Baoxin Auto Group Limited
(Incorporated in the Cayman Islands as an exempted company
with limited liability)
Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2015
Independent review report
To the Board of Directors of Baoxin Auto Group Limited
(Incorporated in the Cayman Islands as an exempted company with limited liability)
Introduction
We have reviewed the interim financial information set out on pages 2 to 25, which comprise the consolidated statement of
financial position of Baoxin Auto Group Limited (the “Company”) and its subsidiaries (together, the “Group”) as at
September 30, 2015 and the related condensed consolidated statements of profit or loss, comprehensive income,
changes in equity and cash flows for the nine-month period then ended, and explanatory notes. The directors of the
Company are responsible for the preparation and presentation of this interim financial information in accordance with
Hong Kong Accounting Standards 34 “Interim Financial Reporting” (“HKAS 34”) issued by the Hong Kong Institute of
Certified Public Accountants (the “HKICPA”). Our responsibility is to express a conclusion on this interim financial
information based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of
engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for
the contents of this report.
Scope of review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim
Financial Information Performed by the Independent Auditor of the Entity” (“HKSRE 2410”) issued by the HKICPA. A
review of interim financial information consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an
audit conducted in accordance with Hong Kong Standards on Auditing and, consequently, does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is
not prepared, in all material respects, in accordance with HKAS 34.
Other matters
Without qualifying our review conclusion, we draw attention to the fact that the comparative condensed consolidated
statements of profit or loss, comprehensive income, changes in equity and cash flows of the Group for the nine-month
period ended September 30, 2014 have not been reviewed in accordance with HKSRE 2410.
Ernst & Young
Certified Public Accountants
Hong Kong
December 11, 2015
1
Baoxin Auto Group Limited
Interim consolidated statements of profit or loss
For the nine months ended September 30, 2015
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
Notes RMB’000 RMB’000
REVENUE 4(a) 16,595,734 22,065,216
Cost of sales and services provided 5(b) (15,101,295) (20,016,643)
Gross profit 1,494,439 2,048,573
Other income and gains, net 4(b) 246,807 354,242
Selling and distribution costs (644,002) (710,158)
Administrative expenses (471,068) (472,642)
Profit from operations 626,176 1,220,015
Finance costs 6 (402,046) (422,325)
Share of profit of a joint venture 4,372 4,579
Share of loss of an associate (16,151) -
Profit before tax 5 212,351 802,269
Income tax expense 7 (57,343) (243,459)
Profit for the period 155,008 558,810
Attributable to:
Owners of the parent 153,033 549,458
Non-controlling interests 1,975 9,352
155,008 558,810
Earnings per share attributable to
ordinary equity holders of the parent
Basic and diluted
- For profit for the period (RMB) 9 0.06 0.21
2
Baoxin Auto Group Limited
Interim consolidated statement of comprehensive income
For the nine months ended September 30, 2015
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
Profit for the period 155,008 558,810
Other comprehensive income
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
Exchange differences on translation of financial statements (163,040) (806)
Net other comprehensive income to be reclassified
to profit or loss in subsequent periods (163,040) (806)
Other comprehensive income for the period, net of tax (163,040) (806)
Total comprehensive income for the period (8,032) 558,004
Attributable to:
Owners of the parent (10,007) 548,652
Non-controlling interests 1,975 9,352
(8,032) 558,004
3
Baoxin Auto Group Limited
Interim consolidated statement of financial position
September 30, 2015
Unaudited Audited
September 30, December 31,
2015 2014
Notes RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 10 3,848,384 3,788,537
Prepaid land lease payment 646,778 537,139
Intangible assets 893,459 922,189
Prepayments and deposits 367,836 498,084
Finance lease receivables 20,081 12,207
Goodwill 100,725 100,725
Investment in a joint venture 49,388 45,016
Available-for-sale investment 16,573 16,573
Deferred tax assets 85,377 74,229
Total non-current assets 6,028,601 5,994,699
CURRENT ASSETS
Inventories 11 2,582,274 3,056,777
Trade receivables 12 615,305 393,155
Finance lease receivables 26,318 12,731
Prepayments, deposits and other receivables 5,649,636 5,503,515
Amounts due from related parties 21(a) 51,431 41,063
Pledged bank deposits 1,315,438 2,436,468
Cash in transit 72,333 134,987
Cash and cash equivalents 3,194,421 2,202,892
13,507,156 13,781,588
Non-current asset classified as held for sale 13 80,510 -
Total current assets 13,587,666 13,781,588
CURRENT LIABILITIES
Bank loans and other borrowings 14 5,466,412 5,107,438
Trade and bills payables 15 4,402,948 4,877,913
Other payables and accruals 770,087 779,516
Income tax payable 509,617 522,339
Dividends payable 1,513 -
Total current liabilities 11,150,577 11,287,206
Net current assets 2,437,089 2,494,382
Total assets less current liabilities 8,465,690 8,489,081
NON-CURRENT LIABILITIES
Bank loans 14 2,669,866 2,621,136
Bonds 16 427,453 396,095
Deferred tax liabilities 328,847 323,050
Total non-current liabilities 3,426,166 3,340,281
Net assets 5,039,524 5,148,800
4
Baoxin Auto Group Limited
Interim consolidated statement of financial position (continued)
September 30, 2015
Unaudited Audited
September 30, December 31,
2015 2014
Note RMB’000 RMB’000
EQUITY
Equity attributable to owners of the parent
Share capital 17 20,836 20,836
Reserves 4,956,574 5,067,825
4,977,410 5,088,661
Non-controlling interests 62,114 60,139
Total equity 5,039,524 5,148,800
5
Baoxin Auto Group Limited
Interim consolidated statement of changes in equity
For the nine months ended September 30, 2015
Attributable to owners of the parent
Share awards Exchange Proposed Non-
Share Share and option Statutory Merger fluctuation Retained final controlling Total
capital premium reserve reserve reserve reserve profits dividend Total interests equity
* * * * * *
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2014 20,836 1,868,372 15,925 271,303 (58,327) 7,636 2,240,486 303,885 4,670,116 53,149 4,723,265
Profit for the period - - - - - - 549,458 - 549,458 9,352 558,810
Other comprehensive income
for the period:
Exchange differences on translation
of financial statements - - - - - (806) - - (806) - (806)
Total comprehensive income
for the period - - - - - (806) 549,458 - 548,652 9,352 558,004
Equity-settled share-based transactions - - 15,745 - - - - - 15,745 - 15,745
Final 2013 dividend declared - - - - - - - (303,885) (303,885) - (303,885)
At September 30, 2014 (Unaudited) 20,836 1,868,372 31,670 271,303 (58,327) 6,830 2,789,944 - 4,930,628 62,501 4,993,129
At January 1, 2015 20,836 1,767,128 31,670 350,069 (58,327) 7,677 2,868,364 101,244 5,088,661 60,139 5,148,800
Profit for the period - - - - - - 153,033 - 153,033 1,975 155,008
Other comprehensive income
for the period:
Exchange differences on translation
of financial statements - - - - - (163,040) - - (163,040) - (163,040)
Total comprehensive income
for the period - - - - - (163,040) 153,033 - (10,007) 1,975 (8,032)
Final 2014 dividend declared - - - - - - - (101,244) (101,244) - (101,244)
At September 30, 2015 (Unaudited) 20,836 1,767,128 31,670 350,069 (58,327) (155,363) 3,021,397 - 4,977,410 62,114 5,039,524
*These reserve accounts comprise the consolidated reserves of RMB 4,956,574,000 (2014: RMB 4,966,581,000) in the consolidated statement
of financial position.
6
Baoxin Auto Group Limited
Interim condensed consolidated statement of cash flows
For the nine months ended September 30, 2015
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
Notes RMB’000 RMB’000
Operating activities
Profit before tax 212,351 802,269
Adjustments for:
Share of profit of a joint venture (4,372) (4,579)
Share of loss of an associate company 16,151 -
Depreciation of property, plant
and equipment 5(c) 240,922 216,062
Amortisation of prepaid land lease payments 5(c) 5,818 5,101
Amortisation of intangible assets 5(c) 28,347 29,938
Gain on disposal of subsidiaries 4(b) (16,016)
-
Interest income 4(b) (20,887) (24,558)
Net gain on disposal of items of
property, plant and equipment 4(b) (492) (2,196)
Net loss on disposal of items of
intangible assets - 715
Written-down of inventories to
net realisable value - 9,044
Finance costs 6 402,046 422,325
Equity-settled share option expense 5(a) - 15,745
863,868 1,469,866
Decrease in pledged bank deposits 1,121,030 389,266
Decrease/(increase)in cash in transit 62,654 (38,201)
(Increase)/decrease in trade receivables (222,150) 83,340
Increase in prepayments,
deposits and other receivables (100,584) (904,094)
Decrease/(increase)in inventories 474,503 (1,078,768)
(Decrease)/increase in trade and bills payables (474,965) 634,065
(Decrease)/Increase in other payables
and accruals (43,395) 31,052
Increase of finance lease receivable (21,461) (1,964)
Cash generated from operations 1,659,500 584,562
Income tax paid (81,259) (119,728)
Net cash generated from operating activities 1,578,241 464,834
7
Baoxin Auto Group Limited
Interim condensed consolidated statement of cash flows (continued)
For the nine months ended September 30, 2015
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
Investing activities
Purchase of items of property,
plant and equipment (317,864) (576,269)
Proceeds from disposal of items
of property, plant and equipment 123,701 38,076
Prepaid land lease payment (75,278) (197,275)
Purchase of intangible assets (129) (6,104)
Acquisition of subsidiaries net of cash paid - (66,118)
Deemed disposal of subsidiaries 19 (100,151) -
Interest received 20,887 24,558
Dividends paid (99,731) (300,485)
Net cash used in investing activities (448,565) (1,083,617)
Financing activities
Proceeds from bank loans and other borrowings 7,227,076 9,809,611
Repayment of bank loans and other borrowings (6,913,623) (9,385,123)
Interest paid (398,791) (436,414)
Net cash used in financing activities (85,338) (11,926)
Net increase/(decrease) in cash and cash equivalents 1,044,338 (630,709)
Cash and cash equivalents at the beginning of each period 2,202,892 2,020,926
Effect of foreign exchange rate changes, net (52,809) 9,449
Cash and cash equivalents at the end of each period 3,194,421 1,399,666
8
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements
September 30, 2015
1. General information
The Company was incorporated in the Cayman Islands as an exempted company with limited
liability under the Companies Law of the Cayman Islands on September 6, 2010. The registered
office of the Company is located at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104,
Cayman Islands. The shares of the Company were listed on the Main Board of the Stock
Exchange of Hong Kong Limited (the “Stock Exchange”) on December 14, 2011.
During the period, the Group was principally engaged in the sale and service of motor vehicles.
In the opinion of the Directors, the ultimate holding company of the Company is Baoxin
Investment Management Ltd., which was incorporated in the British Virgin Islands.
2. Basis of preparation and accounting policies
2.1 Basis of preparation
The interim financial information for the nine-month period ended September 30, 2015 have
been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 Interim
Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”). The interim financial information should be read in conjunction with the annual
financial statements for the year ended December 31, 2014, which have been prepared in
accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).
The interim financial information was presented in Renminbi (“RMB”) and all values are
rounded to the nearest thousand except when otherwise indicated. This interim financial
information was approved for issue on December 11, 2015.
2.2 Significant accounting policies
The accounting policies adopted in the preparation of the interim financial information are
consistent with those followed in the preparation of the Group’s annual consolidated
financial statements for the year ended December 31, 2014 except for the adoption of new
and revised standards and interpretations effective as of January 1, 2015, noted below.
HKAS 19 Amendments Amendments to HKAS 19– Defined
Benefit Plans: Employee Contributions1
Annual Improvements Amendments to a number of HKFRSs1
2010-2012 Cycle
Annual Improvements Amendments to a number of HKFRSs1
2011-2013 Cycle
1
Effective for annual periods beginning on or after July 1, 2014
The adoption of these revised HKFRSs has had no significant financial effect on the interim
financial information.
Taxes on income in the interim periods are accrued using the tax rate that would be
applicable to expected total annual earnings.
9
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
2. Basis of preparation and accounting policies(continued)
2.3 Issued but not yet effective Hong Kong Financial Reporting Standards
The Group has not applied the following new and revised HKFRSs that have been issued but
are not yet effective, in these financial statements:
HKFRS 9 Financial Instruments2
HKFRS 10 and HKAS 28 Amendments to HKFRS 10 and HKAS 28 (Revised)
(Revised) Amendments - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture1
HKFRS 10, HKFRS 12 Amendments to HKFRS 10, HKFRS 12 and HKAS 28
and HKAS 28(Revised) - Investment Entities: Applying the
ConsolidationException1
Amendments
HKFRS 11 Amendments Amendments to HKFRS 11 Joint Arrangements
- Accounting for Acquisitions of Interests in Joint
Operations1
HKFRS 14 Regulatory Deferral Accounts3
HKFRS 15 Revenue from Contracts with Customers2
HKAS 1 Amendments Amendments to HKAS 1 - Disclosure Initiative1
HKAS 16 and HKAS 38 Amendments to HKAS 16 and HKAS 38 - Clarification of
Amendments Acceptable Methods of Depreciation and Amortisation1
HKAS 16 and HKAS 41 Amendments to HKAS 16 and HKAS 41
Amendments -Agriculture: Bearer Plants1
HKAS 27(Revised) Amendments to HKAS 27
Amendments Equity Method in Separate FinancialStatements1
Annual Improvements Amendments to a number of HKFRSs1
2012-2014Cycle
1
Effective for annual periods beginning on or after January 1, 2016
2
Effective for annual periods beginning on or after January 1, 2018
3
Effective for an entity that first adopts IFRSs for its annual financial statements beginning on or
after January 1, 2016 and therefore is not applicable to the Group
The Group is in the process of making an assessment of the impact of these new and revised
HKFRSs upon initial application. So far, the Group considers that these new and revised
HKFRSs are unlikely to have a significant impact on the Group’s results of operations and
financial position.
3. Segment information
The Group is principally engaged in the sale and service of motor vehicles. For management
purposes, the Group operates in single business unit based on its products, and has one reportable
segment which includes the sale of motor vehicles and the provision of related services.
No operating segments have been aggregated to form the above reportable operating segment.
Information about geographical area
Since nearly all of the Group’s revenue was generated from the sale and service of motor vehicles
in Mainland China and nearly all of the Group’s non-current assets other than deferred tax assets
were located in Mainland China, no geographical segment information is presented in accordance
with HKFRS 8 Operating Segments.
Information about major customers
Since none of the Group’s sales to a single customer amounted to 10% or more of the Group’s
revenue during the nine months ended September 30, 2015, no major customers segment
information is presented in accordance with HKFRS 8 Operating Segments.
10
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
4. Revenue, other income and gains, net
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
(a) Revenue
Revenue from the sale of motor vehicles 14,512,686 19,849,239
Finance leasing services 4,407 336
Others 2,078,641 2,215,641
16,595,734 22,065,216
(b) Other income and gains, net
Commission income 190,727 299,076
Advertisement support received from
motor vehicle manufacturers 5,768 7,371
Rental income 3,084 2,705
Government grants 4,816 11,948
Interest income 20,887 24,558
Net gain on disposal of items of
property, plant and equipment 492 2,196
Gain on deemed disposal of subsidiaries 16,016 -
Others 5,017 6,388
246,807 354,242
5. Profit before tax
The Group’s profit before tax is arrived at after charging:
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
(a) Employee benefit expense
(including Directors’ remuneration)
Wages and salaries 320,462 337,254
Other welfare 136,436 131,154
Equity-settled share option expense - 15,745
456,898 484,153
(b) Cost of sales and services provided
Cost of sales of motor vehicles 13,981,951 18,862,732
Others 1,119,344 1,153,911
15,101,295 20,016,643
11
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
5. Profit before tax (continued)
The Group’s profit before tax is arrived at after charging (continued):
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
(c) Other items
Depreciation of items of
property, plant and equipment 240,922 216,062
Amortisation of prepaid land lease payments 5,818 5,101
Amortisation of intangible assets 28,347 29,938
Advertisement and business promotion expenses 79,374 117,636
Bank charges 41,127 42,967
Lease expenses 123,494 139,181
Logistics and gasoline expenses 47,099 45,575
Office expenses 13,990 18,997
Write-down of inventories to net realisable value - 9,044
Foreign exchange differences, net 27,721 11,794
6. Finance costs
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
Interest expense on bank borrowings
- Wholly repayable within five years 395,709 411,764
- Interest expense on other borrowings 15,655 19,135
Interest expense on bonds 15,378 19,113
Less: Interest capitalised (24,696) (27,687)
402,046 422,325
12
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
7. Income tax expense
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
Current:
Mainland China corporate income tax 68,537 263,270
Deferred tax (11,194) (19,811)
Total tax charge for the period 57,343 243,459
Pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, the
Company has obtained an undertaking from the Governor-in-Council that no law which is enacted
in the Cayman Islands imposing any tax to be levied on profits or income or gain or appreciation
shall apply to the Company or its operations.
The subsidiary incorporated in the British Virgin Islands (“BVI”) is not subject to income tax as
this subsidiary does not have a place of business (other than a registered office only) or carry on
any business in the BVI.
The subsidiary incorporated in Hong Kong is subject to an income tax at the rate of 16.5% (nine
months ended September 30, 2014:16.5%) during the period. No provision for Hong Kong profits
tax has been made as the Group had no assessable profits arising in Hong Kong during the period.
According to the Corporate Income Tax Law of the People’s Republic of China, the income tax
rate is 25% (nine months ended September 30, 2014:25%).
8. Dividends
The Board of the Company has resolved not to declare interim dividend for the nine months ended
September 30, 2015(nine months ended September 30, 2014: Nil).
9. Earnings per share attributable to ordinary equity holders of the parent
Basic earnings per share is calculated by dividing the profit attributable to the ordinary equity
holders of the parent by the weighted average number of shares in issue, during the nine months
ended September 30, 2015 and 2014, respectively.
No adjustment has been made to the basic earnings per share amounts presented in the nine
months ended September 30, 2015 and 2014 in respect of a dilution as the impact of the share
options outstanding had an anti-dilutive effect on the basic earnings per share amounts presented.
13
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
9. Earnings per share attributable to ordinary equity holders of the parent (continued)
The calculations of basic and diluted earnings per share are based on:
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
Earnings
Profit attributable to ordinary equity holders
of the parent (RMB’000) 153,033 549,458
Shares
Weighted average number of ordinary shares
in issue during the period 2,557,311,429 2,557,311,429
Earnings per share
Basic and diluted (RMB) 0.06 0.21
10. Property, plant and equipment
Leasehold Plant and Furniture Motor Construction
Buildings improvements machinery and fixtures vehicles in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
September 30, 2015
At December 31,2014 and
at January 1, 2015:
Cost 2,089,468 407,834 235,938 220,894 743,310 900,485 4,597,929
Accumulated
depreciation (303,123) (97,358) (105,348) (107,224) (196,339) - (809,392)
Net carrying
amount 1,786,345 310,476 130,590 113,670 546,971 900,485 3,788,537
At January 1, 2015, net of
accumulated
depreciation 1,786,345 310,476 130,590 113,670 546,971 900,485 3,788,537
Additions 3,608 - - - - 443,239 446,847
Disposal of
subsidiaries(Note 19) - (11,442) (1,372) (3,606) - (6,449) (22,869)
Disposals - - (519) (167) (122,523) - (123,209)
Depreciation provided
during the period (49,538) (46,374) (15,684) (24,278) (105,048) - (240,922)
Transfers 3,770 - 10,541 14,509 106,313 (135,133) -
At September 30, 2015, net of
accumulated
depreciation 1,744,185 252,660 123,556 100,128 425,713 1,202,142 3,848,384
At September 30, 2015:
Cost 2,096,846 396,198 242,591 230,836 639,405 1,202,142 4,808,018
Accumulated
depreciation (352,661) (143,538) (119,035) (130,708) (213,692) - (959,634)
Net carrying amount 1,744,185 252,660 123,556 100,128 425,713 1,202,142 3,848,384
14
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
10. Property, plant and equipment (continued)
Leasehold Plant and Furniture Motor Construction
Buildings improvements machinery and fixtures vehicles in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
December 31, 2014
At December 31, 2013 and
at January 1, 2014:
Cost 1,855,142 388,379 203,914 169,830 636,227 654,483 3,907,975
Accumulated
depreciation (246,934) (54,159) (78,277) (78,205) (140,012) - (597,587)
Net carrying
amount 1,608,208 334,220 125,637 91,625 496,215 654,483 3,310,388
At January 1, 2014, net of
accumulated
depreciation 1,608,208 334,220 125,637 91,625 496,215 654,483 3,310,388
Additions 113,990 10,130 - - - 853,538 977,658
Acquisition of
a subsidiary 891 5,752 3,214 969 11,038 - 21,864
Disposals (134) (13,045) (2,326) (706) (220,370) - (236,581)
Depreciation provided
during the year (56,612) (50,217) (25,847) (28,340) (123,776) - (284,792)
Transfers 120,002 23,636 29,912 50,122 383,864 (607,536) -
At December 31, 2014, net of
accumulated
depreciation 1,786,345 310,476 130,590 113,670 546,971 900,485 3,788,537
At December 31, 2014:
Cost 2,089,468 407,834 235,938 220,894 743,310 900,485 4,597,929
Accumulated
depreciation (303,123) (97,358) (105,348) (107,224) (196,339) - (809,392)
Net carrying amount 1,786,345 310,476 130,590 113,670 546,971 900,485 3,788,537
11. Inventories
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Motor vehicles 2,296,955 2,752,913
Spare parts and accessories 285,319 303,864
2,582,274 3,056,777
As at September 30, 2015, the carrying amount of inventories carried at fair value less costs to
sell was RMB 225,265,000 (December 31, 2014: RMB 105,237,000).
15
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
12. Trade receivables
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Trade receivables 615,305 393,155
The Group seeks to maintain strict control over its outstanding receivables and has a credit control
department to minimize credit risk. The Group does not offer any credit to the Group’s customers
for automobile purchases or for out-of-warranty repairs that are not covered by insurance.
However, the Group generally provides a credit term of two to three months to automobile
manufacturers for the reimbursement of costs relating to the in-warranty repair services. Overdue
balances are reviewed regularly by senior management. In view of the aforementioned and the fact
that the Group’s trade receivables relate to a large number of diversified customers, there is no
significant concentration of credit risk.
An aged analysis of the trade receivables as at each statement of financial position date (based on
the invoice date, net of impairment) is as follows:
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Within 3 months 539,262 343,982
More than 3 months but less than 1 year 62,388 47,211
Over 1 year 13,655 1,962
615,305 393,155
Trade receivables are non-interest-bearing.
16
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
13. Non-current asset classified as held for sale
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Unlisted equity investment in an associate 80,510 -
In the nine-month period ended September 30 ,2015, Autostreets Development Limited
(“Autostreets”), a former subsidiary of the Group, accepted capital injection from the Group and
other independent third parties(“Capital Injection”). As the result of the Capital Injection, the
Group’s equity interest in “Autostreets” decreased from 100% to 38%. The Group lost its control
over “Autostreets” after the Capital Injection (the “Deemed Disposal”).
The Group had significant influence over “Autostreet” after the Deemed Disposal as the Group is
able to appoint certain number of its directors to the board of directors of Autostreet. Its remaining
equity interest in “Autostreet” was accounted for as investment in an associate until August 28,
2015. The Group and Orient Rich Investment Development Limited (“Orient Rich”) ,a wholly
owned subsidiary of the controlling shareholder, entered into a sale and purchase agreement on
August 28, 2015, pursuant to which the Group has agreed to sell and Orient Rich has agreed to
purchase the entire issued share capital of Extensive Prosperous Investments Limited at
consideration of RMB100 million. Extensive Prosperous Investments Limited, a wholly owned
subsidiary of the Group, held 38% equity interest in “Autostreets”. Upon completion of the
transaction, the Group will have no equity interest in “Autostreets”. Such transaction was not
completed as at the report date. The investment was classified as a non-current asset classified as
held for sale accordingly.
17
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
14. Bank loans and other borrowings
Unaudited Audited
As at September 30, 2015 As at December 31, 2014
Effective Effective
interest interest
rate(%) Maturity RMB’000 rate(%) Maturity RMB’000
Current
Bank loans 6.6 on demand 29,000 6.6 on demand 29,000
Libor+2.2 on demand 311,904 Hibor+2.2 on demand 299,433
Hibor+2.7 on demand 190,863 Libor+2.7 on demand 184,869
5.3-7.0 2016 3,285,648 6.2-6.8 2015 251,292
Libor+2.2 2015 198,014
5.6-6.7 2015 2,962,874
Current portion of long
term bank loans Libor+3.0 2016 12,560 6.8 2015 140,000
Libor+3.5 2016 627,970 Libor+3.0 2015 11,901
Libor+3.7 2016 951,058 Libor+3.5 2015 917,850
Other Borrowings 8.5 2016 57,409 7.7-9.1 2015 112,205
5,466,412 5,107,438
Non-Current
Bank loans
Libor+3.5 2017 1,517,217 Libor+3.5 2016 302,207
Libor+3.7 2018 1,152,649 Libor+3.7 2016 1,028,116
Libor+3.7 2017 1,290,813
2,669,866 2,621,136
8,136,278 7,728,574
18
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
15. Trade and bills payables
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Trade payables 671,096 125,299
Bills payable 3,731,852 4,752,614
Trade and bill payables 4,402,948 4,877,913
An aged analysis of the trade and bills payables as at the end of reporting period is as follows:
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Within 3 months 4,015,520 4,784,702
3 to 6 months 380,164 82,650
6 to 12 months 1,369 930
Over 12 months 5,895 9,631
4,402,948 4,877,913
The trade and bills payables are non-interest-bearing.
19
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
16. Bonds
As at September 30, 2015, outstanding bonds are summarised as follows:
Unaudited Audited
Fixed September 30, December 31,
Face value Maturity interest rate 2015 2014
USD’000 RMB’000 RMB’000
Bonds 58,160 2017 5.65% 427,453 396,095
17. Share capital
As at September 30, 2015
and December 31,2014
Shares
Authorised:
Ordinary shares 5,000,000,000 shares of HK$0.01 each
Issued and fully paid
Ordinary shares 2,557,311,429 shares of HK$0.01 each
Equivalent to RMB’000 20,836
18. Share option scheme
On April 22, 2013, 13,150,000 share options (the “Option A”) with an exercise price of HK$6.83
were granted to employees in respect of their service to the Group, under the share option schemes
adopted by the Company on November 22, 2011 (the “Share Option Scheme”). All share options
shall vest on a one-off basis on April 23, 2014. Any share option accepted but not exercised shall
automatically lapse on April 22, 2016.
On January 10, 2014, 2,000,000 share options (the “Option B”) with an exercise price of HK$6.74
were granted to employees in respect of their service to the Group, under the Share Option
Scheme. All share options shall vest on a one-off basis on January 11, 2015. Any share option
accepted but not exercised shall automatically lapse on January 10, 2017.
The Option A and Option B were modified with an exercise price of HK$5.724 and a revised
condition on September 4, 2014, besides, 400,000 new share options (the “Option C”), with an
exercise price of HK$5.724, were granted on September 4, 2014. All of above options were
vested on a one-off basis immediately upon acceptance by the relevant grantees, and these share
options are valid till the earlier of (i) the day on which the relevant grantees cease to be an
employee of the Company and its subsidiaries, and (ii) September 4, 2016.
During the nine months ended September 30, 2015, no expense (nine months ended September
30, 2014: RMB15,745,000) was recognized in the statements of profit or loss for the Share Option
Scheme, because all of them were fully expensed in September 2014.
20
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
19. Deemed Disposal of subsidiaries
The Deemed Disposal on January 28, 2015, details refer to note 13.
The details of the net assets disposed of are as follows:
January 28, 2015
RMB’000
Net assets disposed of
Cash and cash equivalents 1,699
Property, plant and equipment 22,869
Intangible assets 512
Deferred tax assets 5,843
Prepayments, deposits and other receivables 2,056
Other payables and accruals (47,157)
Due to related parties (3,629)
(17,807)
Capital injection by the Group* 98,452
Gain on deemed disposal of subsidiaries(note 4(b)) 16,016
Investments in an associate 96,661
Satisfied by:
Cash -
An analysis of the cash flows of cash and cash equivalents in respect of the Deemed Disposal is
as follows:
Unaudited
For the nine
months ended
September 30,
2015
RMB’000
Cash consideration -
Less: cash and cash equivalents of “Auto streets”disposed of (1,699)
Less: Capital injection by the Group* (98,452)
Net outflows of cash and cash equivalents in respect of the
Deemed Disposal (100,151)
* As the result of the capital injections made by the Group and certain independent third parties
on January 28, 2015, the Group’s equity interest in “Autostreets” was diluted from 100% to
38% and the Group lost its control over “Autostreets”. Please see more details about the
Deemed Disposal of “Autostreets” in note 13.
21
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
20. Commitments
(a) Capital commitments
The Group had the following capital commitments at the end of the reporting period:
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Contracted, but not provided for
land use rights and buildings 160,500 212,500
Authorised, but not contracted for
land use rights and buildings 250,000 270,000
410,500 482,500
(b) Operating lease commitments
At the end of reporting period, the Group had total future minimum lease payments under
non-cancellable operating leases falling due as follows:
Unaudited Audited
At September 30, 2015 At December 31, 2014
Properties Land Vehicles Properties Land Vehicles
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 91,890 50,905 8,924 111,742 65,307 9,090
After 1 year but
within 5 years 265,516 163,568 35,635 322,807 229,553 35,721
After 5 years 305,704 534,688 28,211 373,137 523,619 35,666
663,110 749,161 72,770 807,686 818,479 80,477
The Group is the lessee in respect of a number of properties, land and vehicles held under
operating leases.
22
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
21. Related party transactions and balances
(a) Balances with related parties
The Group had the following significant balances with its related parties as at September 30,
2015:
Amounts due from related parties:
Unaudited Audited
September 30, December 31,
2015 2014
RMB’000 RMB’000
Non-trade related:
A jointly-controlled entity
- Shenyang Xinbaohang Automobile Sales &
Services Co., Ltd. 40,835 40,835
An associate entity
-Autostreet 10,596 -
The Controlling Shareholder
- Mr. Yang Aihua - 228
51,431 41,063
Balances with related parties were unsecured and non-interest-bearing, and had no
fixed repayment terms.
(b) Compensation of key management personnel of the Group:
Unaudited Unaudited
For the nine For the nine
months ended months ended
September 30, 2015 September 30, 2014
RMB’000 RMB’000
Short term employee benefits 12,048 12,014
Equity-settled share option expense - 1,730
Post-employee benefits 476 441
Total compensation paid to key
management personnel 12,524 14,185
23
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
22. Fair value and fair value hierarchy of financial instruments
The carrying amounts and fair value of the Group’s financial instruments, other than those with
carrying amounts that reasonably approximate to fair values, are as follows:
Group
Carrying amounts Fair values
September 30, December 31, September 30, December 31,
2015 2014 2015 2014
RMB’000 RMB’000 RMB’000 RMB’000
Financial liabilities
Bonds 427,453 396,095 444,473 418,646
Management has assessed that the fair values of cash and cash equivalents, cash in transit,
pledged bank deposits, trade and bills receivables, financial assets included in prepayments,
deposits and other receivables, amounts due from related parties, trade and bills payables,
financial liabilities included in other payables and accruals, amounts due to related parties,
dividends payable and current portion of bank loans and other borrowings approximate to their
carrying amounts largely due to the short term maturities of these instruments.
Management has assessed that the fair values of non-current portion of bank loans and other
borrowings with floating interest rates approximate to their carrying amounts because the interest
rates are adjusted periodically by reference to the fair market interest rates.
The Group’s corporate finance team headed by the finance manager is responsible for
determining the policies and procedures for the fair value measurement of financial instruments.
The corporate finance team reports directly to the chief financial officer. At each reporting date,
the corporate finance team analyses the movements in the values of financial instruments and
determines the major inputs applied in the valuation. The valuation is reviewed and approved by
the chief financial officer.
The fair values of the financial assets and liabilities are included at the amount at which the
instrument could be exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale. The following methods and assumptions were used to estimate the fair
values:
The fair value of bonds has been calculated by discounting the expected future cash flows using
rates currently available for instruments with similar terms, credit risk and remaining maturities.
The Group’s own non-performance risk for bonds as at September 30, 2015 was assessed to be
insignificant.
The fair values of unlisted available-for-sale equity investments cannot be measured reliably
because they do not have quoted market prices in an active market and the range of reasonable
fair value estimates is so significant.
24
Baoxin Auto Group Limited
Notes to the interim condensed consolidated financial statements (continued)
September 30, 2015
22. Fair value and fair value hierarchy of financial instruments (continued)
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group’s financial
instruments:
Liabilities for which fair values are disclosed:
Group
As at September 30, 2015
Fair value measurement using
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bonds - - 444,473 444,473
As at December31, 2014
Fair value measurement using
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Bonds - - 418,646 418,646
23. Event after the reporting period
There is no significant subsequent event undertaken by the Company or by the Group after
September 30, 2015.
25
