长安汽车(000625)长安Ｂ2005年年度报告摘要（英文版）

Chongqing Changan Automobile Limited Company Extracts of 2005 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 Guo Xuewu On Business 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. Zhang Baolin, and Chief Accountant Mr. Cui Yunjiang guarantee the truthfulness and completeness of the financial statements of the annual report. 1.6 This report will be compiled in Chinese and English, and when there is different understanding of the two editions, please depend on the report in Chinese. §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 023-67594009 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 2005 2004 2003 （％） Sales 19,168,550 18,526,610 3.46% 14,358,768 Profit before tax 240,913 1,468,239 -83.59% 1,796,976 Net profit 199,309 1,197,215 -83.35% 1,435,616 Net cash flow from 1,361,892 1,452,499 1,612,152 operating activities -6.24% December 31, 2005 December 31, 2004 Increase/Decrease December 31, 2003 （％） Total assets 18,793,387 14,848,265 26.57% 10,984,325 Shareholders’ equity 6,759,500 4,810,372 （excluding minority 6,440,137 interest） -4.72% 3.2 Key financial indicator (In RMB Yuan) Increase/Decrease 2005 2004 2003 （％） Earnings per share 0.12 0.84 -85.71% 1.17 Return on net asset 3.09% 17.71% 29.84% -82.55% Net cash flow from operating activities 0.84 0.90 1.31 per share(Rmb thousand yuan) -6.67% Increase/Decrease 2005 2004 2003 （％） Net asset per share 3.97 4.17 -4.80% 3.92 Adjusted net assets 3.74 per share 3.67 4.15 -11.57% Note: If any change happened in the period from the end the report period to the disclosure day, the calculation above is based on the shares changed. 3.3 Reconciliation of net profits presented under the PRC accounting standards and International Financial Reporting Standards (“IFRS”) √ Applicable □ Not applicable (In RMB thousand) Net assets Net profit attributable to attributable to the Company’s the Company’s equity holders equity holders RMB’000 RMB’000 As reported in the accounts of the Group under PRC 6,731,717 236,750 accounting regulations 1. Staff and workers’ bonus and welfare fund charged to - (15,380) income statement 2. Reversal of revaluation made in 1995 (14,597) 859 3. Deferred income tax 178,729 88,175 4. Government grants relating to assets (243,660) 11,881 5 Government grants relating to income - 45,671 6. Tax credit arising from purchase of domestically (37,824) 3,836 manufactured machinery and equipment 7. Reversal of amortisation of goodwill 9,421 9,421 8. Pre-operating expense of Changan Ford Mazda and new (105,474) (105,474) branch of Changan Ford 9. Provision for impairment of goodwill (75,442) (75,442) 10. Liabilities not to be settled - 2,857 11. Difference in share of result of associates (3,918) (3,918) 12. Others 1,185 73 As restated in conformity with IFRS 6,440,137 199,309 §4 Changes in Shareholdings and Information on Shareholders 4.1 Change in shareholdings Balance before current Addion or change Deduction Balance after change Quantity Rate Total Quantity Rate I.Non-circulated shares 850,399,200 52.47% 0 850,399,200 52.47% 1. Promoter shares 850,399,200 52.47% 0 850,399,200 52.47% Including: State-owned legal person 52.47% 52.47% shares 850,399,200 0 850,399,200 Domestic legal person shares 0 0.00% 0 - 0.00% Foreign legal person shares 0 0.00% 0 - 0.00% Others 0 0.00% 0 - 0.00% 2. Legal entity shares raised 0 0.00% 0 - 0.00% 3. Employee shares 26,766 0.00% 0 26,766 0.00% 4.Preference shares and others 0 0.00% 0 - 0.00% II. Circulated shares 770,423,234 47.53% 0 770,423,234 47.53% 1.Domestic listed RMB shares 21.62% 0 21.62% 350,423,234 350,423,234 2.Domestic listed foreign shares 420,000,000 25.91% 0 420,000,000 25.91% 3.Overseas listed foreign shares 0 0.00% 0 - 0.00% 4. Others 0 0.00% 0 - 0.00% III. Total shares 1,620,849,200 100.00% 0 1,620,849,200 100.00% 4.2 The largest ten shareholders Total shareholders at the end of the reporting period 61,915 The largest ten share holders Non-circulated % of total Shares held at Pledged/ Frozen Name of shareholders Shareholders shares held at shares the year-end shares the year-end 1.CHANGAN AUTOMOBILE State-owned 52.47% 850,399,200 850,399,200 354,333,000 GROUP COMPANY (“CAC”) CMBLSA RE FTIF TEMPLETON Foreign 2.41% 38,991,758 0 Unknown ASIAN GRW FD GTI 5496 A share Unknown 1.14% 18,503,714 0 National social security fund 108 share-holder EMERGING MARKETS Unknown Foreign 1.01% 16,448,057 0 GROWTH FUND INC BOSHI VALUE ADDED Unknown A share SECURITIES INVESTMENT 0.94% 15,228,959 0 share-holder FUND MORGANSTANLEY INT'L Unknown Foreign 0.75% 12,087,132 0 (CHINA)-FIRM TEMPLETON EMERGING Unknown MARKETS INVESTMENT Foreign 0.73% 11,837,000 0 TRUST VALUE PARTNERS CLASSIC Unknown Foreign 0.68% 10,977,610 0 FUND BBH BOS S/A FIDELITY FD - Unknown Foreign 0.62% 10,000,000 0 CHINA FOCUS FD A share Unknown 0.52% 8,400,000 0 National social security fund 102 share-holder Top ten circulated share holders Name of Shareholders Shares at the year-end Type of Shares CMBLSA RE FTIF TEMPLETON ASIAN GRW FD 38,991,758 B share GTI 5496 National social security fund 108 18,503,714 A share EMERGING MARKETS GROWTH FUND INC 16,448,057 B share BOSHI VALUE ADDED SECURITIES 15,228,959 A share INVESTMENT FUND MORGANSTANLEY INT'L (CHINA)-FIRM 12,087,132 B share TEMPLETON EMERGING MARKETS B share 11,837,000 INVESTMENT TRUST VALUE PARTNERS CLASSIC FUND 10,977,610 B share BBH BOS S/A FIDELITY FD - CHINA FOCUS B share 10,000,000 FD National social security fund 102 8,400,000 A share DIT-RCM ASIAN SELECTIONS FUND 7,590,879 B share PLC Among the largest ten share holders, Changan Automobile Group Company had no relationship with other share holders, and nor was the party who agreed to act alike as stipulated in Administrative Measures on Information Disclosure Concerning Changes in Shareholdings of Listed Companies. The company did not know whether there was relationship among the large ten circulated shareholders , and nor knew whether they were the parties who agreed to act alike as stipulated in Administrative Measures on Information Disclosure Concerning Changes in Shareholdings of Listed Companies. Explanation on the relationship and the action alike of above shareholders 4.3 Information on the controlling shareholder 4.3.1 Change in the controlling shareholders □ Applicable √ Not Applicable Name of new controlling shareholder China South Automobile Co., Ltd Name of new ultimate controlling shareholder Change date March 30, 2006 April 1, 2006 Publication of new controlling shareholder China Securities, Securities Daily and Hong Kong Business Publication of new ultimate controlling shareholder 4.3.2 Information on the controlling shareholders and other actual controllers The largest shareholder: China South Automobile Co., Ltd Legal representative: Xu Bin Date of establishment: December 26, 2005 Registered capital: RMB 4,582,373,700 Business scope and major products: Automobile, autocycle, Engine of automobile and autocycle, designing, development, manufacture, and sales of spare parts; sales of Optical products, electronic and photoelectron products, 夜视 equipment, information and communication equipment; technical development, technical transfer, technical consultation, technical training, and other technical service relative with the operation mentioned above; imports and exports; merge and acquisition and consultation about reconstruction of capita The ultimate parent of the controlling shareholder : China South Industries Group Legal representative: Xu Bin Date of establishment: June 29, 1999 Registered capital: RMB 12,645,210,000 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. 4.3.3 Relationship among the Company and its controlling shareholders China South Industries Group 100% China South Automobile Co., Ltd 52.47% Chongqing Changan Automobile Co., Ltd. §5 Information on Directors, Supervisors and Seniors Shares held Remuneation Whether or not getting in 2005 remuneation Name Position Gender Age Term of office from shareholders At beginning of At end of Reasons for or other related year year change parties Yin Jiaxu Chairman M 49 2003.05-2006.05 5,040 5,040 0.00 Y Xu Liuping Deputy Chairman, M 41 2003.05-2006.05 0 0 0.00 Y Zhang Baolin Director, General M 43 2003.05-2006.05 0 0 34.96 N manager Deng Tengjiang Director M 49 2003.05-2006.05 0 0 0.00 Y Wang Tingwei Director M 34 2005.05-2006.05 0 0 0.00 Y Zhao Luchuan Director M 52 2003.05-2006.01 5,040 5,040 37.75 N Wang Chongsheng Director M 47 2003.05-2006.05 5,040 5,040 0.00 Y Guo Xuewu Director M 49 2003.05-2006.05 0 0 0.00 Y Ma Jun Director M 46 2003.05-2006.05 0 0 0.00 Y Cui Yunjiang Director, Deputy General M 42 2003.05-2006.05 0 0 16.63 N Manager, Board Secretary Guo Konghui Independent Director M 70 2003.05-2006.05 0 0 5 N Xia Donglin Independent Director M 44 2003.05-2006.05 0 0 5 N Gao Zhikai Independent Director M 43 2003.05-2006.05 0 0 5 N Wen Zongyu Independent Director M 42 2003.05-2006.05 0 0 5 N Liu Wei Independent Director M 41 2003.05-2006.05 5 N Shi Yubao Organizer of the Board M 52 2003.05-2006.05 0 0 0.00 Y of Supervisors Peng Minggeng Supervisor M 55 2003.05-2006.05 5,040 5,040 0.00 Y Zhou Xiaying Supervisor F 56 2003.05-2006.05 6,606 6,606 0.00 Y Cao Dongping Supervisor F 52 2003.05-2006.05 0 0 0.00 Y Xiong Huilin Supervisor F 46 2003.05-2006.05 0 0 11.11 N Zhu Zhiping Supervisor M 43 2003.05-2006.05 0 0 9.92 N Hua Dubiao Supervisor M 40 2003.05-2006.05 0 0 9.87 N Fu Xiangyu Supervisor F 50 2003.05-2006.05 0 0 7.36 N Zhu Huarong Senior Deputy General M 40 2003.04-2006.04 0 0 N 34.91 Manager Huang Zhongqiang Senior deputy general M 37 2003.04-2006.04 0 0 N 34.98 manager Jia Tingyue Deputy general manager M 42 2003.04-2006.04 0 0 27.51 N Zou Yi Deputy general manager M 42 2003.04-2006.04 0 0 20.56 N Cui Xiaomei Deputy general manager F 50 2003.04-2006.04 0 0 15.51 N Li Jun Board Secretary F 36 2003.04-2006.04 0 0 6.09 N Total - - - - 26,766 26,766 - 292.16 - §6 Report by the Board of the Directors 6.1 Operation discussion and analysis The year 2005 has seen a vital period for accomplishing the Tenth Plan and linking up the Eleventh Plan. On the adverse condition that competition in the automobile industry was more and more severe, the Profit-making space kept shrinking, the price of raw materials, such as steel and oil, climbed up continually, and the customers held cash rather than consuming in China at large, the Company carried out the “3337” strategy seriously, worked hard, and made unceasing progress. Finally, it stood the racket from unprecedented keen competition in domestic automobile market, made a new comprehensive development, and achieved the yearly objective of production and operation. In 2005, the Company totally produced 489,368 vehicles, a 2.95% increase from 2004. And a total number of 474,625 vehicles were sold, a 4.48% increase from 2004. The Company has 8.24% share in the national automobile market. Item 2005 2004 （%） Sales 19,168,550 18,526,610 3.46% Profit from major business 3,022,160 3,920,501 -22.91% lines Net profit 199,309 1,197,215 -83.35% During the reporting year, a 3.46% in sales increase from 2004, mainly due to the sales of Changan Ford and Hebei Changan increased 77,799and 100,588 ten thousand respectively. During the reporting year, a 22.91% in Profit of sales and a 82.35% in Net profit decrease from 2004, because the Company’s profitability descended for the adjustment in selling price of Changan automobile series and changes in structure of selling variety, and, in the meantime, the selling expense and running expense rose, leading to the Profit from major business lines decreased by 84.65%; the net profit of Changan Ford declined by 72.70% for the adjustment in selling price and the rise of tariff rate; and the net profit of Changan Suzuki declined by 57.18% for decrease in sales volume, the adjustment in selling price, and changes in structure of selling variety. 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 Sales revenue Cost of sales product (%) revenue (％) sales (％) margin (%) Automobile 1,916,855 3.46% 1,542,354 10.33% 15.91% -24.70% Major business analysis per specific products Mini car 1,027,379 3.32% 830,765 10.91% 15.51% -27.04% Sedan 814,097 -0.78% 654,281 5.25% 16.01% -23.11% 6.3 Business operation by area (RMB ten thousand) Area Sales revenue Increase/decrease（％） Domestic 1,894,175 2.96% Overseas 22,680 75.41% 6.4 The utilization of proceeds from previous public offerings (‘the proceeds “) √ Applicable □ Not Applicable The condition of changed item √ Applicable □ Not Applicable Changes in projects √ Applicable □ Not Applicable 6.5 The use of proceeds not derived from the proceeds from public offering. (in 10 Thousand) √ Applicable □ Not Applicable No. Investment project Funds injected Project stage Earnings 1 Automobile production line 28,179 In progress 2 Engine production line 9,601 In progress 3 Technology Development In progress Included in the overall earnings Centre 10,712 of the Company 4 ERP project 550 In progress 5 Others 1,350 In progress Total 50,392 6.6 Note for the “non-standard opinion” issued by Certified Public Accountants □ Applicable √ Not Applicable 6.7 The draft scheme for the profit distribution of 2005 proposed by the Board of Directors √ Applicable □ Not Applicable The net profit of 2005 is RMB 236,750,289 (RMB 199,309 thousand under IFRS), add the retained earning RMB 1,920,803,018 and the profit available to be distributed is RMB 2,157,553,307. Transfer from statement of income to statutory reserve fund is RMB 26,902,294, to statutory common reserve fund is RMB 23,711,851. As to Changan Suzuki and Chang Ford, who was included in the consolidation scope, the transfer to staff bonus and welfare fund is RMB 15,380,000, to reserve fund is RMB40,800,000, to enterprise expansion fund is RMB11,220,000. The retained earning is RMB 2,039,539,162 and the common share dividend transferred to the capital RMB518,671,744, and the result is RMB 1,520,867,418(RMB 1,424,739 thousand under IFRS). According to the scheme of the profit distribution, the cash dividend is RMB 0.60 (including tax) per 10 shares, totalled RMB 97,250,952 (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 √ Not Applicable §7 Important Matters 7.1 Acquisition of assets √ Applicable □ Not applicable 7.2 Sales of assets √ Applicable □ Not applicable 7.3 Significant guarantee □ Applicable √ Not Applicable 7.4 Significant related party transaction 7.4.1 Sales and purchase with the related parties √ Applicable □ Not applicable In RMB ten thousand Sales or provide service to the related Purchase of the product and service from the parties related parties Related party Transaction Percentage of the same Transaction Percentage of the same amount transaction nature amount transaction nature Chongqing Changan Jinling 10,781.00 0.56% 52,989.00 3.31% Vehicles Parts Co., Ltd Chongqing Tsingshan 103.00 0.01% 33,318.00 2.08% Industries Co., Ltd Wanyou Economic Technological 43,878.00 2.29% 0.00 0.00% Development Co.,Ltd Chongqing Wanyou Economic 39,864.00 2.08% 8,443.00 0.53% Development Co., Ltd. Chongqing Changan 0.00 0.00% 71,294.00 98.79% Minsheng Logistics Co. Ltd. Total 94,626.00 4.94% 166,044.00 20.37% Note: During the reporting period, the amount of transaction that the Company sold product or provided service to related parties totalled RMB 51.75 million. 7.4.2 Debt transactions with related parties √ Applicable □ Not applicable About cash-impropriated and scheme of paying it back √ Applicable □ Not applicable To ensure this scheme of paying cash-impropriated back solve the problem of the cash to be improriated before the end of year 2006. √ Applicable □ Not applicable 7.5 Financial management entrustment □ Applicable √ Not Applicable 7.6 Commitment □ Applicable √ Not Applicable 7.6.1 Commitment of share reform 1. Description about the commitment a. Comply with laws, rules and regulations, and perform legal duty of commitment. b. Since the non-circulated shares are entitled to be circulated, can’t deal with or transfer it within 24 months. At the expiration of 24 months, the shareholders of non-circulated shares can sell the shares in exchange in amount of no more than 5% of total within 12 month, and no more than 10% of total within 24 months. c. After the reform of non-tradable shares, perform the scheme of incentive share awards for the management according to government regulation. 2. Performing the commitment After the completion of share reform, the controlling shareholder will perform the duty mentioned above. 3. Violating the commitment 7.6.1 Other commitment 7.7 Significant litigation √ Applicable □ Not applicable §8 Report of the Board of the Supervisors √ 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 fifth session of the Board of the Supervisors’ third meeting was held on April 13, 2005 and the report of the Board of the Supervisors for the year 2004, the annual financial report and the extract for the year 2004, the final financial settlement for the year 2004, and proposal of related-party transactions were discussed and passed. (2) The sixth session of the Board of the Supervisors’ third meeting was held on August 23, 2005, and the semi-annual financial report and the extract 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 9.2.1 Financial report CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands As at 31 December Note 2005 2004 ASSETS Non-current assets Property, plant and equipment 5 6,047,177 4,759,172 Land use rights 6 505,766 451,556 Intangible assets 7 104,677 176,637 Investments in associates 8 1,350,472 4,500 Available-for-sale financial assets 9 99,589 21,780 Other non-current assets 10 141,268 3,982 Deferred income tax assets 11 201,205 97,410 8,450,154 5,515,037 Current assets Inventories 12 3,883,668 3,043,572 Trade and other receivables 13 2,673,338 1,814,237 Held-to-maturity investments 14 - 247,298 Other financial assets at fair value through profit or 15 - 219,254 loss Restricted cash 16 86,650 157,952 Cash and cash equivalents 17 3,699,577 3,850,915 10,343,233 9,333,228 Total assets 18,793,387 14,848,265 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands As at 31 December 2005 2004 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 1,620,849 1,620,849 Share premium 1,743,168 1,743,168 Other reserves 1,554,130 1,451,496 Retained earnings 1,424,739 1,425,315 Proposed final dividends 97,251 518,672 6,440,137 6,759,500 Minority interests 1,657,997 1,144,218 Total equity 8,098,134 7,903,718 LIABILITIES Non-current liabilities Borrowings 964,039 535,000 Deferred income tax liabilities 71,853 - Retirement benefit obligations 22,690 21,976 Deferred income 361,774 369,613 Other non-current liabilities 17,343 - 1,437,699 926,589 Current liabilities Trade and other payables 7,840,699 5,236,788 Current income tax liabilities (17,032) Borrowings 1,078,937 523,943 Provisions for other liabilities and charges 347,511 274,259 9,257,554 6,017,958 Total liabilities 10,695,253 6,944,547 Total equity and liabilities 18,793,387 14,848,265 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands, except per share data Year ended 31 December 2005 2004 Sales 19,168,550 18,526,610 Sales tax and surcharge (694,395) (632,618) Net sales 18,474,155 17,893,992 Cost of goods sold (15,451,995) (13,973,491) Gross profit 3,022,160 3,920,501 Selling and marketing costs (1,621,357) (1,504,775) Administrative expenses (1,412,428) (1,145,692) Other income 215,615 236,375 Operating profit 203,990 1,506,409 Finance costs (52,243) (38,170) Share of results of associates 89,166 - Profit before income tax 240,913 1,468,239 Income tax expense 31,013 (147,988) Profit for the year 271,926 1,320,251 Attributable to: Equity holders of the Company 199,309 1,197,215 Minority interests 72,617 123,036 271,926 1,320,251 Earnings per share for profit attributable to the equity holders of the Company during the year (RMB per share) － Basic and diluted 0.12 0.84 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED SATATEMENT OF CHANGES IN EQUTIY FOR THE YEAR ENDED 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands Minority Total Attributable to equity holders of the Company interest Equity Proposed Share Share Other Retained final capital premium reserves earnings dividends Balance at 1 January 2004 1,226,666 833,438 1,053,878 1,144,390 552,000 947,461 5,757,833 Cash dividend relating to - - - - (306,667) - (306,667) 2003 Bonus share relating to 245,333 - - - (245,333) - - 2003 Proposed final dividends - - - (518,672) 518,672 - - relating to 2004 Issue of shares 148,850 909,730 - - - - 1,058,580 Net profit for the year - - - 1,197,215 - 123,036 1,320,251 Reserve transfer - - 397,618 (397,618) - - - Newly incorporated - - - - - 50,000 50,000 subsidiaries Dividends paid to minority - - - - - (18,130) (18,130) shareholders Additional share of net - - - - - 35,137 35,137 assets by minority shareholders due to additional injection by the Company Increase in net assets due - - - - - 6,900 6,900 to additional injection from minority shareholders Others - - - - - (186) (186) Balance at 31 December 1,620,849 1,743,168 1,451,496 1,425,315 518,672 1,144,218 7,903,718 2004 Cash dividend relating to - - - - (518,672) - (518,672) 2004 Proposed final dividends - - - (97,251) 97,251 - - relating to 2005 Net profit for the year - - - 199,309 - 72,617 271,926 Reserve transfer 102,634 (102,634) - - - Newly incorporated - - - - - 300 300 subsidiaries Dividends paid to minority - - - - - (6,000) (6,000) shareholders Additional capital injection - - - - - 450,000 450,000 by minority shareholders Transfer shares to the - - - - - (4,900) (4,900) Company Additional share of net - - - - - 1,762 1,762 assets by minority shareholders due to additional injection by the Company Balance at 31 December 1,620,849 1,743,168 1,554,130 1,424,739 97,251 1,657,997 8,098,134 2005 CHONGQING CHANGAN AUTOMOBILE CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands Year ended 31 December 2005 2004 Cash flows from operating activities Cash generated from operations 1,412,264 1,629,749 Income tax paid (50,372) (234,981) Net cash generated from operating activities 1,361,892 1,394,768 Cash flows from investing activities Proceeds from disposal of property, plant and equipment 10,805 17,255 Proceeds from disposal of land use rights 432 - Decrease in held-to maturity investments 172,432 - Investment income from financial assets 4,542 9,275 Receipt of government grants 9,039 78,561 Interest received 65,127 57,731 Sub-total of cash inflow 262,377 162,822 Purchase of property, plant and equipment (1,677,950) (1,470,312) Purchase of land use rights (65,400) (99,915) Purchase of intangible assets (12,547) (2,784) Purchase of deferred assets (2,619) (1,941) Purchase of held-to-maturity investments - (172,432) Purchase of available-for-sale financial assets (80,000) - Purchase of subsidiary’s shares from minority shareholders (2,500) - Acquisition of subsidiaries, net of cash acquired - (2,008) Sub-total of cash outflow (1,841,016) (1,749,392) Net cash used in investing activities (1,578,639) (1,586,570) HONGQING CHANGAN AUTOMOBILE CO., LTD. C ONSOLIDATED CASH FLOW STATEMENT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2005 All amounts in Renminbi (“RMB”) thousands Year ended 31 December Note 2005 2004 Cash flows from financing activities Contribution from minority shareholders 300 56,900 Gross proceeds from issuance of shares - 1,100,002 Proceeds from borrowings 1,772,766 911,270 Decrease in restricted cash 71,302 21,615 Sub-total of cash inflow 1,844,368 2,089,787 Repayment of borrowings (1,474,054) (375,086) Interest paid (74,353) (28,132) Dividends paid to shareholders (518,672) (306,667) Dividends paid to minority shareholders (6,000) (18,130) Share issuance expenses - (41,422) Sub-total of cash outflow (2,073,079) (769,437) Net cash (used in)/generated from financing activities (228,711) 1,320,350 Net (decrease)/increase in cash and cash (445,458) 1,128,548 equivalents Cash and cash equivalents at beginning of year 4,145,035 3,016,487 Cash and cash equivalents at end of year 17 3,699,577 4,145,035 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 √ Not Applicable 9.4 Significant accounting errors, the correction amount, the reason and the impact □ Applicable √ Not Applicable 9.5 The explanation to the changes of the consolidation scope of this reporting period as compared with the latest annual report. √ Applicable □ Not applicable The consolidation scope added Changan Ford Mazda Motor Co., Ltd. The Company hold 50% shares of Changan Ford Mazda Motor Co., Ltd. Based on the Article of Association, the Company co-controlled it with other investors, and adopt the method of consolidated by proportion. Changan Ford Mazda Motor Co., Ltd has not open its business yet by the end of December 31, 2005