. Non-current liabilities due within one year In RMB Yuan Item Ending Beginning Credit loan 1,555,300,000.00 55,300,000.00 Total 1,555,300,000.00 55,300,000.00 31.Long-term payables Item Ending Beginning Special payables 702,461,540.35 857,356,423.71 Total 702,461,540.35 857,356,423.71 Special payables 99 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Item Beginning Addition Deduction Ending New vehicle product 13,397,745.48 2,032,200.00 906,362.96 14,523,582.52 Land relocation compensation 555,350,709.40 555,350,709.40 Development and industrialization of C206 pure 31,167.55 23,196.00 7,971.55 electric cars Intelligent manufacturing 167,757,531.08 2,238,300.00 140,724,363.46 29,271,467.62 project Lightweight design of 48,960,118.00 13,153,605.26 35,806,512.74 automobile structure Others 71,859,152.20 10,761,953.00 15,119,808.68 67,501,296.52 Total 857,356,423.71 15,032,453.00 169,927,336.36 702,461,540.35 32. Deferred income 30 June, 2020 In RMB Yuan Item Beginning Addition Deduction Ending Government grants related to 2,858,873,083.08 267,690,549.97 146,117,354.84 2,980,446,278.21 assets Government grants related to 209,830,081.10 300,000,000.00 39,313,256.02 470,516,825.08 income Others 125,587,915.03 8,118,378.89 133,706,293.92 Total 3,194,291,079.21 575,808,928.86 319,136,904.78 3,450,963,103.29 As at 30 June 2020, details of liabilities related to government grants are as follows: Recorded to Relates to Item Beginning Addition Ending other income asset/gain Project subsidy funds 2,259,609,252.14 142,587,149.97 65,267,136.32 2,336,929,265.79 Related to asset Subsidies for plant 400,927,900.80 125,103,400.00 35,929,748.82 490,101,551.98 Related to asset construction Technical innovation funds 16,150,000.00 16,150,000.00 Related to asset Other asset - related subsidies 182,185,930.14 - 44,920,469.70 137,265,460.44 Related to asset Income-related government 209,830,081.10 300,000,000.00 39,313,256.02 470,516,825.08 Related to income subsidies Total 3,068,703,164.18 567,690,549.97 185,430,610.86 3,450,963,103.29 100 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 33. Share capital In RMB Yuan Current movement Transfer of Beginning Issuance of Ending Stock dividend reserve to others Subtotal shares common shares The sum of 4,802,648,511.00 - - - - - 4,802,648,511.00 shares 34. Capital reserves In RMB Yuan Item Beginning Addition Deduction Ending Share premium 4,938,329,830.94 4,938,329,830.94 Capital reserve transferred 44,496,899.00 44,496,899.00 arising from the old standards Restricted capital reserve of 17,015,985.20 17,015,985.20 equity investments Others 366,254,879.52 366,254,879.52 Total 5,366,097,594.66 5,366,097,594.66 35. Other comprehensive income In RMB Yuan Increase or Increase or 2019/1/1 2019/12/31 2020/6/30 decrease decrease Remeasure the net liabilities or changes in net assets of defined 1,175,000.00 254,000.00 1,429,000.00 1,429,000.00 benefit plans Under the equity method, the invested unit's share of other -2,088,068.00 -2,088,068.00 -2,088,068.00 comprehensive income that cannot be reclassified into profit and loss Changes in the fair value of other 131,858,460.00 63,584,845.00 195,443,305.00 195,443,305.00 equity instrument investments Translation differences of foreign -60,928,211.01 6,138,554.20 -54,789,656.81 6,766,939.37 -48,022,717.44 currency financial statements Total 70,017,180.99 69,977,399.20 139,994,580.19 6,766,939.37 146,761,519.56 101 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 36. Surplus reserves In RMB Yuan Item Beginning Addition Deduction Ending Statutory surplus 2,401,324,255.50 - - 2,401,324,255.50 Total 2,401,324,255.50 - - 2,401,324,255.50 37. Retained earnings In RMB Yuan Item Sum Retained earnings at beginning of year 31,271,171,559.60 Add: Net profit belong to parent company 2,602,166,402.68 Retained earnings at the end 33,873,337,962.28 38. Operating revenue and cost In RMB Yuan Report period Same period of last year Revenue Cost Revenue Cost Main business 32,014,959,151.44 29,353,108,421.60 29,100,899,960.18 26,869,270,640.75 Other business 766,698,327.66 381,507,276.03 774,880,136.66 550,139,986.17 Total 32,781,657,479.10 29,734,615,697.63 29,875,780,096.84 27,419,410,626.92 39. Tax and surcharges In RMB Yuan Item Report period Same period of last year Consumption tax 954,339,591.94 858,219,663.65 City maintenance and construction tax 79,821,375.83 66,201,215.72 Education additional expenses 50,469,342.13 48,193,289.93 Others 121,656,073.55 107,656,305.48 Total 1,206,286,383.45 1,080,270,474.78 40. Operating expenses In RMB Yuan Item Report period Same period of last year Payroll and welfare 204,419,163.59 217,259,045.38 102 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Promotional advertising fees and sales 863,454,318.26 315,728,251.14 service fees Transportation expenses 110,198,692.55 840,974,104.51 Travelling expenses 21,867,777.56 39,917,298.97 Package expenses 4,637,273.00 12,659,730.13 Administrative expenses 1,929,938.37 2,538,568.31 Consulting fee 993,897.25 3,900,858.69 Training fee 1,557,051.04 3,755,007.88 Others 61,658,970.45 6,483,676.29 Total 1,270,717,082.07 1,443,216,541.30 41. General and administrative expenses In RMB Yuan Item Report period Same period of last year Payroll and welfare 710,197,732.15 511,834,200.57 Administrative expenses 1,813,546.15 8,543,521.30 Depreciation and amortization 133,684,029.10 138,824,075.95 Miscellaneous service charges 11,389,441.25 5,974,056.43 Traffic and travelling expenses 19,024,299.22 22,241,582.82 Entertainment expenses 450,275.19 1,162,489.46 Others 287,593,449.85 154,580,626.09 Total 1,164,152,772.91 843,160,552.62 42. Research and development expenses Item Report period Same period of last year Wages and benefits 519,844,836.98 868,126,885.03 Material fee 58,974,839.13 85,090,579.88 Subcontract fee 171,587,497.89 119,210,568.21 Travel research fee 10,103,859.15 17,519,367.04 Test fee 43,007,880.00 49,958,628.39 Depreciation and amortization 580,661,427.53 501,999,298.39 other fee 80,374,082.74 78,254,331.94 Total 1,464,554,423.42 1,720,159,658.88 103 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 43. Financial expenses In RMB Yuan Item Report period Same period of last year Interest expense 20,373,153.36 28,216,059.24 Less: interest income 131,048,028.86 128,484,820.10 Exchange gain or loss 4,908,537.21 -2,640,391.42 Others 7,712,792.91 6,076,443.13 Total -98,053,545.38 -96,832,709.15 44. Assets disposal income In RMB Yuan Included in 2018 non-recurring Item Report period Same period of last year gains and losses Fixed assets disposal income 33,428,646.97 9,392,459.28 33,428,646.97 Total 33,428,646.97 9,392,459.28 33,428,646.97 45. Impairment loss on assets In RMB Yuan Item Report period Same period of last year 1. Bad debt loss 207,237,744.91 152,676,538.06 2. Impairment provision of obsolete inventory 1,004,872.80 Total 208,242,617.71 152,676,538.06 46. Credit impairment loss (applicable from January 1, 2019) Item Report period Same period of last year I. Notes receivable and bad debts of accounts receivable 18,590,707.11 7,380,783.24 2. Impairment of contranct assets 123,075.90 2,148,950.42 3. Loss of bad debts of other receivables 4,586,336.00 Total 23,300,119.01 9,529,733.66 47. Changes in fair value gains and losses Sources of income from changes in fair value Report period Same period of last year Transactional financial assets 1,753,674,697.00 40,337,151.27 104 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Total 1,753,674,697.00 40,337,151.27 48. Investment income In RMB Yuan Item Report period Same period of last year 1.Long-term equity investment income under equity -528,282,156.89 -108,336,709.94 method 2.Investment income from disposal of long-term 3,514,298,597.59 equity investments 3.Investment income obtained during the period of 7,903,143.08 holding trading financial assets 4.Others 6,884,080.21 Total 3,000,803,663.99 -108,336,709.94 49. Other income In RMB Yuan Item Report period Same period of last year Explain R&D special funds 49,313,256.03 476,456,238.65 Deferred revenue amortization 146,117,354.84 110,976,095.19 Other government subsidies 20,547,344.41 33,300,740.27 Total 215,977,955.28 620,733,074.11 -- 50. Non-operating income In RMB Yuan Item Report period Same period of last year Fines and others 31,178,860.44 18,836,680.44 Total 31,178,860.44 18,836,680.44 51. Non-operating expenses In RMB Yuan Item Report period Same period of last year Donation 16,759,250.00 2,300,000.00 Vehicle reward 6,029,776.00 Fines and late fees 130,851.84 1,065,115.94 105 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Others 34,461,544.29 3,250,175.26 Total 51,351,646.13 12,645,067.20 52. Income tax expenses In RMB Yuan Item Report period Same period of last year Current income tax expense 26,707,074.55 31,508,825.01 Deferred income tax adjustment 163,224,222.09 85,058,871.07 Total 189,931,296.64 116,567,696.08 53. Notes to cash flow statement (1) The major cash received relating to other operating activities In RMB Yuan Item Amount Interest income 120,704,400.68 Government grants related to operating activities 474,224,889.28 Others 865,665,430.32 Total 1,460,594,720.28 (2) The major cash paid relating to other operating activities In RMB Yuan Item Amount Selling expenses 933,772,246.27 Administrative expenses 1,025,434,454.14 R&D expensess 401,581,519.34 Others 746,994,963.28 Total 3,107,783,183.03 (3) The major cash received relating to other investing activities In RMB Yuan Item Amount Others 2,401,804.55 Total 2,401,804.55 (4) The major cash paid relating to other investing activities In RMB Yuan Item Amount 106 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Disposal of subsidiary equity 104,231,229.20 Total 104,231,229.20 (5) The major cash received relating to other financing activities In RMB Yuan Item Amount Redemption of the deposit for acceptance 330,073,299.87 Total 330,073,299.87 (6) The major cash paid relating to other financing activities Item Amount Payment of acceptance billsother 129,678,677.47 Others 12,249,709.00 Total 141,928,386.47 54. Supplementary information of cash flow statement (1) Supplementary information of cash flow statement In RMB Yuan Supplementary information Current Amount Prior-period Amount 1. Cash flow relating to operating activities calculated by adjusting the net profit Net profit 2,601,622,809.19 -2,244,061,428.35 Add: credit impairment loss 23,300,119.01 9,529,733.66 Add: provision for assets impairment 208,242,617.71 152,676,538.06 Depreciation of fixed assets, oil and gas assets, productive 1,341,780,516.22 1,412,926,235.60 biological assets Amortization of intangible assets 514,642,717.04 485,234,277.39 Amortization of long-term deferred expense 2,725,128.43 1,190,008.24 Disposal loss/(income) on fixed assets, intangible assets and -33,428,646.97 -9,392,459.28 others long-term assets(with “-” for gains) Loss of fair value change (revenue is marked with "-") -1,753,674,697.00 -40,337,151.27 Financial expense(with “-” for gains) 20,373,153.36 28,216,059.24 Investment loss(with “-” for gains) -3,000,803,663.99 108,336,709.94 Decrease in deferred tax assets(with “-” for gains) -97,937,262.08 91,826,434.28 Increase in deferred tax debts(with “-” for gains) 261,161,484.17 -6,753,936.40 Decrease in inventory(with “-” for gains) -664,950,981.62 -787,955,680.07 Decrease in operating receivables(with “-” for gains) 4,982,533,829.23 3,615,249,233.77 107 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Increase in operating payables(with “-” for gains) 2,756,790,261.85 1,406,660,271.88 Others -249,790,690.95 -3,081,215.74 Net cash flows from operating activities 6,912,586,693.60 4,220,263,630.95 2. Investment and financing activities involving no cash incomings / outgoings 3. Movement of cash and cash equivalents Ending balance of cash equivalents 16,821,119,181.24 10,147,607,013.29 Less: beginning balance of cash equivalents 9,360,474,674.89 9,648,153,614.80 Net increase in cash and cash equivalents 7,460,644,506.35 499,453,398.49 (2) Cash and cash equivalents In RMB Yuan Item Ending balance Beginning balance I. Cash Including: Cash on hand 14,977.41 18,280.08 Bank deposits that can be readily used 16,821,104,203.83 9,360,456,394.81 II. Ending balance of cash and cash equivalents 16,821,119,181.24 9,360,474,674.89 VIII. The change of consolidation scope 1. Business combination not under the Same Control The company originally held 50% of the equity of Changan Weilai New Energy Automobile Technology Co., Ltd. (hereinafter referred to as "Changan Weilai"), and was able to exercise joint control over it, accounting for the equity method. In 2020, the company will increase its investment in Changan Weilai through cash increase and other methods. The transaction date is June 4, 2020. After the capital increase is completed, the company holds a total of 95.38% of the equity of Changan Weilai and confirmed goodwill of RMB 32,782,190.41. 2. Combination under the same control □ Applicable √ Not Applicable 3. Counter purchase □ Applicable √ Not Applicable 4. Disposing subsidiary Whether there is a single disposal of the subsidiary company investment that is the loss of control of the situation □ Applicable √ Not Applicable 108 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Whether there is a situation of the loss of control over the period of the investment and the loss of control of the subsidiary company through multiple transactions □ Applicable √ Not Applicable 5. Change of consolidation scope due to other reasons (1) Newly established subsidiary companies during the reporting period Registered Type of Registered Capital(Ten Proportion of shares enjoyed Name Address business Thousand Yuan) by the group Chongqing Changan Automobile 100% Chongqing Sales 9900 Software Technology Co., Ltd. (2) Subsidiary clearing during the reporting period □ Applicable √ Not Applicable Subsidiary clearing during the reporting period and related circumstances: □ Applicable √ Not Applicable (3) Other reduced subsidiaries during the reporting period Chongqing Changan New Energy Automobile Technology Co., Ltd. introduced a strategic investor. The company lost control over it, and its shareholding ratio was reduced to 48.96%. It was no longer included in the scope of consolidation and was subsequently measured by the equity method. IX. Stake in other entities 1. Rights in subsidaries The subsidiaries of the Company are as follows: Total proportion Main Registered Registered Nature of of shareholders Company name operating capital (ten place business (%) place thousand) Direct Indirect I. The subsidiary formed by establishment or investment Hebei Changan Automobile Co., Ltd. (Note - Dingzhou Dingzhou Manufacturing 46,469 94.22 1) Chongqing Changan International - Chongqing Chongqing Sales 1,376 100.00 Automobile Sales Co., Ltd. Chongqing Changan Vehicle Networking - Chongqing Chongqing Lease 8,850 100.00 Technology Co., Ltd. Chongqing Changan Special Automobile Chongqing Chongqing Sales 2,000 50.00 - Sales Co., Ltd (Note 2) Chongqing Changan Automobile Supporting Chongqing Chongqing Sales 3,000 99.00 1.00 Service Co., Ltd. Chongqing Changan New Energy Chongqing Chongqing R&D 2,900 100.00 - 109 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Automobile Co. Ltd. Chongqing Changan Europe Design Turin, Italy Turin, Italy R&D EUR1,738.36 100.00 - Academy Co., Ltd. Nottingham, Nottingham, Changan United Kingdom R&D Center Co., United United R&D GBP2,482 100.00 - Ltd. Kingdom Kingdom Beijing Changan R&D Center Co., Ltd. Beijing Beijing R&D 100 100.00 - Changan Japan Designing Center Co.,Ltd Habin Habin R&D JPY2,000 100.00 - Troy, Troy, Changan United States R&D Center Co., United United R&D USD154 100.00 - Ltd. states states Moscow, Moscow, Changan Automobile Russia Co., Ltd. Sales RUB220,382 100.00 - Russia Russia St. Paul, St. Paul, Changan Brazil Holdings Limited Sales BRL100 100.00 - Brazil Brazil Shenzhen Changan New Energy Automobile Shenzhen Shenzhen Sales 14,800 100.00 - Service Co., Ltd Hangzhou Changan Yixing Technology Co., Hangzhou Hangzhou Lease 500 100.00 - Ltd. Hefei Changan Yixing Technology Co., Ltd. Hefei Hefei Lease 500 100.00 - Nanjing Changan Connected Car Nanjing Nanjing Lease 500 100.00 - Technology Co., Ltd. Nanjing Changan New Energy Automobile Nanjing Nanjing Sales 5,000 100.00 Sales & Service Co., Ltd. Fuzhou Fuqing Changan New Energy Fuzhou Fuzhou Sales 200 100.00 - Automobile Sales & Service Co., Ltd. Xiamen Changan New Energy Automobile Xiamen Xiamen Sales 200 100.00 - Sales & Service Co., Ltd. Guangzhou Changan New Energy Guangzhou Guangzhou Sales 400 100.00 - Automobile Sales & Service Co., Ltd. Chongqing Chehemei Technology Co., Ltd. Chongqing Chongqing Sales 1,000 100.00 Chongqing Changan Automobile Software Chongqing Chongqing R&D 9900 100.00 - Technology Co., Ltd. II. The subsidiary formed by business combination not under common control Nanjing Changan Automobile Co., Nanjing Nanjing Manufacturing 60,181 84.73 - Ltd.(Note1) Chongqing Changan Suzuki Automobile Co., Chongqing Chongqing Manufacturing 133,764 100.00 Ltd. Zhenjiang Demao Hairun Equity Investment Financial Zhenjiang Zhenjiang 150,001 100.00 Fund Partnership (Limited Partnership) industry Changan Weilai New Energy Automobile Nanjing Nanjing Manufacturing 18800 95.38 110 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Sales & Service Co., Ltd. III. The subsidiary formed by business combination under common control Hebei Baoding Changan Bus Co., Ltd. Dingzhou Dingzhou Manufacturing 3,000 100.00 - Hefei Changan Automobile Co.,Ltd. Hefei Hefei Manufacturing 77,500 100.00 - Note 1: The Company owns 93.79% and 95.70% of voting shares of Nanjing Changan Automobile Co., Ltd. And Hebei Changan Automobile Co., Ltd. respectively, the difference between proportion of voting shares and proportion of shares held is due to the voting right consigned from minority shareholders. Note 2: The remaining shareholders of Chongqing Changan Special Automobile Co., Ltd. made an agreement with the Company that the remaining shareholders are to vote in accordance with the Company. The main financial and operating policies have been controlled by the Company, so it is included in the scope of consolidated financial statements. As at June 30, 2020, the Group has no subsidiaries with important minority interests. 2. Transctions result in change of holdingshare proportion but no effect in control of subsidiaries □ Applicable √ Not applicable 3. Stakes in joint ventures and associates Main Registered Total proportion of Registered Accounting Company name operating Nature of business capital (ten shareholders (%) place treatment place thousand) Direct Inderect I. Joint ventures Manufacture and sale Changan Ford Automobile Chongqing Chongqing ofautomobiles, and USD24,100 50.00 - Equity Co., Ltd. components Manufacture and sale Changan Mazda Automobile Nanjing Nanjing ofautomobiles, and USD11,097 50.00 - Equity Co., Ltd. components Manufacture and sale Changan Mazda Engine Co., Nanjing Nanjing ofautomobiles, and USD20,996 50.00 - Equity Ltd. (Note 1) components Manufacture and sale Jiangling Investment Co., Ltd. Nanchang Nanchang ofautomobiles, and 100,000 50.00 - Equity components II. Associates Develop, product and Chongqing Changan Kuayue sale of automobile and Chongqing Chongqing 6,533 34.30 - Equity Automobile Co., Ltd. components; import and export goods. Chongqing Changan Kuayue Sale of Changan Chongqing Chongqing 300 34.30 - Equity Automobile Sales Co., Ltd. Kuayue’ s automobile 111 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report and agricultural cars and components. Technical advisory services for automobile For the car loan Beijing Fang’an Taxi Co., Ltd. Beijing Beijing 2,897.96 20.70 - Equity business Provide car loan; provide vehicle loans and operating equipment loans to car Chongqing Auto Finance Co., dealers, including the Chongqing Chongqing 476,843.1 28.66 - Equity ltd. construction loans of exhibition hall,spare parts loans and maintenance equipment loans, etc. Software and hardware Hainan Anxinxing technology Chengmai Chengmai Information Technology Co., development, technical 3,000 30.00 - Equity County County Ltd. consulting, auto parts sales Car sales, leasing, Nanjing Chelai Travel software technology Nanjing Nanjing 10,000 10.00 - Equity Technology Co., Ltd. development, technical services Technology development Hunan Guoxin Semiconductor consulting, technical Zhuzhou Zhuzhou 50,000 25.00 - Equity Technology Co., Ltd. services, technology transfer in the field of power semiconductors Technology development, technical Beijing Wutong Chelian Beijing Beijing consulting, technical 20,000 - - Equity Technology Co., Ltd. services, technology transfer Anhe (Chongqing) Equity Equity investment Investment Fund Management Chongqing Chongqing 1,000 - - Equity management Co., Ltd. Hangzhou Chelizi Intelligent Hangzhou Hangzhou Car travel service 630 - - Equity Technology Co., Ltd. Manufacture and sale Pakistan Master Motors Co., Lahore, Lahore, ofautomobiles, and PKR75,000 30,000 Equity Ltd. Pakistan Pakistan components 112 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Manufacture and sale Jiangling Holding Co., Ltd. Nanchang Nanchang ofautomobiles, and - Equity 200,000 25.00 components Equity investment, Nanjing Leading Equity Nanjing Nanjing venture capital 976,000 15.00 - Equity Investment Partnership investment Nanjing Leading Equity Equity investment Investment Management Co., Nanjing Nanjing 1,000 16.39 - Equity management Ltd. X. Risks associated with financial instruments 1. Classification of financial instruments As at balance sheet day, the book values of financial instruments are as follows: Financial assets In RMB Yuan Financial Assets Measured at Measured at fair value and Fair Value and Their Changes 2019.6.30 Measured at amortized cost its changes are included in Included in Current Profits and other comprehensive income Losses Cash 17,326,421,237.43 Transactional financial assets 4,173,150,897.00 Notes receivable 21,629,277,146.93 Accounts receivable 2,299,982,425.41 Other receivables 1,042,027,106.65 Other current assets 315,431,147.57 Investment in other equity 734,506,100.00 instruments Total 4,173,150,897.00 42,613,139,063.99 734,506,100.00 In RMB Yuan Financial assets measured at Financial assets measured at fair fair value with changes value and whose changes are Financial assets measured at 2019.12.31 included in other included in the current profit and amortized cost comprehensive income loss (standard requirements) (designated) Cash - 10,066,171,353.48 - Transactional financial 2,419,476,200.00 - - assets 113 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Notes receivable - 26,805,635,587.19 - Accounts receivable - 838,314,076.82 - Other receivables - 3,731,755,992.46 - Other current assets - 317,546,789.66 - Investment in other equity - - 734,506,100.00 instruments Total 2,419,476,200.00 41,759,423,799.61 734,506,100.00 Financial liabilities In RMB Yuan 2020.6.30 2019.12.31 Short-term loans 365,525,472.30 229,580,000.00 Notes payable 17,021,001,941.49 13,430,543,294.23 Accounts payable 18,206,448,534.41 18,905,725,271.50 Other payables 3,074,351,444.31 4,809,918,141.45 Long-term loan 1,555,300,000.00 55,300,000.00 Total 40,222,627,392.51 37,431,066,707.18 114 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 2. Transfer of financial assets The transferred financial assets that entirely derecognized but continuing involved As at June 30, 2020, the book value of the bank acceptance bill that the Group has endorsed to the supplier to settle accounts payable is RMB 991,651,260.00 (December 31, 2019: RMB 1,894,125,685.18). On June 30, 2020, its maturity date is 1 to 6 months. According to the relevant provisions of the "Negotiable Instruments Law", if the accepting bank refuses to pay, its holder has the right to recourse against the Group ("continued involvement "). The Group believes that the Group has transferred almost all of its risks and rewards, and therefore, terminates the confirmation of the book value of the settlement accounts payable and the related accounts payable. The maximum loss and undiscounted cash flow of continuing involvement and repurchase are equal to its book value. The Group believes that continued involvement in fair value is not significant. In the first half of 2020, the Group did not recognize gains or losses on its transfer date. The Group shall continue to be involved in the proceeds or expenses of the year in which the recognition of financial assets has been terminated and the cumulative recognition thereof. Endorsements occur roughly and evenly during the year. 3. Risks of financial instruments The Group’s principal financial instruments, except for derivatives, include bank loans, bonds payable, cash, etc. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as accounts receivable and accounts payable, which arise directly from its operations. The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk. The Group’s risk management policies are summarized below: Credit risk The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the special department of credit control. Since the counterparties of monetary funds and bank acceptance bills receivable are banks with good reputation and high credit ratings, these financial instruments have low credit risk. With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, available-for-sale financial assets, other receivables, dividend receivables and certain derivatives financial instruments, the Group’s exposure to credit risk arising from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments, listed as book value of financial assets in consolidated financial statements. In 2020, there was no credit risk arising from financial guarantee. No gage is required since the Group trades only with recognized, creditworthy third parties. Credit risks are managed by clients and industries collectively. As at 30 June 2020, among the Group’s collections with specific credit risk, 63.54% of accounts receivables of the Group are due from top five clients. The Group does not hold any gage from or enhance credit limit to these clients. Credit Risk Increasing the Judgment Criteria Significantly The Group assesses whether the credit risk of the relevant financial instruments has increased significantly since the initial confirmation on each balance sheet day. In determining whether credit risk has increased significantly since the initial confirmation, 115 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report the Group considers that reasonable and valid information, including qualitative and quantitative analysis based on the Group's historical data, external credit risk rating and forward-looking information, can be obtained without unnecessary additional costs or efforts. Based on a single financial instrument or a portfolio of financial instruments with similar credit risk characteristics, the Group compares the risk of default of financial instruments on the balance sheet date with the risk of default on the initial confirmation date to determine the change of default risk of financial instruments during the expected lifetime. When triggering one or more of the following quantitative and qualitative criteria, the Group believes that the credit risk of financial instruments has increased significantly: Quantitative criteria are that the probability of default of the remaining duration of the reporting day rises by more than a certain percentage compared with the initial confirmation Qualitative criteria include major adverse changes in the debtor's business or financial situation, early warning customer lists, etc. The upper limit indicator is that the debtor's contract payments (including principal and interest) are overdue for more than [30] days. Other financial assets of the Group include monetary funds, sellable financial assets, other receivables, etc. The credit risk of these financial assets originates from the default of the counterparty, and the maximum risk exposure equals the book value of these instruments. The Group faces no credit risk in this year due to the provision of financial guarantees. Definition of assets with impaired credit In order to determine whether credit impairment occurs, the defining criteria adopted by the Group are consistent with the internal objectives of credit risk management for relevant financial instruments, taking into account quantitative and qualitative indicators. When assessing whether the debtor has suffered credit impairment, the Group mainly considers the following factors: Major financial difficulties occur to the issuer or debtor; The debtor breaches the contract, such as defaulting of the interest or overdue principal, etc. The creditor gives the debtor concessions in no other case for economic or contractual considerations related to the debtor's financial difficulties; The debtor is likely to go bankrupt or undergo other financial restructuring; The financial difficulties of the issuer or debtor lead to the disappearance of the active market of the financial assets; Purchase or derivation of a financial asset at a substantial discount reflects the credit losses. Credit impairment of financial assets may be caused by the interaction of multiple events, not necessarily by separate identifiable events. Parameters for Measuring Expected Credit Loss Depending on whether credit risk has increased significantly and whether credit impairment has occurred, the Group measures impairment provision for different assets by anticipated credit losses for 12 months or the whole life period, respectively. The key parameters of anticipated credit loss measurement include default probability, default loss rate and default risk exposure. Considering the quantitative analysis and forward-looking information of historical statistics (such as counterparty ratings, guarantees and 116 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report collateral types, repayment methods, etc.), the Group establishes a default probability, default loss rate and default risk exposure model. The relevant definitions are as follows: The probability of default refers to the possibility that the debtor will not be able to fulfil its obligation to pay in the next 12 months or throughout the remaining period. The default probability of the group is adjusted based on the results of XX model, and forward-looking information is added to reflect the default probability of the debtor under the current macroeconomic environment. The default loss rate refers to the group's expectation of the extent of loss from exposure to default risk. According to the type of counterparty, the way and priority of recourse, and the different collateral, the loss rate of breach of contract is also different. The default loss rate is the percentage of risk exposure loss at the time of default, which is calculated on the basis of the next 12 months or the whole duration. The default risk exposure is the amount that the group should be repaid in the event of default in the next 12 months or throughout the remaining period. Prospective information The assessment of significant increase in credit risk and the calculation of anticipated credit losses involve forward-looking information. Through historical data analysis, the Group identifies key economic indicators affecting credit risk and expected credit loss of various business types. The impact of these economic indicators on default probability and default loss rate varies with different business types. In this process, the Group applies expert judgment to forecast these economic indicators annually based on the results of expert judgment, and determines the impact of these economic indicators on default probability and default loss rate through [regression analysis]. Liquidity risk The Group adopts cycle liquidity planning instrument to manage capital shortage risks. The instrument takes into consideration the maturity date of financial instruments plus estimated cash flow from the Group’s operations. The Group’s objective is to maintain a balance between continuity of funding and flexibility and sufficient cash to support operating capital through financing functions by the use of bank loans, debentures, etc. Market risk Interest rate risk The Group’s revenue and operating cash flows are seldomly influenced by the interest fluctuation. As at 30 June 2019, the Group’s loans are bearing fixed interest rate and the Group is not hedging the risk currently. Foreign currency risk The Group’s exposures to fluctuation in foreign currency exchange rate mainly arise from operating activities where transactions are settled in currencies other than the units' functional currency and net investment to offshore subsidiary. 117 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report In 30 June, 2019, the Group only has limited transactional currency exposures of its total revenue that is valued in currencies other than the units' functional currency. Since most of the Group’s businesses are operated in China mainland, the estimated influence of fluctuation of foreign currency is insignificant; therefore, the Group hasn’t carried out large amount of hedging to reduce the risk. Equity instruments investment price risk The Group is exposed to equity price risk arising from individual equity investments classified as transactional financial investments (Note VII 2) as at 30 June 2020. The Group’s listed investments are listed on the Shanghai and Shenzhen stock exchanges and valued at quoted market prices at the end of the reporting period. The following table demonstrates the sensitivity to every 5% change (based on the carrying amount as at the end of reporting period) in the Group’s net profit and fair value of the equity investments, with all other variables held constant, based on their carrying amounts at the end of the reporting period. Carrying amount of equity Change in fair value Increase/(decrease) in equity investments 2020.6.30 Shanghai- Transactional 162,945,000.00 5% 6,925,162.50 financial assets Shanghai- Transactional 162,945,000.00 -5% -6,925,162.50 financial assets Shenzhen-Transactional 4,010,205,897.00 5% 170,433,750.62 financial assets Shenzhen-Transactional 4,010,205,897.00 -5% -170,433,750.62 financial assets 2019.12.31 Shanghai- Available for sale 184,245,000.00 5% 7,830,412.50 Shanghai- Available for sale 184,245,000.00 -5% -7,830,412.50 Shenzhen- Available for sale 2,235,231,200.00 5% 94,997,326.00 Shenzhen- Available for sale 2,235,231,200.00 -5% -94,997,326.00 4. Capital management The main goal of the Group’s capital management is to ensure that the ability of continuous operation, and maintain a healthy capital ratios in order to support business development, and to maximize shareholder value. The Group manages the capital structure and adjusts it with the change of economy trend and the risk feature of the assets. To maintain or adjust the capital structure, the Group can rectify dividend distribution, return capital to shareholders or issue new shares. The Group is not subject to external mandatory capital requirements constraints. The goal, principle and procedure of capital management stay the same in 2019 and 30, June 2020. 118 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report The Group’s leverage ratio on the balance sheet date is as follows: 30 June 2020 31 December 2019 Leverage ratio 54.70% 54.99% XI. Disclosure of fair value 1. Assets and liabilities measured at fair value June 30, 2020 In RMB Yuan Input measured at fair value Quoted price in active Important and Important but unobservable market observable input input Total (The first level) (The second level) (The third level) Transactional financial assets 4,173,150,897.00 4,173,150,897.00 Other equity instruments 734,506,100.00 734,506,100.00 Total 4,173,150,897.00 734,506,100.00 4,907,656,997.00 December 31, 2019 In RMB Yuan Input measured at fair value Quoted price in active Important and observable Important but market input unobservable input (The Total (The first level) (The second level) third level) Transactional financial 184,245,000.00 2,235,231,200.00 - 2,419,476,200.00 assets Other equity instruments - - 734,506,100.00 734,506,100.00 Total 184,245,000.00 2,235,231,200.00 734,506,100.00 3,153,982,300.00 2. Fair value valuation The management has assessed the monetary funds, notes receivable and accounts receivable, other receivables, short-term loans, other payables, bills payable and accounts payable. The fair value is equal to the book value because the remaining period is not long. The fair value of financial assets and financial liabilities is determined by the amount of voluntarily exchange of assets or debt settlement between the parties to the transaction in a fair transaction, rather than the amount of money that is forced to sell or liquidate. Long-term borrowings and long-term borrowings due within one year are determined using the discounted future cash flow method to determine the fair value, using the market yields of other financial instruments with similar contractual terms, credit risk and 119 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report remaining maturity as the discount rate. On June 30, 2020 the risk assessment of long-term borrowings and long-term borrowings due within one year was not significant. The equity instruments listed by the Company include unrestricted ordinary shares and restricted shares. The unrestricted ordinary shares investment determines the fair value by market quotation, and the restricted stock investment uses the discounted valuation model to estimate the fair value. We believe that the fair value and its changes estimated by valuation techniques are reasonable and are also the most appropriate value on the balance sheet date. XII. Related parties and related party transactions 1. Parent company of the Company Proportion of Proportion of Parent company Place of registration Registered capital Nature of the business shares in the voting rights in Company (%) the company (%) China Changan Manufacture and sale of Automobile Group Beijing 6,092,273,400.00 automobiles, engine, and 22.53% 22.53% Co ,Ltd. components The Final controlling party is China South Industries Group corporation 2. Subsidiaries See subsidiaries in IX. Stake in other entities. 3. Joint ventures and associates See Joint ventures and associates in IX.3 Stake in other entities. 4. Other related parties Other related parties Relationship Chongqing Qingshan Transmission Sales Co., Ltd. Subordinate company of South Industries Hubei Xiaogan Huazhong Automobile Light Co., Ltd. Subordinate company of South Industries Chongqing Changrong Machinery Co., Ltd. Subordinate company of South Industries Chengdu Lingchuan Special Industry Co., Ltd. Subordinate company of South Industries Chengdu Lingchuan Vehicle Oil Tank Co., Ltd. Subordinate company of South Industries Chongqing Changfeng Jiquan Machinery Co., Ltd. Subordinate company of South Industries Chongqing Construction Tongda Industrial Co., Ltd. Subordinate company of South Industries Yunnan Xiyi Industries Co., Ltd. Subordinate company of South Industries Chongqing Shangfang Auto Parts Co., Ltd. Subordinate company of South Industries 120 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Other related parties Relationship Chongqing Dajiang Xinda Vehicle Co., Ltd. Subordinate company of South Industries Chongqing Dajiang Guoli Precision Machinery Manufacturing Co., Ltd. Subordinate company of South Industries Chongqing Jianshe Automobile Air-conditioner Co., Ltd. Subordinate company of South Industries China South Industries Group Finance Co., Ltd. Subordinate company of South Industries Southwest Ordnance Industry Corporation Subordinate company of South Industries Chengdu Wanyou Filter Co., Ltd. Subordinate company of South Industries Chongqing Yihong Engineering Plastic Products Co., Ltd. Subordinate company of South Industries Beijing Beiji Mechanical and Electrical Industry Co., Ltd. Subordinate company of South Industries Chengdu Jialing Huaxi Optical & Precision Machinery Co., Ltd. Subordinate company of South Industries Chongqing Nexteer Steering System Co., Ltd. Subordinate company of South Industries Chongqing Dajiang Jiexin Forging Co., Ltd. Subordinate company of South Industries Chongqing Jialing Yimin Special Equipment Co., Ltd. Subordinate company of South Industries Chengdu Guangming Tianzhong Environmental Technology Co., Ltd. Subordinate company of South Industries Chongqing Xiyi Automobile Connecting Rod Co., Ltd. Subordinate company of South Industries Chongqing Changan Industry (Group) Co., Ltd. Subordinate company of South Industries Hubei Huazhong Marelli Automotive Lighting Co., Ltd. Subordinate company of South Industries Chongqing Changan Real Estate Development Co., Ltd. Subordinate company of Changan Industry Chongqing Changan Construction Engineering Co., Ltd. Subordinate company of Changan Industry Chongqing Changan Property Management Co., Ltd. Subordinate company of Changan Industry China Changan Automobile Group Co., Ltd. Parent company China Changan Automobile Group Co., Ltd. Chongqing Qingshan Transmission Branch China Changan Branch Sichuan Jian'an Industry Co., Ltd. Subordinate company of China Changan Southern Inte Air Conditioning Co., Ltd. Subordinate company of China Changan Sichuan Ningjiang Shanchuan Machinery Co., Ltd. Subordinate company of China Changan Chengdu Huachuan Denso Co., Ltd. Subordinate company of China Changan Chongqing Automotive Air Conditioner Co., Ltd. Subordinate company of China Changan Southern Trina Chassis Systems Co., Ltd. Subordinate company of China Changan Chongqing Changan Minsheng Logistics Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Longrui Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Longxing Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chengdu Wanyou Xiangyu Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chengdu Wanyou Trading Co., Ltd. Subordinate company of China Changan 121 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Other related parties Relationship Hafei Automobile Co., Ltd. Subordinate company of China Changan Chongqing Anfu Automobile Marketing Co., Ltd. Subordinate company of China Changan China Changan Automobile Group Tianjin Sales Co., Ltd. Subordinate company of China Changan Chengdu Ningjiang Showa Auto Parts Co., Ltd. Subordinate company of China Changan Harbin Dongan Automobile Power Co., Ltd. Subordinate company of China Changan Harbin Dongan Automobile Engine Manufacturing Co., Ltd. Subordinate company of China Changan Zhonghui Fortis (Hong Kong) Investment Co., Ltd. Subordinate company of China Changan China North Industries Group Financial Leasing Co., Ltd. Subordinate company of China Changan Wanyou Automobile Investment Co., Ltd. Subordinate company of China Changan Chengdu Wanyou Automobile Trading Service Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Economic Development Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Zunda Automobile Sales Service Co., Ltd. Subordinate company of China Changan .Yunnan Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Guizhou Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Yunnan Xiangyu Automobile Sales Service Co., Ltd. Subordinate company of China Changan Guangxi Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Nanning Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chongqing Fuji Supply Chain Management Co., Ltd. Subordinate company of China Changan Panzhihua Wanyou Automobile Sales Service Co., Ltd Subordinate company of China Changan Ya'an Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd Subordinate company of China Changan Chongqing Wanyou Xingjian Automobile Sales Service Co., Ltd. Subordinate company of China Changan Luzhou Wanyou Automobile Service Co., Ltd. Subordinate company of China Changan Southern Faurecia Auto Parts Co., Ltd. Subordinate company of China Changan Chengdu Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Bazhong Wanyou Automobile Sales Service Co., Ltd. Subordinate company of China Changan Harbin Broadcom Auto Parts Manufacturing Co., Ltd. Subordinate company of China Changan China Changan Automobile Group Hefei Investment Co., Ltd. Subordinate company of China Changan 5. Related-party transaction (1) Goods purchased and services received In RMB Yuan 122 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Whether it exceeds Nature of the Approved Prior-period Related parties Current amount the transaction transaction amount amount transactio n amount Purchase of Changan Ford Automobile Co., Ltd. 4,825,291.25 4,161,704.83 Yes 1,290,483.83 spare parts Purchase of Changan Mazda Automobile Co., Ltd. - 24,596,000.00 No - spare parts Purchase of Changan Auto Finance Co., Ltd. - 1,100,000.00 No - spare parts Purchase of Hangzhou Cherizi Intelligent Technology spare parts、 32,858.40 2,477,105.19 No 3,150,482.79 Co., Ltd. Accept service Chongqing Changan New Energy Purchase of 292,316,059.70 2,913,152,000.00 No - Automobile Technology Co., Ltd. spare parts Chongqing Qingshan Transmission Sales Purchase of 3,951,626.52 10,380,349.56 No 3,559,602.32 Co., Ltd. spare parts Hubei Xiaogan Huazhong Automotive Accept service 38,549,124.98 100,294,692.47 No 46,683,372.83 Lamp Co., Ltd. Chongqing Changrong Machinery Co., Accept service 68,484,512.99 87,999,257.12 No 6,433,171.02 Ltd. Chengdu Lingchuan Special Industry Co., Purchase of - 81,402,637.59 No 9,930,016.99 Ltd. spare parts Chengdu Lingchuan Vehicle Fuel Tank Accept service 4,856,159.30 24,721,523.51 No 18,186,753.45 Co., Ltd. Chongqing Changfeng Jiquan Machinery Purchase of 39,562.52 13,116,014.09 No 10,396,114.98 Co., Ltd. spare parts Chongqing Construction Tongda Purchase of 15,227,209.83 37,741,834.31 No - Industrial Co., Ltd. spare parts Purchase of Yunnan Xiyi Industry Co., Ltd. 31,247,072.00 85,283,366.75 No 30,665,985.08 spare parts Chongqing Shangfang Auto Parts Co., Purchase of 18,227,944.17 46,753,393.44 No 15,447,216.43 Ltd. spare parts Chongqing Dajiang Xinda Vehicle Co., Purchase of - 9,208.73 No 7,009,231.20 Ltd. spare parts Chongqing Dajiang Yuqiang Plastic Purchase of 60,582,775.09 181,289,169.09 No 70,660,688.47 Products Co., Ltd. spare parts Chongqing Jianshe Vehicle Air Purchase of 50,801,423.79 120,259,712.43 No 45,884,509.86 Conditioner Co., Ltd. spare parts 123 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Whether it exceeds Nature of the Approved Prior-period Related parties Current amount the transaction transaction amount amount transactio n amount Purchase of Chengdu Wanyou Filter Co., Ltd. 47,326,318.61 110,217,592.57 No 56,809,638.72 spare parts Chongqing Yihong Engineering Plastic Purchase of 1,785,587.35 6,841,082.30 No 3,943,111.25 Products Co., Ltd. spare parts Purchase of Beijing Beiji Electromechanical Industry spare parts、 262,158.45 697,033.72 No 21,611.25 Co., Ltd. Accept service Chengdu Jialing Huaxi Optical Precision Accept service 6,983,371.89 15,441,943.93 No 6,120,347.20 Machinery Co., Ltd. Chongqing Nexteer Steering System Co., Accept service 303,123,612.34 850,598,822.58 No 319,878,978.48 Ltd. Chongqing Dajiang Jiexin Forging Co., Accept service 1,330,537.16 2,830,268.77 No 1,178,761.66 Ltd. Chengdu Guangming Tianzhong Accept service - - No (1,885.21) Environmental Technology Co., Ltd. Chongqing Xiyi Automobile Connecting Accept service (1,571.72) - No (5,769.12) Rod Co., Ltd. Chongqing Changan Industry (Group) Purchase of 2,646,670.74 10,123,723.73 No 348,568.01 Co., Ltd. spare parts Hubei Huazhong Marelli Automotive Purchase of 379,667,416.38 354,480,088.86 Yes - Lighting Co., Ltd. spare parts Chongqing Changan Construction Purchase of - 190,379,474.50 No 7,313,785.24 Engineering Co., Ltd. spare parts Chongqing Changan Property Accept service 2,933,009.46 4,252,500.00 No 1,812,064.04 Management Co., Ltd. China Changan Automobile Group Co., Purchase of Ltd. Chongqing Qingshan Transmission spare parts、 1,091,053,146.70 1,956,447,808.69 No 455,343,757.53 Branch Accept service Sichuan Jian'an Industry Co., Ltd. Accept service 300,829,143.28 905,645,453.27 No 353,770,028.01 Southern Inte Air Conditioning Co., Ltd. Accept service 173,331,986.97 414,801,618.97 No 153,661,141.06 Sichuan Ningjiang Shanchuan Machinery Accept service 97,803,118.73 207,425,439.69 No 51,016,595.30 Co., Ltd. Chengdu Huachuan Denso Co., Ltd. Accept service 196,376,880.72 402,906,003.30 No 130,426,180.96 Southern Trina Chassis Systems Co., Ltd. Accept service 307,409,807.58 602,765,517.99 No 202,875,095.90 Chongqing Changan Minsheng Logistics Accept service 865,998,486.41 2,728,794,918.17 No 827,152,859.32 124 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Whether it exceeds Nature of the Approved Prior-period Related parties Current amount the transaction transaction amount amount transactio n amount Co., Ltd. Chengdu Wanyou Xiangyu Automobile Accept service 426,011.37 865,631.43 No 248,627.10 Sales Service Co., Ltd. Chengdu Wanyou Trading Co., Ltd. Accept service 10,555.36 82,713.89 No 18,514.24 Chongqing Anfu Automobile Marketing Purchase of 43,818.58 - Yes - Co., Ltd. spare parts China Changan Automobile Group Accept service 6,413.27 51,612.68 No 25,144.55 Tianjin Sales Co., Ltd. Chengdu Ningjiang Showa Auto Parts Accept service 43,467,720.96 130,921,565.82 No 47,772,865.85 Co., Ltd. Harbin Dongan Automobile Power Co., Purchase of 451,467,256.21 1,063,183,700.68 No 420,102,474.82 Ltd. spare parts Harbin Dongan Automobile Engine Purchase of 417,266,451.54 1,260,355,536.15 No 353,143,739.85 Manufacturing Co., Ltd. spare parts Chengdu Wanyou Automobile Trading Purchase of 411,726.27 1,566,868.08 No 464,001.50 Service Co., Ltd. spare parts Chongqing Wanyou Economic Purchase of 571,494,801.82 583,856,955.71 No 134,932,176.36 Development Co., Ltd. spare parts Yunnan Wanyou Automobile Sales Purchase of 780,899.66 3,099,140.81 No 1,084,974.53 Service Co., Ltd. spare parts Guizhou Wanyou Automobile Sales Purchase of 655,606.26 2,661,096.18 No 986,717.54 Service Co., Ltd. spare parts Yunnan Xiangyu Automobile Sales Purchase of 79,915.55 361,697.69 No 124,427.22 Service Co., Ltd. spare parts Panzhihua Wanyou Automobile Sales Purchase of 90,562.92 219,811.59 No 13,092.15 Service Co., Ltd. spare parts Ya'an Wanyou Automobile Sales Service Purchase of 112,581.31 390,845.20 No 128,960.48 Co., Ltd. spare parts Chongqing Wanyou Ducheng Purchase of 274,639.05 1,034,263.79 No 327,791.37 Automobile Sales Service Co., Ltd. spare parts Chongqing Wanyou Xingjian Automobile Purchase of 160,585.36 699,496.18 No 257,093.48 Sales Service Co., Ltd. spare parts Luzhou Wanyou Automobile Service Co., Purchase of 84,600.36 138,350.93 No 20,198.04 Ltd. spare parts 125 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Whether it exceeds Nature of the Approved Prior-period Related parties Current amount the transaction transaction amount amount transactio n amount Purchase of Southern Faurecia Auto Parts Co., Ltd. 200,998,771.72 421,007,240.46 No 114,560,039.57 spare parts Bazhong Wanyou Automobile Sales Purchase of 41,138.48 52,948.05 No 14,698.71 Service Co., Ltd. spare parts Harbin Broadcom Auto Parts Purchase of Manufacturing Co., Ltd.Changan Ford - 167,559.70 No - spare parts Automobile Co.,Ltd. Total 6,055,875,357.64 15,970,104,295.17 3,915,188,036.21 The price of the Group’s purchase from related parties is based on contracts agreed by both parties. Note:The company calculated the actual amount of related party transactions according to the related parties under the same control of the South Group, and compared with the transaction amount approved at the beginning of the year. (2) Goods sold and services offered In RMB Yuan Related parties Nature of the transaction Current amount Prior-period Amount Changan Ford Automobile Co., Ltd. Sales of spare parts、staff support 743,941.88 856,081.97 Changan Mazda Automobile EngCo., Sales of spare parts、staff support 4,036,655.18 2,683,010.71 Ltd. Changan Mazda Engine Co., Ltd. Sales of spare parts、staff support - 12,830.19 Nanjing Chelai Travel Technology Co., Sales of spare parts - 50,442.48 Ltd. Chongqing Changan Kuayue Training fee 137,603.78 5,913.00 Automobile Co., Ltd. Hangzhou Chelizi Intelligent Car rental income - 8,193,799.97 Technology Co., Ltd. Chongqing Changan New Energy Income from trademark right 972,051,413.45 - Automobile Technology Co., Ltd. Chongqing Changan Industrial (Group) Sales of spare parts - 124,339.62 Co., Ltd. Chengdu Lingchuan Special Industry Electricity fee - 2,011.39 Co., Ltd. Chengdu Lingchuan Vehicle Fuel Tank Sales of spare parts 1,668,185.97 1,362,120.82 Co., Ltd. Yunnan Xiyi Industry Co., Ltd. Sales of vehicles and spare parts 2,559,166.80 2,876,531.50 Chongqing Shangfang Auto Parts Co., Sales of spare parts - 20,037.74 Ltd. Chongqing Dajiang Yuqiang Plastic Sales of vehicles and spare parts 558,413.01 345,391.14 126 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Related parties Nature of the transaction Current amount Prior-period Amount Products Co., Ltd. Chongqing Jianshe Vehicle Air Sales of vehicles and spare parts - 12,037.74 Conditioner Co., Ltd. Ordnance Equipment Group Finance Sales of vehicles and spare parts - 1,260,010.87 Co., Ltd. Chengdu Wanyou Filter Co., Ltd. Sales of spare parts、Training fee - 76,460.18 Chongqing Yihong Engineering Plastic Electricity fee - 943.30 Products Co., Ltd. Chongqing Changan Industry (Group) Sales of vehicles and spare parts - 312,427.84 Co., Ltd. Chongqing Changan Construction Sales of vehicles and spare parts - 19,563.79 Engineering Co., Ltd. China Changan Automobile Group Co., Ltd. Chongqing Qingshan Transmission Sales of vehicles and spare parts 1,579,125.47 270,959.66 Branch Sichuan Ningjiang Shanchuan Sales of vehicles 305,799.06 - Machinery Co., Ltd. Chongqing Changan Minsheng Logistics Sales of vehicles and spare parts 507,924.04 9,676,923.83 Co., Ltd. Chengdu Wanyou Xiangyu Automobile Sales of spare parts 514,114,179.34 414,364,744.60 Sales Service Co., Ltd. Chongqing Anfu Automobile Marketing Sales of spare parts 7,627,054.89 34,296,238.49 Co., Ltd. China Changan Automobile Group Sales of spare parts 62,075,372.58 62,048,690.92 Tianjin Sales Co., Ltd. Chengdu Ningjiang Showa Auto Parts Sales of vehicles and spare parts - 559,797.07 Co., Ltd. Harbin Dongan Automobile Power Co., Sales of vehicles and spare parts 31,887.37 6,860,735.86 Ltd. Harbin Dongan Automobile Engine Sales of vehicles and spare parts 23,028,367.10 11,294,757.38 Manufacturing Co., Ltd. China North Industries Group Financial Sales of vehicles and spare parts 77,547.17 - Leasing Co., Ltd. Wanyou Automobile Investment Co., Sales of vehicles and spare parts 264,690,859.01 194,731,627.80 Ltd. Chengdu Wanyou Automobile Trading Sales of vehicles and spare parts 190,745,183.84 173,518,730.23 Service Co., Ltd. Chongqing Wanyou Economic Sales of vehicles and spare parts 695,050,958.14 602,957,695.96 Development Co., Ltd. Chongqing Wanyou Zunda Automobile Sales of vehicles and spare parts 131,579,690.10 150,130,921.74 Sales Service Co., Ltd. Yunnan Wanyou Automobile Sales Sales of vehicles and spare parts 437,318,866.83 309,384,958.88 127 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Related parties Nature of the transaction Current amount Prior-period Amount Service Co., Ltd. Guizhou Wanyou Automobile Sales Sales of vehicles and spare parts 370,715,806.38 347,551,447.54 Service Co., Ltd. Yunnan Xiangyu Automobile Sales Sales of vehicles and spare parts 43,517,953.51 45,082,563.98 Service Co., Ltd. Panzhihua Wanyou Automobile Sales Sales of vehicles and spare parts 144,054.09 - Service Co., Ltd. Ya'an Wanyou Automobile Sales Sales of vehicles and spare parts 252,146.29 - Service Co., Ltd. Chongqing Wanyou Ducheng Sales of vehicles and spare parts 347,013.72 5,998.70 Automobile Sales Service Co., Ltd. Chongqing Wanyou Xingjian Sales of vehicles and spare parts 496,623.26 - Automobile Sales Service Co., Ltd. Luzhou Wanyou Automobile Service Sales of vehicles and spare parts 284,227.69 - Co., Ltd. Chengdu Wanyou Automobile Sales Sales of vehicles and spare parts (196,660.99) 3,373,560.20 Service Co., Ltd. Bazhong Wanyou Automobile Sales Sales of vehicles and spare parts 183,115.86 - Service Co., Ltd. China Changan Automobile Group Hefei Sales of vehicles and spare parts 66,969,966.54 - Investment Co., Ltd. Total 3,793,202,441.36 2,384,324,307.09 The price of the Group’s purchase from related parties is based on contracts agreed by both parties. (3) Related-party leasing Rent assets to related parties In RMB Yuan Type of leased Report period Lessee Starting date Expiring date assets recognized rental Chongqing Changan Industrial (Group) Building 2018.01.01 2032.12.31 3,283,373.71 Co., Ltd. Chongqing Changan New Energy Building 2020.01.01 2020.12.31 2,098,588.40 Automobile Technology Co., Ltd. Chongqing Changan New Energy Battery 2020.01.01 2020.12.31 1,175,045.73 Automobile Technology Co., Ltd. workshop Chongqing Changan Min Sheng Building 2019.10.01 2020.09.30 601,461.41 Logistics Co., Ltd. Rent assets from related parties In RMB Yuan 128 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Report period Type of Lessor Starting date Expiring date recognized leased assets rental (4) Other related transactions Integrated service charges In RMB Yuan Same period of last Related parties Nature of the transaction Report period Amount period Amount Payment of land rental fees 13,960,191.76 13,960,191.76 Payment of building rental fees 2,129,622.09 2,320,098.28 Changan Industries (Group) Payment of utilities 62,495,905.46 41,936,461.05 Co. Ltd Payment of fire fighting fees - - Others 4,286,872.15 5,598,032.75 Total 82,872,591.46 63,814,783.84 Purchase of project materials In RMB Yuan Same period of last period Related parties Report period Amount Amount Chongqing Changan Construction Co., Ltd 66,354,530.30 219,003,991.17 Chongqing Changan Min Sheng Logistics Co., Ltd. 1,646,984.15 510,059.11 Changan Industries (Group) Co. Ltd 17,522.13 6,163.00 Total 68,019,036.58 219,520,213.28 Staff expenses for technical supporting In RMB Yuan Same period of last period Related parties Report period Amount Amount Changan Mazda Automobile Co.,Ltd. 7,021,656.61 7,242,531.36 Changan Ford Automobile Co.,Ltd. 9,057,020.82 10,419,283.74 Changan Mazda Engine Co., Ltd. - 833,481.46 Jiangling Holding Co., Ltd. - 884,649.40 Changan PSA Automobiles Co., Ltd. - 242,271.06 Hainan Anxinxing Information Technology Co., Ltd. - 652,302.36 129 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Total 16,078,677.43 20,274,519.38 Techonology development service charges In RMB Yuan Same period of last period Related parties Report period Amount Amount Changan Ford Automobile Co.,Ltd. - 769,811.32 Harbin Dongan Auto Engine Co., Ltd. - 11,320,754.71 Total - 12,090,566.03 Collection of trademark use rights fees In RMB Yuan Same period of last period Related parties Report period Amount Amount Chongqing Changan Kuayue Automobile Co., Ltd. 9,596,603.77 8,689,641.51 Related party monetary funds In RMB Yuan Related parties Ending Amount Beginning Amount China South Industries Group Finance Co., Ltd 5,495,658,697.16 5,352,685,473.98 Changan Automobile Finance Co., Ltd 3,500,000,000.00 1,200,000,000.00 In the first half of 2020, the annual rate of return of the company in the financial limited liability company of China South Industries Group Finance Co., Ltd and Changan automobile finance co., ltd is 1.81% and 2.89% respectively. Borrowing Short-term borrowing In RMB Yuan Related parties Ending Amount Beginning Amount China South Industries Group Finance Co., Ltd 330,000,000.00 200,000,000.00 Interest income of deferred payment In RMB Yuan Same period of last period Related parties Report period Amount Amount Wanyou Automobile Investment Co., Ltd. 18,756.64 - Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. 624,381.42 373,037.00 China Changan Automobile Group Tianjin Sales Co., Ltd. - 14,735.00 130 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Same period of last period Related parties Report period Amount Amount Chengdu Wanyou Auto Trade Service Co., Ltd. 165,392.98 193,056.00 Yunnan Wanyou Automobile Sales & Service Co., Ltd. 54,715.93 349,378.00 Guizhou Wanyou Automobile Sales & Service Co., Ltd. 200,337.69 97,614.00 Guangxi Wanyou Automobile Sales & Service Co., Ltd. - 64,825.00 Nanning Wanyou Automobile Sales & Service Co., Ltd. - 34,018.00 Chongqing Wanyou Economic Development Co., Ltd. 81,141.59 153,555.00 Yunnan Xiangyu Auto Sales and Service Co., Ltd. - 78,469.00 China Changan Automobile Group Hefei Investment 20,224.78 - Co., Ltd. Total 1,164,951.03 1,358,687.00 6. Payment and receivables of related parties Payment receivables of related listed companies In RMB Yuan Ending balance Beginning balance Provision Provision Items Related parties Book balance for Book balance for bad-debts bad-debts Notes Harbin Dongan Automotive Engine 13,938,175.05 - 9,190,280.17 - receivable Manufacturing Co., Ltd. Notes Wanyou Automobile Investment Co., Ltd. 2,191,420,000.00 - 2,602,280,000.00 - receivable Notes Chengdu Wanyou Automobile Trading 26,500,000.00 - 9,500,000.00 - receivable Service Co., Ltd. Notes Chongqing Wanyou Economic 15,000,000.00 - 8,000,000.00 - receivable Development Co., Ltd. Notes Guizhou Wanyou Automobile Sales and 16,500,000.00 - 3,500,000.00 - receivable Service Co., Ltd Subtotal 2,263,358,175.05 - 2,632,470,280.17 - Account Jiangling Holding Co., Ltd. 39,964,487.77 - 40,768,788.19 - receivable Account Chongqing Changan Minsheng Logistics 31,032,040.00 - 31,516,680.23 - receivable Co., Ltd. Account Changan Ford Automobile Co., Ltd. 174,282.81 - 19,811,465.27 - receivable Account Changan Weilai New Energy Automobile - - 16,596,799.90 - 131 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Ending balance Beginning balance Provision Provision Items Related parties Book balance for Book balance for bad-debts bad-debts receivable Technology Co., Ltd. Account Chongqing Changan Crossing Vehicle Co., 12,275,376.76 - 11,194,267.89 - receivable Ltd. Account Harbin Dongan Automobile Engine 5,077,565.84 - 9,855,355.88 - receivable Manufacturing Co., Ltd. Account Changan Mazda Automobile Co., Ltd. - - 5,775,176.73 - receivable Account Changan Mazda Engine Co., Ltd. - - 5,042,050.65 - receivable China Changan Automobile Group Co., Account Ltd. Chongqing Qingshan Transmission 1,647,356.43 - 1,737,782.37 - receivable Branch Account Chongqing Changan Industry (Group) Co., 719,539.69 - 719,539.69 - receivable Ltd. Account Hainan Anxinxing Information Technology - - 555,058.16 - receivable Co., Ltd. Nanning Wanyou Automobile Sales Account Service Co., Ltd. - - 13,398.00 - receivable Account Guangxi Wanyou Automobile Sales - - 997.60 - receivable Service Co., Ltd. Account Chongqing Wanyou Economic - - 50.00 - receivable Development Co., Ltd. Account Changan Auto Finance Co., Ltd. 34,280.44 - - - receivable Account Chongqing Changan New Energy 1,125,261,727.03 - - - receivable Automobile Technology Co., Ltd. Subtotal 1,216,186,656.77 - 143,587,410.56 - Other Changan Ford Automobile Co.,Ltd. 124,312,677.99 - 124,312,677.99 - receivable Other Ordnance Equipment Group Finance Co., 222,083.89 - - - receivable Ltd. Other Ordnance Equipment Group Finance Co., 1,157,446.69 - 1,157,446.69 - receivable Ltd. Other Hafei Automobile Co., Ltd. 1,500,000.00 - 1,500,000.00 - 132 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Ending balance Beginning balance Provision Provision Items Related parties Book balance for Book balance for bad-debts bad-debts receivable Other Changan Mazda Automobile Co., Ltd. - 8,505,710.03 - receivable Other Chongqing Changan Minsheng Logistics - 2,000.00 - receivable Co., Ltd. Subtotal 127,192,208.57 - 135,477,834.71 - Advanced Chongqing Changan New Energy 1,746,847.67 - - - payment Automobile Technology Co., Ltd. Advanced Sichuan Ningjiang Shanchuan Machinery 698.29 - - - payment Co., Ltd. Subtotal 1,747,545.96 - - - Accounts payable to related parties of listed companies In RMB Yuan Beginning Items Related parties Ending balance balance Notes Chongqing Changan New Energy Automobile Technology Co., Ltd. 50,758,200.00 - payable Notes Hubei Xiaogan Huazhong Automotive Lamp Co., Ltd. 14,190,000.00 10,780,000.00 payable Notes Chongqing Construction Tongda Industrial Co., Ltd. 9,790,000.00 1,830,000.00 payable Notes Chongqing Shangfang Auto Parts Co., Ltd. 13,430,000.00 4,290,000.00 payable Notes Chongqing Dajiang Yuqiang Plastic Products Co., Ltd. 76,250,000.00 53,810,000.00 payable Notes Chongqing Jianshe Vehicle Air Conditioner Co., Ltd. 54,807,896.33 33,330,000.00 payable Notes Chengdu Wanyou Filter Co., Ltd. 13,590,000.00 21,280,000.00 payable Notes Chengdu Jialing Huaxi Optical Precision Machinery Co., Ltd. 7,820,000.00 5,990,000.00 payable Notes Chongqing Nexteer Steering System Co., Ltd. 335,060,000.00 74,380,000.00 payable 133 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance Notes Chongqing Changan Industry (Group) Co., Ltd. 1,052,750.94 - payable Notes Hubei Huazhong Marelli Automotive Lighting Co., Ltd. 35,970,000.00 20,220,000.00 payable Notes Chongqing Changan Construction Engineering Co., Ltd. 73,390,060.00 121,867,838.20 payable Notes China Changan Automobile Group Co., Ltd. Chongqing Qingshan 481,590,000.00 2,340,000.00 payable Transmission Branch Notes Sichuan Jian'an Industry Co., Ltd. 8,900,000.00 9,040,000.00 payable Notes Southern Inte Air Conditioning Co., Ltd. 175,960,000.00 23,620,000.00 payable Notes Sichuan Ningjiang Shanchuan Machinery Co., Ltd. 41,910,000.00 20,130,000.00 payable Notes Chengdu Huachuan Denso Co., Ltd. 3,970,000.00 5,250,000.00 payable Notes Southern Trina Chassis Systems Co., Ltd. 1,800,000.00 - payable Notes Chongqing Changan Minsheng Logistics Co., Ltd. 245,490,874.09 208,474,669.94 payable Notes Chengdu Ningjiang Showa Auto Parts Co., Ltd. 53,630,000.00 33,410,000.00 payable Notes Harbin Dongan Automobile Power Co., Ltd. 448,020,000.00 456,350,000.00 payable Notes Harbin Dongan Automobile Engine Manufacturing Co., Ltd. 272,510,000.00 215,280,000.00 payable Notes Southern Faurecia Auto Parts Co., Ltd. 10,900,000.00 10,430,000.00 payable Notes Chongqing Wanyou Economic Development Co., Ltd. - 85,000,000.00 payable Notes Chongqing Dajiang Jiexin Forging Co., Ltd. - 990,000.00 payable Notes Chongqing Changfeng Jiquan Machinery Co., Ltd. - 6,530,000.00 payable Notes Chengdu Lingchuan Special Industry Co., Ltd. - 11,750,000.00 payable 134 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance Subtotal 2,430,789,781.36 1,436,372,508.14 Account Changan Ford Automobile Co., Ltd. 2,205,450.09 - payable Account Jiangling Holdings Co., Ltd. 102,373.73 54,252,872.36 payable Account Hangzhou Cherizi Intelligent Technology Co., Ltd. 47,430.00 10,300.00 payable Account Chongqing Changan New Energy Automobile Technology Co., Ltd. 51,067,341.49 - payable Account Chongqing Qingshan Transmission Sales Co., Ltd. 4,688,757.02 6,000,654.43 payable Account Hubei Xiaogan Huazhong Automotive Lamp Co., Ltd. 20,321,529.68 16,125,402.98 payable Account Chongqing Changrong Machinery Co., Ltd. 31,588,885.68 34,631,661.73 payable Account Chengdu Lingchuan Special Industry Co., Ltd. 83,416.46 11,517,508.37 payable Account Chengdu Lingchuan Vehicle Fuel Tank Co., Ltd. 1,322,372.50 2,314,165.15 payable Account Chongqing Changfeng Jiquan Machinery Co., Ltd. 18,385.26 771,021.74 payable Account Chongqing Construction Tongda Industrial Co., Ltd. 12,686,425.28 13,392,905.91 payable Account Yunnan Xiyi Industry Co., Ltd. 10,359,553.43 10,260,364.91 payable Account Chongqing Shangfang Auto Parts Co., Ltd. 10,053,054.65 9,623,137.04 payable Account Chongqing Dajiang Yuqiang Plastic Products Co., Ltd. 22,871,520.77 43,490,517.76 payable Account Chongqing Jianshe Vehicle Air Conditioner Co., Ltd. 23,175,345.06 36,717,236.76 payable Account Chengdu Wanyou Filter Co., Ltd. 24,267,680.72 14,735,390.09 payable Account Chongqing Yihong Engineering Plastic Products Co., Ltd. 635,885.86 2,483,796.69 payable Account Chengdu Jialing Huaxi Optical Precision Machinery Co., Ltd. 2,361,138.41 2,296,210.05 135 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance payable Account Chongqing Nexteer Steering System Co., Ltd. 262,870,488.08 275,441,045.49 payable Account Chongqing Dajiang Jiexin Forging Co., Ltd. 705,714.98 407,750.93 payable Account Chongqing Jialing Yimin Special Equipment Co., Ltd. 104,496.50 104,496.50 payable Account Chengdu Guangming Tianzhong Environmental Technology Co., Ltd. 83,175.03 83,175.03 payable Account Chongqing Xiyi Automobile Connecting Rod Co., Ltd. 42,457.58 44,233.62 payable Account Chongqing Changan Industry (Group) Co., Ltd. 355,985.02 1,091,699.47 payable Account Hubei Huazhong Marelli Automotive Lighting Co., Ltd. 131,231,660.26 124,726,255.34 payable Account China Changan Automobile Group Co., Ltd. Chongqing Qingshan 232,087,750.72 394,961,436.10 payable Transmission Branch Account Sichuan Jian'an Industry Co., Ltd. 74,999,608.58 92,109,316.98 payable Account Southern Inte Air Conditioning Co., Ltd. 56,895,179.13 166,469,317.60 payable Account Sichuan Ningjiang Shanchuan Machinery Co., Ltd. 18,709,148.33 9,726,316.79 payable Account Chengdu Huachuan Denso Co., Ltd. 40,851,167.54 37,881,398.09 payable Account Southern Trina Chassis Systems Co., Ltd. 128,293,897.03 113,131,244.68 payable Account Chongqing Changan Minsheng Logistics Co., Ltd. 10,442,349.66 77,014,716.44 payable Account Hafei Automobile Co., Ltd. 661,117.68 661,117.68 payable Account Chengdu Ningjiang Showa Auto Parts Co., Ltd. 28,498,953.39 49,157,712.35 payable Account Harbin Dongan Automobile Power Co., Ltd. 218,070,561.01 203,956,811.46 payable Account Harbin Dongan Automobile Engine Manufacturing Co., Ltd. 133,347,777.10 228,154,563.74 136 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance payable Account Chongqing Wanyou Economic Development Co., Ltd. 216,078,209.48 75,873,758.78 payable Account Chongqing Wanyou Xingjian Automobile Sales Service Co., Ltd. 9,264.78 - payable Account Southern Faurecia Auto Parts Co., Ltd. 76,765,551.38 90,040,708.53 payable Account Chongqing Dajiang Xinda Vehicle Co., Ltd. - 4,267,143.49 payable Account Chongqing Automotive Air Conditioner Co., Ltd. - 205,041.51 payable Account Chongqing Changan Crossing Vehicle Co., Ltd. - 47,749.88 payable Account Beijing Beiji Mechanical and Electrical Industry Co., Ltd. - 6,129.88 payable Account Changan Ford Automobile Co., Ltd. - 5,890.05 payable 2,204,192,176.3 Subtotal 1,848,961,059.35 8 Contract Changan Mazda Automobile Co., Ltd. 1,423,660.83 - liabilities Contract Changan Mazda Engine Co., Ltd. 3,256,185.92 - liabilities Contract Chongqing Shangfang Auto Parts Co., Ltd. 3,980.00 3,980.00 liabilities Contract China Changan Automobile Group Co., Ltd. Chongqing Qingshan 1.57 - liabilities Transmission Branch Contract Chongqing Wanyou Automobile Sales Service Co., Ltd. 86,425.66 - liabilities Contract Chengdu Wanyou Xiangyu Automobile Sales Service Co., Ltd. 27,144,500.69 65,138,573.75 liabilities Contract Hafei Automobile Co., Ltd. 670,500.00 670,500.00 liabilities Contract Chongqing Anfu Automobile Marketing Co., Ltd. 2,180,268.00 1,507,840.00 liabilities Contract China Changan Automobile Group Tianjin Sales Co., Ltd. 3,680,686.89 2,144,856.26 137 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance liabilities Contract Wanyou Automobile Investment Co., Ltd. 5,347,008.74 69,383,313.74 liabilities Contract Chengdu Wanyou Automobile Trading Service Co., Ltd. 7,890,116.87 39,526,387.91 liabilities Contract Chongqing Wanyou Economic Development Co., Ltd. 44,265,770.78 142,137,256.41 liabilities Contract Chongqing Wanyou Zunda Automobile Sales Service Co., Ltd. 7,282,961.81 755,716.55 liabilities Contract Yunnan Wanyou Automobile Sales Service Co., Ltd. 18,994,713.86 42,896,658.83 liabilities Contract Guizhou Wanyou Automobile Sales Service Co., Ltd. 27,977,493.85 52,269,285.08 liabilities Contract Yunnan Xiangyu Automobile Sales Service Co., Ltd. 1,971,343.67 5,542,733.67 liabilities Contract Panzhihua Wanyou Automobile Sales Service Co., Ltd. 2,173.15 - liabilities Contract Ya'an Wanyou Automobile Sales Service Co., Ltd. 21,840.00 - liabilities Contract Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd. 87,279.35 - liabilities Contract Chongqing Wanyou Xingjian Automobile Sales Service Co., Ltd. 77,522.48 - liabilities Contract Luzhou Wanyou Automobile Service Co., Ltd. 24,390.55 - liabilities Contract Chengdu Wanyou Automobile Sales Service Co., Ltd. 500,317.00 1,489,422.47 liabilities Contract Bazhong Wanyou Automobile Sales Service Co., Ltd. 89,330.80 50,000.00 liabilities Contract Jiangling Holdings Co., Ltd. - 6,854,200.00 liabilities Contract China Changan Automobile Group Hefei Investment Co., Ltd. 4,776,515.65 4,033,352.74 liabilities Contract Changan Auto Finance Co., Ltd. - 41,300.00 liabilities Contract Chongqing Changan Minsheng Logistics Co., Ltd. - 259.00 138 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance liabilities Subtotal 157,754,988.12 434,445,636.41 Other Yunnan Wanyou Automobile Sales Service Co., Ltd. 10,599.68 108,223.30 payables Other Guizhou Wanyou Automobile Sales Service Co., Ltd. 5,475.56 5,016.48 payables Other Panzhihua Wanyou Automobile Sales Service Co., Ltd. 13,793.08 16,219.40 payables Other Ya'an Wanyou Automobile Sales Service Co., Ltd. 1,853.44 12,267.46 payables Other Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd. 3,116.82 5,889.92 payables Other Chongqing Changan Minsheng Logistics Co., Ltd. 442,398,207.89 191,519,531.45 payables Other Chongqing Changan Crossing Vehicle Co., Ltd. - 64,412,855.00 payables Other Chongqing Changan Industry (Group) Co., Ltd. 19,834,668.85 4,770,656.96 payables Other Chongqing Changan Construction Engineering Co., Ltd. 1,105,910.99 2,356,505.24 payables Other Chongqing Changan Property Management Co., Ltd. 4,656,723.41 1,655,478.59 payables Other Changan Ford Automobile Co., Ltd. - 1,461,694.00 payables Other Sichuan Jian'an Industry Co., Ltd. 6,188.00 579,179.33 payables Other Chongqing Wanyou Economic Development Co., Ltd. 23,882.15 415,466.55 payables Other Southern Inte Air Conditioning Co., Ltd. - 190,324.96 payables Other Changan Mazda Engine Co., Ltd. - 144,115.79 payables Other Chengdu Wanyou Filter Co., Ltd. 120,000.00 121,303.84 payables Other Nanning Wanyou Automobile Sales Service Co., Ltd. - 120,520.60 payables 139 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance Other China Changan Automobile Group Tianjin Sales Co., Ltd. - 100,000.00 payables Other Harbin Dongan Automobile Power Co., Ltd. - 67,239.90 payables Other Southern Trina Chassis Systems Co., Ltd. 36,431.20 65,122.43 payables Other Chengdu Wanyou Automobile Trading Service Co., Ltd. - 58,295.80 payables Other Chengdu Huachuan Denso Co., Ltd. 31,591.08 51,037.08 payables Other Chongqing Dajiang Xinda Vehicle Co., Ltd. - 50,000.00 payables Other Guangxi Wanyou Automobile Sales Service Co., Ltd. - 48,424.07 payables Other Chengdu Lingchuan Special Industry Co., Ltd. - 26,343.16 payables Other Chengdu Wanyou Xiangyu Automobile Sales Service Co., Ltd. - 20,493.00 payables Other Hubei Xiaogan Huazhong Automotive Lamp Co., Ltd. - 10,951.72 payables Other Sichuan Ningjiang Shanchuan Machinery Co., Ltd. - 8,324.53 payables Other Luzhou Wanyou Automobile Service Co., Ltd. - 3,770.68 payables Other Bazhong Wanyou Automobile Sales Service Co., Ltd. - 2,683.74 payables Other Chengdu Wanyou Trading Co., Ltd. 816.23 1,176.14 payables Other Chongqing Changfeng Jiquan Machinery Co., Ltd. - 800.00 payables Other Hubei Huazhong Marelli Automotive Lighting Co., Ltd. - 389,785.41 payables Other Chongqing Nexteer Steering System Co., Ltd. - 307,910.00 payables Other Harbin Dongan Automobile Engine Manufacturing Co., Ltd. 290,793.25 304,924.09 payables 140 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Beginning Items Related parties Ending balance balance Other Chongqing Anfu Automobile Marketing Co., Ltd. - 300,000.00 payables Other Chongqing Changrong Machinery Co., Ltd. - 299,999.63 payables Other Chongqing Changan New Energy Automobile Technology Co., Ltd. 177,488.10 - payables Other Chongqing Changan Minsheng Logistics Co., Ltd. 20,000.00 - payables Other Chongqing Wanyou Zunda Automobile Sales Service Co., Ltd. 550,000.00 - payables Other Luzhou Wanyou Automobile Service Co., Ltd. 4,544.61 - payables Other Southern Faurecia Auto Parts Co., Ltd. 254,250.00 - payables Subtotal 469,546,334.34 270,012,530.25 XIII. Share-based payments 1. General information 2020.06 The total amount of the employee services as a result of the share-based payments The equity settled share based payments are as follows: 2019.06 The accumulated amount of equity settled share-based payments included in capital reserve The amount of equity settled share-based payments included in expense 2. Share-based payment scheme On 23 September 2016, the share option was approved to be granted on 23 September 2016 by the 12th meeting of the seventh session of the Board of Directors and the 8th meeting of the seventh session of Board of Supervisors. According to the share option scheme, the Company granted 29,140,000 options to 202 employees, conferring rights to purchase 1 A share of Changan Automobile for each option before the expiration date. Share options are granted to directors, chief executive officers and key technical and management personnel. 141 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report The share option will expire in 5 years. After the vesting period of 24 month since the grant date, the option shall be exercised in three periods. In each exercise period, 1/3 of the total options could be exercised when the prescribed performance conditions are met. The exercise price is RMB14.12 per share. The options granted shall be exercised before the expiration date. The share should not be exercised unless the prescribed conditions are met. The exercisable shares not exercised in above periods will be written off by the Company. The company has disclosed in June 1, 2017 "The 2016 annual notice of the implementation of equity distribution".According to the company's stock option incentive plan (Revised Draft), the relevant provisions on the stock option price adjustment, if dividends and capital reserve capitalization, stock dividends, stock split delivery, allotment, issuance or reduced matters occur before the stock exercise, the stock option price should be adjusted. The exercise price of the adjusted stock option is 13.478 yuan. The incentive object must be exercised within the validity period of the option exercise. If the exercise conditions are not met, the current stock options may not be exercised. If part of the stock options that meet the exercise conditions but are not exercised in the above exercise period are cancelled by the company. The performance indicators of the share option includes: (1) Return on equity (ROE) (2) Net profit growth rate attributable to owners (3) Economic value added (EVA), and (4) The ratio of prime operating revenue to operating revenue The above net profit and ROE are based on net profit and weighted average net assets attributable to owners deducting non-recurring gains and losses. The exercise terms of share options: Exercise Exercise Exercise Time Exercise Terms Period Ratio 2017 net profit growth rate based on 2015 average growth rate ≥3.2%(growth amount equivalent to The 1st trading day since 2 RMB10,182,000,000); The 1 st 4 month after the grant date ROE≥15% exercise 1/3 to the last trading day sinc The above indicators≥benchmark average, and ≥75 period e 36 month after the grant quartile date △EVA>0; The ratio of prime operating revenue to operating revenue≥95% 2018 net profit growth rate based on 2015 averag e growth rate ≥3.2%(growth amount equivalent to The 1st trading day since 3 RMB10,507,000,000); The 2nd 6 month after the grant date ROE≥15% exercise 1/3 to the last trading day sinc The above indicators≥benchmark average, and ≥75 period e 48 month after the grant quartile date △EVA>0; The ratio of prime operating revenue to operating 142 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report revenue≥95% 2019 net profit growth rate based on 2015 averag e growth rate ≥3.2%(growth amount equivalent to The 1st trading day since 4 RMB10,844,000,000); The 3 rd 8 month after the grant date ROE≥15% exercise 1/3 to the last trading day sinc The above indicators≥benchmark average, and ≥75 period e 60 month after the grant quartile date △EVA>0; The ratio of prime operating revenue to operating revenue≥95% On the grant date, the fair value of the above stock options of the Company was RMB 139,527,600.00. As the performance appraisal target of the first and second exercise periods of the stock option incentive plan of the company has not reached the target, and a total of 21 incentive objects have respectively terminated the labor contract with the company, the company no longer meets the stock option incentive conditions. On December 31, 2019, a total of 29.14 million stock options were cancelled. The share option fee confirmed by the company in June 2019 is RMB 0.00. The fair value of the equity-settled share option is determined using Black-Scholes model based on the estimate in accordance with the terms and conditions of the share options. The input variables are as follows: Valuation factors 2016 Dividend rate (%) 0% Expected volatility (%) 29.78% Historical volatility (%) 29.78% Risk-free rate (%) 2.4987% Expected duration (year) 4 Share price as at the grant date (Yuan) 15.43 The expected duration of the option is based on the historical data of the past, which is not necessarily reflected in the exercise of the right in future.The expected volatility is based on the assumption that the historical volatility reflects the future trend, but not necessarily the actual results. XIV. Commitments and Contingencies 1. Significant commitments Investment commitment By June 30th 2020, the group has no investment commitment that has been signed but not yet fully fulfilled. 143 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 2. Contingencies By June 30th 2020, the company has no significant contingencies that need to be published. XV. Events after the balance sheet date 1. Significant non-adjusting events □ Applicable √Not Applicable 2. Distribution of profit □ Applicable √ Not Applicable 3. Sales return □ Applicable √ Not Applicable XVI. Other important events 1. Correction of accounting error of earlier stage □ Applicable √ Not Applicable 2. Debt restructuring □ Applicable √ Not Applicable 3. Asset replacement □ Applicable √ Not Applicable 4. Annuity plan □ Applicable √ Not Applicable 5. Discontinuing operation □ Applicable √ Not Applicable 6. Information on business branch Identify business branch of the group according to internal organization structure, management requirements, internal reporting rules, and identify the report and information disclosed of the brand based on the identified branch. Identify business branch of the group according to internal organization structure, management requirements, internal reporting rules, 144 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report and identify the report and information disclosed of the brand based on the identified branch. business branch refers to the component of the group that meets the following conditions: (1) the component has income and expenditure incurred in routine activities; (2) the management of the company regularly evaluates the operation performance of the component to decide the company’s resource distribution and evaluate its overall performance (3) The group receives related accounting information on the financial situation, operation performance and cash flow. If two or more components have similar economic features and meet the conditions, they should be consolidated into one branch. Income and profit of the group consists of automobile manufacturing and domestic sales. Main asset of the group is in China. The management of the group evaluates the performance of the group as a whole. Thus, report of the branch is not included in this year’s report. XVII. Notes to the main items of the parent company’s financial statements 1. Account Receivables (1)The aging analysis is as follow: In RMB Yuan Account receivable age Ending Beginning Within 1 year 4,258,303,879.00 3,555,684,864.42 1 to 2 years 644,991,910.51 822,210,403.02 2 to 3 years 568,696,835.44 482,665,541.27 Over 3 years 360,166,448.23 256,419,059.60 Total 5,832,159,073.18 5,116,979,868.31 Bad debt provision -39,114,651.97 -22,709,502.59 5,793,044,421.21 5,094,270,365.72 (2) The changes in the provision for bad debts of accounts receivable are as follows In RMB Yuan Items Beginning balance Provision Decrease Ending balance 2020.06.30 22,709,502.59 16,405,289.98 140.60 39,114,651.97 2019.12.31 15,559,782.05 7,149,720.54 22,709,502.59 (3) Disclosure of accounts receivable In RMB Yuan Items Ending Book balance Provision for bad-debts 145 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Amount (%) Amount (%) Individual assessment of credit expected loss and provision for bad 5,533,699,691.47 94.88 10,079,188.59 0.18 debts Assess bad debt provision for expected credit expected loss 298,459,381.71 5.12 29,035,463.38 9.73 according to credit risk characteristics combination Total 5,832,159,073.18 100.00 39,114,651.97 0.67 Beginning Items Book balance Provision for bad-debts Amount (%) Amount (%) Individual assessment of credit expected loss and provision for bad 4,991,086,298.96 97.54 debts Assess bad debt provision for 18.04 expected credit expected loss 125,893,569.35 2.46 22,709,502.59 according to credit risk characteristics combination Total 5,116,979,868.31 100.00 22,709,502.59 0.44 (4) The parent company's portfolio of expected credit losses based on credit risk assessment is as follows: In RMB Yuan Ending Beginning Expected Estimated book Lifetime Estimated book Lifetime credit Expected credit balance in expected credit balance in expected credit loss rate loss rate (%) default loss default loss (%) Within 1 year 262,887,578.65 2.66 6,990,427.49 90,224,930.90 2.49 2,248,850.10 1 to 2 years 65.00 10.82 7.03 26.00 22.04 5.73 2 to 3 years 10,885,166.00 34.02 3,703,548.10 18,843,871.50 32.27 6,080,101.72 3 to 4 years 12,760,271.43 50.27 6,415,180.13 4,898,440.32 50.10 2,454,244.41 4 to 5 years - - - - - - Over 5 years 11,926,300.63 100.00 11,926,300.63 11,926,300.63 100.00 11,926,300.63 Total 298,459,381.71 9.73 29,035,463.38 125,893,569.35 18.04 22,709,502.59 146 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report (5)As of June 30, 2020, the top five accounts receivable totaled RMB 4,928,714,691.57, accounting for 84.51% of the total accounts receivable (As of December 31, 2019, the top five accounts receivable totaled RMB 4,011,467,403.94 , Accounting for 78.40% of the total accounts receivable). (6)As of June 30, 2020, the Group has no accounts receivable that are derecognized as the transfer of financial assets (December 31, 2019: None) 2. Other receivables (1)The aging analysis is as follow: In RMB Yuan Account receivable age Ending Beginning Within 1 year 1,833,502,273.67 601,025,929.83 1 to 2 years 44,921,624.68 334,100,615.63 2 to 3 years 203,660,776.86 259,642.21 Over 3 years 9,493,155.47 9,493,155.47 Total 2,091,577,830.68 944,879,343.14 Bad debt provision -3,841,273.24 - 3,718,197.34 2,087,736,557.44 941,161,145.80 (2)Other receivables are classified by nature as follows: In RMB Yuan Items Ending Beginning Equity transfer receivable 798,700,000.00 Subsidy 5,318,000.00 3,458,000.00 Loans to subsidiaries 1,077,303,980.00 640,557,716.20 Reserve fund 31,996,661.76 36,352,884.22 Asset disposal 5,789,491.11 23,424,046.17 Other receivables 168,628,424.57 237,368,499.21 Total 2,087,736,557.44 941,161,145.80 (3)The changes in bad debt provision for other receivables based on 12-month expected credit losses and the entire lifetime expected credit losses are as follows(Only for 2020): In RMB Yuan Bad debt provision The first stage The second stage The second stage Total 147 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Expected credit Expected credit Expected credit losses in the next loss for the entire loss for the entire 12 months life life (Single evaluation) (Group evaluation) Balance at the end of the previous year 1,095,164,331.54 1,614,084,422.33 2,850,000.87 2,712,098,754.74 Changes in accounting policies -157,274,027.00 -1,609,945,384.60 -1,767,219,411.60 Balance on January 1, 2020 937,890,304.54 4,139,037.73 2,850,000.87 944,879,343.14 In this period, Balance on January 1, 2020 --Transfer to the second stage -2,700,041.57 2,700,041.57 --Transfer to the third stage -826,113.91 826,113.91 --Turn back to the second stage --Turn back to the first stage Current provision 1,241,942,939.89 1,241,942,939.89 Current return -95,244,452.35 -95,244,452.35 Ending balance The changes in the balance of other receivables are as follows: In RMB Yuan The first stage The second stage The second stage Expected credit Expected credit loss Expected credit Bad debt provision losses in the next for the entire life loss for the entire Total 12 months (Single evaluation) life (Group evaluation) Balance at the end of the previous year 1,095,164,331.54 1,614,084,422.33 2,850,000.87 2,712,098,754.74 Changes in accounting policies 102,251,573.00 -1,609,945,384.60 0.00 -1,507,693,811.60 Balance on January 1, 2019 1,197,415,904.54 4,139,037.73 2,850,000.87 1,204,404,943.14 In this period, Balance on January 1, 2019 --Transfer to the second stage -2,700,041.57 2,700,041.57 --Transfer to the third stage -826,113.91 826,113.91 --Turn back to the second stage --Turn back to the first stage New in this period 982,417,339.89 982,417,339.89 Termination confirmation -95,244,452.35 -95,244,452.35 Write off this year 148 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Total 2,081,888,750.51 6,012,965.39 3,676,114.78 2,091,577,830.68 (4)The changes in bad debt provision for other receivables based on 12-month expected credit losses and the entire lifetime expected credit losses are as follows(Only for 2019): In RMB Yuan The first stage The second stage The second stage Expected credit Expected credit loss Expected credit Bad debt provision losses in the next for the entire life loss for the entire Total 12 months (Single evaluation) life (Group evaluation) Balance on January 1, 2019 155,223.55 348,425.91 99,781.94 603,431.40 In this period, Balance on January 1, 2019 --Transfer to the second stage - - - - --Transfer to the third stage -348,425.91 348,425.91 --Turn back to the second stage - - - - --Turn back to the first stage - - - - Current provision 135,958.46 111,643,227.46 2,501,574.96 114,280,760.88 Current return - - - - Resale of the current period - - -99,781.94 -99,781.94 Write off this year - - - - Other changes - - - - Total 291,182.01 111,643,227.46 2,850,000.87 114,784,410.34 The changes in the balance of other receivables are as follows: In RMB Yuan The first stage The second stage The second stage Expected credit Expected credit loss Expected credit Bad debt provision losses in the next for the entire life loss for the entire Total 12 months (Single evaluation) life (Group evaluation) Balance on January 1, 2019 2,326,952,103.37 436,899.38 99,781.94 2,326,952,103.37 In this period, Balance on January 1, 2019 --Transfer to the second stage -1,664,613,313.78 1,664,613,313.78 - -1,664,613,313.78 --Transfer to the third stage -2,413,101.49 -436,899.38 2,850,000.87 -2,413,101.49 --Turn back to the second stage - - - - 149 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report --Turn back to the first stage - - - - New in this period 706,450,278.94 516,085,890.00 1,222,536,168.94 Termination confirmation -271,211,635.50 -566,614,781.45 - -837,826,416.95 Write off this year - - -99,781.94 -99,781.94 Other changes - Total 1,095,164,331.54 1,614,084,422.33 2,850,000.87 2,712,098,754.74 (5) As of June 30, 2020, the top five other receivables are as follows: In RMB Yuan company name Amount Aging Proportion to the total balance of other receivables (%) First place 877,303,980.00 within half year 41.94 Second place 798,700,000.00 In half year 38.19 Third place 200,000,000.00 2 to 3 years 9.56 Fourth place 124,312,677.99 within 5 year 5.94 Fifth place 10,944,887.98 within 6 mounths 0.52 Total 2,011,261,545.97 96.15 (6)As of June 30, 2020, the Group had no other receivables derecognized as financial asset transfers (December 31, 2019: None). 150 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 3. Long-term equity investment In RMB Yuan Investment gains and Other impairment beginning cash bonus in current Invested in increase/decrease losses under the equity equity Other reduction provision in Ending balance Impairment amount period method changes current period 1、Joint ventures Changan Ford Automobile Co., 1,782,823,327.91 -570,006,507.40 1,212,816,820.51 Ltd Changan Mazda Automobile 2,177,010,905.02 323,202,621.60 2,500,213,526.62 Co.,Ltd. Changan Ford Mazda Engine 830,272,340.69 11,597,486.28 -37,000,000.00 804,869,826.97 Co., Ltd. Changan PSA Automobiles Co., 346,038,983.87 -114,234,986.00 -231,803,997.87 - Ltd. Changan Weilai New Energy Automobile Technology Co., -12,871,719.42 -18,666,611.81 31,538,331.23 - Ltd. Jiangling Investment Co., Ltd. 2,081,815,165.31 34,848,792.52 2,116,663,957.83 2、Associated Enterprises Chongqing Changan Kuayue 192,005,274.10 27,957,230.96 219,962,505.06 Automobile Co., Ltd Chongqing Changan Kuayue Automobile Marketing Co., - - Ltd. Beijing Fang’an Xinyue taxi - - 151 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Investment gains and Other impairment beginning cash bonus in current Invested in increase/decrease losses under the equity equity Other reduction provision in Ending balance Impairment amount period method changes current period Co., Ltd Chongqing Auto Finance Co., 2,195,040,654.44 123,493,951.66 2,318,534,606.10 Ltd. Hainan Anxinxing Information 3,560,384.10 -795,039.88 2,765,344.22 Technology Co., Ltd. Nanjing Chelai Travel 1,474,945.09 -143,024.65 1,331,920.44 Technology Co., Ltd. Hunan Guoxin Semiconductor 25,152,447.20 -126,648.85 25,025,798.35 Technology Co., Ltd. Nanjing Leading Equity 935,218,323.32 32.16 935,218,355.48 Investment Partnership Nanjing Lingxing Equity Investment Management Co., 1,445,415.69 -93,594.67 1,351,821.02 Ltd. Jiangling Holding Co., Ltd. 398,992,953.62 -94,049,105.60 304,943,848.02 Chongqing Changan New Energy Automobile Technology Co., Ltd. 1,610,174,778.05 -153,230,307.40 1,456,944,470.65 3、Subsidiaries Nanjing Changan Automobile 422,533,259.00 422,533,259.00 Co., Ltd. Hebei Changan Automobile 438,223,236.00 438,223,236.00 152 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Investment gains and Other impairment beginning cash bonus in current Invested in increase/decrease losses under the equity equity Other reduction provision in Ending balance Impairment amount period method changes current period Co., Ltd. Chongqing Changan Automobile International Sales 13,068,581.00 13,068,581.00 Service Co., Ltd. Chongqing Changan Automobile Customer Service 29,700,000.00 29,700,000.00 Co., Ltd. Chongqing Changan Chelian 88,500,000.00 88,500,000.00 Technology Co., Ltd. Chongqing Changan Special 2,500,000.00 2,500,000.00 Vehicle Co., Ltd. Chongqing Changan Europe 155,469,913.50 155,469,913.50 Design Center Co., Ltd Chongqing Changan new - - Engergy Automobile Co. Ltd Changan United Kingdom 250,093,850.95 250,093,850.95 R&D Center Co., Ltd. Beijing Changan Automotive engineering and Technology 1,000,000.00 1,000,000.00 Reseach Co., Ltd. Changan Japan Design Center 1,396,370.15 1,396,370.15 Co., Ltd. Changan United States R&D 10,243,460.00 10,243,460.00 153 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Investment gains and Other impairment beginning cash bonus in current Invested in increase/decrease losses under the equity equity Other reduction provision in Ending balance Impairment amount period method changes current period Center Co., Ltd. Baoding Changan Bus 176,002,613.18 176,002,613.18 Manufacturing Co., Ltd. Hefei Changan Automobile Co., 35,367,765.23 35,367,765.23 Ltd Changan Automobile Russia 251,242,589.15 251,242,589.15 Co., Ltd. Changan Brazil Holding Co., 2,584,556.97 2,584,556.97 Ltd Shenzhen Changan New Engergy Automobile Service 184,800,000.00 13,338,871.00 198,138,871.00 Co. Ltd Nanjing Changan New Energy Automobile Sales & Service 50,000,000.00 50,000,000.00 Co., Ltd. Fuzhou Changan New Energy Automobile Sales & Service 2,000,000.00 2,000,000.00 Co., Ltd. Xiamen Changan New Energy Automobile Sales & Service 2,000,000.00 2,000,000.00 Co., Ltd. Guangzhou Changan New 4,000,000.00 4,000,000.00 Energy Automobile Sales & 154 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Investment gains and Other impairment beginning cash bonus in current Invested in increase/decrease losses under the equity equity Other reduction provision in Ending balance Impairment amount period method changes current period Service Co., Ltd. Chongqing Changan New Energy Automobile Technology 1,238,742,571.54 -1,238,742,571.54 - Co., Ltd. Changan Suzuki Automobile 594,949,059.30 594,949,059.30 Co., Ltd. Zhenjiang Demao Hairun Equity Investment Fund 1,129,922,044.91 1,129,922,044.91 Partnership (Limited Partnership) Chongqing Chehemei 10,000,000.00 10,000,000.00 Technology Co., Ltd. Chongqing Changan Automobile Software - 99,000,000.00 99,000,000.00 Technology Co., Ltd. Changan Weilai New Energy Automobile Technology Co., - 58,461,669.77 58,461,669.77 Ltd. Total 16,052,319,271.82 1,780,975,318.82 -430,245,711.08 -37,000,000.00 -1,439,008,238.18 - 15,927,040,641.38 - 155 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report 4. Operating revenue and cost In RMB Yuan Report period Same period of last year Revenue Cost Revenue Cost Main business 28,058,352,585.87 26,601,356,969.23 25,956,607,065.04 24,182,358,106.88 Other business 1,700,567,311.50 1,310,501,933.80 848,501,257.18 455,548,664.07 Total 29,758,919,897.37 27,911,858,903.03 26,805,108,322.22 24,637,906,770.95 5. Investment income (1) Details of investment income In RMB Yuan Items Current amount Prior-period amount Long-term equity investment income measured by cost 608,962,802.11 method Long-term equity investment income measured by equity -430,245,711.08 -78,048,193.41 method investment income from long -term equity investment 2,124,526,141.26 disposition Investment income obtained during the period of holding 2,840,290.34 trading financial assets others 11,056,250.03 4,149,371.08 Total 2,317,139,772.66 -73,898,822.33 (2) Long-term equity investment incomemeasured by cost accounting method In RMB Yuan Items Current amount Prior-period amount Chongqing Changan Automobile Customer Service Co., 603,900,000.00 Ltd. Zhenjiang Demao Hairun Equity Investment Fund 5,062,802.11 Partnership (Limited Partnership) Total 608,962,802.11 (3) Long-term equity investment income measured by equity accounting method In RMB Yuan Invested in company Current amount Prior-period amount Changan Ford Automobile Co., Ltd -570,006,507.40 -388,312,379.14 Changan Mazda Automobile Engine Co., Ltd 11,597,486.28 22,279,051.96 Hainan Anxinxing Information Technology Co., Ltd. -795,039.88 -775,195.24 Nanjing Chelai Travel Technology Co., Ltd. -143,024.65 -238,955.00 Jiangling Holding Co., Ltd -94,049,105.60 -236,679,161.41 Changan Mazda Automobile Co., Ltd 323,202,621.60 431,236,189.88 Chongqing Changan Kuayue Automobile Co., Ltd 27,957,230.96 39,038,877.69 Changan Suzuki Automobile Co., Ltd. -114,234,986.00 -37,577,002.31 Changan Auto Finance Co., Ltd. 123,493,951.66 121,622,360.91 Changan Weilai New Energy Automobile Technology Co., -18,666,611.81 -16,493,522.92 Ltd. Hunan Guoxin Semiconductor Technology Co., Ltd. -126,648.85 -145,569.13 Jiangling Investment Co., Ltd. 34,848,792.52 Chongqing Changan New Energy Automobile Technology -153,230,307.40 Co., Ltd. 156 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Nanjing Leading Equity Investment Partnership (Limited 32.16 -12,002,888.70 Partnership) Nanjing Leading Equity Investment Management Co., Ltd. -93,594.67 Total -430,245,711.08 -78,048,193.41 XVIII. Additional information 1. Non-recurring profit and loss statement of current period In RMB Yuan Items Amount Explanation Profit and loss of non-current assets disposition 3,547,727,244.56 Government subsidies counted in current profit and loss (except the government subsidies which are closely related with business events, and 215,977,955.28 given certain amount according to national standards) In addition to the effective hedging business related to the normal business of the company, the gains and losses from changes in fair value arising from the holding of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and 1,753,674,697.00 disposal of transactional financial assets, derivative finance, investment income from trading financial assets, trading financial liabilities, derivative financial liabilities and other debt investments Gains and losses from entrusted loans 6,884,080.21 Interest on deferred payment of funds received from non - financial 21,549,119.75 enterprises Other non-business incomings and outgoings except above-mentioned -20,172,785.69 items Less: amount influenced by income tax 293,310,943.88 Amount influenced by minority shareholders’ interest (after tax) 13,274,663.08 Total 5,219,054,704.15 Notes:Profit and loss of non-current assets disposition are mainly from the disposal of the equity of Chongqing Changan New Energy Automobile Technology Co., Ltd. and Changan PSA Peugeot Citroen Automobile Co., Ltd. held during the period. If the company identifies non-recurring profit and loss defined by Information Disclosure by Companies Offering Securities to the Public No. 1--non-recurring profit and loss and non-recurring profit and loss defined by Information Disclosure by Companies Offering Securities to the Public No. 1--non-recurring profit and loss as recurring profit and loss, explain the reasons. □ Applicable √ Not applicable 2. Return on equity and earnings per share In RMB Yuan Weighted average return on Earnings per share Profit in report period equity Basic EPS Basic EPS Net profit belonging to the Company’s common 5.74% 0.54 Not applicable stockholders Net profit belonging to the Company’s common -5.75% -0.54 Not applicable stockholders after deducting non-recurring profit and loss 3. Accounting data difference by domestic and foreign accouting standards (1) Net profit and net asset differences from financial statements by global GAAC and prc GAAC □ Applicable √ Not applicable (2) Net profit and net asset differences from financial statements by GAAC abroad and PRC GAAP □ Applicable √ Not applicable 157 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report (3) Description on accounting data differences by domestic and foreign accounting standards. If auditing institutions abroad have adjusted the data differences, identify the name of the auditing institution abroad. None 4. Others □ Applicable √ Not applicable 158 Chongqing Changan Automobile Company Limited 2020 Semi-annual Report Chapter 10 Documents for Future Reference Catalogue of Reference Files 1、Semi-annual report with signature of legal representative; 2、Financial statements, with the signatures and seals of legal representative, person in charge of accounting, and person in accounting agency; 3、BOD resolutions and written confirmation documents signed by board members and senior executives; 4、Written auditing opinions in form of resolution by the Board of Supervisors; 5、All original copies of company documents and announcements disclosed in China Securities Journal, Securities Time, and Hong Kong Commercial Daily in reporting period. The company will provide the the abovementioned reference files timely when required by China Securities Regulatory Commission and Shenzhen Stock Exchange, and required by shareholders according to law and corporate regulations. Chairman and CEO: Zhu Huarong Chongqing Changan Automobile Company Limited August 31, 2020 159