长安汽车(000625)2004年年度报告摘要（英文版）

Chongqing Changan Automobile Limited Company Extracts of 2004 Annual Report §1 Important Notes 1.1 The Board of Directors of Chongqing Changan Automobile Co., Ltd. (hereinafter referred to as “ the Company”) and the directors guarantee that the information contained in the annual report are free of false records, misguiding statements or significant omissions, and assume individual and joint liabilities for the truthfulness, accuracy and integrity of the annual report. The annual report extracts are extracted from the original report, and for detailed information, please refer to the annual report. 1.2 There are no directors of the Board who are unable to agree the truthfulness, accuracy, completeness or disagreement on the contents of the annual report. 1.3 Directors absent from the meeting. Name of the Director Reasons for the absence Name of the consignee Li Shou Wu On Business Yin Jiaxu Xu Liuping On Business Deng Tengjiang Ma Jun On Business Xia Dongling On Business Wen Zhongyu 1.4 The auditor of the Company, PricewaterhouseCoopers Zhong Tian Certified Public Accountants, issued an unqualified audit report. 1.5 Chairman Mr. Yin Jiaxu, General Manager Mr. Zhao Luchuan and Chief Accountant Mr. Cui Yunjiang guarantee the truthfulness and completeness of the financial statements of the annual report §2 General Introduction of the Company 2.1 General Introduction of the Company Abbreviated Changan Automobile, Changan B name of the stock Stock Code 000625、 200625 Place of listing Shenzhen Stock Exchange Registered and No. 260, Jian Xin East Road, Jiang Bei District, Chongqing Office Address Post code 400023 Internet Website http://www.changan.com.cn of the Company Email Address of cazqc@mail.changan.com.cn the Company 2.2 Contact persons and contact manner Secretaries of the Board Securities matters Representative Name Cui Yunjiang, Li Jun No. 260, Jian Xin East Road, Jiang Bei Contact Address District, Chongqing Telephone 023-67591349 Fax 023-67866055 Email Address cazqc@mail.changan.com.cn §3 Extracts of Accounting and Operating Data 3.1 Key accounting data (In RMB thousand) Increase/Decrease 2004 2003 2002 （％） Sales 18,526,610 14,358,768 29.03% 9,884,068 Profit before tax 1,468,239 1,796,976 -18.29% 1,124,537 Net profit 1,197,215 1,435,616 -16.61% 865,146 Net cash flow from 1,452,499 1,612,152 -9.90% 2,086,356 operating activities December 31, 2004 December 31, 2003 Increase/Decrease December 31, 2002 （％） Total assets 14,848,265 10,984,325 35.18% 8,775,246 Shareholders’equity 6,759,500 4,810,372 40.52% 3,472,889 （ excluding minority interest） 3.2 Key financial indicator (In RMB Yuan) Increase/Decrease 2004 2003 2002 （％） Earnings per share 0.84 1.17 -28.21% 0.71 Return on net asset 17.71% 29.84% -12.13% 24.91% Net cash flow from operating activities 0.90 1.31 -31.30% 1.70 per share(Rmb thousand yuan) Increase/Decrease 2004 2003 2002年 （％） Net asset per share 4.17 3.92 6.38% 2.83 Adjusted net assets 4.15 3.74 10.96% 2.79 per share Non-routine Profit/Loss ?Applicable v Not applicable 3.3 Reconciliation of net profits presented under the PRC accounting standards and International Financial Reporting Standards (“IFRS”) v Applicable ? Not applicable (In RMB thousand) PRC accounting standards IFRS Net profit 1,317,300 1,197,215 Net Assets Net Profit As reported under PRC accounting standards 6,977,455 1,317,300 Adjustment made in accordance with IFRS 1.Staff bonus and welfare fund of Changan Suzuki - (9,690) 2. Reversal of revaluation made in 1995 (15,456) 8,735 Explanation of Variance 3.Deferred tax assets 90,553 (5,231) 4. Government grants relating to purchase of assets (251,392) (73,049) 5. Tax credit arising from purchase of domestically manufactured machinery and equipment (41,660) (41,660) 6.Others - 810 As restated in conformity with IFRS 6,759,500 1,197,215 §4 Changes in Shareholdings and Information on Shareholders 4.1 Change in shareholdings Balance before Balance after current change Change in the reporting period change Additional “A” Share Bonus shares Issue Subtotal I. Non-circulated shares 1. Promoter shares 708,666,000 141,733,200 - 141,733,200 850,399,200 Including: State- owned legal person shares - - - - - Domestic legal person 141,733,200 shares 708,666,000 141,733,200 - 850,399,200 Foreign legal person shares - - - - - Others - - - - - 2. Legal entity shares raised - - - - - 3. Employee shares 21,000 4,200 1,566 5,766 26,766 4. Preference shares and - others - - Sub-total of non-circulated shares 708,687,000 141,737,400 1,566 141,738,966 850,425,966 II. Circulated shares 1. Domestic listed RMB 182,444,234 shares 167,979,000 35,595,800 148,848,434 350,423,234 2. Domestic listed foreign 70,000,000 shares 350,000,000 70,000,000 - 420,000,000 3. Overseas listed foreign - shares - - - - 4. Others - - - - - Subtotal circulated shares 517,979,000 103,595,800 148,848,434 252,444,234 770,423,234 III. Total shares 1,226,666,000 245,333,200 148,850,000 394,183,200 1,620,849,200 The number of the shares should be disclosed, distinguished among shares sold to the Fund, internal employee’ s shares sold over the counter, the shares sold to the strategy investor, the shares sold to the common legal entities. ? Applicable v Not applicable 4.2 The largest ten shareholders Total shareholders at the end of the reporting period 54,268 The largest ten share holders Name of Increase/ Shares held at % of total Pledged/ Frozen Decrease in the Share type Shareholders shareholders the year-end shares shares year CHANGAN AUTOMOBILE 141,733,200 850,399,200 52.47% Non-circulated 354,333,000 State-owned GROUP COMPANY (“CAC”) BOSHI VALUE ADDED A share SECURITIES 7,606,576 15,228,959 0.94% circulated Unknown share-holder INVESTMENT FUND HTHK-VALUE Unknown 14,427,910 0.89% circulated Unknown Foreign PARTNERS 'A' FD KGI ASIA LIMITED 7,436,366 10,105,018 0.62% circulated Unknown Foreign BBH BOSTON A/C GMO EMERGING -2,339,479 9,589,461 0.59% circulated Unknown Foreign MARKETS FUND HTHK-BOBL/MAN NUL IFE GLOBAL Unknown 9,279,902 0.57% circulated Unknown Foreign FUND-CHINA VALUE CHINA-RELATED STOCKS MOTHER Unknown 9,121,678 0.56% circulated Unknown Foreign FUND . KINGHING TRUST & 7,754,816 8,463,351 0.52% circulated Unknown A share INVESTMENT CO., share-holder LTD. MERRILL LYNCH PLERCE FENNER 6,034,712 9,298,993 0.57% circulated Unknown Foreign & SMITH INC GUOTAI JUNAN SECURIES HONG -282,569 7,649,794 0.47% circulated Unknown Foreign KONG LIMITED Top ten circulated share holders Name of shareholders Shares held at the year-end Shareholders(A、B、H share or others) BOSHI VALUE ADDED SECURITIES 15,228,959 A share INVESTMENT FUND HTHK-VALUE PARTNERS 'A' FD 14,427,910 B share KGI ASIA LIMITED 10,105,018 B share BBH BOSTON A/C GMO EMERGING 9,589,461 B share MARKETS FUND HTHK-BOBL/MANNUL IFE GLOBAL 9,279,902 B share FUND-CHINA VALUE CHINA-RELATED STOCKS MOTHER 9,121,678 B share FUND KINGHING TRUST & INVESTMENT 8,463,351 A share CO., LTD. MERRILL LYNCH PLERCE FENNER 9,298,993 B share & SMITH INC GUOTAI JUNAN SECURIES HONG 7,649,794 B share KONG LIMITED STATE SOCIAL SECURITIES FUND 7,340,000 A share ONE-ZERO-SEVEN PACKAGE The company did not know whether there was relationship among the large ten Explanation on the relationship and the circulated shareholders , and nor knew whether they were the parties who action alike of above shareholders agreed to act alike as stipulated in Administrative Measures on Information Disclosure Concerning Changes in Shareholdings of Listed 4.3 Information on the controlling shareholder 4.3.1 Change in the controlling shareholders ? Applicable v Not Applicable 4.3.2 Information on the controlling shareholders and other actual controllers The largest shareholder: Changan Automobile Group Company Limited(“CAC”) Legal representative: Yin Jiaxu Date of establishment: October 28, 1996 Business scope and major products: manufacturing, development and sale of Changan series cars and spare parts; manufacturing and sale of firearms for civil use, ammunition, general use machinery, dies, tools etc. Registered capital: RMB 740,000,000 The controlling party of CAC: China South Industries Group Legal representative: Xu Bin Date of establishment: June 29, 1999 Business scope and major products: investment and management of state-owned assets; manufacturing of guns and firearms; engineering prospecting, designing, construction, contracting, construction supervision; equipment installation, etc. Registered capital: RMB 12,645,210,000 4.3.3 Relationship among the Company and its controlling shareholders China South Industries Group 100% Changan Automobile Group Company 52.47% Chongqing Changan Automobile Co., Ltd. §5 Information on Directors, Supervisors and Seniors 5.1 Change in shares held by directors, supervisors and senior Shares held Name Position Gender Age Term of office At beginning At end of Reasons for of year year change Yin Jiaxu Chairman M 48 2003.05-2006.05 4,200 5,040 Bonus shares Zhao Luchuan Deputy M 51 2003.05-2006.05 4,200 5,040 Bonus Chairman, shares General Manager Li Shouwu Director M 38 2003.05-2006.05 0 0 Xu Liuping Director M 40 2003.05-2006.05 0 0 Deng Director M 48 2003.05-2006.05 0 0 Tengjiang Wang Director M 46 2003.05-2006.05 4,200 5,040 Bonus Chongsheng shares Guo Xuewu Director M 48 2003.05-2006.05 0 0 Zhang Baolin Director, M 42 2003.05-2006.05 0 0 Executive Deputy General Manager Ma Jun Director M 45 2003.05-2006.05 0 0 Cui Yunjiang Director, Deputy M 41 2003.05-2006.05 0 0 General Manager, Board Secretary Guo Konghui Independent M 69 2003.05-2006.05 0 0 Director Xia Donglin Independent M 43 2003.05-2006.05 0 0 Director Gao Zhikai Independent M 42 2003.05-2006.05 0 0 Director Wen Zongyu Independent M 41 2003.05-2006.05 0 0 Director Liu Wei Independent M 40 2003.05-2006.05 Director Shi Yubao Organizer of the M 51 2003.05-2006.05 0 0 Board of Supervisors Zhou Xiaying Supervisor F 55 2003.05-2006.05 4,200 6,606 Bonus shares; additional share issue Peng Supervisor M 54 2003.05-2006.05 4,200 5,040 Bonus Minggeng shares Cao Dongping Supervisor F 51 2003.05-2006.05 0 0 Xiong Huilin Supervisor F 45 2003.05-2006.05 0 0 Zhu Zhiping Supervisor M 42 2003.05-2006.05 0 0 Hua Dubiao Supervisor M 39 2003.05-2006.05 0 0 Fu Xiangyu Supervisor F 49 2003.05-2006.05 0 0 Zhu Huarong Senior D eputy M 39 2003.03-2006.03 0 0 General Manager Huang Senior deputy M 36 2003.03-2006.03 0 0 Zhongqiang general manager Jia Tingyue Deputy general M 41 2003.03-2006.03 0 0 manager Zou Yi Deputy general M 41 2003.03-2006.03 0 0 manager Cui Xiaomei Deputy general F 49 2003.03-2006.03 0 0 manager Li Jun Board Secretary F 35 2003.03-2006.03 0 0 5.2 The positions of the Directors and Supervisors in their respective shareholder companies v Applicable ? Not Applicable Get remuneration from Name Shareholders Company Position Term of office the Company(Yes or No) President , Board Yin Jiaxu Changan AutomobileChairman , 1998.07- Y Group Company Secretary of the Party Committee Vice President, Y Wang Chongsheng Changan Automobile 1996.01- Group Company Deputy Secretary of the Party Committee Guo Xuewu 1999.12- Y Changan AutomobileDirector, Chief Group Company Financial Officer Group Company Financial Officer Y Director, Deputy Secretary of the Shi Yubao Changan AutomobileParty Committee, 2000.09- Group Company Chairman of the Worker’s Union Y Deputy Secretary of the Party Peng Minggeng Changan AutomobileCommittee , 2004.09- Group Company Secretary of the Discipline Committee Y Vice President, Director of the Ma Jun Changan AutomobileInformation Centre, 2001.02- Group Company Director of the Administration Office Y Cao Dongping Changan AutomobileDirector of Finance 2000.03- Group Company Department 5.3 Annual remuneration for directors, supervisors and senior management (In RMB Ten thousand) Total annual remuneration 239.00 Three highest paid to 80.00 directors Three highest paid to senior 90.00 management Ten thousand Remuneration of 5.00 Yuan/Person independent directors annually Expenses incurred in the discharge of responsibilities in attending board of Remuneration of directors meetings and shareholders general meetings and in connection with independent directors the Company’ s Article of Association are reimbursed by the Company 。 The directors who did not Li Shouwu, Xu Liuping, Deng Tengjiang receive remuneration from the Company the Company Payment scope Headcount 5-10 ten thousand 3 10-15 ten thousand 5 20-35 ten thousand 5 §6 Report by the Board of the Directors 6.1 Operation discussion and analysis Faced with changes in the national macro control, a less promising market, fierce price competitions, and growing competitors, all the staff of the Company concerted their endeavors and overcome numerous difficulties with creativity. In this way, the strategies and plans of “3337” were well followed, and various operation objectives were successfully reached, thereby the first step in “3337” was completed one year ahead of the original expectations. Number of automobiles sold in the year totaled 454,262, a 17.84% increase from 2003. Revenue increased 29.03% to RMB 18,527 million, and net profit RMB 1,197 million 6.2 The business operation by industry or products (In RMB ten thousand) Major business analysis per industry/products Industry/ Gross margin Variance of sales Variance of cost of Variance of product Sales revenue Cost of sales (%) revenue (％) sales (％) margin (%) Automobile １，８５２，６６１．００１，３９７，８８５．００ ２４．５５％ ２９．０３％ ３３．５７％ －９．４８％ Including: related party １０６，６５４．００ ８０，４７３．００ ２４．５５％ －７．１１％ －３．８４％ －９．４８％ transaction Major business analysis per specific products Mini car ９９４，３７５．００ ７４９，０２１．００ ２４．６７％ ８．４３％ １７．４３％ －１８．９５％ Sedan ８２０，５０５．００ ６２１，６３８．００ ２４．２４％ ６４．１８％ ５７．５１％ １５．２４％ Including: related party ８１，３３９．００ ６１，３７３．００ ２４．５５％ －１３．３６％ －１０．３０％ －９．４８％ transaction Pricing for related partyThe price is executed based on the national price management department designated price, market price or the price the two sides agreed. transactions CAC and the other related parties provide general service, spare parts and sales of automobiles, which is Necessity and good for the Company to take advantage of the resources and keep the business goes on well. The consistency of transactions with the related parties are in accordance with the laws and regulations and the transactions related party are dealt under the principles of the market economics and do no harm to the interest of the Company transaction and the other non-related parties. Such transaction is necessary to the Company and will occur in the future.。 Including: During the reporting period, the Company sold products and services to the related parties with the total amount RMB 81.60 million。 6.3 Business operation by area (RMB ten thousand) Area Sales revenue Increase/decrease（ ％ ） Domestic 1,839,731.00 28.36% Overseas 12,930.00 80.11% 6.4 Main suppliers and clients (RMB ten thousand) Proportion of total 234,122.00 16.34% Gross purchase from the top five purchase suppliers Gross sales to top five Proportion of total 163,139.00 8.81% sales 6.5 Operation and performance of the subsidiaries of the Company (investment income was account for 10% of net profit) ? Applicable v Not applicable 6.6 The reasons for changes in main business and its structure ? Applicable v Not applicable 6.7 The reasons for significant changes in profitable capability (margin) ? Applicable v Not applicable 6.8 The reasons for signif icant changes in structure of operating results and profit v Applicable ? Not Applicable Refer to the analysis of the reasons for the material changes in the whole financial condition as compared with last year The analysis of the reasons for the material changes in the whole financial condition as compared with last year v Applicable ? Not applicable In RMB thousand Increase/ Project 2004 2003 Decrease Reasons Of the Changes The increase in the production scale of Total Asset 14,848,265 10,984,325 35.18%Changan Ford, Changan Suzuki, Nanjing Changan, Hebei Changan at consolidation level. Additional public offering and bonus shares in the reporting period, which results in the in crease of 394,183.2 Shareholders’ equity 6,759,500 4,810,372 40.52%thousand in share capital and 909,730 thousand in the capital reserve, as well as the increase in reserve and the retained earnings Profit from major 3,920,501 3,523,019 11.28%Increase of the sales of Changan Ford, business lines Adjustment in the price of the products, Net Profit 1,197,215 1,435,616 -16.61%which results in the decrease in the gross margin Net increase in Cash 1,356,433 98,203 1281.25%Cash collected from the financing and cash equivalents activities 6.9 The impact of significant changes in the productive and operating environment and macro policies and laws regulations on the Company v Applicable ? Not Applicable • The status of the automobile industry of China shifted from explosive growth in the previous two years and has entered a more stable stage, thus the Company’ s sustainable development capabilities are at trial. • The competition in the automobile market is deepening continuously, which poses great challenges to the Company’ s new product development, cost control, and quality improvement capabilities. • Price reductions are increasingly frequent with greater scales, and consumers consequently are inclined to wait. Therefore greater efforts are needed in cost control. • Stimulated by the new policies in the automobile industry, a new round of mergers and acquisitions will put the Company’ s mass production capabilities on test. • The implementation of the vehicle recall will be immense challenges for the Company’ s capabilities to cope with sudden issues. 6.10 Completion of the profitable forecast ? Applicable v Not applicable 6.11 Completion of the operating ? Applicable v Not applicable 6.12 The utilization of proceeds from previous public offerings (‘ the proceeds “) v Applicable ? Not Applicable (RMB: ten thousand) Gross proceeds Proceeds used Accumulated raised 180,744.00 in current year 109,334.00 used 180,744.00 proceeds Investment Planned Actual Consistent Consistent with project Change Earnings the planned investment investment with plan committed earnings Technology Reflected in Development 10,000 No 10,000 the overall No Yes Center operating construction results CM8 19,984.00 No 19,984.00 Earnings not Yes Yes Ecdemic occurred yet expansion project for the 4,221 No 4,221 Yes Yes inner trimming production line of minicar Ecdemic expansion project for the 4,633 No 4,633 Yes Yes chassis and sub-assembly line of minicar Ecdemic expansion project for the 4,982 No 4,982 Yes Yes detecting and debugging line of minicar Ecdemic expansion project for the welding line on 4,527 No 4,527 Yes Yes front and rear panel & lower body of minicar Ecdemic expansion project for the 4,270 No 4,270 Yes Yes inspecting and reworking line of minicar Ecdemic expansion project for the 4,714 No 4,714 Yes Yes cathode electrophoresis line of minicar Ecdemic expansion project for the 4,002 No 4,002 Yes Yes final assembly line of minicar Ecdemic expansion project for the welding line on 7,279 No 7,279 Yes Yes vehicle body and finishing line of minicar Ecdemic expansion project for the 8,412 No 8,412 Yes Yes surface painting line of minicar Ecdemic expansion project for the 4,923 No 4,923 Yes Yes pre-treating line of minicar Ecdemic expansion project for the welding line on 5,738 No 5,738 Yes Yes front and rear side panel and door of minicar Ecdemic expansion project for the 6,821 No 6,821 Yes Yes inner trimming production line of minicar Technology innovation 4,984 No 4,984 Yes Yes project on die of minicar Complementary 16,368 No 16,368 Yes Yes current capital Total 115,858 - 115,858 - Reasons for not As during the early stage, the Technology Development Centre project was in the process of achieving the feasibility verification, the actual progress is not in line with those disclosed in prospectus. plan and earnings projection (for individual project) Reasons for the - change and its procedure（for individual project） Changes in projects ? Applicable v Not applicable 6.13 The use of proceeds not derived from the proceeds from public offering. v Applicable ? Not Applicable (In RMB million) No. Funds Investment project Project stage Earnings injected 1 Automobile production 57.90 In progress line 2 Engine production line 177.22 In progress Included in the overall earnings of 3 ERP project 16.18 In progress the 4 Technology Development 49.58 In progress Company Centre 5 Others 10.88 In progress Total 311.76 6.14 Note for the “non-standard opinion” issued by Certified Public Accountants ? Applicable v Not Applicable 6.15 Operating plan for next year of Board of directors v Applicable ? Not Applicable In 2005, the company will strive for the “3337” objectives and sustainable development by focusing on cost control and CPS (Changan Production System), and stressing the development of new products, improvement of product quality, and marketing and services. The Company aims at stable progresses on the existing basis, and increasing automobile production and sales volume to 600 thousand (100% of Ford’s volume incorporated). Profitable forecast for next year ? Applicable v Not Applicable 6.16 The draft scheme for the profit distribution of 2004 proposed by the Board of Directors v Applicable ? Not Applicable The net profit of 2004 is RMB 1,317,299,675 (RMB 1,197,215 thousand under IFRS), add the retained earning RMB 1,562,812,020, and the profit available to be distributed is RMB 2,880,111,695. Transfer from statement of income to statutory reserve fund is RMB 135,180,290, to statutory common reserve fund is RMB 134,428,687. As to Changan Suzuki, who was included in the consolidation scope, the transfer to staff bonus and welfare fund is RMB 9,690,000, to reserve fund is RMB 100,470,000, to enterprise expansion fund is RMB 27, 540, 000. The retained earning is that of the lower of the two statements of income audited by domestic and foreign audit companies, which is RMB 2,472,802,718 minus the common share dividend RMB 306,666,500 and the common share dividend transferred to the capital RMB 245,333,200, and the result is RMB 1,920,803,018. According to the scheme of the profit distribution, the cash dividend is RMB 3.2 (including tax) per 10 shares, totaled RMB 518,671,744 (including tax). There was no transfer from capital reserve to share capital. No profit distribution scheme although there is profit in the reporting period ? Applicable v Not Applicable §7 Important Matters 7.1 Acquisition of assets v Applicable ? Not applicable The net profit Contributed to Transf Acquired the company Transfer Relate er of Transferring Acquired Price from of Title Title of Purchase Date d Party Pricing Policy Company Assets (RMB acquisition or Not of the the million) date to the assets liability year end (RMB million) 10 Net assets CAC Subsidiari August 31, 2004 2.47 -1.15Yes with book Yes Yes es of CAC value 7.2 Sales of assets v Applicable ? Not applicable 7.1、 7.2 Impact on the consistency of operation and stabilization of management of the Company It is good to combine the sales net of the Company to strengthen the capacity of the sales and there is no harm to the Company’ s financial condition and operating results. 7.3 Significant guarantee ? Applicable v Not Applicable 7.4 Significant related party transaction 7.4.1 Sales and purchase with the related parties v Applicable ? Not applicable In RMB ten thousand Sales or provide service to the related Purchase of the product and service from the Related party parties related parties Transaction Percentage of the same Transaction Percentage of the same amount transaction nature amount transaction nature Chongqing Changan Jinling 5,993.00 0.32% 52,110 3.64% Vehicles Parts Co., Ltd Chongqing Tsingshan 131 0.01% 35,327 2.47% Industries Co., Ltd Chongqing Changan 60,855 98.2.00% Minsheng Logistics Co. Ltd. Total 6,124 0.33% 148,292 9.92% 7.4.2 Debt transactions with related parties v Applicable ? Not applicable (In RMB ten thousand) Fund to Related party Fund from related party Related party Transaction Amount Transaction Amount CAC (Controlling 0.00 0.00 9,500.00 7,500.00 shareholder) Total 0.00 0.00 9,500.00 7,500.00 Including: During the reporting period, the fund the Company provide to the controlling shareholder and its subsidiaries, the transaction and balance are both ZERO. 7.5 Financial management entrustment ? Applicable v Not Applicable 7.6 Commitment ? Applicable v Not Applicable 7.7 Significant litigation v Applicable ? Not applicable In February, 2004, the Company’s subsidiary Changan Automobile Sales Co., Ltd. sued Beifang Pudong Economic and Technology Development Co., Ltd. for disputes over RMB 7,960,000 and RMB 1,500,000 has been executed and Chongqing Wanyou Economic Development Co., Ltd. paid back RMB 2,000,000 and will repay another RMB 3,800,000 by others means. 7.8 Performance of the independent directors Independent Directors’Attendance of the Board Meetings: Name of Times of Times of Times of Times of Independent Attendance Attendance in Entrusted Absence Director Required Person Attendance Guo Konghui 7 4 2 1 Xia Donglin 7 6 1 Wen Zongyu 7 6 1 Gao Zhikai 7 7 Liu Wei 7 7 Disagreement raised by the Independent Directors ? Applicable v Not Applicable §8 Report of the Board of the Supervisors v Applicable ? Not applicable 1. The basic information of the meeting During the reporting period, there are two meetings of the Board of the Supervisors. (1) The third session of the Board of the Supervisors’third meeting was held on March 16, 2004 and the report of the Board of the Supervisors for the year 2003, the annual financial report and the extract for the year 2003, the final financial settlement for the year 2003, the financial budget for the year 2004 and the were discussed and passed. (2) The fourth session of the Board of the Supervisors’third meeting was held on August 1, 2004, and the semi-annual financial report and the extract for the half year 2004 and the proposal of the semi-annual financial report were discussed and passed. 2. The working result of the Board of the Supervisors During the reporting period, all the supervisors of the Company sat in all of the meetings of the Board of the Directors, give their independent opinions and exercise the right of the supervision. In accordance with the Company Law and the Article of the Association, the supervisors exercise following rights: (1) Supervision of the compliance issues of the Company in its operation and management. The Board of Supervisors performed its supervisory duties through sitting in the meetings of Board of Directors. The Board of Supervisors was of the view that the decision-making procedures of the Company were in compliance with the Company Law and the Articles of Association, a proper internal control system had been established, and there had been no violations of the laws, regulations and the Articles of Association and no acts harmful to the interests of the Company by the directors, supervisors and senior managers in fulfilling their duties. (2) Review of the financial status of the company Through its review, the Board of Supervisors was of the view that the financial statements of the Company had been in compliance with relevant standards and regulations and truly reflected the financial status and operating performance of the Company. The auditor of the Company, PricewaterhouseCoopers Zhong Tian Certified Public Accountants issued an unqualified audit report. (3) Supervision of the use of proceeds from the public offering Through its review, the Board of Supervisors was of the view that the proceeds from public offering had been properly used in line with the commitments of the prospectus. (4) Supervision of the acquisition and disposal of the assets Through its review, the Board of the Supervision was of the view that the price of the acquisition and disposal of the assets was fair and reasonable and there is no under-table transaction, no acts harmful to the interests of the shareholders or leading to the loss of company’ s assets. (5) Supervision of the related party transaction Through its review, the Board of Supervisors was of the view that all related party transactions had been conducted fairly with pricing based on the market prices which are fair and there had been no harm done to the interests of the Company. §9 Financial Report 9.1 Audit opinion Unqualified 9.2 Financial report CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands, except per share data Year ended 31 December Note 2004 2003 Sales 4 18,526,610 14,358,768 Sales tax and surcharge (632,618) (370,448) Net sales 17,893,992 13,988,320 Cost of sales (13,973,491) (10,465,301) Gross profit 3,920,501 3,523,019 Distribution costs (1,504,775) (1,194,687) Administrative expenses (1,108,021) (630,150) Other operating income and expenses 132,198 52,539 Profit from operations 5 1,439,903 1,750,721 Finance income –net 6 28,336 45,309 Share of result of associates 14 - 946 Profit before tax 1,468,239 1,796,976 Taxation 8 (147,988) (258,496) Profit before minority interests 1,320,251 1,538,480 Minority interests 33 (123,036) (102,864) Net profit 1,197,215 1,435,616 Basic earnings per share (RMB per share) 9 0.84 1.17 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands As at 31 December Note 2004 2003 ASSETS Non-current assets Property, plant and equipment 11 4,759,172 3,553,950 Land use rights 12 451,556 241,147 Intangible assets 13 176,637 118,307 Investments in associates 14 4,500 4,500 Available-for-sale investments 15 21,780 44,798 Other non-current assets 16 3,982 67,339 Deferred tax assets 17 97,410 100,447 5,515,037 4,130,488 Current assets Inventories 18 3,043,572 1,994,629 Receivables and prepayments 19 1,814,237 1,663,154 Trading investments 20 219,254 - Held-to-maturity investments 21 247,298 99,729 Pledged deposits 22 17,500 10,000 Term deposits with initial terms of over three months 23 423,000 680,000 Cash and cash equivalents 24 3,568,367 2,406,325 9,333,228 6,853,837 Total assets 14,848,265 10,984,325 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands As at 31 December Note 2004 2003 EQUITY Shareholders’equity Ordinary shares 30 1,620,849 1,226,666 Share premium 31 1,743,168 833,438 Reserves 32 1,451,496 1,053,878 Retained earnings 1,943,987 1,696,390 6,759,500 4,810,372 Minority interests 33 1,144,218 947,461 LIABILITIES Non-current liabilities Borrowings 26 535,000 245,000 Retirement benefit obligations 28 21,976 19,884 Deferred income 29 369,613 - 926,589 264,884 Current liabilities Trade and other payables 25 5,236,788 4,366,684 Current tax liabilities (17,032) 121,056 Borrowings 26 523,943 277,759 Provisions 27 274,259 196,109 6,017,958 4,961,608 Total liabilities 6,944,547 5,226,492 Total equity and liabilities 14,848,265 10,984,325 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED SATATEMENT OF CHANGES IN SHAREHOLDERS’EQUTIY FOR THE YEAR ENDED 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands Share Share Retained Note capital premium Reserves earnings Total (Note 30) (Note 31) (Note 32) Balance at 1 January 2003 1,226,666 833,438 627,955 784,830 3,472,889 Dividend relating to 2002 - - - (98,133) (98,133) Net profit for the year - - - 1,435,616 1,435,616 Reserve transfer - - 425,923 (425,923) - Balance at 1 January 2004 1,226,666 833,438 1,053,878 1,696,390 4,810,372 Cash dividend relating to 2003 10 - - - (306,667) (306,667) Bonus share relating to 2003 30 245,333 - - (245,333) - Issue of shares 30 148,850 909,730 - - 1,058,580 Net profit for the year - - - 1,197,215 1,197,215 Reserve transfer 32 - - 397,618 (397,618) - Balance at 31 December 2004 1,620,849 1,743,168 1,451,496 1,943,987 6,759,500 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands Year ended 31 December Note 2004 2003 Cashflow from Operating Activities Cash generated from operations 35 1,687,480 1,882,912 Tax paid (234,981) (270,760) Net cash generated from operating activities 1,452,499 1,612,152 Cashflow from Investing Activities Proceeds from disposal of property, plant and equipment 35 17,255 2,613 Proceeds from disposal of land use rights - 1,780 Decrease in term deposits with initial terms of over three months 257,000 - Investment income from securities investment 9,275 958 Cash received in relation to obtaining government grant 78,561 - Sub-total of cash inflow 362,091 5,351 Purchase of property, plant and equipment (1,470,312) (1,129,241) Purchase of land use rights (99,915) (27,302) Purchase of intangible assets (2,784) (14,310) Purchase of deferred assets (1,941) (1,288) Purchase of held-to-maturity investment (172,432) - Increase in term deposits with initial terms of over three months - (223,950) Purchase of available-for-sale investments - (2,900) Acquisition of a jointly controlled entity, net of cash acquired - (139,313) Acquisition of subsidiaries, net of cash acquired 34 (2,008) - Cash paid relating to other investing activities - (6,800) Sub-total of cash outflow (1,749,392) (1,545,104) Net cash used in investing activities (1,387,301) (1,539,753) CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2004 All amounts in Renminbi (“RMB”) thousands Year ended 31 December Note 2004 2003 Cashflow from Financing Activities Contribution from minority shareholders 56,900 2,650 Gross proceeds from issue of shares 1,100,002 - Proceeds from borrowings 911,270 416,259 Sub-total of cash inflow 2,068,172 418,909 Repayment of borrowings (375,086) (260,000) Payment of interest expenses (28,132) (16,352) Dividends paid to shareholders (306,667) (98,133) Dividends paid to minority shareholders (18,130) (18,620) New share issue expenses (41,422) - Increase in pledged deposits (7,500) - Sub-total of cash outflow (776,937) (393,105) Net cash generated from financing activities 1,291,235 25,804 Net Increase in cash and cash equivalents 1,356,433 98,203 Cash and cash equivalents at beginning of year 2,506,054 2,407,851 Cash and cash equivalents at end of year 24 3,862,487 2,506,054 9.3 The explanation to the changes in accounting policies of this reporting period, accounting estimations and calculation methods as compared with the latest annual report. ? Applicable v Not Applicable 9.4 Significant accounting errors, the correction amount, the reason and the impact ? Applicable v Not Applicable 9.5 The explanation to the changes of the consolidation scope of this reporting period as compared with the latest annual report. v Applicable ? Not applicable Jiangxi Jiangling Holding Co., Ltd. and additional sales offices were added to the consolidation scope of the Company