Chongqing Changan Automobile
Company Limited
2018 Annual Report
April, 2019
Chapter 1 Important Notice, Contents, and Definitions
The Board of Directors, the Board of Supervisors, Directors, Supervisors and SeniorExecutives of our company hereby guarantee that no false or misleading statement or majoromission was made to the materials in this report and that they will assume all the responsibilities,individually and jointly, for the trueness, accuracy and completeness of the contents of this report.
The Chairman of the Board Zhang Baolin, the Chief Financial Officer Zhang Deyong and theresponsible person of the accounting institution (Accountant in charge) Chen Jianfeng herebydeclare that the Financial Statements enclosed in this annual report are true, accurate and complete.
Except the following directors, all the directors attended the board meeting for reviewing theannual report.
| The name of the directors absent | Positions | Reasons for the absence | Name of the consignee |
| Zhu Huarong | Directors | Business trip | Zhang Deyong |
| Zhou zhiping | Directors | Business trip | Zhang Dongjun |
| Tan Xiaogang | Directors | Business trip | Zhang Deyong |
| Liu Jipeng | Independent Directors | Business trip | Wei Xinjiang |
| Li Qingwen | Independent Directors | Business trip | Pang Yong |
The prospective description regarding future business plan and development strategy in thisreport does not constitute virtual commitment. The investors shall pay attention to the risk.
The preplan profit distribution of the Company deliberated and approved by the Board is:
taking the total shares 4,802,648,511 as of Dec. 31, 2018 as the radix, sending cash dividends ofRMB 0.18 Yuan (tax included) per every 10 shares to all shareholders, and not converting capitalreserve into share capital.
CONTENTS
Chapter 1 Important Notice, Contents, and Definitions ...... 1
Chapter 2 Company Profile & Main Financial Indexes ...... 4
Chapter 3 Analysis of Main Business ...... 9
Chapter 4 Business Discussion and Analysis ...... 11
Chapter 5 Important Matters ...... 32
Chapter 6 Changes in the shareholding of the company and shareholders ...... 45Chapter 7 Information about Directors, Supervisors, Senior Management andEmployees ...... 52
Chapter 8 Corporate Governance ...... 66
Chapter 9 Corporate Bonds ...... 72
Chapter 10 Auditor’s Report ...... 73
Chapter 11 Documents for Future Reference ...... 208
Definitions
| Items | Definitions | |
| Changan Auto., the Company | Refers to | Chongqing Changan Automobile Company Limited |
| South Industries | Refers to | China South Industries Group Co., Ltd., the Company’s actual controller |
| China Changan | Refers to | China Changan Automobile Group Co., Ltd., old name: China South Industries automobile Co., Ltd., a subsidiary company of South Industries |
| Changan Industry | Refers to | Chongqing Changan Industry (Group) Co., Ltd., old name: Changan Automobile Co., Ltd., Changan Automobile (Group) Co., Ltd., a subsidiary company of South Industries, the controlling shareholder of the Company before December, 2005 |
| Nanjing Changan | Refers to | Nanjing Changan Automobile Co., Ltd., a subsidiary company of the Company |
| Hebei Changan | Refers to | Hebei Changan Automobile Co., Ltd., a subsidiary company of the Company |
| Hefei Changan | Refers to | Hefei Changan Automobile Co., Ltd., a subsidiary company of the Company |
| Changan Bus | Refers to | Baoding Changan Bus Co., Ltd. , a subsidiary company of the Company |
| International Company | Refers to | Chongqing Changan Automobile International Sale Service Co., Ltd. , a subsidiary company of the Company |
| Changan Suzuki | Refers to | Chongqing Changan Suzuki Auto. Co.Ltd., a subsidiary company of the Company |
| Changan Ford | Refers to | Changan Ford Automobile Co. Ltd,，a JV of the Company |
| Changan Mazda | Refers to | Changan Mazda Automobile Co. Ltd, a JV of the Company |
| CME | Refers to | Changan Mazda Engine Co. Ltd, a JV of the Company |
| CAPSA | Refers to | Changan PSA Automobiles Co., Ltd，a JV of the Company |
| Jiangling Holding | Refers to | Jiangling Holding Co., a JV of the Company |
| Changan Finance | Refers to | Changan Auto Finance Co.Ltd Company's Joint Stock Company |
| Financial Co. of CSGC | Refers to | Financial Co. of China South Industries Group Co., Ltd. , |
| UPI | Refers to | United Prosperity (Hong Kong)Investment Co., Ltd,a subsidiary company of China Changan |
| Hafei Group | Refers to | Harbin Hafei Automobile Industry Group Co., Ltd., a subsidiary company of China Changan |
| CMAL | Refers to | Chongqing Changan Minsheng APLL Logistics Co., Ltd, a Joint Stock Company of China Changan. |
Chapter 2 Company Profile & Main Financial Indexes
I. Basic Information
| Stock abbreviation | Changan Automobile 、Changan B | Stock Code | 000625、200625 |
| Listed on | Shenzhen Stock Exchange | ||
| Company in Chinese name | 重庆长安汽车股份有限公司 | ||
| Company abbreviation in Chinese name | 长安汽车 | ||
| Company name in English | Chongqing Changan Automobile Company Limited | ||
| Legal representative | Zhang Baolin | ||
| Registered address | No. 260, East Jianxin Road Jiangbei District, Chongqing | ||
| Post code of the registered address | 400023 | ||
| Office address | No. 260, East Jianxin Road, Jiangbei District, Chongqing | ||
| Post code of the office address | 400023 | ||
| Website | http://www.changan.com.cn | ||
| E-mail address | cazqc@changan.com.cn | ||
Ⅱ. Contact Information
| Secretary of the Board of Directors | Securities affairs representative | |
| Name | Li Jun | |
| Contact address | No. 260, East Jianxin Road, Jiangbei District, Chongqing | |
| TEL: | 023-67594008 | |
| FAX: | 023-67866055 | |
| E-mail address | cazqc@changan.com.cn |
Ⅲ. Information Disclosure and Filing Site
| Newspaper selected by the Company for information disclosure | China Securities Journal, Securities Daily and Hong Kong Commercial Daily |
| Website selected by CSRC for publishing this annual report | www.cninfo.com.cn |
| The place where this annual report is prepared and kept | Secretary's Office of Board of Directors |
IV. Changes of Registration Information
| Organization Code | 9150000020286320X6 |
| Changes in the main business since the company's listing | Not applicable |
| All previous changes of dominant stockholders | In July 2009, with the approval of State Administration for Industry and Commerce, “China South Industries Automobile Company Limited”, changed its name to “China Changan Automobile Group Co., Ltd.”. With the change of its name, no change occurred in its property, ownership and control relation of the Company. |
V. Other Relevant Information
The accounting firm employed by the Company:
| Name of the accounting firm | Ernst & Young Hua Ming LLP (Special Ordinary Partner) |
| Address of the accounting firm | Level 16, Ernst & Young Tower, Oriental Plaza, No. 1 East Chang An Avenue, Dong Cheng District, Beijing, China |
| Name of the certified public accountant for signature | Qiao Chun, Hu Yan |
The recommendation agency engaged by the Company executing the persistent supervision responsibilities in thereporting period
□ Applicable √ Not applicable
The financial consultant engaged by the Company performing the duties of persistent supervision and guidance inthe reporting period
√ Applicable □ Not applicable
| Financial Consultant | Address of financial consultant | Name of financial consultant | Supervision duration |
| Shanghai Realize Investment Consulting Co., Ltd. | No.639,Xinhua Road, Shanghai | Ye Suqin | September 2016 - September 2020 |
VI. Summary of Accounting Data and Financial Indexes
Does the company conduct the retrospective adjustment or restatement of previous years accounting data due to changes inaccounting policies or accounting errors?□Yes √ No
| 2018 | 2017 | Increase/decrease on a y-o-y basis (%) | 2016 | |
| Operating revenue (Yuan) | 66,298,270,389.77 | 80,012,205,182.37 | -17.14% | 78,542,441,757.19 |
| Net profit belonging to shareholders of the listed company (Yuan) | 680,728,392.03 | 7,137,234,723.47 | -90.46% | 10,285,284,120.57 |
| Net profit belonging to shareholders of the listed company after deduction of non-recurring profit and loss (Yuan) | -3,165,070,272.21 | 5,716,114,648.34 | -155.37% | 9,448,723,644.17 |
| Net cash flow arising from operating activities (Yuan) | -3,887,475,302.44 | -1,123,470,776.83 | -246.02% | 2,286,551,305.20 |
| Basic earnings per share (Yuan/Share) | 0.14 | 1.49 | -90.60% | 2.19 |
| Diluted earnings per share (Yuan/Share) | Not applicable | Not applicable | Not applicable | Not applicable |
| Return on equity (ROE) (%) | 1.45% | 15.65% | Down 14.20 Points | 26.81% |
| End of 2018 | End of 2017 | Increase/decrease of the end of current year compared with that of the previous year (%) | End of 2016 | |
| Total assets (Yuan) | 93,488,854,098.95 | 106,125,114,622.69 | -11.91% | 106,510,473,733.93 |
| Net assets belonging to shareholders of the listed company (Yuan) | 46,244,958,676.52 | 47,598,690,942.28 | -2.84% | 43,573,812,403.87 |
VII. The differences between domestic and international accounting standards
(1).Simultaneously pursuant to both Chinese accounting standards and international accounting standards disclosed in the financialreports of differences in net income and net assets.□ Applicable √ Not applicableNo difference.(2). Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards.□ Applicable √ Not applicableNo difference.
VIII. Key financial indicators for the quarter
Unit: Yuan
| First Quarter | Second Quarter | Third Quarter | Forth Quarter | |
| Business income | 20,010,746,940.77 | 15,632,085,249.27 | 14,208,826,200.12 | 16,446,611,999.61 |
| Net profit attributable to shareholders of listing Corporation | 1,391,793,407.67 | 217,813,171.17 | -446,525,102.83 | -482,353,083.98 |
| Net profit attributable to shareholders of the listing Corporation after deducting non-recurring gains and losses | 896,758,297.55 | -201,041,609.14 | -711,470,154.01 | -3,149,316,806.61 |
| Net cash flows from operating activities | 2,636,312,735.66 | 1,765,089,024.49 | -3,477,552,441.10 | -4,811,324,621.49 |
Whether or not the above mentioned financial indicators and the total number of the company has disclosed the major differencebetween quarterly reports and semi-annual report□ Yes √ No
IX. Non-recurring items and amounts
√ Applicable □Not applicable
Unit: Yuan
| Item | 2018 | 2017 | 2016 |
| Non-recurring items and amounts(including accrued reversal assets impairment part) | 8,561,074.73 | 41,774,452.23 | -26,176,073.44 |
| Government subsidies included in the profit and loss of the current period (Except closely related to business operations, in accordance with the national unified standard quota or quantitative enjoyment of government subsidies) | 2,873,192,102.56 | 1,613,343,216.59 | 864,258,952.35 |
| The investment cost of the enterprise to obtain subsidiaries and joint ventures which is less than the fair value of the identifiable net assets of the investee when the investment is obtained | 1,020,821,274.01 | - | - |
| Except the above other operating income and expenses | 48,285,737.46 | 29,262,070.84 | 53,570,410.76 |
| Interest on deferred payment of funds received by non financial enterprises | 29,303,167.73 | 33,408,866.16 | 41,300,590.86 |
| Reduction: the impact of income tax | 82,007,701.31 | 188,136,520.19 | 94,404,693.21 |
| Impact of minority shareholders' equity (after tax) | 52,356,990.94 | 108,532,010.50 | 1,988,710.92 |
| Total | 3,845,798,664.24 | 1,421,120,075.13 | 836,560,476.40 |
According to “Public offering of securities information disclosure of the company's information disclosure announcement No. 1 –non-recurring gains and losses “Public offering of securities information disclosure of the company's information disclosureannouncement No. 1 – non-recurring gains and losses” defined non-recurring items ,and Public offering of securities informationdisclosure of the company's information disclosure announcement No. 1 - non-recurring gains and losses “The items listed in thenon-recurring items defined as recurring items shall be explained .□ Applicable √ Not applicableThe company in the reporting period does not base on the definition and listing of “Public offering of securities informationdisclosure of the company's information disclosure announcement No. 1 – non-recurring gains and losses” about non-recurring gainsand losses to define a case of recurring profit or loss.
Chapter 3 Analysis of Main Business
I．The main business of the Company in the reporting period
Does the Company need to comply with the disclosure requirements of special industry□ Yes √ No
During the reporting period, the company's main business is the R&D, manufacturing and sale of cars (including sedan andcommercial vehicles), the R&D and production of automobile engine products. Besides, the company integrates advantageousresources to actively develop travel services, new retail and so on and carry out multi-dimensional industrial layout.
Changan automobile always adheres to the mission of "leading the car civilization for the benefit of human life", and theconcept of "energy conservation, environmental protection, scientific and technological intelligence", vigorously develops newenergy and smart cars, guides the automobile civilization by the use of scientific and technological innovation, and providescustomers with high quality products and services. After years of development, the products cover low & middle class, wide rangeand various series such as sedans, mini cars, buses, trucks, SUV, MPV, including the traditional fuel and new energy models, and theengine platforms from 1.5L to 2.0L. The company owns many famous brands such as Changan passenger car, Oushang automobile,Kaicheng automobile, Changan Ford, Changan Mazda, Changan SUZUKI, Changan PSA and so on. Up to now, the Company hassuccessfully launched a series of classic brands such as Raeton CC, Eado series, Alsvin series, CS series SUV, COS1°, Oushang andHonor; a series of famous JV products such as all new Focus, new Mondeo, Kuga, Edge, Axela, CX-5, CX-8, Vitara, Alivio, DS7 andso on. At the same time, we have launched new energy vehicles such as Eado EV, new Benben EV and CS75 PHEV, which areadmired by the market and loved by the consumers.
II. Major changes in assets
1、 Major changes in assets
No significant changes in major assets during the reporting period
2、 Main Overseas Assets
□ Applicable √ Not applicable
III. Core Competence Analysis
In 2018, Chang'an Automobile set off by "zero in" and officially released the "Third Entrepreneurship-Innovation andEntrepreneurship Plan", which is driven by innovation and renders efficiency into the core competitiveness of the organization, and iscommitted to transforming into a smart travel technology company. In 2018, Chang'an Automobile invested 3.823 billion yuan in thedevelopment of products and technology projects, and continued to build leading R&D capabilities in the industry.
Speed up R&D, and new products delivery released on schedule. The new products such as the second-generation Eado,Eado DT, second-generation Eado XT, CS35PLUS, new CS75, new CS55, Keshang, CS75PHEV, and Eado EV 460 were put intoproduction on time. In 2018, the sales number of CS55 reached 165,000; the sales number of CS75 reached 140,000; the salesnumber of CS35 reached 130,000; the sales number of Eado series reached 126,000; the sales number of new energy vehiclesreached 87,000, an year-on-year increase of 42.9 %.
R&D technology is progressing steadily, and create the "3 + N" technology label. New energy core technology has madegreat breakthroughs. Changan made breakthroughs in five key technologies such as energy flow optimization, and the new pureelectric products have a low power consumption of 100 kilometers to 10 degrees; The EV 460 was used to complete the 80 km/hrear-end test in a live state to achieve the industry's starting point. The Intelligent technology took the lead in the industry. L2 levelintegrated adaptive cruise and fully automatic parking technology were applied into the first mass production of Chinese brands. TheL3 limited automatic driving technology completed the engineering and entered the phase of mass production. The L4 unmanned
implementation of the first domestic demonstration operation is in the leading position in the industry. We will create three technicallabels: "Fashion, Intelligence, and Green", improve collision safety, NVH(noise, vibration and acoustic roughness),CAE(computer-aided engineering), testing, body, chassis, electrical appliances, interior and exterior decoration, lightweight and othernew technology capabilities. In the evaluation results of the National Enterprise Technology Center 2017-2018 announced by theNational Development and Reform Commission, Chang 'an Automobile ranked third in the country and first in the industry with 96.4points, and its R&D strength ranked first in China's automotive industry for 5 consecutive years.
The R&D system is continuously improved and the management process is continuously optimized. We will optimize thedesign of top-level structures, push forward the matrix transformation in research and development, and set up the "7 institutes and 2departments". We will focus on breakthroughs in intelligent technology, new energy technology, and product experience design, andinnovate and enhance R&D capabilities. The first phase of the Changan Automobile Global R&D Center, which is the global R&Dhub of Changan Automobile, basically completed with admissions of The R&D department in 2019. The R&D process systemgradually extends and covers business processes such as pre-products, pre-technologies, product platforms, and pre-modeling.Changan automobile was granted as Chongqing Outstanding Innovative Enterprise in 2018 and Chongqing Smart Network UnitedAutomobile Technology Innovation Center.
R&D and innovations are fruitful. There were 1,093 patent applications throughout the year, of which 401 were filed forinvention patents. As of 2018, Changan automobile had 1,225 valid invention patents. The "Key Technologies and Industrializationof Auto Double Clutch Automatic Transmission (DCT)" and "Development and Application of New Energy Vehicle FunctionalSafety Technology" won 9 awards in the Automotive Engineering Society Science and Technology Progress Award. The total numberof winners ranked first in the automobile industry. The H15TG-AA engine won the 2018 China Top Ten Engine Award; the newCS75 has won four + + + +(excellent) highest rated models in the evaluation of China's smart car index; Raeton CC won the "RedPoint Design Award" with "high color value" and "warm enough" product design. Raeton CC won the new five-star performanceunder the C-NCAP standard of the 2018 edition and became the first safety practitioner under the new standard.; The new CS75, thenew CS35PLUS, Raeton CC, and the second-generation Eado were assembled to defeat 39 autonomous and joint venture brands witha strong performance of 23 crowns in the China Mass Production Performance Competition (CCPC), which demonstrates thestrength and style of Chang 'an Automobile as the leader of Chinese automobile brand industry. Supported by advanced technology,Chang 'an Automobile successfully challenged the Guinness World Record TM honor- the largest auto-driving vehicle parade andbecame the world's first car brand to successfully create this record.
The brand is advancing steadily and the brand structure is clear. Chang'an Automobile implemented a multi-brand strategy,formally released the four major business brands of Chang 'an Passenger Car, Middle-end Passenger Car, Oushang Automobile, andKaicheng Automobile, carried out brand structure landing projects, clarified market segmentation and development paths, andaccelerated collaborative development; Chang'an Automobile accelerated the promotion of Chang'an passenger car "brand upward",focus on building brand positioning, brand constitution, enterprise identification system and business processes and other brandplanning and management systematization work; We will deepen brand research, strengthen data-driven operations, and enhancebrand asset management and management capabilities. In the "2018 China Brand Value Evaluation Information" issued by the StateAdministration of Market Supervision and Administration, Chang 'an Automobile ranked second in the Chinese brand valueautomobile industry with 35.835 billion yuan.
Chapter 4 Business Discussion and Analysis
I、Overview
The year 2018 coincided with the 40th anniversary of China's reform and opening up. During the period, China achieved thelargest economic transformation and social development. As an important pillar industry of the country, the automobile industry hasbecome the world's largest automobile market for 10 consecutive years and has achieved remarkable achievements. In 2018, theautomobile industry carried out the decisions of the Communist Party Central Committee and the State Council, insisted on theoverall key tone of the steady progress, regarded the supply side structural reform as the main line, actively promoted the industrialtransformation and upgrading, pushed forward the strategy of innovation driven development and promoted the high qualitydevelopment of the industry. In 2018, China's economy has shifted from a high-speed growth phase to a high-quality developmentphase, while facing a complex and severe external situation. Affected by policy factors and macroeconomics, the Chinese automarket has ended its growth momentum of the past 28 years. The cumulative sales volume of the whole year was 28.081 millionunits, down 2.8% year-on-year, and the growth rate was 5.8 percentage points lower than the previous year. 23.71 million units ofPassenger cars were sold, down by 4.1% year-on-year. Among them, the SUV fell by 2.5% year-on-year, a sharp drop from 2017growth; MPV sales fell by 16.2% year-on-year; due to the impact of joint venture product prices, the Chinese brand market share fellyear-on-year. Among the new energy passenger vehicles, the sales of pure electric passenger vehicles reached 788,000 units, ayear-on-year increase of 68.4%, and continued to maintain a high-speed growth momentum. As the automobile industry entered atransition period, the industry concentration continued to increase, and the top ten group sales of automobile sales totaled 25.036million units, accounting for 89.2% of total vehicle sales (88.5% in the same period of last year). The above data comes from "Chinaautomobile industry production and sales express" (China Automobile Industry Association) and its industry information release.
Production and sales of China's auto industry in 2018
| （ten thousand） | （%） | （ten thousand） | （%） | |
| Automobile | 2780.9 | -4.2 | 2808.1 | -2.8 |
| Passenger cars | 2352.9 | -5.2 | 2371.0 | -4.1 |
| Sedan | 1146.6 | -4.0 | 1152.8 | -2.7 |
| MPV | 168.5 | -17.9 | 173.5 | -16.2 |
| SUV | 995.9 | -3.2 | 999.5 | -2.5 |
| Cross-passenger car | 42.0 | -20.8 | 45.3 | -17.3 |
| New energy cars | 127 | 59.9 | 125.6 | 61.7 |
| New energy Passenger cars | 107 | 80.5 | 105.3 | 82 |
| EV | 79.2 | 65.5 | 78.8 | 68.4 |
During the reporting period, Changan earnestly studied and implemented Xi Jinping’s thought on socialism with Chinesecharacteristics for a new era and the spirit of the 19th Party Congress. With the key of "strengthening efficiency, promoting brand,experience orientation and innovation breakthrough", Changan overcame various difficulties, withstood various pressures andworked hard together to promote high quality development. In 2018, Changan Automobile (Group) achieved sales of 2,137,800 units,with a market share of 7.6% and sold 1,479,700 units of Chinese brand cars. The main work in the reporting period is as follows:
(1) The third-time entrepreneurship starting, strongly promoting strategic execution
Changan Automobile was guided by the innovation and entrepreneurship plan and focused on the “1143” strategy to promotethe company's key business strategy decomposition, promote strategic measures such as improving efficiency, operating customers,branding, marketing innovation, new energy, integrating resource development, jointing venture and cooperation. Changan conductedstrategic discussions on four areas of innovation and entrepreneurship, capital operation, brand building and forward-lookingtechnology to further clarify strategic thinking and initiatives.
(2) Closely focusing on efficiency, promoting reform and innovation
Since 2018, Changan Automobile has continued to deepen its reforms and implemented a series of vigorous and wide-rangingreforms with efficiency as its core. The matrix transformation of R&D field has begun to take effect. CA-PDS 4.0 was officiallyreleased, and the product development cycle was shortened from 36 months to 24 months. The matrix transformation of the powersector was completed, and the full-time power project director was set up. The matrix operation mode was initially formed. The “1/2Project” was rapidly advanced, the process optimization results were remarkable, and the management efficiency was greatlyimproved. With the initial effect of the reform of the marketing field of “customer-centered, product and service as the main line”, thenew marketing business department was established to realize the integration of online and offline resources. The reform of the lightvehicle hybrid ownership system has steadily advanced. Changan has innovated incentive and restraint mechanisms, promoted thematching of people and posts, optimized the organizational position system, promoted R&D projects and investment mechanisms,fully implemented the deferred bonus plan, implemented the compensation reform project, and established a position system andcompensation system that is in line with the market to motivate employees.
(3) Completing management weaknesses and improving development quality
Changan Automobile regards efficiency as the vitality of the company, and strives to improve the quality of its operations. Ithas established a matrix of project quality improvement projects and promoted 20 upgrading projects. Changan Automobile stronglypromoted the increase of revenue, cost reduction, control of investment, and reduction of the library, built system capabilities, andsolved the painful and difficult problems that affect the current efficiency improvement. The project team promoted the company'soperation quality by adopting precise resources to open source and increase income, focusing on product structure to optimize
product mix, optimizing logistics structure to reduce logistics costs.
(4) Key product updating iterations, the results of technological innovations being significantCS35PLUS, new CS75, second-generation Eado, second-generation Eado XT, Eado DT, COS1° and many other new orreplacement products entered the market on schedule. CS85 COUPE made a stunning appearance at the Guangzhou Auto Show.National Science and Technology Support Project-S10TGDI and H15TGDI two high-efficiency clean engines passed the nationalacceptance. In the evaluation of the National Enterprise Technology Center issued by the National Development and ReformCommission, Changan Automobile ranked first in the Chinese automotive industry for 10 consecutive years. Reaton CC won theGerman Red Dot Design Award and successfully challenged the most severe crash test in the history of C-NCAP. .
List of products listed in 2018
| Date of listing | Model name | Model features |
| March 2018 | Second-generation Eado | The product model incorporates fashionable and dynamic elements to highlight the youthfulness. The product is better than the previous generation in terms of styling, interior and exterior jewelry texture, active and passive safety and driving comfort. The new car adopts the 18th version of the collision five-star safety design, equipped with 6 airbags, automatic emergency braking system, adaptive endurance, tire pressure monitoring system, LED headlights and other safety and technology configurations. |
| March 2018 | Eado DT | Equipped with a floating 10.25-inch LCD screen, in Call3.0 intelligent car interconnect system, intelligent driving computer, keyless entry, one-button start, intelligent light control. It is equipped with Blue Core 1.6L DVVT aluminum engine, advanced chassis adjustment, EPS electronic steering assist system, ESP body electronic stability system, HHC ramp assist system. |
| April 2018 | New CS75 | The product is equipped with high-strength steel energy-absorbing frame body, with new five-star safety standard, equipped with APA automatic parking system, AEB emergency braking system, ACC full-speed adaptive cruise system, LCDA parallel line auxiliary system, LDW lane departure warning system and AVM360 ° Panoramic parking assist system. |
| August 2018 | Second-generation Eado XT | The new car is equipped with safety features, 6 airbags, automatic emergency braking system, adaptive endurance, tire pressure monitoring and other security |
| configurations, and equipped with 10.25-inch large screen, inCall3.0s and other smart technology configurations. | ||
| August 2018 | Third-generation Alsvin | Using the latest Changan family design, it creates a visually impactful product appearance. The overall style is stylish and dynamic, with detailed design to shape the aesthetic benchmark of small cars. It is equipped with two engines, EA14 and EA15, and is matched with 5MT and DCT transmissions respectively. Equipped with a variety of fuel-saving technologies, the fuel consumption is as low as 5.2L/100km. At the same time, it provides users with a high-quality experience through practical space and practical configuration, and fully interprets the new concept of fashion and practical sedan. |
| October 2018 | CS35PLUS | CS35PLUS is characterized by styling, intelligence and quality. The overall shape technology, fashion, tough, interior technology, luxury, exquisite, equipped with ESP/ESC, tire pressure monitoring, panoramic sunroof, EPB electronic parking, ACC adaptive battery life, PAB active brakes and other technology configurations. The price range is 69,900-104,900 yuan, setting a new benchmark for the small SUV market of 70,000-100,000 yuan. |
(5) The new energy industry developing smoothly and "Shangri-La" plan gradually taking formThe "Shangri-La" plan is accelerating. Chongqing Changan New Energy Automobile Technology Co., Ltd. was incorporatedand prepared for independent operation and capital introduction. Changan layout battery, IGBT, entry-level electric vehicles, andpromote cooperation with BYD, China Railway (IGBT). We have strategic cooperation with BYD, Weilai and other auto companies,and deep integration with high-tech and Huawei technology companies, and the future integration of the national grid and specialcalls to coordinate the future charging ecology, and signed a framework agreement with Chongqing to build a new energy industrialpark. "Shangri-La" plan has begun to take shape. New energy core technologies have made progress and many key technologies haveachieved breakthroughs. The new energy product line has been further enriched, and the cruising range has continued to improve. Ithas successfully developed and launched Eado EV460, New Benben EV360, CS75PHEV and other products.
(6) Intelligent innovation speeding up and industrial cooperation achievements appearingThe intelligent strategy is solidly advanced. In August 2018, Changan Automobile released its intelligent strategy, “BeidouTianshu”, which aims to transform from a traditional automobile manufacturing enterprise to a smart travel technology company.Changan cooperated with Tencent, Huawei, and Keda Xunfei to build a smart car industry alliance. The new CS75 is equipped withAPA 4.0, which realizes the L2-class intelligent driving mass production in China. The L3-class limited auto-driving technology hasbeen completed and entered into mass production development. 55 new CS55s are equipped with L3-class automatic drivingtechnology, which has completed the world's largest scale. The autopilot parade successfully challenged the Guinness World Record.The L4-class unmanned driver achieved the first domestic demonstration operation and was in the leading position in the industry.During the Zhibo Conference, 17,500 users registered to experience the Changan intelligent function. The intelligent manufacturingconstruction has achieved initial success. The Liangjiang 2 factory was rated as the intelligent factory in Chongqing, and its weldingand stamping workshop was rated as the digital workshop in Chongqing. The intelligent manufacturing special project “IntelligentFlexible High-speed Stamping New Mode Application” undertaken by Changan Automobile passed the municipal acceptance. .
(7) Integrating industry's superior resources and creating a new development modelChangan strengthens cooperation with advantageous resources inside and outside the industry, cooperates with BYD to developnew energy battery technology, cooperates with FAW and Dongfeng, and deploys forward-looking technology. It has established ajoint venture with Weilai to concentrate on resources to build a pure electric platform. In addition, the cooperation with thebenchmarking companies in the Internet/communication industry has also made progress. Together with Tencent, the company hasestablished the Wutong Chelian, and the product technology development has progressed in an orderly manner. It has formed
strategic alliances with China Mobile and Baidu, and established a joint innovation center with Huawei to promote strategiccooperation.
“T3 Travel” was carried out in an orderly manner, and “Changan Travel” completed the layout of 7 major cities and operatednearly 10,000 vehicles. Changan established a new energy “car to travel” technology company, and quickly transformed into a “trip+ sales” model. Changan actively explored a new marketing model, and Chongqing's three new retail-operated stores, ChehemeiAuto Mall, were put into operation, and the nationwide 10 store pilots are advancing. The e-commerce platform sold 21,000 vehicles,with a network maintenance of 465,000 orders and a financial sales of 16,000 units.
(8) The brand moving steadily upwards with the clearer brand positioning and structure
Changan officially released four major business brands of Changan passenger vehicle, middle and advanced passenger vehicle,Oushang automobile and Kaicheng automobile, and launched a brand architecture project to accelerate coordinated development.From the brand level of Changan automobile business, we will strengthen the brand system construction work, enhance the image ofthe company's external communication, and vigorously promote the brand.
(9) Overseas markets actively expanding, and overseas sales growing rapidly
Changan optimizes its overseas development strategy, focuses on strategic cooperation projects in key markets, and developshigh-quality in America, Central and Eastern Africa, and Asia-Pacific markets. The annual export volume was 61,000 vehicles, ayear-on-year increase of 34.6%, which was historically high.
(10) Introducing big data platform management, improving quality, reducing costs and increasing efficiency
Changan fully promotes cost reduction and quality control, carries out full value chain cost management, grasps data and usesthe principle of “unified platform, unified data, and unified operation” to promote CA-DDM construction and builds acomprehensive, real, transparent and shared big data platform, achieving over 90% of the core system coverage. The companypromotes the efficiency of the “Cheetah Program” by significantly improving management efficiency, and the process mobility rateis nearly 100%.
II. Analysis of Main Business
1、Overview
Whether it is the same as the summary in the business discussion and analysis.
√ Yes □ No
2、Income and cost
（1）Composition of the operating revenue
Unit :Yuan
| 2018 | 2017 | Increase/decrease on a y-o-y basis (%) | |||
| Sum | Share of operating income（%） | Sum | Share of operating income(%) | ||
| Operating revenue | 66,298,270,389.77 | 100.00% | 80,012,205,182.37 | 100.00% | -17.14% |
| Industry | |||||
| Automobile | 66,298,270,389.77 | 100.00% | 80,012,205,182.37 | 100.00% | -17.14% |
| Products | |||||
| Vehicles | 66,276,054,153.09 | 99.97% | 79,980,063,484.58 | 99.96% | -17.13% |
| Outsourcing | 22,216,236.68 | 0.03% | 32,141,697.79 | 0.04% | -30.88% |
| Area | |||||
| China | 63,892,840,365.38 | 96.37% | 78,348,298,046.00 | 97.92% | -18.45% |
| Overseas | 2,405,430,024.39 | 3.63% | 1,663,907,136.37 | 2.08% | 44.57% |
（2）Accounted for more than 10% of the company's operating income or operating profit of the industry,products or area
√ Applicable □ Not applicable
Unit : Yuan
| Operating Revenue | Operating Cost | Gross margin | Increase/decrease on a year-on-year basis Operating Revenue (%) | Increase/decrease on a year-on-year basis Operating Cost (%) | Increase/decrease on a year-on-year basis gross margin | |
| Industry | ||||||
| automobile | 66,298,270,389.77 | 56,583,468,369.14 | 14.65% | -17.14% | -18.42% | Up 1.34 points |
| Products | ||||||
| Sales of products | 66,276,054,153.09 | 56,564,408,454.35 | 14.65% | -17.13% | -18.42% | Up 1.34 points |
The company's statistics scope of main business in the reporting period was adjusted, and the company has adjusted its main businessdata last year according to the scope in the reporting period.□Applicable √ Not applicable
（3）Is the income from sales in kind greater than the service income
√ Yes □ No Unit：One set
| Industry | Item | 2018 | 2017 | Increase/decrease on a year-on-year basis (%) |
| Automobile Industry | Sales volume | 2,137,785 | 2,872,456 | -25.58% |
| Production volume | 2,062,396 | 2,814,792 | -26.73% | |
| Stock volume | 46,937 | 46,660 | 0.59% | |
| Market share（%） | 7.60% | 9.95% | Down 2.35 points |
Note：The above sales volume and production volume are consistent with the date from the Company and its subsidiaries and JVs.The analysis over market share is based on the data from China Automobile Industry Association.Notes to the year-on-year change of the relevant data by over 30%□ Applicable √ Not applicable
（4）The company has signed a major sales contract as of the time of the fulfillment of this report
□ Applicable √ Not applicable
（5）Cost
Unit: Ten Thousand Yuan
| Industry classification | Item | 2018 | 2017 | Increase/decrease on a year-on-year basis (%) | ||
| Amount | Ratio in operation cost (%) | Amount | Ratio in operation cost (%) | |||
| Production | Product Sale | 5,656,441 | 99.97% | 6,933,589 | 99.96% | -18.42% |
| Outsourcing | 1,906 | 0.03% | 2,714 | 0.04% | -29.77% | |
| Total | 5,658,347 | 100.00% | 6,936,303 | 100% | -18.42% | |
（6）Notes to the change of the consolidated scope in the reporting year
√ Applicable □ Not applicableDuring the reporting period, Changan Automobile has added Chongqing Changan New Energy Automobile Technology Co., Ltd.,Fuzhou Fuqing Changan New Energy Automobile Sales Co., Ltd., Guangzhou Changan New Energy Automobile Sales and ServiceCo., Ltd., Xiamen Changan New Energy Automobile Sales and Service Co., Ltd. and Nanjing Changan New Energy AutomobileSales and Service Co., Ltd. Changan has acquired Chongqing Changan Suzuki Automobile Co., Ltd. and Zhenjiang Demao HairunEquity Investment Fund Partnership (Limited Partnership). A total of seven companies were included in the consolidated statements.Changan has liquidated Heilongjiang Changan Automobile Sales Co., Ltd., Xinjiang Changan Automobile Sales Co., Ltd., HarbinChangan Automobile Technology Research Co., Ltd. and Shanghai Changan Automobile Engineering Technology Co., Ltd., and atotal of four companies are no longer included in the consolidated statements.
（7）Significant change or adjustment of the business, products or services in the reporting period
□ Applicable √ Not applicable
（8）Main Customers and principal suppliers
Main Customers
| Total sales amount to top 5 customers (RMB) | 5,374,405,160.90 |
| Proportion of sales to top 5 customers in the annual sales (%) | 8.11% |
| Proportion of sales amount of the related party in the top 5 customers（%） | 4.68% |
Top 5 customers
Unit : Yuan
| Serial No. | company | Sales value | proportion in total sales（%） |
| 1 | First | 1,459,155,094.78 | 2.20% |
| 2 | Second | 1,335,816,637.76 | 2.01% |
| 3 | Third | 958,757,083.78 | 1.45% |
| 4 | Fourth | 811,959,547.62 | 1.22% |
| 5 | Fifth | 808,716,796.96 | 1.22% |
| total | 5,374,405,160.90 | 8.11% | |
Other descriptions of major customers□ Applicable √ Not applicablePrincipal suppliers
| Total purchase amount to top 5 suppliers (RMB) | 7,961,460,531.71 |
| Proportion of purchase to top 5 suppliers in the annual purchase (%) | 14.07% |
| Proportion of purchase amount of the related party in the top 5 suppliers（%） | 6.05% |
Top 5 suppliers
Unit : Yuan
| Serial No. | Company name | Purchase value | Proportion in the total purchase(%) |
| 1 | First | 3,521,735,458.18 | 6.22% |
| 2 | Second | 1,389,088,291.94 | 2.45% |
| 3 | Third | 1,284,085,746.55 | 2.27% |
| 4 | Fourth | 1,018,878,772.01 | 1.80% |
| 5 | Fifth | 747,672,263.03 | 1.32% |
| Total | 7,961,460,531.71 | 14.07% | |
Other descriptions of major suppliers□ Applicable √ Not applicable
3、Expenses
Unit: Ten Thousand Yuan
| Item | 2018 | 2017 | increase/decrease（%） | Description of major changes |
| Selling expense | 5,283,255,346.48 | 3,978,124,859.65 | 32.81% | Mainly due to the increase in business resources and promotion expenses during the reporting period to promote sales. |
| Management expense | 2,782,755,531.47 | 2,663,645,058.45 | 4.47% | |
| Financial expense | -427,062,035.06 | -524,973,961.02 | 18.65% | |
| R&D expense | 2,543,265,379.12 | 2,616,651,435.07 | -2.80% |
4、Research and Development Expenditure
√Applicable □ Not applicable
In 2018, Changan Automobile invested 3.823 billion yuan in product and technology project development, and continued tobuild industry-leading research and development strength.
R&D investment Table
| 2018 | 2017 | Changes in ratio | |
| Labor Number | 7,722 | 7,177 | 7.59% |
| Proportion of labor in the Company | 21.43% | 18.34% | Up 3.09 pionts |
| Investment value (yuan) | 3,823,210,086.54 | 3,631,454,231.54 | 5.28% |
| Proportion of investment in the revenue | 5.77% | 4.54% | Up 1.23 pionts |
| Capitalization (yuan) | 1,279,944,707.42 | 1,014,802,796.47 | 26.13% |
| Proportion of capitalization in R&D investment | 33.48% | 27.94% | Up 5.54 pionts |
Significant Change of the proportion of R&D investment in the revenue□ Applicable √ Not applicableSignificant change of the proportion of capitalization in the R&D investment□ Applicable √ Not applicable
5、Cash Flow
Unit: Yuan
| Item | 2018 | 2017 | Increase/decrease（%） |
| Subtotal of cash inflows from operating activities | 81,996,970,246.85 | 88,973,892,693.73 | -7.84% |
| Subtotal of cash outflows from operating activities | 85,884,445,549.29 | 90,097,363,470.56 | -4.68% |
| Net cash flows from operating activities | -3,887,475,302.44 | -1,123,470,776.83 | -246.02% |
| Subtotal of cash inflows from investing activities | 2,488,521,707.35 | 8,760,050,883.48 | -71.59% |
| Subtotal of cash outflows from investing activities | 9,057,241,752.33 | 4,578,162,255.41 | 97.84% |
| Net cash flows from investing activities | -6,568,720,044.98 | 4,181,888,628.07 | -257.08% |
| Subtotal of cash inflows from financing activities | 1,195,280,377.20 | 1,163,689,175.66 | 2.71% |
| Subtotal of cash outflows from financing activities | 2,547,968,288.91 | 5,738,660,114.27 | -55.60% |
| Net cash flows from financing activities | -1,352,687,911.71 | -4,574,970,938.61 | 70.43% |
| Net increase in cash and cash equivalents | -11,803,151,475.73 | -1,542,126,976.52 | -665.38% |
Notes to the year-on-year change of the relevant data by over 30%√ Applicable □ Not applicable
In 2018, “net cash flow from operating activities” decreased by RMB 2,764.01 million compared with the previous year,mainly due to the significant decrease in “cash received from sales of goods and services” compared with the previous year; “netcash flow from investing activities” "The decrease of RMB 10,750.61 million compared with the previous year was mainly due to thesharp decline in the "cash received from investment income" compared with the previous year, and the "cash for the purchase andconstruction of fixed assets and intangible assets" increased significantly from the previous year; Net cash flow increased by RMB3,222.28 million compared with the previous year, mainly due to the decrease in “payment of cash paid for debts” compared with theprevious year (the payment of corporate bonds due in the previous year) and “cash for dividends distributed” decreased from theprevious year.Notes to the significant difference between cash flow from operating activities and net profit in the reporting year√ Applicable □ Not applicableAs for the significant difference between cash flow from operating activities and net profit in the reporting period, refer to theitem “Supplementary Information of the Cash Flow Statement” in the Financial Statements Note 56.
III. Analysis of non principal business
□ Applicable √ Not applicable
IV. Assets and liability
1、The significant changes of the assets
Unit: Yuan
| Item | Dec.31,2018 | Dec.31,2017 | decrease (%) | instructions | ||
| Amount | Ratio in total assets（%） | Amount | Ratio in total assets（%） | |||
| Cash | 9,980,544,526.14 | 10.68% | 22,631,536,496.53 | 21.33% | -10.65% | Reduction in cash received from sales of goods, reduction in cash received from investment income, increase in cash paid for purchase and construction of fixed assets and intangible assets, and increase in cash paid for investment. |
| Notes receivable | 1,409,419,600.50 | 1.51% | 1,806,807,193.04 | 1.70% | -0.19% | |
| Inventory | 4,917,420,457.19 | 5.26% | 4,666,183,421.80 | 4.40% | 0.86% | |
| Investment property | 7,329,561.28 | 0.01% | 7,556,272.84 | 0.01% | 0.00% | |
| Long-term equity investments | 13,275,170,118.83 | 14.20% | 14,098,523,896.97 | 13.28% | 0.92% | |
| Fixed assets | 22,161,054,058.31 | 23.70% | 19,044,533,667.68 | 17.95% | 5.75% | |
| Construction in | 5,383,844,030.75 | 5.76% | 3,234,173,155.52 | 3.05% | 2.71% | New investment in NE1 |
| progress | project, global R&D phase I project, automobile product structure adjustment project, H fifth phase project and V301 project. | |||||
| Short-term loans | 190,000,000.00 | 0.20% | 185,000,000.00 | 0.17% | 0.03% | |
| Long-term loans | - | 0.00% | 6,575,973.33 | 0.01% | -0.01% |
2、Assets and liabilities measured by fair value
Unit: Yuan
| Item | Amount at year beginning | Comprehensive income in the reporting period | Cumulative fair value change recorded into equity | Impairment provisions in the reporting period | Amount purchased in the current period | Amount sold in the current period | Amount at year end |
| Financial assets | |||||||
| Financial assets available for sales | 164,365,000.00 | - | 208,339,952.31 | - | 1,157,616,359.00 | 1,530,321,311.31 | |
| Subtotal of financial assets | 164,365,000.00 | - | 208,339,952.31 | - | 1,157,616,359.00 | 1,530,321,311.31 | |
| Others | |||||||
| Total | 164,365,000.00 | - | 208,339,952.31 | - | 1,157,616,359.00 | 1,530,321,311.31 | |
| Financial liabilities | |||||||
Whether the measurement attributes of main assets in the reporting period have significantly changed□ Yes √ No
3、Property rights limits by the end of report period
| Item | book value at the end of this year | Limited Reason |
| Cash | 332,390,911.34 | Used to open the acceptance deposit |
| Notes receivable and accounts receivable | 469,622,570.00 | Notes receivable pledge to issue notes payable |
| Intangible assets | 18,499,267.20 | Obtain liquidity borrowings and obtain commercial acceptance bills |
| Total | 820,512,748.54 |
V. Analysis of Investment
1、General information
√ Applicable □ Not applicable
| External investment | ||
| Investment Amount in the report period（RMB） | Investment Amount in 2017（RMB） | Variance rate |
| 2,933,579,617.67 | 1,217,743,029.48 | 140.90% |
| Particulars of investees | ||
| Company Name | Principal business | Proportion in the investees’ equity (% |
| Changan Peugeot Citroen Automobile Co., Ltd. | Design, manufacture and sale of Peugeot, Citroen and DS brand cars and light commercial vehicles. | 50% |
| Guoqi (Beijing) Intelligent Network Association Automotive Research Institute Co., Ltd. | Engineering and technology research and experimental development; product design, industrial design; technology development, consulting, promotion, service, transfer; sales of mechanical equipment, hardware, electrical, electronic products, electronic components; import and export of goods, technology import and export, agent Export; technical testing, property management. | 8.33% |
| Beijing Wutong Chelian Technology Co., Ltd. | Technology development, technical consultation, technical services, technology transfer; economic and trade consultation; design, production, agency, advertising; import and export of goods, technology import and export; sales of self-developed products. | 49% |
| Changan Automobile Russia Co., Ltd. | Automobile and parts import and export, automobile distribution and other services. | 100% |
| Chongqing Changan Suzuki Automobile Co., Ltd. | Production and sales of self-produced cars, engines and their parts and components, sales of self-produced products, provision of relevant after-sales services, and engaged in research and development work. | 100% |
| Weapon Equipment Group Finance Co., Ltd. | (1) Handling financial and financing consultants, credit certificates and related consulting and agency services for member units; (2) assisting member units in realizing | 3.83% |
| the payment and payment of transaction funds; (3) approved insurance agency business; (4) for members The unit provides guarantees; (5) handles entrusted loans and entrusted investments between member units; (6) handles bill acceptance and discounting for member units; (7) handles internal transfer settlement between member units and corresponding settlement and liquidation plans (8) absorbing the deposits of member units; (9) handling loans and financing leases for member units; (10) engaging in interbank lending; (11) issuing financial company bonds upon approval; (12) underwriting corporate bonds of member units; (13) Equity investment in financial institutions; (14) Investment in securities; (15) Consumer credit, buyer credit and financial leasing of member units. | ||
| Hunan Guoxin Semiconductor Technology Co., Ltd. | Technology development, technical consulting, technical services, technology transfer in the field of power semiconductors; design, research and development, testing, sales of power semiconductors; import and export of goods and technology; conference and exhibition services. | 25% |
2、Major equity investment in the reporting period
Unit: Yuan
| Company name | Principal business | Investment mode | Investment amount | Share-holding ratio | Capital source | Partner | Investment period | Progress on book closing date | Any litigations | Disclosure date(in case) | Disclosure index(in case) |
| Changan Peugeot Citroen Automobile Co., Ltd. | Design, manufacture and sale of Peugeot, Citroen and DS brand cars and light commercial vehicles. | Increasing capital | 1,800,000,000 | 50% | Its own capital | Peugeot Citroen Group | Indefinite duration | Capital increase completed, industrial and commercial registration procedures completed | No | 2018-01-13 | Announcement on Related Transactions of Capital Increase of Changan Peugeot Citroen Automobile Co., Ltd. (Bulletin No: 2018-03) |
| Total | -- | -- | 1,800,000,000 | -- | -- | -- | -- | -- | -- | -- | -- |
3、Major non-equity investment in the reporting period
Please refer to Notes V to Financial Statement Item 13” Construction in progress”.
4、Investment of Financial Assets(1)Equity-holdings in financial enterprises
√ Applicable □ Not applicable
| Company name | Company variety | Initial investment cost (RMB Yuan) | Holdings (share) | holding ratio (%) | holdings (share) | Holdings （%） | Closing book value (RMB Yuan) | Gain/loss in the reporting period (RMB Yuan) | Accounting title | Equity source |
| Southwest Securities | Securities Firm | 50,000,000 | 35,500,000 | 0.63% | 35,500,000 | 0.63% | 123,540,000 | 1,775,001.20 | Tradable financial assets | Initial investment |
(2) Derivative Investments
□ Applicable √ Not applicable
5、Use of raised funds
□ Applicable √ Not applicable
VI. Selling of major assets and major equity
1、Selling of major assets
□Applicable √ Not applicableThere is no selling of major assets.
2、Selling of Equity
□Applicable √ Not applicableThere is no selling of major equity.
VII. Analysis of main holding companies and equity companies
√ Applicable □Not applicableBasic information of main subsidiary companies and shareholding companies which have an impact on over 10% of net profits
Unit: ten thousand yuan
| Name | Registered capital | Equity held | Main businesses | Total assets | Main operating income | Net profit |
| Nanjing Changan Automobile Co., Ltd. | 60,181 | 84.73% | Produce and sell auto and parts | 125,443 | 243,106 | 25,854 |
| Chongqing Changan Automobile Customer Service Co., Ltd. | 3,000 | 100% | Produce and sell auto and parts | 74,959 | 162,391 | 25,679 |
| Chongqing Changan Chelian Technology Co., Ltd. | 8,850 | 100% | Produce and sell auto and parts | 105,352 | 36,328 | -15,139 |
| Chongqing Changan New Energy Automobile Technology Co., Ltd. | 9,900 | 100% | Produce and sell auto and parts | 117,997 | 8,306 | -24,380 |
| Changan Mazda Engine Co., Ltd. | 20,996USD | 50% | Produce and sell auto and parts | 212,264 | 195,640 | 7,654 |
| Jiangling Holdings Co., Ltd. | 200,000 | 50% | Produce and sell auto and parts | 930,108 | 412,282 | -81,874 |
| Changan Ford Automobile Co., Ltd | 24,100USD | 50% | Produce and sell auto and parts | 4,217,594 | 4,975,428 | -80,399 |
| Changan Mazda Automobile Co. Ltd | 11,097USD | 50% | Produce and sell auto and parts | 1,337,457 | 2,004,878 | 252,640 |
| Changan Peugeot Citroen Automobile Co., Ltd. | 760,000 | 50% | Produce and sell auto and parts | 669,644 | 91,513 | -87,408 |
Subsidiaries acquired and sold in the reporting period√ Applicable □ Not applicableDuring the reporting period, Changan Automobile has added Chongqing Changan New Energy Automobile Technology Co., Ltd.,Fuzhou Fuqing Changan New Energy Automobile Sales Co., Ltd., Guangzhou Changan New Energy Automobile Sales and ServiceCo., Ltd., Xiamen Changan New Energy Automobile Sales and Service Co., Ltd. and Nanjing Changan New Energy AutomobileSales and Service Co., Ltd. Changan has acquired Chongqing Changan Suzuki Automobile Co., Ltd. and Zhenjiang Demao HairunEquity Investment Fund Partnership (Limited Partnership). A total of seven companies were included in the consolidated statements.Changan has liquidated Heilongjiang Changan Automobile Sales Co., Ltd., Xinjiang Changan Automobile Sales Co., Ltd., HarbinChangan Automobile Technology Research Co., Ltd. and Shanghai Changan Automobile Engineering Technology Co., Ltd., and atotal of four companies are no longer included in the consolidated statements.
| Name | Acquisition and disposal of subsidiaries during the reporting period | On the overall production and operation and performance impact |
| Chongqing Changan New Energy Automobile Technology Co., Ltd. | Newly established | No major influence |
| Fuzhou Fuqing Changan New Energy Automobile Sales Co., Ltd. | Newly established | None |
| Guangzhou Changan New Energy Automobile Sales and Service Co., Ltd. | Newly established | None |
| Xiamen Changan New Energy Automobile Sales and Service Co., Ltd. | Newly established | None |
| Nanjing Changan New Energy Automobile Sales | Newly established | None |
| and Service Co., Ltd. | ||
| Chongqing Changan Suzuki Automobile Co., Ltd. | Acquisition | Major influence |
| Zhenjiang Demao Hairun Equity Investment Fund Partnership (Limited Partnership) | Acquisition | No major influence |
| Heilongjiang Changan Automobile Sales Co., Ltd. | Liquidation | None |
| Xinjiang Changan Automobile Sales Co., Ltd. | Liquidation | None |
| Harbin Changan Automobile Technology Research Co., Ltd. | Liquidation | None |
| Shanghai Changan Automobile Engineering Technology Co., Ltd. | Liquidation | None |
VIII. Structural main business under the company control
□Applicable √Not applicable
IX. The company's future development prospect
1、Industry competition pattern and trend of developmentDue to uncertainties such as trade frictions, the global GDP growth will face downside risks. IMF forecasts that global GDPgrowth will keep around 3.5-3.6% in 2019 and 2020, and even slow down to 2.9% in 2020.
China's external environment is undergoing significant changes, and the transformation and upgrading of China's economy isclimbing the slope and overcoming the difficulties. China's economy is generally stable with variations and worries. The GDP growthis expected to be 6.0-6.5% for 2019. The automobile industry is an important component of consumption, ranking first andaccounting for more than 10% of the total social retail sales, but there is a downward trend.
Policy Trend: China strengthens the sustained reform, promotes consumption, reduces taxes and fees, and encourages theinnovation, further supports the excellent and strong enterprises, intensifies the supervision, and stimulates the development of theautomobile industry. However, under the background of environment-protection acceleration, subsidy recession, acceleration ofopening up, the automobile industry is facing a test.
Consumption trend: The consumption upgrade trend is obvious. The proportion of sales from over 100,000 -yuan vehicles isincreasing year by year. The distinct regional differences in China bring about diversification and gradient development ofautomobile demand. Internet Aborigines have gradually become the main consumer of automobiles with strong demand forpersonalization and fashion. We can occupy consumers' minds only by strengthening high-quality and diversified products andservices.
Technology Trend: The breakthroughs in big data, chips, artificial intelligence and communication technology (5G) will bringsubversive changes to the social, industrial and business models. Cross-border integration, mutual benefit and win-win situation, andfulfillment of commitments will be the general trend of intelligent development. At the same time, 2025 will be the key turning pointfor the return of electronics to market, demand and technology.
Competition situation: The competition pattern of automobile industry is further chaotic with the differentiated competitions. Itmainly manifests that the multinational automobile enterprises regard China as their main battlefield; the prices of joint venturebrands are exploring downward with continuous price wars and shrinking product gross profit; Chinese brands continue to integrateresources to develop electrification and intellectualization; new forces of automobile manufacturing enter the stage of massproduction.
2、Development strategy of the CompanyFaced with the new normal status of "low growth, micro profit" in the automobile market, Chang'an automobile will conduct thereform and innovation, stimulate vitality, focus on the core part, integrate resources, strengthen efficiency and enhance profitabilitywith "2025 vision planning" as the traction. Driven by innovation, the "efficiency" will become the core competitiveness of thecompany. Four strategic measures should be taken as the starting point to achieve the third entrepreneurship - innovativeentrepreneurship plan.
We should adhere to the two legs of independence and joint venture, insist on the coordination of traditional business and newbusiness, build a world-class automobile enterprise, transform from serving customers to operating customers, from operatingproducts to brand, from traditional products to intelligent + new energy products, and from traditional enterprises providing productsto intelligent travel technology companies.
3、Business plan
The business objective of the board of directors of the company in 2019 is: work hard to produce and sell more than 2.15 millionvehicles. In order to achieve the above objectives, the company focuses on the six quality improvement requirements of"development, reform, party building, scientific and technological innovation, management and three key battles". With the fourstrategic measures of upgrading brand, integrating resources, innovative marketing and opening up overseas as the grab, the companydeepens reform, improves efficiency, vigorously grasps marketing, achieves the quality leadership and makes every effort to promotethe third entrepreneurship-innovative entrepreneurship plan of Chang'an Automobile. The key work of the company is as follows:
firstly, make a painful determination to improve the quality of operation; secondly, persevere and unswervingly build efficiency asthe core competitiveness of the organization; thirdly, optimize the system and unswervingly achieve marketing breakthroughs;fourthly, focus on the core business, and unswervingly create classic products; fifthly, go straight to the front, and unswervinglytransform to operating customers; sixthly, persevere in promoting brand development; seventhly, deepen the strategy and firmlyimplement the Shangri-La plan; eighthly, promote the Beidou Tianshu plan down-to-earth and unswervingly; ninthly, break throughthe key points and unswervingly develop overseas business; tenthly, integrate resources and unswervingly break through newbusiness; Eleventhly, deepen reform and unswervingly stimulate organizational innovation vitality; twelfthly, improve cooperation ofjoint ventures and promote the strategic adjustment. Thirteenthly, utilize the culture of Party building to guide production andoperation.
4、Capital requirement and use plan of 2019
In order to achieve the company's strategic objectives, it is expected that in 2019 the investment in fixed assets will mainlyguarantee the investment of new product projects, encourage the improvement of core competence, focus on resources to build coreR&D and brand publicity capabilities such as intellectualization, new energy, shape-creating, and so on. Equity investment is mainlyused for intellectualization, new energy, brand promotion, core competence construction and overseas development. According to theprogress of the projects and the operation and financing environment, the company will study and formulate a variety of financingplans and plans for the use of funds to improve the efficiency of the use of funds and reduce the cost of funds.
5、Possible risks
Firstly, the macroeconomic downside risks. China's development is still in and will remain in an important period of strategicopportunities for a long time. The world is facing unprecedented changes in a century, in which opportunities coexist with danger.Economic operation is stable and changing, the external environment is complex and severe, the economy is facing downwardpressure, the consumer confidence of residents is insufficient, the car market is seriously declining, and the growth target ofexpanding domestic demand is under pressure.
Measures: We should strengthen the sense of suffering, seize the main contradictions and solve them pertinently; strengthen themacro-situation research and judgment, and increase policy efforts, take the initiative to seize the opportunity; strengthen thecommunication of local policies in key regions, and adjust the promotional plans properly.
Secondly, the risk of profit reduction of joint ventures: the future automobile market is featured with more new products and
faster price reduction. Taking 2018 as an example, according to incomplete statistics, 578 new products (including 154 brand-newmodels) are on the market and 920 products are on sale. Over the next three years, multinational automobile companies willaccelerate their localization, and Chinese brands and new automobile manufacturers will continue to brand up, which compelled jointventure brands to cut sales price under competitive pressure, and the product profit margins will shrink fast.
Measures: Focus on products, accelerate product replacement and new product introduction, and accelerate the localization ofcomponents.
Thirdly, the efficiency risk of corporate organizational mechanism. The current organizational mechanism is difficult to fullystimulate the vitality and efficiency of personnel, and does not meet the strategic needs of state-owned enterprise reform in the newera; the process efficiency is not improved significantly, and the organizational ability to support the strategic landing is facing greatchallenges.
Measures: Explore the overall reform plan of the organizational system, establish an incentive mechanism with externalcompetitiveness, and attract external talents.
X. Registration form for reception, research, communication, interview，etc. during thereporting period
| Date | Manner | Type of Reception Object | Index |
| 2018.1.4 | On-Site Survey | Institution | For details, see the January 5, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: January 4, 2018 investor relations activities record sheet |
| 2018.1.11 | On-Site Survey | Institution | For details, see the January 15, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: January 11, 2018 investor relations activities record sheet |
| 2018.1.17 | On-Site Survey | Institution | For details, see the January 19, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: January 17, 2018 investor relations activities record sheet |
| 2018.1.18 | On-Site Survey | Institution | For details, see the January 19, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan automobile: January 18, 2018 investor relations activities record sheet |
| 2018.1.24 | On-Site Survey | Institution | For details, see the January 25, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: January 24, 2018 investor relations activities record sheet |
| 2018.1.26 | On-Site Survey | Institution | For details, see the January 30, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: January 26, 2018 investor relations activities record sheet |
| 2018.2.12 | On-Site Survey | Institution | For details, see the February 13, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: February 12, 2018 investor relations activities record sheet |
| 2018.3.6 | On-Site | Institution | For details, see the March 8, 2018 Shenzhen stock exchange interactive |
| Survey | (http://irm.cninfo.com.cn) on the Changan Automobile: March 6, 2018 investor relations activities record sheet | ||
| 2018.3.8 | On-Site Survey | Institution | For details, see the March 12, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: March 8, 2018 investor relations activities record sheet |
| 2018.3.13 | On-Site Survey | Institution | For details, see the March 16, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: March 13, 2018 investor relations activities record sheet |
| 2018.3.15 | On-Site Survey | Institution | For details, see the March 19, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: March 15, 2018 investor relations activities record sheet |
| 2018.7.19 | On-Site Survey | Institution | For details, see the July 23, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: July 19, 2018 investor relations activities record sheet |
| 2018.7.24 | On-Site Survey | Institution | For details, see the July 26, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: July 24, 2018 investor relations activities record sheet |
| 2018.8.31 | On-Site Survey | Institution | For details, see the September 3, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: August 31, 2018 investor relations activities record sheet |
| 2018.9.5 | On-Site Survey | Institution | For details, see the September 6, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 5, 2018 investor relations activities record sheet |
| 2018.9.10 | On-Site Survey | Institution | For details, see the September 11, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 10, 2018 investor relations activities record sheet |
| 2018.9.13 | On-Site Survey | Institution | For details, see the September 14, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 13, 2018 investor relations activities record sheet |
| 2018.9.14 | On-Site Survey | Institution | For details, see the September 17, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 14, 2018 investor relations activities record sheet |
| 2018.9.18 | On-Site Survey | Institution | For details, see the September 19, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 18, 2018 investor relations activities record sheet |
| 2018.9.19 | On-Site Survey | Institution | For details, see the September 21, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 19, 2018 investor relations activities record sheet |
| 2018.9.25 | On-Site Survey | Institution | For details, see the September 27, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 25, 2018 |
| investor relations activities record sheet(1) | |||
| 2018.9.25 | On-Site Survey | Institution | For details, see the September 27, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 25, 2018 investor relations activities record sheet(2) |
| 2018.9.26 | On-Site Survey | Institution | For details, see the September 28, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 26, 2018 investor relations activities record sheet(1) |
| 2018.9.26 | On-Site Survey | Institution | For details, see the September 28, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 26, 2018 investor relations activities record sheet(2) |
| 2018.9.27 | On-Site Survey | Institution | For details, see the September 28, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: September 27, 2018 investor relations activities record sheet |
| 2018.10.10 | On-Site Survey | Institution | For details, see the October 12, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: October 10, 2018 investor relations activities record sheet |
| 2018.10.18 | On-Site Survey | Institution | For details, see the October 22, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: October 18, 2018 investor relations activities record sheet |
| 2018.10.26 | On-Site Survey | Institution | For details, see the October 26, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: October 26, 2018 investor relations activities record sheet |
| 2018.11.21 | On-Site Survey | Institution | For details, see the November 23, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: November 21, 2018 investor relations activities record sheet |
| 2018.11.23 | On-Site Survey | Institution | For details, see the November 26, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: November 23, 2018 investor relations activities record sheet |
| 2018.11.27 | On-Site Survey | Institution | For details, see the November 29, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: November 27, 2018 investor relations activities record sheet |
| 2018.12.14 | On-Site Survey | Institution | For details, see the December 18, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: December 14, 2018 investor relations activities record sheet |
| 2018.12.18 | On-Site Survey | Institution | For details, see the December 20, 2018 Shenzhen stock exchange interactive (http://irm.cninfo.com.cn) on the Changan Automobile: December 18, 2018 investor relations activities record sheet |
| Reception Times | 33 | ||
| Number of Agencies | 85 | ||
| Number of Individuals | 0 |
| Number of other entities | 0 |
| Whether to disclose undisclosed important information | No |
Chapter 5 Important Matters
Ⅰ.Company common stock profit distribution and capital reserves converting into sharecapital
During the reporting period, the common stock profit distribution policy, especially the formulation, implementation orthe adjustment situation of cash dividend policy.√ applicable □ not applicable
According to the China Securities Regulatory Commission requirements, in combination with the practical situation of thecompany, the Company has rectified the “Articles of Association” and clarified about the distributable profit caliber, dividenddistribution way, principle, form, cash dividend conditions and proportion, stock dividend condition, plans to set up and reviewprocedures, the implementation, the conditions of distribution policy adjustment, and decision-making procedures, etc, to strengthenthe supervision function of independent directors in the profit distribution plan, policy adjustment, and strengthen the guaranteesystem of the dividend return for investors. For details of the company’s specific distribution policy, please refer to the Articles ofAssociation. Company’s reported profit distribution plan and equity shares in line with the relevant provisions of the Articles ofAssociation and relevant provisions.
During the reporting period, profit distribution plan and capital reserves converting into share capital plans conforming to therelevant provisions of the company's articles of association, etc.
| Special Statement for Cash Dividend Policy | |
| Whether comply with the company's articles of association or requirements of resolutions of the shareholders' general meeting: | Yes |
| Whether the standard of distribution and the proportion is clear: | Yes |
| Whether the related decision-making process and mechanism is complete: | Yes |
| Whether the independent directors play a proper role: | Yes |
| Whether the small and medium-sized shareholders have the chance to fully express their views and demands, whether the legitimate rights and interests get fully protected: | Yes |
| Whether cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | Not Applicable |
For the last three years (including the reporting period), the company profit distribution draft or plan, and draft or planthat the capital reserves converting into share capital
2016 annual profit distribution plan is: Based on the existing total shares of 4,662,886,108, distribute cash of RMB 6.42 yuan(including tax) to all the shareholders every 10 shares.
2017 annual profit distribution plan is: Based on the existing total shares of 4,802,648,511, distribute cash of RMB 4.46 yuan(including tax) to all the shareholders every 10 shares
2018 annual profit distribution plan is: Based on the existing total shares of 4,802,648,511, distribute cash of RMB 0.18 yuan(including tax) to all the shareholders every 10 shares.
Share out Cash Bonus Table for last three years
Unit: Yuan
| Year | Cash dividend amount (tax included) | Net profit attributable to shareholders of listed companies in dividends annual consolidated statements | The net profit ratio (%) attributable to shareholders of listed companies in consolidated statements |
| 2018 | 86,447,673.20 | 680,728,392.03 | 12.70% |
| 2017 | 2,141,981,235.91 | 7,137,234,723.47 | 30.01% |
| 2016 | 3,083,300,344.06 | 10,285,284,120.57 | 29.98% |
Ⅱ. Preplan of profit allocation and capital reserve converting into share equity during thereporting period
| For every 10 shares to send bonus shares | 0 |
| For every 10 shares dividend number (RMB) (tax included) | 0.18 |
| The equity base of distribution plan(shares) | 4,802,648,511 |
| Total cash dividends (yuan) (tax included) | 86,447,673.20 |
| Distributable profits (yuan) | 34,682,279,143.32 |
| Proportion (%) of cash dividends to total profit distribution | 100% |
| Cash dividend policy： | |
| Others | |
| Detailed statement of profit allocation or plan that capital accumulation fund turn to be added | |
| 2018 annual profit distribution plan is: Based on the existing total shares of 4,802,648,511, send cash of RMB 0.18 yuan (including tax) to all the shareholders every 10 shares with total cash of RMB 86,447,673.20 yuan (including tax). | |
III. Commitments Fulfillment Condition
1、Commitments that company, shareholders, actual controllers, the acquirer, directors, supervisors andsenior management personnel or other affiliated parties during the report period fulfilled and by the end ofreport period not yet fulfilled.
| Commitments | Commitment entity | Commitment content | Commitment time | period for commitment | Performance |
| Share limited commitment | China Changan | When the company non-publicly subscribes for new shares of listed companies in 2017, the newly acquired shares of listed company can not be transferred within 36 months since the listing, but can be transferred after 36 months according to relevant provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange. | Oct., 2017 | 36 months | China Changan did not sell company shares during the reporting period |
| Other small shareholders commitment | China Changan | In order to avoid and eventually solve the possible competition or potential competitors, better maintain the interests of investors, the company controlling shareholder China Changan made the commitment: In two consecutive years profit of Harbin Hf Automobile Industry Group Co, With the continuous development ability and management level is improved significantly. Under such condition, the enterprise will be affiliated into the company. | September, 2010 | The Harbin Hefei Automobile Industry Group Co at present is still running at a loss, The conditions have not yet reached the profitable for two consecutive years. |
2、The assets of the company or project include the earnings forecast, and during the report period, theprofit forecast still existed, the company assets or projects achieve the profit forecast and explain thereasons
□Applicable √Not-applicable
IV. The non-operating fund occupation situation of the controlling shareholders and theiraffiliates to the listed companies
□Applicable √Not-applicableDuring the reporting period there does not exist non-operating fund of the listed company occupied by the controlling shareholderand its affiliated parties.
V. The board of directors, supervisors, and independent directors (if applicable) explainingthe "non standard audit report" from the accounting firm during the reporting period
□Applicable √Not-applicableCertified public accountants do not issue "non-standard audit report" for the current report.
VI. Explaining the change with last year's financial statements, accounting policies,accounting estimate and accounting methods
√Applicable □ Not-applicable
For details, please refer to “32. Accounting Policies and Changes in Accounting Estimates” of the “Significant AccountingPolicies and Accounting Estimates” in Note 3 to the Financial Statements in the “2018 Annual Report of the Company”.
VII. During the reporting period, big accounting errors correction and the need for tracerestatement
□Applicable √Not-applicableDuring the reporting period, no significant accounting errors correction and no need for trace restatement.
VIII、Compared with financial report for last year, the explanation to the scope change ofconsolidated statements
√ applicable □ not applicableDuring the reporting period, Changan Automobile has added Chongqing Changan New Energy Automobile Technology Co., Ltd.,Fuzhou Fuqing Changan New Energy Automobile Sales Co., Ltd., Guangzhou Changan New Energy Automobile Sales and ServiceCo., Ltd., Xiamen Changan New Energy Automobile Sales and Service Co., Ltd. and Nanjing Changan New Energy AutomobileSales and Service Co., Ltd. Changan has acquired Chongqing Changan Suzuki Automobile Co., Ltd. and Zhenjiang Demao HairunEquity Investment Fund Partnership (Limited Partnership). A total of seven companies were included in the consolidated statements.Changan has liquidated Heilongjiang Changan Automobile Sales Co., Ltd., Xinjiang Changan Automobile Sales Co., Ltd., HarbinChangan Automobile Technology Research Co., Ltd. and Shanghai Changan Automobile Engineering Technology Co., Ltd., and atotal of four companies are no longer included in the consolidated statements.
IX. The appointment, dismissal of the accounting firm
The appointment of the accounting firm
| The name of the domestic accounting firm | Ernst & Young Hua Ming LLP |
| Domestic accounting firms payment (ten thousand Yuan) | 395 |
| A continuous years of domestic accounting firms audit service | 12 |
| Domestic accounting firm of Certified Public Accountants name | Qiao Chun, Hu Yan |
Whether to change the accounting firms
□Applicable √Not-applicable
Employ audit of internal control accounting firms, financial adviser or sponsor
√Applicable □Not-applicable
Through the approval from the company's 2017 annual shareholders' meeting, the company hired Ernst &Young Huamingcertified public accountants (special ordinary partnership) as the company's 2018 annual internal control audit certified public
accountants. In 2018 the internal control audit fee paid for the internal control auditing services provided by Ernst &Young Huamingcertified public accountants (special ordinary partnership) is RMB 1.27 million yuan.
X. After the disclosure of the annual report, the Company faces the suspension andtermination of the listing
□Applicable √Not-applicable
XI. Bankruptcy restructuring related matters
□Applicable √Not-applicableDuring the report period no bankruptcy restructure related matters occur.
XII. Crucial litigation and arbitration events
□Applicable √Not-applicableDuring the reporting period the company has no crucial litigation and arbitration events.
XIII．Punishment and rectification
□Applicable √Not-applicableDuring the reporting period there’s no punishment and rectification.
XIV. The integrity of company and its controlling shareholder, actual controller
□Applicable √Not-applicable
XV. Company equity incentive plan, the implementation of the employee stock ownershipplan or other staff incentives.
√Applicable □Not-applicable
At the 30th meeting of the 7th board of directors, A bill to cancel some stock options of the Company was deliberated and passedon Apr 17th, 2018, and 10,826,600 stock options would be cancelled. For details, please refer to The announcement of cancellationabout some stock options of the company (Announcement Number: 2018-23) on Apr 18th, 2018. On May 24th, 2018, the companydisclosed Notice on the completion of cancellation about some stock options (Announcement Number: 2018-35), according torelevant regulations, the company applied to the shenzhen branch of China securities registration and settlement co., LTD for thecancellation of stock options and completed the cancellation procedures.
XVI. Significant related party transactions
1、Related transactions related to day-to-day operation
For details, please refer to Note 9 "Related Party Relationships and Transactions" in the Financial Statements.
2、Assets or equity acquisition, sales related transactions
For details, please refer to Note 9 "Related Party Relationships and Transactions" in the Financial Statements.
3、Related transactions of common investment
√Applicable □Not-applicable
For details, please refer to Chapter four " Major equity investment in the reporting period " in the Financial Statements.
4、Related rights and debt relations
√Applicable □Not-applicable
For details, please refer to Note 9 "Related Party Relationships and Transactions" in the Financial Statements.Whether there is any non-business related credits and debts□Applicable √ Not-applicableThere is no non-operating associated credits and debts during the reporting period.
5、Other significant related transactions
√applicable □ not applicableRelated queries in disclosure website of interim report of related transactions
| Name of temporary announcement | Temporary announcement date | Temporary announcement site name |
| Announcement about related transaction of replenishment chang 'an Peugeot Citroen automobile co., LTD | Jan, 13th, 2018 | http://www.cninfo.com.cn |
| Related transactions announcement about renewing 《Daily Framework Agreement For Related Transactions》、《Property Leasing Framework Agreement》、《Integrated Service Agreement》 | Apr, 4th, 2018 | http://www.cninfo.com.cn |
| Announcement about increasing estimated amount of 2018 daily related transaction | Apr, 18th, 2018 | http://www.cninfo.com.cn |
| Related Transactions Announcement that China South Industries Group Co., Ltd. provides financial service for the company (Note 1) | May, 7th, 2018 | http://www.cninfo.com.cn |
| Related transaction announcement thet Chongqing Automobile Finance Co., Ltd. provides financial services (Note 2) | May, 7th, 2018 | http://www.cninfo.com.cn |
Note 1：Changan Automobile has signed a Financial Service Agreement with China South Industry Group Finance Co.,Ltd andstrictly implemented the approval procedures from BOD meeting and Shareholders' meeting. In accordance with " AdministrativeMeasures for Financial Companies of Enterprise Groups" issued by CBRC, Changan Automobile reviewed China South IndustryGroup Finance Co.,Ltd and issued a risk assessment report.(For details, please refer to " A report on risk assessment of China SouthIndustry Group Finance Co.,Ltd " disclosed on http://www.cninfo.com.cn on Feb., 1st 2019)In 2019, China South Industry Group Finance Co.,Ltd will provide the following services for the company:
①Provide the maximum deposit balance of not more than 5.5 billion, and the deposit interest rates should not be lower than that ofother domestic financial institutions over the same period;②Provide the maximum credit total of 12 billion yuan and related credit services, the credit rate provided by the finance Companyfor Changan Automobile should not be higher than that of other domestic financial institutions over the same period;③Provide the maximum credit total of 15 billion auto financial services and other financial services, and set the prices for financialservices in accordance with the standards not higher than market fair prices or national standards.Note 2：Changan Automobile has signed a Financial Service Agreement with Changan Automobile Fiannce Co.,Ltd and strictlyimplemented the approval procedures from BOD meeting and Shareholders' meeting. In accordance with "Administrative Measuresfor Motor Financing Companies" issued by CBRC, Changan Automobile reviewed Changan auto finance and issued a riskassessment report.(For details, please refer to " A report on risk assessment of Changan Automobile Finance" disclosed onhttp://www.cninfo.com.cn on Feb., 1st 2019)In 2019, Changan auto Finance will provide the following services for the company:
①Provide the maximum deposit balance of not more than 3.5 billion, and the deposit interest rates should not be lower than that ofother domestic financial institutions over the same period;②Provide the maximum of 2 billion yuan in auto finance personal consumer credit discount service , and set the prices for financialservices in accordance with the standards not higher than market fair prices or national standards;③Provide the maximum credit total of 6 billion auto financial services and other financial services, and set the prices for financialservices in accordance with the standards not higher than market fair prices or national standards.
XVII. Major contract and its performance
1、Trusteeship, contracting, leasing matters
（1）Trusteeship
□Applicable √ Not-applicableInformation about TrusteeshipThere is no Trusteeship during the reporting period.
（2）contracting
□Applicable √ Not-applicableInformation about contractingThere is no contracting during the reporting period.
（3）Leasing
√Applicable □Not-applicableInformation about leasingRelated party rental situation can be found in the note nine of financial statements 5 (2) related party relationships and transactions.Projects whose profit and loss to the company during the reporting period is more than 10% of total profits□Applicable √ Not-applicable
Projects whose profit and loss to the company during the reporting period can’t be more than 10% of total profits
2、Major guarantee
□Applicable √ Not-applicableThere’s no major guarantee during the report period.
3、 Entrust others for cash assets management
(1) Entrust financial situation□Applicable √ Not-applicableThere’s no entrusting situation during the reporting period.(2) Entrusted loans situation□Applicable √ Not-applicableThere’s no entrusted loan during the reporting period.
4、Other major contract
□Applicable √ Not-applicableThere’s no other major contract during the reporting period.
XVIII. Social responsibility
Fulfill social responsibility of targeted poverty alleviation
√ applicable □ not applicableIn 2018, Changan Automobile positively responded to the "poverty alleviation plan for the 13th Five-Year-Plan period ", andfully implemented the guiding principles of the Eighteenth National Congress of the CPC , the third , fourth, fifth, sixth plenums ofthe 18th CPC Central Committee, poverty alleviation and development meeting of the central government. Changan Automobilepromoted the poverty alleviation through society and education, public welfare and public utilities construction, etc in fullcompliance with the decisions and arrangements of the Party Central Committee and the State Council based on the enterprise actualsituation to push forward the better and faster economic and social development of poverty-stricken area such as Luxi and YanshanCounties of Yunan Province and Pengshui and Youyang Counties of Chongqing Municipality.1、In 2018, precise poverty alleviation in "two counties" of Yunnan
(1) The company donated RMB 11 million to Luxi County.a. On education poverty alleviation projects: firstly, invest 2 million yuan to improve the teaching facilities of Santang TownJunior Middle School; secondly, invest 1.77 million yuan to build Changan Automobile (Luxi) Training Base Project (Phase II).Thirdly, the Company issues the Circular on Priority Employment of Graduates from Luxi Branch and Yanshan Branch of YunnanInstitute of Technicians (No. 2016), requiring relevant departments to implement it conscientiously. Under the same conditions,students from Luxi and Inkshan Branches should be recruited first, and within their abilities, they should actively promote the goal ofprecise poverty alleviation and poverty alleviation in the two counties. The Institute has set up two "Chang'an Automobile Classes"
for Yubei factories and Oshang Automobiles, recruiting 62 students and continuously promoting the precise poverty alleviation.Fifthly, Changan arranged company experts to teach the courses of "Introduction to World Skills of Automobile Event Competition","Diagnosis and Maintenance of Automobile Electrical Appliances" and "Enterprise Culture" for school teachers and students.
b. On the poverty alleviation project of people's livelihood: invest 7.23 million yuan to build a rural domestic garbagecollection and transportation facility project in Luxi County.
(2) The company donated RMB 11 million to Yanshan County.
a. On the industrial poverty alleviation project: firstly, invest 2.5 million yuan to build an apple planting project in AsheTownship; secondly, invest 2 million yuan to build SanQi planting project in Panlong Township; thirdly, invest 1 million yuan for thecommercial cattle breeding project in Weimo Township; fourthly, invest 1 million yuan in the pepper planting project in GanheTownship; fifthly, Changan intensifies its support to the industrial development of Yanshan County, and actively explores thefeasibility of incorporating Yanshan-related enterprises into the Chang'an Automobile Purchasing Supply Chain.
b. On education poverty alleviation projects: firstly, invest 2 million yuan for the construction of the student dormitorybuilding in Awenzhai Primary School; secondly, invest 1.4 million yuan for the student loan program. Thirdly, the Company issuesthe Circular on Priority Employment of Graduates from Luxi Branch and Yanshan Branch of Yunnan Institute of Technicians (No.2016), requiring relevant departments to implement it conscientiously. Under the same conditions, students from Luxi and InkshanBranches should be recruited first, and within their abilities, they should actively promote the goal of precise poverty alleviation andpoverty alleviation in the two counties; fourthly, sign strategic agreements with Yanshan Branch on school-enterprise cooperation andestablish school-enterprise cooperation relations; The Institute has set up two "Chang'an Automobile Classes" for Yubei factories andOshang Automobiles, recruiting 40 students and continuously promoting the precise poverty alleviation. Fifthly, Changan arrangedcompany experts to teach the courses of "Introduction to World Skills of Automobile Event Competition", "Diagnosis andMaintenance of Automobile Electrical Appliances" and "Enterprise Culture" for school teachers and students.
c. On the poverty alleviation project of people's livelihood: firstly, invest 1 million yuan in township hospitals equipmentconfiguration project to equip some township hospitals with basic equipments such as ventilator, electrocardiograph andelectro-acupuncture apparatus to improve the medical environment and medical conditions; Secondly, implement relief and povertyalleviation projects and donate 100,000 yuan to solve the difficulties of the affected people in a timely manner to ensure socialharmony and stability; Thirdly, implement the "Summary on Organizing the National Day of Poverty Alleviation and submitting theannual work of poverty alleviation notice" (Armament Reform [2018] 422), launch a series of activities called "China SouthIndustries Group Poverty Alleviation Week" and call on all units to publicize and actively mobilize their employees to involve in "Yanshan Material Donation" and "Yanshan Purchase" consumption poverty alleviation work on the premise of voluntary andmarket-oriented transactions, and Changan received a total of 2723 clothes, 281 books and arranged direct transportation of thesedonations to Yanshan County.2、Precise poverty alleviation in tow Counties of Chongqing in 2018
(1) According to the "Notice of the Chongqing Municipal Development and Reform Commission's Leading Group for PovertyAlleviation on Carrying out Donation Assistance and Reporting Poverty Alleviation Materials"( Yu Development and ReformCommission of the Poverty Alleviation Group issued [2018] Document No. 2), Changan Automobile donated 300,000 yuan toPengshui County for improving infrastructure, public services and so on.
(2) In accordance with the spirit of the Notice of the Office of the People's Government of Jiangbei District of Chongqing on theWork Plan of Aiding Youyang County in 2018 (No. 92 of Jiangbei Prefecture Office), Changan Automobile donated 200,000 yuan toYouyang County for the construction of school educational facilities.
Changan Automobile Statistics on Poverty Alleviation in 2018
3、Follow-up precision poverty alleviation plan
Changan Automobile will actively implement poverty alleviation work, continue to carry out targeted poverty alleviation workin Luxi County and Yanshan County of Yunnan Province, Pengshui County and Youyang County of Chongqing Municipality, andeffectively promote accurate poverty alleviation work.
3. Fulfill the social responsibility of the environmental protection
Whether the listed companies and their subsidiaries belong to the key pollutant discharge units announced by the environmentalprotection department√Yes □NoBasic status
Changan Automobile mainly produces engines and automobiles. The main pollutants are chemical oxygen demand, ammonianitrogen, total nickel, toluene, xylene and non-methane hydrocarbon,etc. Waste water mainly comes from the treatment of surfacetreatment wastewater, spray painting wastewater and oil containing wastewater before the coating workshop, which is dischargedafter physicochemical and biochemical treatment. The exhaust gas is mainly painted waste gas and flue gas. The exhaust gas of thespray paint is absorbed, concentrated and burned, and the exhaust gas of the oven is discharged after burning. Two sulfur oxide andnitrogen oxide are mainly from the waste gas from the clean energy of natural gas. All of the exhaust gases from energy and naturalgas combustion are organized emissions. The company's headquarters and subsidiaries have a sound environmental managementsystem, which has passed the environmental management system certification.Pollution discharge information
During the reporting period, there were 309 pollutant outlets and 18 water pollutant outlets. The emission standards were strictlyimplemented according to the national sewage comprehensive discharge standard, the water pollutant discharge standard in Beijing,
| Indicator | Unit | Quantity / Details |
| Ⅰ. Total | —— | —— |
| 1.funds | 10 thousand RMB | 2250 |
| 2. Material | 10 thousand RMB | —— |
| Ⅱ. Subdivision | —— | —— |
| 1. Industrial poverty alleviation | —— | —— |
| 1.1 Industrial poverty alleviation project type | —— | 2) Sanqi Planting Project in Panlong Township; 3) Cattle Breeding Project in Weimo Township; 4) Pepper Planting Project in Ganhe Township. |
| 1.2 Industrial poverty alleviation project investment funds | 10 thousand RMB | 650 |
| 2. Education poverty alleviation | —— | —— |
| 2.1 Funding for poor students | 10 thousand RMB | 140 |
| 2.2 Improve educational resources in poor areas | 10 thousand RMB | 597 |
| 3. Medical and health poverty alleviation | —— | —— |
| 3.1 Medical and health resources invested in poverty areas | 10 thousand RMB | 823 |
| 4. Other projects - people's livelihood poverty alleviation | —— | —— |
| 4.1 Amount of investment | 10 thousand RMB | 40 |
the national standard for the comprehensive emission of air pollutants, the standard for the emission of air pollutants on the surface ofautomobile manufacturing in Chongqing, the standard for the comprehensive emission of air pollutants, and the vehicleManufacturing industry (painting process) air pollutant emission standard in Beijing, national industrial enterprise boundaryenvironmental noise emission standard and so on. The total emission of major pollutants: 383.26 tons of chemical oxygen, 27.02 tonsof ammonia nitrogen, 212.63 tons of sulfur dioxide and 255.14 tons of nitrogen oxides. All the pollutants in the company aredischarged, and there is no excess total emission.
Solid wastes are separately collected and stored. Main dangerous wastes are wastewater and sludge treatment, paint slag,phosphated residue and waste solvent, etc. The units with hazardous waste business qualification are entrusted to dispose hazardouswastes. The general industrial solid wastes and household garbage are disposed by the units with qualification according to therequirement of the local government. The waste electrical and electronic products are disassembled by the units with qualificationand are safely disposed by the units with hazardous waste business qualification.Construction and operation of pollution prevention facilities
During the reporting period, the main waste gas prevention and control facilities include foundry dust removal anddeodorization facilities in engine factories, welding dust removal facilities in vehicle factories and treatment facilities for coatingvolatile organic waste gas; together with wastewater treatment facilities, they are included in preventive maintenance management ofequipment, with account books, operation instructions, preventive maintenance rules, preventive maintenance plans andimplementation records, and equipment spot inspection records, operating records and so on. The facilities are running normally.Administrative licensing of environmental impact assessment and other environmental protection for construction projects
In accordance with the regulations of the State Council on environmental protection and management of construction projects,the People's Republic of China Environmental Impact Assessment Law, the regulations on environmental protection in Chongqing,and the Interim Measures for the construction project completion of environmental protection and acceptance by the Ministry ofenvironmental protection of the state, the environmental impact assessment and completion ring of the new, modified and expandedprojects are required and strictly enforce the environmental impact assessment system and the "Three Simultaneity" system.
In 2018, the Company obtained "New Energy Electric Drive Assembly System Project EIA Approval",and completed the EIAacceptance about Dianjiang Test Site Project(Phase II)、PDC Project(Phase I)、Passenger Car Project.Emergency preparedness and exercise of emergency environmental events
Continue to carry out environmental protection emergency drills to enhance the response capacity to environmental emergencies.In 2018, all bases made environmental risk assessment reports and emergency plans for environmental emergencies. The Companycarried out 3 drills of a company-level environmental emergency, more than 14 emergency drills at the factory and 314 drills atworkshop.Programming and implementation of self-monitoring of the environment
In 2018, Key sewage units of Changan Automobile: Yuzui Base of OuShang Automotive Division, Yuzui Base of JiangbeiEngine Factory, Yubei Factory, Beijing Changan, Hefei Changan. All the key sewage made self-monitoring schemes, andself-monitoring has been carried out, and information disclosure has been carried out according to the requirements of the localecological environment department.Others
During the reporting period, Yubei Factory, Oushang Automobile Business Department, Jiangbei Engine Factory and MoldBusiness Department were included in Chongqing Environmental Credit Evaluation in 2017, and were all evaluated as ChongqingEnvironmental Credit Enterprises.
Whether to publish a report on social responsibility
√Yes □No
| Corporate Social Responsibility Report | |||||
| The nature of the enterprise | Whether it contains environmental information | Whether it contains social information | Whether it contains corporate governance information | Reporting Disclosure Criteria | |
| Domestic standards | Foreign standards | ||||
| State - owned enterprises | Yes | Yes | Yes | "Guidelines for the Shenzhen Stock Exchange Main Board", "Main Board Information Disclosure Business Memorandum No. 1 - Periodic Report Disclosure Relevant Issues", "Contents and Formats of Information Disclosure of Companies for Public Offering No. 2 - Contents and Form of Annual Report ","Guidelines for the Social Responsibility of Shenzhen Stock Exchange " | |
Specific description
| 1. Whether the company has passed the environmental management system certification（ISO14001） | Yes |
| 2. Company "waste gas, waste water, waste residue" three-waste reduction performance | Beijing Changan reused 38,891 tons wastewater and 87,401.96 tons of solid waste. |
| 3. Amount of annual environmental protection investment in 2018 (10 thousand) | 21,335 |
| 4. The company invests in upgrading the ability of employees to improve their personal knowledge and skills to enhance their career development (10 thousand） | 4,039.59 |
| 5. The amount of corporate social donations (funds, materials, free professional services) (10 thousand) | 3,171.99 |
XIX. Other important events
√Applicable □Not-applicable
On Mar. 16th, 2018, the company disclosed 《Chongqing Changan Automobile Co., Ltd. announcement on the free transfer ofstate-owned shares of controlling shareholders》(Announcement Number: 2018-11). The controlling shareholder of the company——China Changan Automobile Group Co., Ltd. intends to transfer about 1,035,312,673 shares of Changan Automobile (accounting for21.56% of the total share capital) to China South Industries Group Co., Ltd. without charge.
On May 31st, 2018, the company disclosed《Announcement of Chongqing Changan Automobile Co., Ltd. on the free transfer ofthe controlling shareholder's state-owned shares approved by the SASAC》(Announcement Number: 2018-39). On Jun 21st, 2018, thecompany disclosed《Announcement on the completion free transfer of controlling shareholders' state-owned shares》(Announcement
Number: 2018-42) and confirmed the transfer registration process of the above-mentioned free transfer of shares on Jun 15th, 2018.XX. Important matters of the Company's subsidiary□Applicable √Not-applicable
Chapter 6 Changes in the shareholding of the company and
shareholders
I. Change in shareholdings
1、Change in shareholdings
Unit: One share
| Balance before current change | Addition and deduction（+，-） during change | Balance after current change | ||||||
| Quantity | (%) | Additional issued | Stock dividend | Provident fund transfer | other | Quantity | (%) | |
| Non-circulated shares | 139,781,303 | 2.91% | 139,781,303 | 2.91% | ||||
| 1、State-owned legal person shares | 139,762,403 | 2.91% | 139,762,403 | 2.91% | ||||
| 2、Senior management personnel shares | 18,900 | 0.00% | 18,900 | 0.00% | ||||
| Circulated shares | 4,662,867,208 | 97.09% | 4,662,867,208 | 97.09% | ||||
| 1、Domestic listed RMB shares | 3,760,881,066 | 78.31% | 3,760,881,066 | 78.31% | ||||
| 2、Domestic listed foreign shares | 901,986,142 | 18.78% | 901,986,142 | 18.78% | ||||
| Total shares | 4,802,648,511 | 100.00% | 4,802,648,511 | 100.00% | ||||
Reason of stock changes□ applicable √ not applicableApproval of stock changes□ applicable √ not applicableOwnership transfer of stock change□ applicable √ not applicableProgress in the implementation of stock repurchase□ applicable √ not applicableProgress in the implementation of the reduction of stock by means of centralized bidding
□ applicable √ not applicableThe influence of share changes on financial indicators, such as the latest year and the latest basic earnings per share anddiluted earnings per share, the net assets per share belonging to the common shareholder of the company□ applicable √ not applicableOther contents which the company regards necessary and securities supervising institution requires the Company to disclose.□ applicable √ not applicable
2、Change in Non-circulated shares
√ Available □Not-available
Unit：one share
| Name of shareholders | Non-circulated shares held at the year-beginning | Decrease during the reporting period | Increase during the reporting period | Non-circulated shares held at the year-end | Reason for non-circulated shares | Date for the circulated shares |
| China Changan Automobile Co., Ltd. | 139,762,403 | - | - | 139,762,403 | Non - public offering shares of 139,762,403 in 2017 | 2019-10-14 |
| Zhu Huarong | 18,900 | - | - | 18,900 | Executive lock stocks | 6 months after the retirement |
| Total | 139,781,303 | - | - | 139,781,303 | -- | -- |
II. Issuing and listing of securities
1、Securities issuance (excluding preferred stocks) during the reporting period□ applicable √ not applicable2、Changes in the total number of shares of the Company and changes in the structure of the shareholders and in thestructure of the Company's assets and liabilities□ applicable √ not applicable3、Existing internal staff shares□ Available √ Non available
III. Shareholders and actual controllers situation
1、The number of shareholders of the company and the stock
Unit: one share
| Number of | 189,472 | Number of | 203,311 | Number of | 0 | Number of | 0 |
| ordinary shareholders at the period-end | ordinary shareholders at the month-end prior to the disclosure of this Report | preferred shareholders with resumed voting rights at the period-end | preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | |||||||||||
| Holding more than 5% of the shareholders, or top 10 shareholders situation | ||||||||||||||
| Name of shareholders | Nature of Shareholders | （%） | Shares held at the year-end | increases and decreases during the report period | Non-circulated shares held at the year-end | Circulated shares held at the year-end | Pledged/ Frozen cases | |||||||
| Share status | amount | |||||||||||||
| China South Industries Group Co., Ltd. | State-owned legal person shares | 21.56% | 1,035,312,673 | 1,035,312,673 | - | 1,035,312,673 | No pledge or freeze | |||||||
| China Changan Automobile Co., Ltd. | State-owned legal person shares | 19.32% | 928,044,946 | -1,035,312,673 | 139,762,403 | 788,282,543 | No pledge or freeze | |||||||
| China securities finance Co, Ltd | domestic general legal person shares | 4.88% | 234,265,333 | 32,220,512 | - | 234,265,333 | No pledge or freeze | |||||||
| United Prosperity (Hongkong) Investment Co., Limited | foreign legal person shares | 3.21% | 154,120,237 | 46,852,509 | - | 154,120,237 | No pledge or freeze | |||||||
| Central Huijin Investment Ltd. | domestic general legal person shares | 1.15% | 55,393,100 | - | - | 55,393,100 | No pledge or freeze | |||||||
| GIC PRIVATE LIMITED | foreign legal person shares | 0.93% | 44,803,223 | -36,090,349 | - | 44,803,223 | No pledge or freeze | |||||||
| DRAGON BILLION SELECT MASTER FUND | foreign legal person shares | 0.85% | 40,597,114 | 39,250,619 | - | 40,597,114 | No pledge or freeze | |||||||
| China Merchants Bank Co., Ltd.-Boss CSI Central Enterprise Structure Adjustment Transaction Open Index Securities Investment Fund | fund, finance products, etc. | 0.75% | 36,010,722 | 36,010,722 | - | 36,010,722 | No pledge or freeze | |||||||
| Hong Kong Central Clearing Company Limited | foreign legal person shares | 0.49% | 23,648,047 | 5,477,959 | - | 23,648,047 | No pledge or freeze | ||||
| Industrial and Commercial Bank of China Co., Ltd. - Yinhua CSI Central Enterprise Structure Adjustment Transaction Open Index Securities Investment Fund | fund, finance products, etc. | 0.39% | 18,676,200 | 18,676,200 | - | 18,676,200 | No pledge or freeze | ||||
| Explanation on the relationship and the action alike of above shareholders | Among the top 10 shareholders, China South Industries Group Co., Ltd., the actual controller; China Changan Automobile Group Co., Ltd., the controlling shareholder, and its wholly owned subsidiary United Prosperity (Hong Kong) Investment Co., Limited. belong to the concerted actor regulated by “Disclosure Administration of Shares Change Information of The Listed Company”. | ||||||||||
| The ten largest circulated shareholders | |||||||||||
| Name of shareholders | Shares at the year end | Shares type | |||||||||
| Type | Amount | ||||||||||
| China South Industries Group Co., Ltd. | 1,035,312,673 | RMB ordinary shares | 1,035,312,673 | ||||||||
| China Changan Automobile Co., Ltd. | 788,282,543 | RMB ordinary shares | 788,282,543 | ||||||||
| China securities finance Co, Ltd | 234,265,333 | RMB ordinary shares | 234,265,333 | ||||||||
| United Prosperity (Hongkong) Investment Co., Limited | 154,120,237 | Domestic listed foreign shares | 154,120,237 | ||||||||
| Central Huijin Investment Ltd. | 55,393,100 | RMB ordinary shares | 55,393,100 | ||||||||
| GIC PRIVATE LIMITED | 44,803,223 | Domestic listed foreign shares | 44,803,223 | ||||||||
| DRAGON BILLION SELECT MASTER FUND | 40,597,114 | Domestic listed foreign shares | 40,597,114 | ||||||||
| China Merchants Bank Co., Ltd.-Boss CSI Central Enterprise Structure Adjustment Transaction Open Index Securities Investment Fund | 36,010,722 | RMB ordinary shares | 36,010,722 | ||||||||
| Hong Kong Central Clearing Company Limited | 23,648,047 | RMB ordinary shares | 23,648,047 | ||||||||
| Industrial and Commercial Bank of China Co., Ltd. - Yinhua CSI Central Enterprise Structure Adjustment Transaction Open Index Securities Investment Fund | 18,676,200 | RMB ordinary shares | 18,676,200 | ||||||||
| The top 10 shareholders to sell circulated shares, and the infinite tradable relationship between shareholders and top 10 shareholders or concerted action | Among the top 10 shareholders, China South Industries Group Co., Ltd., the actual controller; China Changan Automobile Group Co., Ltd., the controlling shareholder, and its wholly owned subsidiary United Prosperity (Hong Kong) Investment Co., Limited. belong | ||||||||||
Whether the company top 10 shareholders of ordinary shares, and the top 10 circulated shareholders agreed on therepurchase transactions during the report period□Available √Not- availableThe company top 10 shareholders of ordinary shares, and the top 10 circulated shareholders did not agree on the repurchasetransactions during the reporting period。
2、The controlling shareholder of the company.
Nature of the controlling shareholder: the central state-ownedType of the controlling shareholder: legal person
to the concerted actor regulated by “Disclosure Administration of Shares ChangeInformation of The Listed Company”.
Name
| Name | Legal /Representative | Date of establishment | Organization code | Business scope and major products: |
| CHINA CHANGAN AUTOMOBILE GROUP CO., LTD | Liu Weidong | Dec 26th, 2005 | 911100007109339484 | Design, development, manufacture and sales of automobile &motorcycle, automobile &motorcycle engine, automotive and motor cycle components& parts; sales of optical products, electronic and photoelectron products, night-time vision device, 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 of assets restructuring. |
| The controlling equity and equity during the reporting period, the controlling shareholder of listed companies in other domestic and foreign markets | To the reporting period, the holding companies: Harbin Dongan Auto Engine Co., Ltd. (stock code 600178); Hunan Tianyan Machinery Co., Ltd. (stock code 600698), Chongqing Changan Minsheng APLL Logistics Co., Ltd(stock code 01292.HK) | |||
The change of controlling shareholder during the reporting period□Available √ Not- availableNo changes in controlling shareholder during the reporting period.
3、The ultimate controller of the Company
Nature of the ultimate controller: the central state-owned asset management institutionType of the ultimate controller: legal person
| Name | Legal | Date of | Organization | Business scope and major products: |
| /Representative | establishment | code | ||
| China South Industries Group Corp. | Xu Ping | 29 Jun.,1999 | 91110000710926043F | investment and management of state-owned assets; manufacturing of guns and firearms; engineering prospecting, designing, construction, contracting, construction supervision; equipment installation, etc. |
| The controlling equity and equity during the reporting period, the controlling shareholder of listed companies in other domestic and foreign markets | To the reporting period, direct or indirect holding companies: Harbin Dongan Auto Engine Co., Ltd. (stock code 600178); Baoding Tianwei Electric Co., Ltd. (stock code 600550); Jiangling Motors Co., Ltd. (stock code 000550); Hunan Tianyan Machinery Co., Ltd. (stock code 600698); China Jialing Industrial Co., Ltd. (stock code 600877); Chongqing Jianshe Automotive Systems Co., Ltd. (stock code 200054); Lida Optical Co., Ltd. (stock code 002189); Yunnan West Instrument industrial Co., Ltd. (stock code 002265); Chongqing Changan Minsheng logistics Limited (stock code 01292.HK). | |||
The change of the ultimate controller during the reporting period□Available √ Not- availableNo changes in the ultimate controller during the reporting period.Relationship among the Company and its controlling shareholders:
Actual control people control the company through trust or other asset management method.
□Available √Not available
4、Other legal shareholders with over 10% holding
□Available √ Not available
5、 Reduced shareholdings of controlling shareholders, actual controllers, restructuring parties and othercommitting parties
□Available √ Not available
Chapter 7 Information about Directors, Supervisors, Senior
Management and Employees
Ⅰ. Share ownership changes of directors, supervisors and senior management
| Name | Position | As state | Gender | Age | Term start date | Term Termination date | Shares held at beginning（stock） | increased share number in this issue（stock） | decreased share number in this issue（stock） | share number at the end（stock） |
| Zhang Baolin | Chairman | present | M | 56 | 2017-09-22 | 2019-03-23 | ||||
| Zhu Huarong | Director, President | present | M | 53 | 2016-03-23 | 2019-03-23 | 25,200 | - | - | 25,200 |
| Zhou Zhiping | Director | present | M | 48 | 2016-03-23 | 2019-03-23 | ||||
| Tan Xiaogang | Director | present | M | 55 | 2016-03-23 | 2019-03-23 | ||||
| Zhang Dongjun | Director, Deputy Vice Director | present | M | 52 | 2018-05-18 | 2019-03-23 | ||||
| Zhang Deyong | Director | present | M | 44 | 2018-05-18 | 2019-03-23 | ||||
| Liu Jipeng | independent director | present | M | 62 | 2016-03-23 | 2019-03-23 | ||||
| Li Qingwen | independent director | present | M | 63 | 2016-03-23 | 2019-03-23 | ||||
| Tan Xiaosheng | independent director | present | M | 48 | 2016-03-23 | 2019-03-23 | ||||
| Pang Yong | independent director | present | M | 49 | 2016-03-23 | 2019-03-23 | ||||
| Chen Quanshi | independent director | present | M | 73 | 2016-03-23 | 2019-03-23 | ||||
| Ren Xiaochang | independent director | present | M | 62 | 2017-09-20 | 2019-03-23 | ||||
| Wei Xinjiang | independent director | present | M | 49 | 2017-09-20 | 2019-03-23 |
| Cao Xingquan | independent director | present | M | 47 | 2018-05-18 | 2019-03-23 | ||||
| Yan Ming | Chairman of the supervisory | present | M | 53 | 2019-01-03 | 2019-03-23 | ||||
| Sun Dahong | Supervisor | present | M | 52 | 2016-03-23 | 2019-03-23 | ||||
| Zhao Huixia | Supervisor | present | M | 58 | 2016-03-23 | 2019-03-23 | ||||
| Zhang Anguo | Employee Supervisor | present | M | 59 | 2016-03-23 | 2019-03-23 | ||||
| Luo Yan | Employee Supervisor | present | F | 44 | 2016-03-23 | 2019-03-23 | ||||
| Yuan Mingxue | Executive Vice President | present | M | 50 | 2016-03-23 | 2019-03-23 | ||||
| Liu Bo | Deputy Vice Director | present | M | 52 | 2016-03-23 | 2019-03-23 | ||||
| He Chaobing | Deputy Vice Director | present | M | 51 | 2016-03-23 | 2019-03-23 | ||||
| Zhang Jingjing | Deputy Vice Director | present | F | 52 | 2016-03-23 | 2019-03-23 | ||||
| Li Wei | Deputy Vice Director | present | M | 52 | 2016-03-23 | 2019-03-23 | ||||
| Tan Benhong | Deputy Vice Director | present | M | 43 | 2017-08-31 | 2019-03-23 | ||||
| Liu Zhengjun | Deputy Vice Director | present | M | 53 | 2017-11-24 | 2019-03-23 | ||||
| Ye Pei | Vice President | present | M | 43 | 2018-09-21 | 2019-03-23 | ||||
| Zhao Fei | Vice President | present | M | 44 | 2018-09-21 | 2019-03-23 | ||||
| Chen Wei | Vice President | present | M | 46 | 2018-09-21 | 2019-03-23 | ||||
| Li Mingcai | Vice President | present | M | 37 | 2018-09-21 | 2019-03-23 | ||||
| Li Jun | Board Sectary | present | F | 49 | 2016-03-23 | 2019-03-23 | ||||
| Huang Zhongqiang | Vice President | departure | M | 50 | 2016-03-23 | 2018-05-21 | ||||
| Luo Minggang | Vice President | departure | M | 55 | 2016-03-23 | 2018-05-21 | ||||
| Dong Qihong | Chairman of the supervisory | departure | M | 54 | 2017-12-16 | 2018-08-27 | ||||
| Gong Bing | Vice President | departure | M | 49 | 2016-03-23 | 2018-05-21 | ||||
| Wang | Director | departure | M | 45 | 2016-03-23 | 2018-05-14 |
| Xiaoxiang | ||||||||||
| Wang Jun | Deputy Vice Director | departure | M | 46 | 2016-03-23 | 2018-09-21 | ||||
| Wang Kun | Director/Vice president | departure | M | 43 | 2016-03-23 | 2018-01-27 | ||||
| Total | 25,200 | - | - | 25,200 |
Ⅱ. Personnel Changes of directors, supervisors and senior management
| Name | Position | Type | Term | Reason |
| Yan Ming | Chairman of the supervisory | elected | 2019-01-03 | recruitment for work needs |
| Zhang Dongjun | Director | elected | 2018-05-18 | recruitment for work needs |
| Cao Xingquan | independent director | elected | 2018-05-18 | recruitment for work needs |
| Zhang Deyong | Director | elected | 2018-05-18 | recruitment for work needs |
| Zhang Deyong | Deputy Vice Director | engaged | 2018-01-26 | recruitment for work needs |
| Ye Pei | Vice President | engaged | 2018-09-21 | recruitment for work needs |
| Zhao Fei | Vice President | engaged | 2018-09-21 | recruitment for work needs |
| Chen Wei | Vice President | engaged | 2018-09-21 | recruitment for work needs |
| Li Mingcai | Vice President | engaged | 2018-09-21 | recruitment for work needs |
| Wang Jun | Deputy Vice Director | departure | 2018-09-21 | Work change |
| Huang Zhongqiang | Vice President | departure | 2018-05-21 | Work change |
| Luo Minggang | Vice President | departure | 2018-05-21 | Work change |
| Dong Qihong | Chairman of the supervisory | departure | 2018-08-27 | Work change |
| Gong Bing | Vice president | departure | 2018-05-21 | Work change |
| Wang Kun | Director/Vice president | departure | 2018-01-27 | Work change |
| Wang Xiaoxiang | Director | departure | 2018-05-14 | Work change |
Ⅲ. Employment
Professional Background, Main Work Experience and Main Duties and Responsibilities of present directors, supervisors and seniormanagers
1、Directors
Mr. Zhang Baolin, Chairman, born in 1962. He has obtained a postgraduate degree, a senior economist and senior political&ideological worker. He currently holds the position of the member of the Party Group and the Vice General Manager of ChinaSouth Industries Group, and the Chairman of Chongqing Changan Automobile. He used to work as Vice Secretary and Secretary of
the League Committee of the South-west Industries Bureau in China Industries Company, Secretary of the Party Committee ofChongqing Changfeng Machinery Factory, Senior Deputy General Manager and General Manager of Chengdu Wanyou Company,Director, Vice President and Deputy General Manager of Changan Automobile (Group) Co., Ltd., the President of the Company, thevice secretary of the Party Committee of China Changan, the president assistant of South Industries Group, the General Manager andthe vice Chairman of the Company, the General Manager of China Changan Automobile Co, Ltd.
Mr. Zhu Huarong, Director and President. He was born in 1965, master graduate student, researcher-level senior engineer.Currently he is the president assistant of South Industries Group, the director of China Changan Automobile Group and the director、president and the vice secretary of party committee of Chongqing Changan Automobile. He was vice director of ChanganTechnology Department, the chief engineer of Changan Automobile Manufacture Factory, president assistant of Changan Automobile(Group) Co., Ltd. and director of technical center, director of science and technology committee, vice President of ChanganAutomobile (Group) Co., Ltd and the leader of engineering research division., vice President and secretary of party committee ofChongqing Changan Automobile, the vice secretary of party committee of China Changan Automobile Group
Mr. Zhou Zhiping, Director. He was born in 1971, the doctor graduate. Currently he is staff director of China South IndustriesGroup, director, secretary of the Party Committee, Union Chairman of Chongqing Changan Automobile. He was deputy director ofMotor sector of development and planning department of China South Industries Group Corp, manager and director of long-termplanning sector of development and planning department of China South Industries Group Corporation, deputy director and directorof capital operation Department of China South Industries Group Corp, the general manager of the southern industrial assetmanagement Ltd, the staff director of China South Industries Group, the secretary of party committee and the labor union chairmanof the Company.
Mr. Tan Xiaogang, Director. He was born in 1963, the master’s degree, researcher-level senior engineer. Currently, he is thedirector of Development & Planning Department of China South Industries Group. He used to be the Vice Director, executive ViceDirector of Workshop No. 343, deputy Secretary of the Yuanling County CPC Committee in Hunan Province, director, executivedeputy general manager, and general manager of Hunan Yunjian Co. Ltd, Chariman, the Secretary of the Party Committee of HunanYunjian Group, and vice director of Development & Planning Department of China South Industries Group.
Mr.Zhang Dongjun, Director, is born in 1966, master’s degree. Now he is the Director and Chief Accountant of China ChanganAutomobile Group Co, Ltd. He used to be the deputy general manager of the southern industrial asset management Ltd, the deputydirector of Capital operation Department of China South Industries Group, the deputy general manager of China South IndustriesAutomobile Co., Ltd, the Deputy Director of Capital Operations Department of Weapons and Equipment Group, Director ofTechnical Management Department of Science and Technology Quality Department, Director of Integrated Technology Office, andDeputy Director.
Mr. Zhang Deyong, director, vice president, born in 1974, MPAcc, senior accountant. He is vice president of the Company andthe head of the capital operation Department of the Company. He was the director, the chief accountant, and a committee member ofthe Party committee of the Chongqing Changan Industry Group. The deputy director (registered) of finance department in SouthIndustries, the director, the chief accountant, the committee member of the Party committee of Chongqing Changjiang Electrician Co.,Ltd., the deputy director (registered) of the Finance Department of South Industries Group, the deputy director, director of financedepartment and the assistant president in the Institute of Automation of South Industries Group.
Mr. Liu Jipeng, independent director. He was born in 1956, master degree. He has the certificates of Phase II Professor, SeniorFellow, Senior Economist and Certified Public Accountant and currently serves as Dean and Phase II Professor of Business School ofChina University of Political Science and Law. Currently, he is the dean, professor, and PhD supervisor of Capital Finance Institute inChina University of Political Science and Law; Legal adviser to the State-owned Assets Supervision and Administration Commissionof the State Council; the vice Chairman of China Enterprise Reform and Development Research Association; Deputy director of theindependent board of directors of the China listed companies Association. He is a famous expert on joint-stock systems and corporateissues, specializing in the combination of joint-stock systems, collectivization, and internationalization theory and practice. He has
published more than 400 articles on newspapers and magazines domestic and abroad, such as People’s Daily and Economic ResearchJournal and received more than 800 interviews by domestic and overseas newspaper and magazines. In the last 20 years, he hasmanaged the shareholding system reform, corporate strategy, acquisition and reorganization, financing scheme design for over 300companies, such as National Electricity Company, Aviation Industry Corporation of China, Chinalco, Haier Group, Hainan Airlines,Wanxiang Group, Li-ning Sproting Goods Co, Tianjin Development Zone Head Office. These enterprises cover more than 20provinces and cities, including various industries. He is called “the first person in stock reform” by media.
Mr. Li Qingwen, independent director. He was born in 1956, master degree. He is currently the dean of the AutomobileEvaluation Institute and vice chairman of the China Automobile Talent Research Association. He once served as chairman of ChinaEnergy Automobile Communications Group, president of China Automobile Newspaper, president of China Energy Newspaper,director and deputy director of the General Office of Heilongjiang Provincial People's Government, and secretary of HailinMunicipal Committee of Heilongjiang Province. Since 1998, his works with a total of nearly one million words in automotiveresearch, monographs, reviews, and interviews have been published.
Mr. Tan Xiaosheng, independent director, born in 1970, bachelor’s degree. Currently, he is Cyber Hero founder, senior engineer,deputy secretary-general of the CCF, outstanding cyber security talents in 2018, high-end leader of Zhongguancun in 2012, technicalexpert of the Network Security Bureau of the Ministry of Public Security, and chairman of the CCF YOCSEF 2015-2016headquarters, and successively worked at Xi'an Jiaotong University, Peking University Founder Group, Shenzhen Modern, ShenzhenHaoxin, 3721, Yahoo! China, MySpace China. From 2009 to 2019, he worked at 360 Company and served as vice president oftechnology, chief privacy officer, chief security officer, and technical president. He is also an adjunct professor and manager of theSchool of Computer Science at Chongqing University of Posts and Telecommunications, an adjunct professor at Xidian University,and an enterprise tutor at Beijing University of Posts and Telecommunications. Technical areas: network security technology, cloudcomputing platform technology, operational automation technology, search engine technology.
Mr. Pang Yong, independent director, born in 1969, master’s degree. Currently, he is the chairman and CEO of IDEO, andadjunct professor of Jilin University. He used to be the manager of Liaoning Industry Group, and director of Raytheon Co. China. “IFlow Smart Terminal- Smart Decision Management Platform” is under his leading design, and he acquires the copyright fromNational Copyright Administration; meanwhile, he is the developer of China AD-CAS, Competitiveness Model of Channel System,and Standardized Database Resources. He is also the Chief expert in lean marketing of automobile dealers certified by Ministry ofHuman Resources and Social Security of the People’s Republic of China.
Mr. Chen Quanshi, independent director, born in 1945, bachelor's degree. Currently, He is currently a professor and director ofthe Department of Automotive Engineering of Tsinghua University, director of the Electric Vehicle Research Office, and honorarydirector of the Electric Vehicle Branch of the China Automobile Engineering Society. He once served as vice president of the Schoolof Mechanical Engineering of Tsinghua University, head of the Department of Automotive Engineering, and director of theAutomobile Research Institute. To undertake the topic of "Fuel Cell City Passenger Vehicle Technology Research" in the majornational "863" electric vehicle projects, national energy conservation and new energy vehicle 863 major projects; He won the firstprize for scientific and technological progress in Beijing in 2009 and the second prize for national invention(ranked second). Hepublished a monograph "Fuel Cell Electric Vehicle"(first author) 2004, Tsinghua University Press; Editor-in-Chief of AdvancedElectric Vehicle Technology (First Author) the first edition of 2007 (won the second prize of the National Machinery IndustryScience and Technology Progress Award).
Mr. Ren Xiaochang, independent director, was born in 1956, bachelor's degree. He served as the chairman and general managerof China Automobile Engineering Research Institute, the group expert of the 12th Five-Year plan national key science andtechnology special (EV) projects, and the committee member of the second national strategic emerging industry development expertadvisory committee. He is the expert of the Chinese machinery industry science and technology, the special subsidy expert of theState Council and the evaluation expert of the national science and technology award. The main social part-time jobs include thedeputy director of the China Automobile Engineering Society, the deputy director of the academic committee of the State Key
Laboratory for automobile body advanced design and manufacture of Hunan University, the deputy director of the technicalcommittee of the State Engineering Laboratory of electric vehicles, and the state key experiment on automobile safety and energysaving of the Tsinghua University, and the member of the academic committee of China Academy of international engineering. Itsmain research and scientific research projects have won the awards such as provincial and ministerial level and scientific andtechnological progress awards, including 3 second-level awards and 3 third-level awards.
Mr. Wei Xinjiang, independent director, was born in 1969, PHD. He is currently assistant general manager of China LifeInsurance (Group) company strategic planning department and a senior commissioner of China Life Financial Insurance ResearchCenter. He was engaged in teaching and scientific research for 13 years at the International Investment Department of the ChineseAcademy of Finance and the Institute of Finance and economics of foreign trade and Economy University. He studied at Hollandbusiness school, the University of Birmingham, the European Commission and the United Nations Hague International Court ofjustice for 3 years. He is the expert in international business, overseas M & A, operation of capital market and so on. It has richresearch on finance, insurance, overseas investment, and comprehensive finance and so on. He also served as a part-time professorand postgraduate instructor of the International College of Renmin University of China, Xi’an Jiaotong-Liverpool University and theHolland business school. He has published nearly 150 papers in international and domestic journals, and 8 books, such as the fraudand anti-fraud of automobile insurance, the comparative study of the anti-monopoly policies between the United States and the EU,and the analysis of the accounting statements and investment value of the enterprises.
Mr. Cao Xingquan, independent director, born in 1971, doctor of law. He is currently a professor at the School of Civil andCommercial Law of Southwest University of Political Science and Law, and a doctoral tutor in the direction of civil and commerciallaw. He has 17 years of civil and commercial law teaching and research experience, including 14 years of teaching at SouthwestUniversity of Political Science and Law. He is a lecturer in the National fine course "Business Law" and the National Resourcesharing course "Business Law". He focuses on the study of commercial law, company law, securities law, and insurance law. He haspresided over or participated in more than 20 various scientific research topics, published more than 60 academic papers, publishedmore than 10 academic works and participated in teaching materials; He is the executive director and director of the China LawConference Law, Insurance Law, and Securities Law Research Association; He once served as vice president of the Fourth Divisionof the Chongqing First Intermediate People's Court Civil Trial; Member of Chongqing People's Procuratorate Expert Committee onCivil Administration Supervision; He has participated in many national and local legislative consultations, engaged in a large numberof professional consultations, special lectures, and legal services in enterprise restructuring, capital operations, and corporategovernance, and concurrently served as an arbitrator in arbitration committees in Shenzhen, Chongqing, and Zunyi.
2、Supervisors
Mr. Yan Ming, Chairman of the Supervisory Board, born in 1965, Master of Law, Senior Political Engineer. He is currently theInspector of the Audit and Risk Department of China South Industries Co., Ltd., Chairman of the Supervisory Board of China SouthIndustries Co., Ltd., Chairman of the Supervisory Board of Chongqing Chang'an Automobile Co., Ltd.. He served as Deputy Ministerand Minister of Organization Department of Jialing Industrial Co., Ltd.; United Front Department Minister, Party School ExecutiveVice President, Director of Human Resources Development Management Office of Jialing Industrial Co., Ltd.; Deputy PartySecretary and Disciplinary Committee Secretary of Jialing Industry Co., Ltd..; Deputy Director of Human Resources Department ofChina South Industries (Exchange); Deputy Director and Director of the Party Group Work Department(Supervision Department) ofChina South Industries Co., Ltd., Deputy Chairman of the Party Group Discipline Inspection Unit, Member, Deputy Secretary,Member and Secretary of the CPC Ordnance Group directly under the Committee; Director of the Supervision Department of ChinaSouth Industries and deputy leader of the Party Group Discipline Inspection Unit; Audit and Risk Department Inspector of ChinaSouth Industries; Chairman of the Supervisory Board of China Chang 'an Automobile Group Co., Ltd., Baoding Tianwei Group Co.,Ltd., Zhonghui Fortis(Shenzhen) Co., Ltd., Southern Industrial Assets Management Co., Ltd..
Mr. Sun Dahong, Supervisor. He was born in 1966, master degree, senior economist. Currently, he is the vice director of generaloffice. He used to be the vice director of legal division under the general office in China South Industries Group, vice director and
director of Legal Advisor Division in China South Industries Group, and director of Legal Affairs Division of general office, and thechief of Secrets Agency in South Industries Group.
Mr. Zhao Huixia, Supervisor. He was born in 1960, bachelor degree, senior account. Currently, he is the professional senior staff.He used to be the deputy general accountant and director of Hafei Automobile Co, vice general manager of Harbin Hafei AutomobileIndustry Group, vice general manager of Hafei Automobile Co, the Secretary of the Party Committee and Vice President of HafeiAutomobile Industry Group, vice general manager of AVIC Automobile Industry Co., Ltd, Assistant President and general managerof Operations Management Department of China Changan Automobile Group Co, Ltd.
Mr. Zhang Anguo, staff supervisor. He was born in 1959, master degree, senior political & ideological worker. Currently, he isthe officer of Management Section under Party organization of Party Work Department. He used to be the chief of quality section ofquality Department, section chief and chief of Labor Union, chief of organization division of Party Work Department, director ofParty Construction division of Party Work Department (Corporate Culture Center).
Ms. Luo Yan, staff supervisor. She was born in 1974, bachelor degree, assistant economist. Currently, she is the chief of salary& performance section of HR department. She used to be the maintenance electricians, engineering measurer person, labortechnology fixed member, schemer in workshop No.232 of No.3 plant, chief of welfare section of Salary Division of HR Department,and chief of welfare office III.
3、Senior Management other than Directors and Supervisors
Mr.Yuan Mingxue, the major executive vice president, born in 1968, master’s degree, senior engineer, he used to be the ViceDirector and Director of the General Manager’s Office, Director of the Quality Control Department, Assistant to President, and VicePresident of Changan Automobile (Group) CO., LTD, the Deputy Executive President and the Secretary of CPC of ChognqingChangan Suzuki Auto. Co., Ltd, vice president of the Company.
Mr. Liu Bo, Executive Vice President and Head of Automobile Engineering General Institute, born in 1966, Master's degree,Senior Researcher-level Engineer. He used to serve as the Vice Director of Workshop No.71 of Jiangling Machinery Plant, the ViceDirector of Engine Research Division under Company Technology Department, the Vice Director of the Technical Center, the ViceDirector, Executive vice Director of Automobile Engineering Institute, Assistant to the President and the Director of ProjectSupervision Office of the Company, the Director of the Project Administration Department, President of Changan AutomobileEngineering Research Institute.
Mr. He Chaobing, Executive Vice President and Director of Operations Management Committee, born in 1967, master's degree,
Professor level senior engineer. A former director of fourth development center and Vice President of Automobile EngineeringResearch Institute, Deputy director of commercial vehicle business management department, President assistant and general manager
of the Beijing Changan Automobile Co., Ltd, President assistant and director of purchase department, President assistant and vicegeneral manager of the commercial vehicle division, Executive vice president and party secretary of changan Ford Motor Co., Ltd.
Ms Zhang Jingjing, Executive Vice President. Born in 1966, bachelor's degree, professor-level and senior engineer. She used toserve as former deputy chief engineer of the 2nd factory of the Company, vice director of development and planning department ofthe Company, deputy director of Science and Technology Committee of the Company, deputy director of the administration office,the director of the project department, the minister of the Company's human resources department , the company CEO assistant andthe director of Quality Department, and General Counsel.
Mr. Li Wei, executive vice president, born in 1966. Master graduate student, research senior engineer. The former president ofthe Beijing Institute, executive vice president, assistant president of Changan automobile and deputy vice president and the Secretaryof the Party Committee of Changan Automotive Engineering Research Institute.
Mr. Tan Benhong, the executive vice president and the director of the Institute of styling design. Born in 1975, master’s degree,engineer. He was the deputy director of the Changan company Automobile Technology Department, the product technology managerof the Nanjing factory of Changan Ford Automobile Co., Ltd., the deputy director of the reception office and the secretarial receptiondepartment of the Changan Company office, the director of the technical Planning Institute of the Automobile Engineering Research
Institute, the deputy chief engineer of the Automobile Engineering Research Institute and the director of the Institute of technicalplanning and research, the Vice president of the General Academy of automobile engineering research, Dean of Beijing ResearchInstitute, the department head of market department, brand public relations, product planning department, and vice deputy Presidentand Secretary of the Party committee of the Research Institute, and the spokesman of company news.
Mr. Liu Zhengjun, executive vice president, general manager of Chongqing changan Co., Ltd., general manager of newmarketing business department, director of Chelizi joint venture project, director of light vehicle operation management committee.He was born in 1965, bachelor's degree and senior engineer. he once was the Chairman of Haifei Automobile, and the chiefeconomist of China Changan. He was the deputy director and director of the inspection department of the quality department in thecompany, the vice department head and department head of the quality department of the Company, the director of the office of thequality division, the general manager and party secretary of the Hebei Changan Automobile Co., Ltd., the vice chairman and generalmanager of Hafei automobile.
Ye Pei, vice president and general manager and the secretary of the party committee of the passenger car marketing department,Secretary of the party committee, deputy director of the passenger car operation management committee, born in 1975, master'sdegree, engineer. He once served as the deputy chief of the Jiangling Engine Branch General Administration Division, deputy chiefof the quality division, deputy director of the quality management department, assistant general manager of Nanjing ChanganAutomobile Co., Ltd., deputy minister of quality and director of the quality evaluation and improvement department. Director ofMarket Quality Office, deputy director of the company's office, general manager of Nanjing Changan Automobile Co., Ltd.,Secretary of the party committee, Deputy general manager of commercial vehicle business department and manufacturing logisticsDepartment of commercial vehicle business department, Secretary of the party branch, assistant to the general manager of thecompany, Secretary of the strategic planning department, Secretary of the party branch, general manager and party secretary of thecar sales department.
Chen Wei, Vice President and Director of Safety Production of the company, Deputy Director of the European BusinessManagement Committee, born in 1972, undergraduate. He once served as secretary of the Youth League Committee of Chang 'anAutomobile Manufacturing Plant, director of the factory office, deputy director, director, and party committee secretary; VicePresident of Personnel and Secretary of Discipline Committee of Changan Ford Co., Ltd.; Chang 'an Automobile Manufacturing andLogistics Department Minister, Party Branch Secretary, Director of the OTD Project of the company, General Manager of BeijingChang' an Automobile Company, Secretary of the Party Committee, and Director of the Beijing Research Institute ConstructionProject.
Li Ming, vice president and general manager of overseas business department, general counsel of the company, 1981, master'sdegree. He used to be the acting manager and manager of the sales department of Chongqing Changan Automobile InternationalSales Service Co., Ltd.. Changan Automobile Overseas Business Development Department Assistant General Manager and SalesRegional Manager, Deputy General Manager of Overseas Business Development Department, General Manager of InternationalSales Company, Deputy General Manager of Changan Automobile Overseas Business Development Department, Director of RussianJV Project, Brazilian Project Manager.
Zhao Fei, vice president and executive vice president of Changan Ford, Secretary of the party committee, born in 1974, master'sdegree, senior engineer. He used to be the technical director and technical quality manager of the engine Department of ChanganFord Mazda Automobile Co., Ltd.; Engine Director of Changan Ford Mazda Automobile Co., Ltd..; Institute Director of Chang 'anAutomobile Research Institute Engine Technology; Deputy director of Chang 'an Engine 4 Factory; China Chang'an Group's deputygeneral manager of science and technology development department; Director and General Manager of Harbin Dongan AutomobileEngine Manufacturing Co. Ltd.. Party secretary and chairman of Harbin Dongan automobile engine manufacturing Co., Ltd.,assistant to President and minister of strategic planning, party branch secretary.
Ms. Li Jun, the Secretary of BOD and the Vice Director of Capital Operation Department, was born in 1969, MBA, senioraccountant. She used to be the Vice Director of Security Investment Office, Director of Capital Operation Office of the Financial
Department, Director of the BOD Office, Vice director of the finance department of the Company.Employment in shareholders’ work unit√Applicable □ Not applicable
| Name | Name of shareholders’ work unit | Position in shareholders’ work unit | Term start date | Term end date | Whether get allowance in shareholders’ work unit |
| Zhangbaolin | China South Industries Group Corp. | secretary of the party committee, vice president | Y | ||
| Zhu Huarong | China South Industries Group Corp、China Changan | the Assistant President of China South Industries Group Corp, the director of China Changan | N | ||
| Zhou Zhiping | China South Industries Group Corp、China Changan | the director of China South Industries Group Corp, the general manager and the secretary of party committee of China Changan | Y, Receiving the Payment allowance in China Changan | ||
| Tan Xiaogang | China South Industries Group Corp | Director of the Strategic Development | Y | ||
| Zhang Dongjun | China Changan | vice president, general accountant | Y | ||
| Yan Ming | China South Industries Group Corp | Audit and Risk Department Inspector | Y | ||
| Sun Dahong | China South Industries Group Corp | vice director of general office | Y | ||
| Zhao Huixia | China Changan | the professional senior staff | Y | ||
| Liu Zhengjun | China Changan | the chief economist of China Changan | N |
Employment in other work unit√Applicable □ Not applicable
| Name | Name of other work units | Position in other work units | Term start date | Term end date | Whether get allowance in other work unit |
| Liu Jipeng | China University of Political Science and Law | the dean, professor, and PhD supervisor of Capital Finance Institute in China University of Political Science and Law; Legal adviser to the State-owned Assets Supervision and Administration Commission of the | Y |
| State Council; the vice Chairman of China Enterprise Reform and Development Research Association; Deputy director of the independent board of directors of the China listed companies Association. | |||||
| Li Qingwen | Automobile Media Group | the dean of the Automobile Evaluation Institute and vice chairman of the China Automobile Talent Research Association | Y | ||
| Tan Xiaosheng | Cyber Hero | The founder of Cyber Hero、senior engineering | Y | ||
| Pang Yong | IDEO | Chairman and CEO of IDEO , adjunct professor of Jilin University | Y | ||
| Wei Xinjiang | China Life Insurance (Group) | assistant general manager of China Life Insurance (Group) company strategic planning department | Y | ||
| Chen Quanshi | Tsinghua University | a professor and director of the Department of Automotive Engineering of Tsinghua University, director of the Electric Vehicle Research Office, and honorary director of the Electric Vehicle Branch of the China Automobile Engineering Society. | Y | ||
| Cao Xingquan | Southwest University | a professor at the School of Civil and Commercial Law of Southwest University of Political Science and Law, and a doctoral tutor in the direction of civil and commercial law | Y | ||
| Position in other work unit | This table only shows the main office performance and position of independent directors. | ||||
Securities regulatory agency’s punishment to the current and former directors, supervisors and seniormanagement during the reporting period in recent three years.
□Applicable √Not applicable
Ⅳ. Remuneration of directors, supervisors and senior management
Payment decision-making process, determination basis, the actual payment of directors, supervisors and senior managers
Decision-making process: except the independent directors, the annual remuneration of directors, supervisors and senior
management is referring to the wage management regulations and rating standard of South Industries Group. Payment of companyindependent directors is prescribed by the board of directors and submitted to the board of directors of the company, and approved bythe shareholders' general meeting.
The basis: the senior management evaluation is divided into annual appraisal, mid-term assessment, term-change assessmentand "look back" examination. Annual appraisal is to evaluate the business performance which senior management is in charge of, andthe employee representatives and part of the units give to democratic appraisal or special evaluation on senior management, theassessment results will feedback to themselves in time on the problems existing in their work and relevant suggestions forimprovement, which will be rectified in the coming new year. At the same time the assessment results will be linked with the annualperformance award. Mid-term assessment is mainly to evaluate the business performance which senior management is in charge of,assessment results are related to the targeted training, position promotion, post communication, etc; term-change assessment is thatthe employee representative gives democratic evaluation on all the senior management and does special visit to part of unit, and theassessment results are related to the targeted training, position promotion, post communication training and post appointment of thesenior management; new office head "look back" examination is mainly to look back the adjusted team, understand the workingstatus of the new team in time, check the configuration effect of the new group, promote the new group into role as soon as possible,and reduce the risk of personnel employment.
Actual payments: senior managers pay basic salary monthly, annual performance prize combines annual appraisal status, therest delays payment according to the company's business situation. In 2018, the remuneration the directors, supervisors and seniormanagers receiving from the company is 10.7489 million yuan in total.Payment of directors, supervisors and senior managers got from the company during the reporting period
| Name | Position | Gender | age | status | Total earning from the company(yuan) |
| Zhang Baolin | Chairman of the board | M | 56 | Present | - |
| Zhu Huarong | Director and President, Secretary of Party Committee | M | 53 | Present | 880,341.90 |
| Zhou Zhiping | Director | M | 48 | Present | 660,256.42 |
| Tan Xiaogang | Director | M | 55 | Present | - |
| Zhang Dongjun | Director | M | 52 | Present | - |
| Zhang Deyong | Director, Executive Vice President | M | 44 | Present | 362,273.00 |
| Liu Jipeng | Independent Director | M | 62 | Present | 120,000.00 |
| Li Qingwen | Independent Director | M | 63 | Present | 120,000.00 |
| Tan Xiaosheng | Independent Director | M | 48 | Present | 120,000.00 |
| Pang Yong | Independent Director | M | 49 | Present | 120,000.00 |
| Chen Quanshi | Independent Director | M | 73 | Present | 120,000.00 |
| Ren Xiaochang | Independent Director | M | 62 | Present | 120,000.00 |
| Wei Xinjiang | Independent Director | M | 49 | Present | 120,000.00 |
| Cao Xingquan | Independent Director | M | 47 | Present | 70,000.00 |
| Yan Ming | Chairman of the supervisory | M | 53 | Present | - |
| Sun Dahong | Supervisor | M | 52 | Present | - |
| Zhao Huixia | Supervisor | M | 58 | Present | - |
| Zhang Anguo | Employee Supervisor | M | 59 | Present | 187,640.00 |
| Luo Yan | Employee Supervisor | F | 44 | Present | 180,458.77 |
| Yuan Mingxue | Major Executive vice president | M | 50 | Present | 709,866.16 |
| Liu Bo | Executive vice president | M | 52 | Present | 733,837.09 |
| He Chaobing | Executive vice president | M | 51 | Present | 731,662.61 |
| Zhang Jingjing | Executive vice president | F | 52 | Present | 709,109.76 |
| Li Wei | Executive vice president | M | 52 | Present | 710,703.55 |
| Tan Benhong | Executive vice president | M | 43 | Present | 700,023.43 |
| Liu Zhengjun | Executive vice president | M | 53 | Present | 470,712.72 |
| Ye Pei | vice president | M | 43 | Present | 98,802.00 |
| Zhao Fei | vice president | M | 44 | Present | 98,802.00 |
| Chen Wei | vice president | M | 46 | Present | 98,802.00 |
| Li Mingcai | vice president | M | 37 | Present | 98,802.00 |
| Li Jun | the Secretary of BOD | F | 49 | Present | 654,427.69 |
| Wang Jun | Executive vice president | M | 46 | Departure | 548,692.00 |
| Huang Zongqiang | vice president | M | 50 | Departure | 360,042.88 |
| Luo Minggang | vice president | M | 55 | Departure | 359,941.85 |
| Dong Qihong | Chairman of the supervisory | M | 54 | Departure | - |
| Gong Bing | vice president | M | 49 | Departure | 423,926.17 |
| Wang Xiaoxiang | Director | M | 45 | Departure | - |
| Wang Kun | Director, Vice President, the Secretary of BOD | M | 43 | Departure | 59,754.64 |
| Total | -- | -- | -- | -- | 10,748,878.64 |
Stock-ownership incentive awarded to directors, supervisors and senior managers during the reporting period□ Applicable √ Not applicable
Ⅴ. Core technology team or key technical personnel changes during the reporting period (notthe directors, supervisors and senior management)
During the reporting period, the company's core technical team and key technical personnel remained stable.
Ⅵ. The Employees of the Company
1. The number of employees, professional composition and education level
| Number of employees in the parent company(persons) | 27,764 |
| Number of employees in major subsidiaries(persons) | 8,265 |
| Total number of active employees(persons) | 36,029 |
| Total number of current salaried employees(persons) | 36,029 |
| Number of retired employees whose parent company and major subsidiary bear the costs(persons) | 6,280 |
| Professional composition | |
| Professional component categories | Professional Composition(persons) |
| Production personnel | 20,440 |
| Sales staff | 1,160 |
| Technicians | 9,888 |
| Finance staff | 385 |
| Administrators | 471 |
| Managers | 3,685 |
| Total | 36,029 |
| Educational Background | |
| Type of education | Number（persons） |
| PHD | 120 |
| Postgraduate | 2,341 |
| Bachelor degree | 11,831 |
| University specialty | 7,424 |
| Secondary school, high school and corresponding education | 12,000 |
| Secondary and below | 2,313 |
| Total | 36,029 |
2. Compensation policy
The company actively deepens the adjustment of the distribution mechanism, continuously optimizes and improves thecompensation system, adheres to the principle of benefit orientation, improves the mechanism of linkage between wages and benefits,improves the efficiency of distribution, and pays employees for job creation and value creation. Salary goes along with profit of the
company. The Company guides the departments to transform from "fighting for people", "fighting for money" to "earning people","making money" , and drastically streamlines remuneration items, simplifies calculation rules, improves employee recognition andmanagement efficiency. Based on the combing and evaluation of jobs, combined with market benchmarks, the company hasestablished salary and broadband standards, and set a reasonable salary gap. At the same time, the company insists on acompensation strategy that combines follow and lead, and implements differentiated distribution. The focus of compensationresources is on key and core positions to support the company strategy.
3. Training plan
With the "third entrepreneurship-innovative entrepreneurship plan" and customer needs as the guide, with the goal of buildingefficiency as the core competitiveness of the organization, the Company comprehensively empowers organizations and employees,and continuously builds a learning organizational culture. The Company will focus on leadership, brand and customer management,management awareness, and core competency training, and work hard to promote special promotion and certification projects at alllevels and in various fields. The Company will create new models for training, make full use of social resources, pay close attentionto the adjustment of the talent structure and the capability structure, increase the training of new frontier knowledge and skills such assmart manufacturing, big data, new energy sources, and artificial intelligence, and face up to the challenges of the market and talentsin the transformation of innovation to effectively support the company strategy.
4. Outsourcing of services
□ Applicable √ Not applicable
Chapter 8 Corporate Governance
I、The basic situation of corporate governance
In strict accordance with the requirements of the Company Law, the Securities Law and the relevant laws andregulations of the CSRC, the Company continuously improved the corporate governance structure and promotedthe standard operation of the Company. The actual situation of the corporate governance of the Company is in linewith the relevant requirements of the CSRC normative documents on corporate governance.
The company has established an effective internal control system over the financial report. According tocompany’s operation and management characteristics, the company strictly implemented the "EnterpriseAccounting Standards", improved the basic accounting management, established a sound financial system,optimized accounting and statements preparation process, strengthened the financial supervision, conducted thein-depth implementation of financial management, established the management foundation work, accounting andfinance management authorization, the monetary fund management, financing, purchasing and payment, fixedassets, projects under construction, accounting policy, accounting estimate, consolidated financial statements, costmanagement, inventory management, financial analysis and other financial management system to ensure thequality of accounting information and the safety of the Company property. According to internal controldeficiencies identified standards of the financial report, there is no internal control defects over financial reportingin the report period. The text of the internal control self-assessment report in 2018 April 18 was published in thehuge influx of information network http://www.cninfo.com.cn.Whether there are differences between corporate governance and the related requirements of "companylaw" and China CSRC.□yes √noThere is no difference between corporate governance and the related requirements of "company law" and ChinaCSRC.
Ⅱ. Independent completion situation in terms of business, personnel, assets,organization and finance which is relative to the controlling shareholders
The company and the controlling shareholders are fully independent in terms of business, assets, personnel,organization and finance.
Ⅲ. Competition situation
In December 2009, according to the national “Automobile Industry Adjustment and Revitalization Plan”regarding promoting auto enterprise merger restructuring and further optimization of state-owned economystrategy layout requirements, the actual controller of the company China South Industries Group Corporation andChina Aviation Industry Group Company proceeded industry restructuring, China Aviation Industry GroupCompany transferred 100% equity of Jiangxi Changhe Automobile Co., LTD free. (hereinafter referred to as"Changhe Automobile") and 100% stake of Harbin Hafei Automobile Industry Group co., LTD. (hereinafterreferred to as "Hafei group") into the company's controlling shareholder China Changan Automobile Group Co.,
LTD. (hereinafter referred to as "China Changan").This above-mentioned behavior led to competition between thecompany and subordinate enterprise of China Changan, the controlling shareholder. To finally solve the possiblecompetition and better maintain the interests of company’s investors, the company’s controlling shareholder ChinaChangan commitment:⒈When Jiangxi Changhe Automobile Co., Ltd. and Harbin Hafei Automobile IndustryGroup Co., LTD. can make profits for two successive years with sustainable development ability and improvedmanagement level, it’s proposed to affiliate the two companies into Changan automobile. In October 28, 2013, thecontrolling shareholder of China Changan transferred Jiangxi Changhe Automobile Co. Ltd. to Jiangxi provincialstate owned enterprise assets (Holdings) Limited, China Changan proposed Jiangxi Changhe Automobile Co. Ltd.injected commitment matter was removed. The Harbin Hafei Automobile Industry Group Co at present is still at astatus of loss, and could not reached the profitable status for two consecutive years.
IV、Annual shareholders meeting and interim shareholders meeting during thereporting period1、Shareholders meeting during the reporting period
| Meeting Session | Type | Investors' participation ratio | Opening Time | Disclosure Time | Disclosure Index |
| 2018 First Interim Shareholders Meeting | Interim | 44.44% | Jan. 30, 2018 | Jan. 31, 2018 | http//www.cninfo.com.cn 2018 First Interim Shareholders Meeting Resolution Announcement(Announcement Number: 2018-07) |
| 2017 Annual Shareholders Meeting | Annual | 57.32% | May. 18th, 2018 | May. 19th, 2018 | http//www.cninfo.com.cn 2017 Annual Shareholders Meeting Resolution Announcement(Announcement Number: 2018-34) |
2、Preferred shareholders’ request to hold the interim shareholders meeting with restorationof voting rights
□Applicable √ Non-applicable
V、Duties performed by independent directors during the reporting period.
1、Independent directors attend board of directors and the shareholders meeting
| Independent directors attend board of directors and the shareholders meeting | ||||||
| Names of independent directors | Times of attending the board of directors during the report period | Times of presence | Times of attendance by communication mode | Times of entrust attendance | Times of absence | Whether absent from the meeting for two consecutive times |
| Liu Jipeng | 20 | 2 | 18 | N | ||
| Li Qingwen | 20 | 2 | 18 | N | ||
| Tan Xiaosheng | 20 | 18 | 2 | N | ||
| Pang Yong | 20 | 2 | 18 | N | ||
| Chen Quanshi | 20 | 2 | 18 | N | ||
| Ren Xiaochang | 20 | 2 | 18 | N | ||
| Wei Xinjiang | 20 | 1 | 18 | 1 | N | |
| Cao Xingquan | 13 | 1 | 12 | N | ||
| Times for independent directors attending the shareholders meeting | 2 | |||||
The explanation on absence in two consecutive board of directors meetings□Applicable √ Non-applicable
2、Independent directors express disagreement to company related matters
Whether independent directors express disagreement to company related matters.□ Yes √ NoIndependent directors did not express disagreement to company related matters during the reporting period.
3、Other explanation on the fulfillment of responsibility of independent directors
Whether the suggestions of Independent directors are adopted or not√Yes □NoExplanation on whether the suggestions of Independent directors are adopted or notDuring the reporting period, the company adopted the proposals of independent directors on the equity acquisitionand related transactions and other aspects.
VI、Duty performance of specialized committees of the board of directors duringthe report period
1、Audit Committee
The audit committee under the board of directors consists of 3 people. The chairman of the committee is Mr.Liu Jipeng, who is an independent director. During the reporting period, the audit committee held 3 meetings andperformed the following duties:
1）Carefully reviewed the 2017 annual financial accounting report and 2018 action plan of audit supervisiondepartment compiled by the company, and agree to the above matters; Reviewed the proposal on Recruitment of2018 Annual Financial Report Auditor and Recruitment of 2018 Annual Internal Control Report Auditor, andagreed to submit the proposal to the board of directors for approval of continuing to hire Ernst & Young Hua Mingas the company's 2018 annual financial report auditor and 2018 Annual internal control report auditor.
2）After the Ernst & Young Hua Ming issued 2017 annual audit report, the audit committee reviewed the 2017annual financial statements (AUDIT) and major adjustments related to accounting firms, concluded the audit workof the Ernst & Young Hua Ming. The audit committee considered that Ernst & Young Hua Ming had professionalcompetence, worked diligently, maintained their independence in audit, and completed 2017 annual audit task ontime. The audit committee voted and made resolutions on company's annual financial report, and agreed to submitthe 2017 financial report to the board of directors for approval.
3）Carefully reviewed the company's 2018 annual audit plan and related materials, and approved the auditplan and audit requirements of 2018 annual financial report proposed by the Ernst & Young Hua Ming.
2、Compensation and Review Committee
The compensation and review committee under the board of directors consists of 3 independent directors. Thechairman of the committee is Mr. Chen Quanshi. During the reporting period, the committee held 2 meetings andperformed the following duties:
1） Review and agree to the "Bill on the Cancellation of Some Stock Options of the Company".
2） Review and agree to the motion on the annual salary distribution plan for deputy management
performance in 2017
3、 Compensation and Review Committee
The strategy and investment committee under the board of directors consists of four non-independentdirectors and one independent director. The chairman is Mr. Zhangbaolin. During the reporting period, the strategyand investment committee held 5 meetings and performed the following duties:
1) Review and agree to the "Proposal on the Transfer of Assets Related to the Company's New Energy VehicleBusiness to a wholly-owned subsidiary";
2) Review and agree to the "Proposal on the Acquisition of 50 % Equity in Chongqing Changan SuzukiAutomobile Co., Ltd.";
3) Examine and agree to the "Proposal on Replenishment of the Finance Co., Ltd. of the Weapons andEquipment Group";
4) Review and agree to the "Proposal for the Establishment of a Power Semiconductor(IGBT) InnovationCenter Project for Changan Automobile Shares";
5) Review and agree to the "Proposal on the Acquisition of 35 % Equity in Chongqing Changan New EnergyAutomobile Co., Ltd".
Ⅶ. The work of the board of supervisors
The board of supervisors found whether the company was at risk or not in the supervision during the reportperiod□ Yes √ NoThe board of supervisors has no disagreement on the supervision during the report period.
Ⅷ. The evaluation and incentive of senior management
For details, please refer to Section 7 of this year's report. "IV. Remuneration of directors, supervisors, and seniormanagement."
Ⅸ. Internal Control
1、Significant Deficiency of Internal Control found during the report period□ Yes √ No
2、Self-assessment report of internal control
| Disclosure date of self-assessment report of internal control | Apr. 23, 2019 | ||
| Disclosure index of self-assessment report of internal control | http://www.cninfo.com.cn | ||
| proportion of total asset in the assessment accounting for the total asset in the financial statement | 91.13% | ||
| proportion of revenue in the assessment accounting for the revenue in the financial statement | 95.23% | ||
| Deficiency Definition Standard | |||
| Type | Financial Report | Non Financial Report | |
| qualitative standard | 1. Fraud behavior of the directors, supervisors and senior management. 2. The company has corrected the published financial report, the significant wrong report due to fraud and mistakes, the significant mistakes in the financial report found by certified public accountants, but not found by the company’s internal control. 3. The supervision of audit committee on the company’s external financial report and internal control of financial report is not effective. | 2.Violate national laws and regulations and get punished 3.Great loss of middle and senior management and senior technical personnel 4.Frequent media negative news with a large range 5.Signifant business lacks regulation control or regulation system becomes ineffective 6.The significant deficiencies of internal control is not corrected | |
| quantitative standard | The amount of misstatement of the financial statements falls within the following ranges: Wrong report ≥ 1% of total asset | Determine the internal control deficiencies in financial reporting by reference to the quantitative criteria. | |
| Financial Report Major Defects | 0 | ||
| Non-financial reporting significant number of defects | 0 | ||
| Financial Reporting Key Number of defects | 0 | ||
| Non-financial reporting Number of important defects | 0 | ||
Ⅹ. Internal control audit report
√Applicable □Not applicable
| deliberations in the internal control audit report | |
| The audit opinion of the internal control audit report compiled by Ernst & Young Hua Ming Accounting Firm: Chongqing Changan Automobile Co., Ltd keeps the effective financial report internal control on significant aspects from Dec.31st,2018, according to “Basic Norms of Enterprise Internal Control” and other related regulations. | |
| Disclosure date of audit report of internal control | Apr.23, 2019 |
| Disclosure index of audit report of internal control | Internal control audit report will be published on http://www.cninfo.com.cn on Apr.23, 2019 |
| type of opinion on internal control audit report | standard and unqualified opinion |
| Whether there is huge deficiency in the non-financial report | No |
Whether the accounting firm issued non-standard internal control audit report or not?□ Yes √ NoWhether the internal control audit report issued by the Accounting Firm agreed with the self-assessmentreport of the board of directors or not?√ Yes □ No
Chapter 9 Corporate Bonds
Is there a corporate bond that is publicly issued and listed on the stock exchangeand fails to be fully paid up or not due on maturity until the approval of theannual report ?
□ Yes √ NO
Chapter 10 Auditor’s Report
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
To the shareholders ofChongqing Changan Automobile Company Limited
Opinion
We have audited the accompanying financial statements of Chongqing Changan AutomobileCompany Limited, which comprise the consolidated and the company balance sheet as at 31December 2018, and the consolidated and the company income statements, the statements ofchanges in equity and the cash flow statements for the year then ended and notes to thefinancial statements.
In our opinion, the accompanying financial statements of Chongqing Changan AutomobileCompany Limited present fairly, in all material respects, the consolidated and the Company’sfinancial position as at 31 December 2018, and the consolidated and the Company’s financialperformance and cash flows for the year then ended in accordance with Accounting Standardsfor Business Enterprises (“ASBEs”).
Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Ourresponsibilities under those standards are further described in the Auditor’s responsibilities forthe audit of the financial statements section of our report. We are independent of the Companyin accordance with China Code of Ethics for Certified Public Accountants (the “Code”), andwe have fulfilled our other ethical responsibilities in accordance with the Code. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters. Foreach matter below, our description of how our audit addressed the matter is provided in thatcontext.
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Key audit matters (continued)
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the auditof the financial statements section of our report, including in relation to these matters.Accordingly, our audit included the performance of procedures designed to respond to ourassessment of the risks of material misstatement of the financial statements. The results of ouraudit procedures, including the procedures performed to address the matters below, providethe basis for our audit opinion on the accompanying financial statements.
| Key audit matter | How our audit addressed the key audit matter |
| Provision for warranties | |
| Provisions for warranties granted by Chongqing Changan Automobile Company Limited for the vehicles sold are recognized based on sales volume and past experience of the cost of repair and replacement, and labor cost, which involves a number of assumptions and judgments. Provision for extra free repairing service program or recalls are recognized based on the vehicles involved and the estimated average cost of repair and replacement, and labor cost, which involves a number of assumptions and judgments. Any increase or decrease in the provision would have a significant impact on the financial statements. Refer to Note III 22, 31 and Note V 24 of the consolidated financial statements for the disclosures of the provision for warranties. | ? We understood and evaluated the process of the warranty provisions. In addition, we tested the key controls and application controls over the process of the warranty provisions. ? We assessed the reasonableness and evaluated the major assumptions of management’s warranty provision models. We tested the samples of payment of the warranty provisions and tested the mathematical accuracy of calculations therein by re-performing the calculations regarding the balance of the provisions. ? We reviewed the adequacy of disclosures in the financial statements. |
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Key audit matters (continued)
| Key audit matter | How our audit addressed the key audit matter |
| Capitalization of internal development costs | |
| The expenditures in development stage are capitalized that should meet all the conditions including technically feasible, use or sale intention, market, finance, resources, and etc. The judgment should be made according to every project and agreed by all related departments. In addition, for projects that have been capitalized in the past, the judgment whether the expenditures in development can be continuing capitalized should be made according the latest progress and future expectations of the project. The judgment made by the management would have a significant impact on the financial statements. Refer to Note III 18, 31 and Note V 13 of the consolidated financial statements for the disclosures of capitalization of internal development costs. | ? We understood, evaluated and validated the key controls over the capitalization of internal development costs. ? We assessed the criterias set by the management related to the capitalization of the costs under development stage. We assessed the accuracy of the start point and the stop point for capitalization of internal development costs. We also tested samples of projects to review the feasibility reports and other reports for important stages. ? We reviewed the adequacy of disclosures in the financial statements. |
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Key audit matters (continued)
| Key audit matter | How our audit addressed the key audit matter |
| Business combination involving entities not under common control | |
| Refer to Note III 4 and Note Ⅵ of the consolidated financial statements for the disclosures of business combinations. | ? Obtained and checked the relevant transaction information such as equity transfer agreement, board resolution and government approval, checked the implementation of relevant legal procedures, and discussed with the management on the determination of the purchase date. ? Obtained and reviewed the evaluation reports of Suzuki Chang'an and Zhenjiang Demao on the purchase date, and reviewed the qualification, professional competence and independence of third-party evaluation agencies. ? Our internal evaluation experts reviewed the methods and key assumptions used in fair value assessment. ? Reviewed the accounting treatment of the merger by management and the adequacy of the relevant disclosure of the transaction in the notes to the financial statements. |
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Other informantion
The management of the Chongqing Changan Automobile Company Limited (the“Management”) is responsible for the other information. The other information comprises theinformation included in the annual report, other than the financial statements and our auditor’sreport thereon.
Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement ofthis other information, we are required to report that fact. We have nothing to report in thisregard.
Management’s and governance’ responsibility for the financial statements
The Management is responsible for the preparation and fair presentation of these financialstatements in accordance with ASBEs, and for designing, implementing and maintaining suchinternal control as the management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting, unless the management eitherintends to liquidate the Company or to cease operations or has no realistic alternative but todo so.
Those charged with governance are responsible for overseeing the Company’s financialreporting process.
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with CSAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and aregenerally considered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of these financialstatements.
As part of an audit in accordance with CSAs, we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than forone resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company’sability to continue as a going concern. If we conclude that a material uncertainty exists,we are required to draw attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report.However, future events or conditions may cause the Company to cease to continue as agoing concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Auditor’s Report (continued)
Ernst & Young Hua Ming Shen Zi (2019) No. 60662431_D01
Chongqing Changan Automobile Company Limited
Auditor’s responsibilities for the audit of the financial statements (continued)
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company to express an opinion on the financialstatements. We are responsible for the direction, supervision and performance of thegroup audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, inextremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Qiao Chun
Ernst & Young Hua Ming (LLP) Chinese Certified Public Accountant(Engagement partner)
Hu Yan
Chinese Certified Public Accountant
Beijing, the People’s Republic of China 19 April 2019
Chongqing Changan Automobile Company LimitedCONSOLIDATED BALANCE SHEET31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
Current assetsCash 1 9,980,544,526.14 22,631,536,496.53Notes receivableand accounts receivable 2 21,971,045,405.74 30,963,288,278.24Prepayments 3 866,249,749.51 1,102,239,931.33Interest receivable 4 3,250,452,923.70 1,687,460,718.92and other receivablesInventories 5 4,917,420,457.19 4,666,183,421.80Other current assets 6 2,227,565,353.23 1,705,910,530.43
Total current assets 43,213,278,415.51 62,756,619,377.25
Non-current assetsAvailable-for-sale financial assets 7 1,957,873,311.31 541,917,000.00Long-term equity investments 8 13,275,170,118.83 14,098,523,896.97Investment property 9 7,329,561.28 7,556,272.84Fixed assets 10 22,161,054,058.31 19,044,533,667.68Construction in progress 11 5,383,844,030.75 3,234,173,155.52Intangible assets 12 5,018,243,552.80 4,047,945,129.67Development expenditure 13 789,597,615.60 836,638,328.10Goodwill 14 9,804,394.00 9,804,394.00Long-term deferred expenses 15 17,104,601.67 13,545,589.39Deferred tax assets 16 1,655,554,438.89 1,533,857,811.27
Total non-current assets 50,275,575,683.44 43,368,495,245.44
TOTAL ASSETS 93,488,854,098.95 106,125,114,622.69
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED BALANCE SHEET (continued)31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
Current liabilitiesShort-term loans 18 190,000,000.00 185,000,000.00Notes payable 19 28,724,063,539.34 39,905,752,773.96and accounts payableAdvances from customers 20 1,556,482,278.92 3,878,382,556.43Payroll payable 21 1,362,995,277.56 1,640,885,322.33Taxes payable 22 669,316,487.25 394,321,397.14Other payables 23 3,079,749,015.81 2,599,093,153.78Contingent liabilities 24 3,245,322,744.12 2,423,958,274.70Other current liabilities 25 4,325,441,152.61 3,562,154,645.82Current portion of
non-current liabilities 26 6,594,120.00 13,151,946.67
Total current liabilities 43,159,964,615.61 54,602,700,070.83Non-current liabilitiesLong-term loans 27 - 6,575,973.33Special payable 28 303,590,824.69 290,607,151.02Long term payroll payable 29 53,837,000.00 113,012,000.00Deferred income 30 3,683,308,534.73 3,627,817,419.05Deferred tax liabilities 16 135,231,170.59 21,222,750.00
Total non-current liabilities 4,175,967,530.01 4,059,235,293.40
Total liabilities 47,335,932,145.62 58,661,935,364.23
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED BALANCE SHEET (continued)31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
Owners’ equityShare capital 31 4,802,648,511.00 4,802,648,511.00Capital reserves 32 5,057,242,440.17 5,099,405,956.94Other Comprehensive Income 33 235,509,930.44 82,959,423.84Special reserves 34 41,222,369.10 28,279,733.06Surplus reserves 35 2,401,324,255.50 2,401,324,255.50Retained earnings 36 33,707,011,170.31 35,184,073,061.94
Equity attributable to owners 46,244,958,676.52 47,598,690,942.28
Minority interests (92,036,723.19) (135,511,683.82)
Total equity 46,152,921,953.33 47,463,179,258.46
TOTAL LIABILITIES
AND OWNERS’ EQUITY 93,488,854,098.95 106,125,114,622.69
The notes form an integral part of the financial statements.
The financial statements have been signed by:
Legal Principal in Charge ChiefRepresentative: of Accountancy: Accountant:
Chongqing Changan Automobile Company LimitedCONSOLIDATED INCOME STATEMENTYear ended 31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
Operating revenue 37 66,298,270,389.77 80,012,205,182.37Less: Operating cost 37 56,583,468,369.14 69,363,032,740.85Tax and surcharges 38 2,305,917,984.34 3,074,023,009.42Operating expenses 39 5,283,255,346.48 3,978,124,859.65General and administrativeexpenses 40 2,782,755,531.47 2,663,645,058.45Research and development 41 2,543,265,379.12 2,616,651,435.07expensesFinancial income 42 (427,062,035.06) (524,973,961.02)Interest expense 11,700,010.25 48,334,684.86Interest income 476,922,766.94 609,804,833.96Impairment loss on assets 43 238,554,564.69 251,517,154.60Add: Other incomes 44 2,873,192,102.56 1,613,343,216.59Investment income or loss 45 (71,306,776.79) 6,906,324,932.20Including: Investment incomefrom associates and jointventure (331,883,560.67) 6,854,896,911.97Gain on disposal of assets 46 8,561,074.73 41,774,452.23
Operating profit/ (loss) (201,438,349.91) 7,151,627,486.37Add: Non-operating income 51 916,219,224.68 104,330,128.12Less: Non-operating expenses 52 56,555,550.94 75,068,057.28
Total profit/ (loss) 658,225,323.83 7,180,889,557.21Less: Income tax expense 53 (65,134,058.04) (27,547,712.85)
Net profit 723,359,381.87 7,208,437,270.06
Classification by going concernNet profit from continuing
operations 723,359,381.87 7,208,437,270.06Net profit from discontinued
operations - -
Classification by ownership attributionNet profit attributable to owners 680,728,392.03 7,137,234,723.47Minority interests 42,630,989.84 71,202,546.59
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED INCOME STATEMENT (continued)Year ended 31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
Other comprehensive income,net of tax 152,550,506.60 (58,521,484.39)
Total comprehensive incomeattributable to owners,net of tax 33 152,550,506.60 (58,521,484.39)
Other comprehensive incomenot to be reclassified toprofit or loss insubsequent periods:
Change in net liability or
assest from definedbenefit plan (13,214,000.00) 6,201,000.00Other comprehensive income
not to be recalssfiedto profit or lossunder equity method (706,228.88) (248,641.80)under equity method (13,920,228.88) 5,952,358.20
Other comprehensive incometo be reclassified to profitor loss in subsequent periods:
Changes in fair value fromavailable-for-sale financialassest 177,088,959.46 (75,437,500.00)Foreign currency reserve (10,618,223.98) 10,963,657.41166,470,735.48 (64,473,842.59)Total comprehensive incomeattributable to minorityinterests, net of tax - -Total comprehensive income 875,909,888.47 7,149,915,785.67Total comprehensive incomeattributable to owners 833,278,898.63 7,078,713,239.08Total comprehensive incomeattributable to minorityinterest 42,630,989.84 71,202,546.59Earnings per share 50Basic earnings per share 0.14 1.49Diluted earnings per share Not Applicable Not Applicable
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED STATMENT OF CHANGES IN SHAREHOLDERS’ EQUITYYear ended 31 December 2018(Expressed in Renminbi Yuan)
| Equity attributable to owners | |||||||||||||||||||||||
| Share capital | reserves | comprehensive income | reserves | reserves | earnings | Subtotal | Mionrity interest | Total equity | |||||||||||||||
| At 31 December 2017 | 4,802,648,511.00 | 5,099,405,956.94 | 82,959,423.84 | 28,279,733.06 | 2,401,324,255.50 | 35,184,073,061.94 | 47,598,690,942.28 | (135,511,683.82 | 47,463,179,258.46 | ||||||||||||||
| Changes during the year | |||||||||||||||||||||||
| Total comprehensive income | - | - | 152,550,506.60 | - | - | 680,728,392.03 | 833,278,898.63 | 42,630,989.84 | 875,909,888.47 | ||||||||||||||
| Capital contributed by owners and capital decreases | |||||||||||||||||||||||
| based payments recorded in owners’ equity | - | (8,735,100.00 | ) | - | - | - | - | (8,735,100.00 | (8,735,100.00 | ||||||||||||||
| 2.Others | - | (33,428,416.77 | ) | - | - | - | - | (33,428,416.77 | 544,858.43 | (32,883,558.34 | |||||||||||||
| Distribition of profit | |||||||||||||||||||||||
| 1.Distribution to owners | - | - | - | - | - | (2,157,790,283.66 | ) | (2,157,790,283.66 | - | (2,157,790,283.66 | |||||||||||||
| Special reserves | |||||||||||||||||||||||
| 1.Provided | - | - | - | 83,826,318.58 | - | - | 83,826,318.58 | 1,218,813.93 | 85,045,132.51 | ||||||||||||||
| 2.Ultilized | - | - | - | (69,587,419.73 | ) | - | - | (69,587,419.73 | (919,701.57 | (70,507,121.30 | |||||||||||||
| of changes in special reserves from joint venture | - | - | - | (1,296,262.81 | ) | - | - | (1,296,262.81 | - | (1,296,262.81 | |||||||||||||
| At 31 December 2018 | 4,802,648,511.00 | 5,057,242,440.17 | 235,509,930.44 | 41,222,369.10 | 2,401,324,255.50 | 33,707,011,170.31 | 46,244,958,676.52 | (92,036,723.19 | 46,152,921,953.33 | ||||||||||||||
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED STATMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)Year ended 31 December 2017(Expressed in Renminbi Yuan)
| Equity attributable to owners | ||||||||||||||||||||||||||
| Share capital | reserves | comprehensive income | reserves | reserves | earnings | Subtotal | Mionrity interest | Total equity | ||||||||||||||||||
| At 31 December 2016 | 4,802,648,511.00 | 5,085,301,532.55 | 141,480,908.23 | 16,349,485.65 | 2,401,324,255.50 | 31,126,707,710.94 | 43,573,812,403.87 | (220,652,853.81 | 43,353,159,550.06 | |||||||||||||||||
| Changes during the year | ||||||||||||||||||||||||||
| Total comprehensive income | - | - | (58,521,484.39 | - | - | 7,137,234,723.47 | 7,078,713,239.08 | 71,202,546.59 | 7,149,915,785.67 | |||||||||||||||||
| Capital contributed by owners and capital decreases | ||||||||||||||||||||||||||
| share-based payments recorded in owners’ equity | - | 18,981,100.00 | - | - | - | - | 18,981,100.00 | - | 18,981,100.00 | |||||||||||||||||
| 2.Others | - | (4,876,675.61 | ) | - | - | - | - | (4,876,675.61 | 13,612,629.45 | 8,735,953.84 | ||||||||||||||||
| Distribition of profit | ||||||||||||||||||||||||||
| 1.Distribution to owners | - | - | - | - | - | (3,079,869,372.47 | ) | (3,079,869,372.47 | - | (3,079,869,372.47 | ) | |||||||||||||||
| Special reserves | ||||||||||||||||||||||||||
| 1.Provided | - | - | - | 63,595,469.61 | - | - | 63,595,469.61 | 1,485,155.93 | 65,080,625.54 | |||||||||||||||||
| 2.Ultilized | - | - | - | (57,200,673.85 | ) | - | - | (57,200,673.85 | (1,159,161.98 | (58,359,835.83 | ) | |||||||||||||||
| venture | - | - | - | 5,535,451.65 | - | - | 5,535,451.65 | - | 5,535,451.65 | |||||||||||||||||
| At 31 December 2017 | 4,802,648,511.00 | 5,099,405,956.94 | 82,959,423.84 | 28,279,733.06 | 2,401,324,255.50 | 35,184,073,061.94 | 47,598,690,942.28 | (135,511,683.82 | 47,463,179,258.46 | |||||||||||||||||
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
CASH FLOWS FROMOPERATING ACTIVITIES
Cash received from sale of goodsor rendering of services 76,764,633,238.29 84,929,650,617.50Refunds of taxes 464,242,119.33 293,750,000.42Cash received relating to otheroperating activities 51 4,768,094,889.23 3,750,492,075.81
Subtotal of cash inflows 81,996,970,246.85 88,973,892,693.73
Cash paid for goods and services 70,504,737,377.42 72,950,596,502.56Cash paid to and on behalf ofemployees 6,114,219,565.04 5,705,682,329.28Cash paid for all types of taxes 2,496,007,225.13 5,152,004,084.25Cash paid relating to otheroperating activities 51 6,769,481,381.70 6,289,080,554.47
Subtotal of cash outflows 85,884,445,549.29 90,097,363,470.56
Net cash flows from operatingactivities 52 (3,887,475,302.44) (1,123,470,776.83)
CASH FLOWS FROMINVESTING ACTIVITIES
Cash received from recovery
of investment - 7,069,600.00Cash received from returnon investment 1,409,353,446.15 8,727,115,553.76Net cash received from disposalof fixed assets, intangible assetsand other long-term assets 42,904,511.29 25,865,729.72Cash received relating to otherinvesting activites 55 1,036,263,749.91 -
Subtotal of cash inflows 2,488,521,707.35 8,760,050,883.48
Cash paid for acquisition offixed assets,intangible assestsand other long-term assets 6,488,329,782.76 3,308,579,224.93Cash paid for acquisition ofinvestments 2,034,743,750.00 1,269,583,030.48Acquisition of net cash payments
from subsidiaries and other
business units 534,168,219.57 -
Subtotal of cash outflows 9,057,241,752.33 4,578,162,255.41
Net cash flows from investing activities (6,568,720,044.98) 4,181,888,628.07
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCONSOLIDATED CASH FLOW STATEMENT (continued)Year ended 31 December 2018(Expressed in Renminbi Yuan)
Notes V 2018 2017
CASH FLOWS FROMFINANCING ACTIVITIES:
Cash received from investors - -Cash received from borrowings 340,000,000.00 185,000,000.00Cash received relating toother financing activities 51 855,280,377.20 978,689,175.66
Sub-total of cash inflows 1,195,280,377.20 1,163,689,175.66
Cash repayments of borrowings 348,133,800.00 2,168,573,600.00Cash paid for distribution of dividendsor profits and interest expenses 2,169,490,293.91 3,200,128,271.95Cash paid relating toother financing activities 51 30,344,195.00 369,958,242.32
Sub-total of cash outflows 2,547,968,288.91 5,738,660,114.27
Net cash flows from financing activities (1,352,687,911.71) (4,574,970,938.61)
EFFECT OF CHANGES IN EXCHANGERATE ON CASH 5,731,783.40 (25,573,889.15)
NET INCREASE IN CASHAND CASH EQUIVALENTS (11,803,151,475.73) (1,542,126,976.52)Add: Opening balance ofcash and cash equivalents 21,451,305,090.53 22,993,432,067.05
CLOSING BALANCE OFCASH AND CASH EQUIVLANT 52 9,648,153,614.80 21,451,305,090.53
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedBALANCE SHEET31 December 2018(Expressed in Renminbi Yuan)
Notes XIV 2018 2017
Current assetsCash 7,310,973,018.99 20,634,514,487.95Notes receivableand accounts receivable 1 25,070,320,963.39 34,002,845,071.70Prepayments 671,849,711.04 960,555,695.17Other receivables 2 2,344,318,158.83 1,765,907,866.77Inventories 3,851,783,233.12 4,005,921,440.85Other current assets 1,355,155,749.21 1,178,094,749.84
Total current assets 40,604,400,834.58 62,547,839,312.28
Non-current assetsAvailable-for-sale financial assets 541,182,000.00 532,007,000.00Long-term equity investments 3 18,017,137,600.72 15,786,743,636.55Fixed assets 16,795,537,563.35 15,582,899,632.64Construction in progress 4,114,409,774.13 2,763,521,275.98Intangible assets 4,054,893,372.88 3,341,218,169.73Development expenditure 559,309,970.45 733,947,670.46Long-term deferred expenses 12,555,353.69 12,821,802.39Deferred tax assets 1,533,057,523.95 1,421,165,907.17Other non-current assets 250,000,000.00 -
Total non-current assets 45,878,083,159.17 40,174,325,094.92
TOTAL ASSETS 86,482,483,993.75 102,722,164,407.20
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedBALANCE SHEET (continued)31 December 2018(Expressed in Renminbi Yuan)
2018 2017
Current liabilitiesNotes payableand accounts payable 24,263,743,505.87 36,351,223,966.94Advances from customers 1,208,631,011.05 3,724,183,178.58Payroll payable 1,001,765,362.99 1,377,250,229.66Taxes payable 604,525,457.30 320,050,382.91Other payables 3,219,909,047.22 3,181,207,281.30Contingent liabilities 2,372,512,543.49 2,380,971,255.26Other current liabilities 3,923,419,042.37 3,453,269,881.59
Total current liabilities 36,594,505,970.29 50,788,156,176.24
Non-current liabilitiesLong term payable 248,240,115.29 235,256,441.62Long term payroll payable 24,315,000.00 91,263,000.00Deferred income 2,827,208,446.74 2,879,604,719.46Deferred tax liabilities 26,683,742.04 21,222,750.00
Total non-current liabilities 3,126,447,304.07 3,227,346,911.08
Total liabilities 39,720,953,274.36 54,015,503,087.32
Owner’s equityShare capital 4,802,648,511.00 4,802,648,511.00Capital reserves 4,705,917,638.38 4,717,192,101.72Other comprehensive income 149,525,803.58 132,520,410.88Special reserves 19,835,367.61 12,013,706.73Surplus reserves 2,401,324,255.50 2,401,324,255.50Retained earnings 34,682,279,143.32 36,640,962,334.05
Total owner’s equity 46,761,530,719.39 48,706,661,319.88
TOTAL LIABILITIESAND OWNERS’ EQUITY 86,482,483,993.75 102,722,164,407.20
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedINCOME STATEMENTYear ended 31 December 2018(Expressed in Renminbi Yuan)
Notes XIV 2018 2017
Operating revenue 4 63,379,464,762.20 77,758,476,387.51Less: Operating cost 4 54,508,948,244.13 68,732,561,860.05Tax and surcharges 1,897,849,791.26 2,565,747,398.92Operating expenses 4,763,764,952.42 3,590,671,641.50General and administrativeexpenses 2,154,621,063.20 2,657,767,379.36Research and development 2,468,444,658.83 1,821,994,878.30expenses
Financial income (449,471,788.18) (547,613,808.85)Interest income - 32,461,480.19Interest expense 464,373,610.97 598,920,267.51Impairment loss on assets 166,593,138.09 270,436,351.89Add: Other income 1,799,031,976.58 534,853,603.29Investment income 5 383,123,214.36 6,908,063,504.35Including: Investment incomefrom associates and fromjoint venture (320,199,939.11) 6,854,896,911.97Gain on disposal of assets 15,582,497.02 24,198,022.49
Operating profit 66,452,390.41 6,134,025,816.47Add: Non-operating income 64,148,620.50 54,345,488.88Less: Non-operating expenses 43,385,534.76 61,733,222.91
Total profit 87,215,476.15 6,126,638,082.44Less: Income tax expense (111,891,616.78) (105,709,086.46)
Net profit 199,107,092.93 6,232,347,168.90
Classification by going concernNet profit from continuing
operations 199,107,092.93 6,232,347,168.90
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedINCOME STATEMENTYear ended 31 December 2018(Expressed in Renminbi Yuan)
Notes XIV 2018 2017
Other comprehensive income,net of tax
Other comprehensive income
not tobe reclassified to
profit or loss insubsequent periods:
Change in net liability or
assest from defined
benefit plan （13,234,000.00） 5,912,000.00Other Comprehensive income
not to berecalssfiedto profit or lossunder equity method (706,228.88) (248,641.80)
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods:
Changes in fair value fromavailable-for-sale financialassest 30,945,621.58 (75,437,500.00)
Total comprehensive income 216,112,485.63 6,162,573,027.10
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedSTATMENT OF CHANGES IN SHAREHOLDERS’ EQUITYYear ended 31 December 2018(Expressed in Renminbi Yuan)
| Share capital | Captial reserves | comprehensive income | Special reserves | Surplus reserves | Retained earnings | Total onwer’s equity | |||||||||||||||
| At 31 December 2017 | 4,802,648,511.00 | 4,717,192,101.72 | 132,520,410.88 | 12,013,706.73 | 2,401,324,255.50 | 36,640,962,334.05 | 48,706,661,319.88 | ||||||||||||||
| Changes during the year | |||||||||||||||||||||
| Total comprehensive income | - | - | 17,005,392.70 | - | - | 199,107,092.93 | 216,112,485.63 | ||||||||||||||
| Capital contributed by owners and capital decreases | |||||||||||||||||||||
| payments recorded in owners’ equity | - | (8,735,100.00 | - | - | - | - | (8,735,100.00 | ) | |||||||||||||
| 2.Others | - | (2,539,363.34 | - | - | - | - | (2,539,363.34 | ) | |||||||||||||
| Distribition of profit | |||||||||||||||||||||
| 1.Distribution to owners | - | - | - | - | - | (2,157,790,283.66 | ) | (2,157,790,283.66 | ) | ||||||||||||
| Special reserves | |||||||||||||||||||||
| 1.Provided | - | - | - | 58,994,940.74 | - | - | 58,994,940.74 | ||||||||||||||
| 2.Ultilized | - | - | - | (49,877,017.05 | ) | - | - | (49,877,017.05 | ) | ||||||||||||
| special reserves from joint venture | - | - | - | (1,296,262.81 | ) | - | - | (1,296,262.81 | ) | ||||||||||||
| At 31 December 2018 | 4,802,648,511.00 | 4,705,917,638.38 | 149,525,803.58 | 19,835,367.61 | 2,401,324,255.50 | 34,682,279,143.32 | 46,761,530,719.39 | ||||||||||||||
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedSTATMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)Year ended 31 December 2017(Expressed in Renminbi Yuan)
| Share capital | Captial reserves | Comprehensive income | Special reserves | Surplus reserves | Retained earnings | Total onwer’s equity | ||||||||||||||
| At 31 December 2016 | 4,802,648,511.00 | 4,689,475,046.88 | 202,294,552.68 | 7,555,003.10 | 2,401,324,255.50 | 33,488,484,537.62 | 45,591,781,906.78 | |||||||||||||
| Changes during the year | ||||||||||||||||||||
| Total comprehensive income | - | - | (69,774,141.80 | - | - | 6,232,347,168.90 | 6,162,573,027.10 | |||||||||||||
| Capital contributed by owners and capital decreases | ||||||||||||||||||||
| payments recorded in owners’ equity | - | 18,981,100.00 | - | - | - | - | 18,981,100.00 | |||||||||||||
| 2.Others | - | 8,735,954.84 | - | - | - | - | 8,735,954.84 | |||||||||||||
| Distribition of profit | ||||||||||||||||||||
| 1.Distribution to owners | - | - | - | - | - | (3,079,869,372.47 | ) | (3,079,869,372.47 | ||||||||||||
| Special reserves | ||||||||||||||||||||
| 1.Provided | - | - | - | 43,664,824.34 | - | - | 43,664,824.34 | |||||||||||||
| 2.Ultilized | - | - | - | (44,741,572.36 | ) | - | - | (44,741,572.36 | ||||||||||||
| special reserves from joint venture | - | - | - | 5,535,451.65 | - | - | 5,535,451.65 | |||||||||||||
| At 31 December 2017 | 4,802,648,511.00 | 4,717,192,101.72 | 132,520,410.88 | 12,013,706.73 | 2,401,324,255.50 | 36,640,962,334.05 | 48,706,661,319.88 |
The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCASH FLOW STATEMENTYear ended 31 December 2018(Expressed in Renminbi Yuan)
2018 2017
CASH FLOWS FROMOPERATING ACTIVITIES
Cash received from sale of goodsor rendering of services 73,237,084,046.94 79,675,129,781.26Cash received relating to otheroperating activities 3,836,274,126.52 2,919,431,256.19
Subtotal of cash inflows 77,073,358,173.46 82,594,561,037.45
Cash paid for goods and services 67,590,149,087.20 70,300,504,407.78Cash paid to and on behalf ofemployees 4,715,386,170.77 4,379,640,973.36Cash paid for all types of taxes 1,723,167,770.46 4,229,906,573.05Cash paid relating to otheroperating activities 6,515,146,136.99 6,383,379,710.17
Subtotal of cash outflows 80,543,849,165.42 85,293,431,664.36
Net cash flows from operatingactivities (3,470,490,991.96) (2,698,870,626.91)
CASH FLOWS FROMINVESTING ACTIVITIES
Cash received from recoveryof investment 2,937,256.01 7,069,600.00Cash received from returnon investment 1,422,371,071.18 8,737,204,497.46Net cash received from disposalof fixed assets, intangible assetsand other long-term assets 60,014,623.13 106,245,076.64Cash received relating to otherinvesting activites 124,782,800.00 166,000,000.00
Subtotal of cash inflows 1,610,105,750.32 9,016,519,174.10
Cash paid for acquisition offixed assets,intangible assestsand other long-term assets 5,973,170,360.48 2,916,256,030.54Cash paid for acquisition ofinvestments 3,132,195,583.18 1,269,180,419.98Cash paid relating to otherinvesting activities 200,000,000.00 100,000,000.00
Subtotal of cash outflows 9,305,365,943.66 4,285,436,450.52
Net cash flows from investing activities (7,695,260,193.34) 4,731,082,723.58The notes form an integral part of the financial statements.
Chongqing Changan Automobile Company LimitedCASH FLOW STATEMENT (continued)Year ended 31 December 2018(Expressed in Renminbi Yuan)
2018 2017
CASH FLOWS FROMFINANCING ACTIVITIESCash receipts relating to other
financing activities 461,856,503.42 978,689,175.66
Sub-total of cash inflows 461,856,503.42 978,689,175.66
Repayment of debts - 1,980,000,000.00Cash paid for distribution of dividendsor profits and for interest expenses 2,157,790,283.66 3,184,699,226.42Cash paid relating to other financing activities - 110,146.05
Sub-total of cash outflows 2,157,790,283.66 5,164,809,372.47
Net cash flows from financing activities (1,695,933,780.24) (4,186,120,196.81)
NET INCREASE IN CASHAND CASH EQUIVALENTS (12,861,684,965.54) (2,153,908,100.14)Add: Cash and cash equivalents at
beginning of year 20,172,657,984.53 22,326,566,084.67
CASH AND CASH EQUIVLANTAT END OF YEAR 7,310,973,018.99 20,172,657,984.53
The notes form an integral part of the financial statements.
I CORPORATE INFORMATION
| On 21 December 2011, the first temporary shareholder meeting was held. The board resolution about ‘the reacquisition of foreign capital stock listed in China’ was approved in the meeting. For the buyback period ended on 20 March 2012, the company repurchased 171,596,438 shares in total, equal to 3.55% of total capital. On 30 March 2012, the company cancelled the share and the share capital decreased to RMB 4,662,886,108. During 2013 and 2014, China Changan, the parent company of the Company, continuously sold 181,260,000 and 89,962,264 shares in total in secondary market. As at 31 December 2014, China Changan holds 1,823,595,216 shares of the Company’s ordinary shares, with shares proportion decreasing to 39.11%. With the approval of China Securities Regulatory Commission on 14 September 2016, the Company issued 139,762,403 non-public common shares (A share) to China Changan Automobile Industry (Group) Co., Ltd., which caused the total share capital increased to RMB 4,802,648,511. After the completion of the issuance, China Changan holds 1,963,357,619 shares of the Company's common stock, with shares proportion increasing to 40.88%. On June 15, 2018, with the approval of the state-owned assets supervision and administration commission of the state council, China Changan, the controlling shareholder of the company, transfers the 1,035,312,673 a-share shares held by the company to the ultimate holding company of the company, South Group and equipment group co., ltd. free of charge. On December 31, 2018, the controlling shareholder of the company, China Changan and its wholly-owned subsidiary, Zhonghui futong (Hong Kong) investment co., LTD., together held 1,082,165,183 ordinary shares of the company, with an equity ratio of 22.53%. The ultimate controlling company of the company is China South Industries Group Co., Ltd. The Group's main business activities are: the manufacture and sales of automobiles, automobile engine series products and accessory parts. According to the Articles of Association, the financial statements, which has been approved by the board of directors on 19 April 2019, was submitted to general meeting of shareholders for approval. The scope of consolidation in the consolidated financial statement is determined based on control. There has been no change of the consolidation scope of 2018. |
II BASIS OF PREPERATION
1. Basis of preparation
| The financial statements have been prepared in accordance with Accounting Standards for Business Enterprises-Basic Standard and the specific standards issued and modified subsequently, and the implementation guidance, interpretations and other relevant provisions issued subsequently by the MOF (correctly referred to as “Accounting Standards for Business Enterprises”). The financial statements are presented on a going concern basis. The financial statements have been prepared under the historical cost convention, except for certain financial instruments. If the assets are impaired, the corresponding provisions should be made accordingly. |
III SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
According to the actual production and operation characteristics, the group formulated the specific accountingpolicies and accounting estimates, mainly reflected in provision of accounts receivables (note 3 (10)), inventoryvaluation (Note 3 (11)), depreciation of fixed assets, intangible assets amortization (Note 3 (14) (17)), condition ofcapitalization of research and development expense (Note 3 (18)) and revenue recognition and measurement (Note3 (24)).
1. Statement of compliance with Accounting Standards for Business Enterprises
2. Accounting year
The financial statements present fairly and fully, the financial position of the Company as at 31 December 2018and the financial results and the cash flows for the year then ended in accordance with Accounting Standards forBusiness Enterprises.The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Functional currency
The accounting year of the Group is from 1 January to 31 December of each calendar year.The Group’s functional and reporting currency is the Renminbi (“RMB”). Unless otherwise stated, the unit of thecurrency is Yuan. Each entity in the Group determines its own functional currency in accordance with theoperating circumstances. At the end of the reporting period, the foreign currency financial statements aretranslated into the reporting currency of the Company of RMB.
4. Business combination
The Group’s functional and reporting currency is the Renminbi (“RMB”). Unless otherwise stated, the unit of thecurrency is Yuan. Each entity in the Group determines its own functional currency in accordance with theoperating circumstances. At the end of the reporting period, the foreign currency financial statements aretranslated into the reporting currency of the Company of RMB.
Business combinations are classified into business combinations involving entities under common control andbusiness combinations involving entities not under common control.
| Business combination involving entities under common control A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination involving entities under common control, the party which, on the combination date, obtains control of another entity participating in the combination is the acquiring party, while that other entity participating in the combination is a party being acquired. Combination date is the date on which the acquiring party effectively obtains control of the party being acquired. Assets and liabilities that are obtained by the acquiring party in a business combination involving entities under common control shall be measured at their carrying amounts at the combination date as recorded by the party being acquired. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. Business combination involving entities not under common control A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For a business combination involving entities not under common control, the party that, on the acquisition date, obtains control of another entity participating in the combination is the acquirer, while that other entity participating in the combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree. The acquirer shall measure the acquiree’s identifiable assets, liabilities and contingent liabilities acquired in the business combination at their fair values on the acquisition date. Goodwill is initially recognised and measured at cost, being the excess of the aggregate of the fair value of the consideration transferred (or the fair value of the equity securities issued) and any fair value of the Group’s previously held equity interest in the acquiree over the Group’s interest in the fair value of the acquiree’s net identifiable assets. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Where the aggregate of the fair value of the consideration transferred (or the fair value of the equity securities issued) and any fair value of the Group’s previously held equity interest in the acquiree is lower than the Group’s interest in the fair value of the acquiree’s net identifiable assets, the Group reassesses the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities and the fair value of the consideration transferred (or the fair value of the equity securities issued), together with the fair value of the Group’s previously held equity interest in the acquiree. If after that reassessment, the aggregate of the fair value |
| If a business combination not under the same control is realized step by step through multiple transactions, the equity of the purchased party held before the purchase date shall be re-measured according to the fair value of the equity on the purchase date, and the difference between the fair value and the book value shall be included in the calculation. Current profit and loss; if the equity of the purchased party held before the purchase date involves other comprehensive income under the equity method, it shall be accounted for on the same basis as the investee directly disposes the relevant assets or liabilities, except for net profit or loss, other comprehensive income. Changes in other shareholders' equity other than the profit distribution are transferred to the current profit and loss of the purchase date. |
5. Consolidated financial statements
| In the preparation of the consolidated financial statements, the financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. When the current loss belong to minorities of the subsidiary exceeds the beginning equity of the subsidiary belong to minorities, the exceeded part will still deduct the equity belong to minorities. With respect to subsidiaries acquired through business combinations involving entities not under common control, the operating results and cash flows of the acquiree should be included in the consolidated financial statements, from the day that the Group gains control, till the Group ceases the control of it. While preparing the consolidated financial statements, the acquirer should adjust the subsidiary’s financial statements, on the basis of the fair values of the identifiable assets, liabilities and contingent liabilities recognized on the acquisition date. With respect to subsidiaries acquired through business combinations involving entities under common control, the operating results and cash flows of the acquiree should be included in the consolidated financial statements from the beginning of the period in which the combination occurs. If the changes of relevant facts and circumstances will result in the changes of one or more control elements, then the Group should reassess whether it has taken control of the investee. |
6 Joint venture arrangement classification and joint operation
7. Cash and cash equivalents
Joint venture arrangements are classified into joint operation and joint venture. Joint operation refers to those jointventure arrangements, relevant assets and liabilities of which are enjoyed and assumed by the joint venturers. Jointventures refer to those joint venture arrangements, only the right to net assets of which is enjoyed by the jointventurers.
Any joint venturer shall recognize the following items related to its share of benefits in the joint operation andconduct accounting treatment in accordance with relevant accounting standards for business enterprises: assets itsolely holds and its share of jointly-held assets based on its percentage; liabilities it solely assumes and its share ofjointly-assumed liabilities based on its percentage; incomes from sale of output enjoyed by it from the jointoperation; incomes from sale of output from the joint operation based on its percentage; and separate costs andcosts for the joint operation based on its percentage.Cash comprises cash on hand and bank deposits which can be used for payment at any time; Cash equivalents areshort-term, highly liquid investments held by the Group, that are readily convertible to known amounts of cashand which are subject to an insignificant risk of changes in value.
8. Foreign currency translation
9. Financial instruments
The Group translates the amount of foreign currency transactions occurred into functional currency.
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to theforeign currency amount at the spot exchange rate on the transaction dates. Foreign currency monetary items aretranslated using the spot exchange rate quoted by the People’s Bank of China at the balance sheet date. Theexchange gains or losses arising from occurrence of transactions and exchange of currencies, except for thoserelating to foreign currency borrowings specifically for construction and acquisition of fixed assets capitalized, aredealt with in the profit and loss accounts. Non-monetary foreign currency items measured at historical cost remainto be translated at the spot exchange rate prevailing on the transaction date, and the amount denominated in thefunctional currency should not be changed. Non-monetary foreign currency items measured at fair value should betranslated at the spot exchange rate prevailing on the date when the fair values are determined. The exchangedifference thus resulted should be charged to the current income or other comprehensive income account of thecurrent period.
When preparing consolidated financial statements, the financial statements of the subsidiaries presented in foreigncurrencies are translated into Renminbi as follows: asset and liability accounts are translated into Renminbi atexchange rates ruling at the balance sheet date; shareholders’ equity accounts other than retained profits aretranslated into Renminbi at the applicable exchange rates ruling at the transaction dates; income and expense inincome statement are translated into Renminbi at spot exchange rates on transaction occurrence; total differencebetween translated assets and translated liabilities and shareholders’ equity is separately listed as “foreign currencyexchange differences” below retained profits. The translation difference arising from the settlement of overseasubsidiaries is charged to the current liquidation profit and loss in proportion to the settlement ratio of the assetsconcerned.
Foreign currency cash flows and the cash flows of foreign subsidiaries should be translated using the averageexchange rate prevailing on the transaction month during which the cash flows occur. The amount of the effect onthe cash arising from the change in the exchange rate should be separately presented as an adjustment item in thecash flow statement.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability orequity instrument of another entity.
| Recognition and derecognition The Group recognizes a financial asset or a financial liability, when the Group becomes a party to the contractual provision of the instrument. The Group derecognizes a financial asset (or part of a financial asset, or part of a group of similar financial assets), be written off from the account and balance sheet , when the following conditions are met: (1) the rights to receive cash flows from the asset have expired; (2) the Group transferred the rights to receive cash flows from the asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. If the underlying obligation of a financial liability has been discharged or cancelled or has expired, the financial liability is derecognized. If an existing financial liability is replaced by the same creditor, with a new financial liability that has substantially different terms, or if the terms of an existing financial liability are substantially revised, such replacement or revision is accounted for as the derecognition of the original liability and the recognition of a new liability, and the difference thus resulted is recognized in profit or loss for the current period. When buy or sell financial instruments under a normal way, financial instruments are recognized or derecognized according to the transaction date accounting. A normal way to buy or sell financial instruments refers to, according to the contract terms, receive or deliver financial instruments within the period as required by legal regulation or generally accepted guidelines. Transaction date refers to the date when the Group committed to buy or sell |
| When there is objective evidence that the asset is impaired, the cumulative loss from declines in fair value that had been recognized directly in capital reserve are removed from equity and recognized in the income statement. The amount of the cumulative loss that is removed from capital reserves and recognized in the income statement (net of any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in the income statement. Impairment of financial assets In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of an investment below its cost. The determination of what is “significant” or ''prolonged” requires judgement. “Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Impairment losses on equity instruments classified as available for sale are not reversed through the income statement. Increases in their fair value after impairment are recognised directly in other comprehensive income. The determination of what is “significant” or “prolonged” requires judgement. In making this judgement, the Group evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost. Financial assets carried at cost If objective evidence shows that the financial assets carried at cost are impaired, the difference between the present value discounted at the prevailing rate of return of similar financial assets and the book value of the financial asset are provided as a provision and recognized in the current income statement. The impairment loss recognized cannot be reversed. Transfer of financial assets If the Group transfers substantially all the risks and rewards of ownership of the financial asset, the Group derecognizes the financial asset; and if the Group retains substantially all the risks and rewards of the financial asset, the Group does not derecognize the financial asset. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, the Group determines whether it has retained control of the financial asset. In this case: (i) if the Group has not retained control, it derecognizes the financial asset and recognize separately as assets or liabilities any rights and obligations created not retained in the transfer; (ii) if the Group has retained control, it continues to recognize the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability. |
10. Accounts receivable
(1) Accounts receivable which is individually significant and analyzed individually for provision：
| Criterion for individually significant items | Accounts receivable balance greater than RMB15 million due from non-related parties |
| Method for provision | A provision of the difference between recoverable amount and book value is recognized based on individually analysis |
(2) Accounts receivable analyzed by credit risk charactristics group for provision：
| Criterion for group | |
| Group 1 | Accounts receivable due from non-related parties other than individually significant items or insignificantly but analyzed individually for provision |
| Group 2 | Accounts receivable due from related parties |
| Method for the provision of group | |
| Group 1 | Making provision according to aging analysis |
| Group 2 | A provision of the difference between recoverable amount and book value is recognized based on individually analysis. |
Group 1, the provision analyzed according to aging analysis:
| Aging | Provision percentage (%) | Provision percentage (%) |
| Within 1 year | ||
| Within 6 months | 0 | 0 |
| 6 to 12 months | 5 | 5 |
| 1 to 2 years | 10 | 10 |
| 2 to 3 years | 30 | 30 |
| 3 to 4 years | 50 | 50 |
| 4 to 5 years | 80 | 80 |
| Above 5 years | 100 | 100 |
(3) Accounts receivable which is individually insignificant but analyzed individually for provision
| Criterion for individually analysis for provision | There is objective evidence that the accounts receivable due from non-related parties is impaired and the future recoverable possibility is little. |
| Method for provision | A provision of the difference between recoverable amount and book value is recognized individually. |
11. Inventories
12. Long-term equity investments
Inventory includes raw materials, goods in transit, work in progress, finished goods, consigned processingmaterials, low-value consumables and spare parts.
Inventory is initially carried at the actual cost. Inventory costs comprise all costs of purchase, costs of conversionand other costs incurred in bringing the inventory to its present location and condition. Weighted average methodis assigned to the determination of actual costs of inventories. One-off writing off method is adopted inamortization of low-value consumables.
The Group applies a perpetual counting method of inventory.
At the balance sheet date, the inventory is stated at the lower of cost and net realizable value. If the cost is higherthan the net realizable value, provision for the inventory should be made through profit or loss. If factors thatresulted in the provision for the inventory have disappeared and made the net realizable value higher than theirbook value, the amount of the write-down should be reversed, to the extent of the amount of the provision for theinventory, and the reversed amount should be recognized in the income statement for the current period.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and the estimated costs necessary to make the sale. The impairment provision should be made on abasis of each item of inventories according to the difference between cost and net realizable value. For largenumbers of inventories at relatively low unit prices, the provision for loss on decline in value of inventories shouldbe made by category.
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
| The long-term investments are initially recorded at costs on acquisition. Long-term investments acquired from business combination under common control shall be initially measured at the carrying value of the held interest of the party being acquired; The difference between the initial measured amounts and the book value of consideration, adjust the capital reserves (if the capital reserve is insufficient to be offset, retained earnings should be adjusted); Long-term investments acquired from business combination not under common control shall be |
13. Investment property
initially measured at the cost (or, the sum of the cost and the carrying value of the previously held equity interestin the acquire for the business combination achieved by stages), which include the fair value of the considerationpaid, the liabilities beard and the fair value of issued equity instrument; the other comprehensive income producedfrom the investment before the acquisition should be transferred into the current year investment income ondisposal.
Long-term investments acquired not from business combination are initially measured at 1)the considerationtogether with the cost necessary incurred; 2) the fair value of the equity instruments; and 3) the considerationagreed in the investment agreement by the investors, otherwise the agreed consideration were not fair
The Company adopted cost method to account for long-term investments in the subsidiaries in the separatefinancial statements of the Company. Control is the power to govern the financial and operating policies of anentity so as to obtain benefits from its activities.
Under cost method, the long-term equity investment is valued at the cost of the initial investment. The cost oflong-term equity investment should be adjusted in case of additional investment or disinvestments. When cashdividends or profits are declared by the invested enterprise is recognized as investment income in current period.
The equity method is applied to account for long-term equity investments, when the Group has jointly control, orsignificant influence on the investee enterprise. Joint control is the contractually agreed sharing of control over aneconomic activity, and exists only when the strategic financial and operating decisions relating to the activityrequire the unanimous consent of the parties sharing control (the venturers). Significant influence is the power toparticipate in the financial and operating policy decisions of an economic activity but is not control or joint controlover those policies.
Under equity method, the Group recognizes its share of post-acquisition equity in the investee enterprise for thecurrent period as a gain or loss on investment, and also increases or decreases the carrying amount of theinvestment. When recognizing its share in the net profit or loss of the investee entities, the Group should, based onthe fair values of the identifiable assets of the investee entity when the investment is acquired, in accordance withthe Group’s accounting policies and periods, after eliminating the portion of the profits or losses, arising frominternal transactions with joint ventures and associates, attributable to the investing entity according to the shareratio (but losses arising from internal transactions that belong to losses on the impairment of assets, should berecognized in full), recognize the net profit of the investee entity after making appropriate adjustments. The bookvalue of the investment is reduced to the extent that the Group’s share of the profit or cash dividend declared to bedistributed by the investee enterprise. However, the share of net loss is only recognized to the extent that the bookvalue of the investment is reduced to zero, except to the extent that the Group has incurred obligations to assumeadditional losses. The Group shall adjust the carrying amount of the long-term equity investment for other changesin owners’ equity of the investee enterprise (other than net profits or losses), and include the correspondingadjustments in equity, which should be realized through profit or loss in subsequent settlement of the respectivelong-term investment.
On settlement of a long-term equity investment, the difference between the proceeds actually received and thecarrying amount shall be recognized in the income statement for the current period. As to other comprehensiveincome recognized based on measurement of the original equity investment by employing the equity method,accounting treatment shall be made on the same basis as would be required if the invested entity had directlydisposed of the assets or liabilities related thereto when measurement by employing the equity method isterminated. As to any change in owners' equity of the invested entity other than net profit or loss, othercomprehensive income and profit distribution, the investing party shall be transferred to the income statement forthe current period. If the remaining equities still be measured under the equity method, accumulative changepreviously recorded in other comprehensive income shall be transferred to current profit or loss, in measurementon the same basis as the invested entity had directly disposed of the assets or liabilities related thereto. The incomeor loss recorded in the equity directly should been transferred to the current income statement on settlement of theequity investment on the disposal proportion.
| Investment property are properties held to earn rentals or for capital appreciation, or both, including rented land use right, land use right which is held and prepared for transfer after appreciation, and rented building. The initial measurement of the investment property shall be measured at its actual cost. The follow-up expenses pertinent to an investment property shall be included in the cost of the investment property, if the economic |
| The group adopts the cost method to make follow-up measurement to the investment property. The buildings are depreciated under straight-line method. |
14. Fixed assets
Fixed assets are depreciated on straight-line basis. The estimated useful lives, estimated residual values and annualdepreciation rates for each category of fixed assets are as follows:
A fixed asset probably shall be recognized only when the economic benefits associated with the asset will flow tothe Group and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed assetthat meet the recognition criteria shall be included in the cost of the fixed asset, and the book value of thecomponent of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall berecognized in the income statement in the period during which they are incurred.
Fixed assets are initially measured at actual cost on acquisition. The cost of a purchased fixed asset comprises thepurchase price, relevant taxes and any directly attributable expenditure for bringing the asset to working conditionfor its intended use, such as delivery and handling costs, installation costs and other surcharges.
Category
| Category | Deprecation period | Residual rate (%) | Yearly deprecation rate (%) |
| Buildings | 20 to 35 years | 3% | 2.77%-4.85% |
| Machinery (Note) | 5 to 20 years | 3% | 4.85%-19.40% |
| Vehicles | 4 to 10 years | 3% | 9.70%-24.25% |
| Others | 3 to 21 years | 3% | 4.62%-32.33% |
| Note: the molds in machinery should be depreciated in units-of-production method. | |||
| The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least at the end of each year and makes adjustments if necessary. |
15. Construction in progress
| The cost of construction in progress is determined according to the actual expenditure for the construction, including all necessary construction expenditure incurred during the construction period, borrowing costs that should be capitalized before the construction reaches the condition for intended use and other relevant expenses. Construction in progress is transferred to fixed assets when the asset is ready for its intended use. |
16. Borrowing costs
| Borrowing costs are interest and other costs incurred by the Group in connection with the borrowing of the funds. Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized, otherwise the borrowing costs are expensed in the period during which they are incurred. A qualifying asset is an asset (an item of property, plant and equipment and inventory etc.) that necessarily takes a substantial period of time to get ready for its intended use of sale. |
| The capitalization of borrowing costs is as part of the cost of a qualifying asset shall commence when: 1) expenditure for the asset is being incurred; 2) borrowing costs are being incurred; and 3) activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs shall be ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale have been done. And subsequent borrowing costs are recognized in the income statement. During the capitalization period, the amount of interest to be capitalized for each accounting period shall be determined as follows: 1) where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned form depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds; 2) where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted average interest rate to the weighted average of the excess amounts of cumulative expenditure on the asset over and above the amounts of specific-purpose borrowings. During the construction or manufacture of assets that are qualified for capitalization, if abnormal discontinuance, other than procedures necessary for their reaching the expected useful conditions, happens, and the duration of the discontinuance is over three months, the capitalization of the borrowing costs is suspended. Borrowing costs incurred during the discontinuance are recognized as expense and charged to the income statement of the current period, till the construction or manufacture of the assets resumes. |
17. Intangible assets
18. Research and development expenditures
The useful life of an intangible asset that is not being amortised shall be reviewed each period to determinewhether events and circumstances continue to support an indefinite useful life assessment for that asset. If thereare indicators that the intangible asset has finite useful life, the accounting treatment would be in accordance withthe intangible asset with finite useful life.
The Group classified the internal research and development expenditures as follows: research expenditures anddevelopment cost.
The expenditures in research stage are charged to the current income on occurrence.
The expenditures in development stage are capitalized that should meet all the conditions of (a) it is technicallyfeasible to finish intangible assets for use or sale; (b) it is intended to finish and use or sell the intangible assets;(c) the usefulness of methods for intangible assets to generate economic benefits shall be proved, including beingable to prove that there is a potential market for the products manufactured by applying the intangible assets orthere is a potential market for the intangible assets itself or the intangible assets will be used internally; (d) it isable to finish the development of the intangible assets, and able to use or sell the intangible assets, with thesupport of sufficient technologies, financial resources and other resources; and (e) the development expendituresof the intangible assets can be reliably measured. Expenses incurred that don’t meet the above requirementsunanimously should be expensed in the income statement of the reporting period.
The Group discriminates between research and development stage with the condition that the project research hasbeen determined, in which the relevant research complete all the fractionalization of products measurements andfinal product scheme under final approval of management. The expenditures incurred before project-determinationstage is charged to the current income, otherwise it is recorded as development cost.
19. Impairment of assets
The Group classified the internal research and development expenditures as follows: research expenditures anddevelopment cost.
The expenditures in research stage are charged to the current income on occurrence.
The expenditures in development stage are capitalized that should meet all the conditions of (a) it is technicallyfeasible to finish intangible assets for use or sale; (b) it is intended to finish and use or sell the intangible assets;(c) the usefulness of methods for intangible assets to generate economic benefits shall be proved, including beingable to prove that there is a potential market for the products manufactured by applying the intangible assets orthere is a potential market for the intangible assets itself or the intangible assets will be used internally; (d) it isable to finish the development of the intangible assets, and able to use or sell the intangible assets, with thesupport of sufficient technologies, financial resources and other resources; and (e) the development expendituresof the intangible assets can be reliably measured. Expenses incurred that don’t meet the above requirementsunanimously should be expensed in the income statement of the reporting period.
The Group discriminates between research and development stage with the condition that the project research hasbeen determined, in which the relevant research complete all the fractionalization of products measurements andfinal product scheme under final approval of management. The expenditures incurred before project-determinationstage is charged to the current income, otherwise it is recorded as development cost.
| The Group determines the impairment of assets, other than the impairment of inventory, deferred income taxes, and financial assets, using the following methods: The Group assesses at the balance sheet date whether there is any indication that an asset may be impaired. If any indication exists that an asset may be impaired, the Group estimates the recoverable amount of the asset and performs impairment tests. Goodwill arising from a business combination and an intangible asset with an indefinite useful life are tested for impairment at least at the end of every year, irrespective of whether there is any indication that the asset may be impaired. An intangible asset which is not ready for its intended use is tested for impairment at least at the end of every year. The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flow expected to be derived from the asset. The Group estimates the recoverable amount on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset group is based on whether major cash flows generated by the asset group are independent of the cash flows from other assets or asset groups. When the recoverable amount of an asset or asset group is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The impairment of asset is provided for and the impairment loss is recognized in the income statement for the current period. For the purpose of impairment testing, the carrying amount of goodwill acquired in a business combination is allocated, on a reasonable basis, to related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to each of the related sets of asset groups. Each of the related asset groups or related sets of asset groups is a group or set of asset group that is able to benefit from the synergies of the business combination and shall not be larger than a reportable segment determined by the Group. When an impairment test is conducted on an asset group or a set of asset groups that contains goodwill, if there is any indication of impairment, the Group firstly tests the asset group or the set of asset groups excluding the |
| Once the above impairment loss is recognized, it cannot be reversed in subsequent periods. |
20. Long-term deferred expenses
21. Employee benefits
The long-term deferred expenses represent the payment for the improvement on buildings and other expenses,which have been paid and should be deferred in the following years. Long-term deferred expenses are amortizedon the straight-line basis over the expected beneficial period and are presented at actual expenditure net ofaccumulated amortization.
| Employee benefits refer to all kinds of remunerations or compensation made by enterprises to their employees in exchange for services provided by the employees or termination of labor relation. Employee compensation includes short-term compensation and post-employment benefits. The benefits offered by enterprises to the spouse, children, the dependents of the employee, the family member of deceased employee and other beneficiaries are also employee compensation. Short-term employee salaries During the accounting period of employee rendering service, the actural employees salaries and are charged to the statement of profit or loss as they become payable in balance sheet. Post-employment benefits (Defined contribution plans) The employees of the Group participate in pension insurance, which is managed by local government and the relevant expenditure, is recognized, when incurred, in the costs of relevant assets or the profit and loss for the current period. Post-employment benefits (Defined benefit plan) The Group operates a defined benefit pension plan which requires contributions to be made to a separately administered fund. The benefits are unfunded. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial valuation method. Remeasurements arising from defined benefit pension plans are recognised immediately in the consolidated statement of financial position with a corresponding debit or credit to retained profits through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in profit or loss at the earlier of: the date of the plan amendment or curtailment; and the date that the Group recognises restructuring-related costs. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under administrative expenses in the consolidated statement of profit or loss by function: ?service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements;net interest expense or income. |
| Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises restructuring costs involving the payment of termination benefits. |
22. Provisions
| An obligation related to a contingency shall be recognised by the Group as a provision when all of the following conditions are satisfied, except for contingent considerations and contingent liabilities assumed in a business combination not involving entities under common control: 1) the obligation is a present obligation of the Group; 2) it is probable that an outflow of economic benefits from the Group will be required to settle the obligation; 3) a reliable estimate can be made of the amount of the obligation. Contingent liabilities are initially measured according to the current best estimate for the expenditure necessary for the performance of relevant present obligations, with comprehensive consideration given to factors such as the risks, uncertainty and time value of money relating to contingencies. The book value of the contingent liabilities should be reviewed at each balance sheet date. If there is objective evidence showing that the book value cannot reflect the present best estimate, the book value should be adjusted according to the best estimate. |
23. Share-based payments
| The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. The term "equity-settled share-based payment" refers to a transaction in which an enterprise grants shares or other equity instruments as a consideration in return for services. The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees. As to an equity-settled share-based payment in return for services of employees, if the right may be exercised immediately after the grant, the fair value of the equity instruments shall, on the date of the grant, be included in the relevant cost or expense and the capital reserves shall be increased accordingly. As to a equity-settled share-based payment in return for employee services, if the right cannot be exercised until the vesting period comes to an end or until the prescribed performance conditions are met, then on each balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the number of vested equity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the date of the grant. The fair value is determined using Black-Scholes model (Note 10). Within the vesting period or before the prescribed performance conditons are met, the relevant costs or expenses and capital reserves shall be determined and increased based on the best estimate of the number of vested equity instruments on each balance sheet date. For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the |
24. Revenue
previous paragraph.
| Revenue is recognized only when an inflow of economic benefits is probable, the amount of which can be reliably measured, and all of the following conditions are qualified. Revenue from the sale of goods The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing management involvement to the degree usually associated with ownership nor effective control over the goods sold; and the amount of revenue can be measured reliably. The proceeds earned from sales of goods are determined based on the amount received or receivable as stipulated in the contract or agreement, otherwise the amount is not fair; If the amount received or receivable as stipulated in the contract or agreement is collected in a defer method, it includes the financing elements and should be determined according to the fair value of the amount received or receivable as stipulated in the contract or agreement. Revenue from the rendering of services When the outcome of a transaction involving the rendering of services can be estimated reliably at the balance sheet date, revenue associated with the transaction is recognized using the percentage of completion method, or otherwise, the revenue is recognized to the extent of costs incurred that are expected to be recoverable. The outcome of a transaction involving rendering of services can be estimated reliably when all of the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow into the Group; the stage of completion of the transaction can be measured reliably; and the costs incurred and to be incurred for the transaction can be measured reliably. The Group determines the stage of completion of a transaction involving the rendering of services by using the proportion of services performed to date to the total services to be performed. The total amount of revenue earned from rendering service are determined based on the amount received or receivable as stipulated in the contract or agreement, otherwise the amount is not fair. Interest income It should be measured based on the length of time for which the Group’s cash is used by others and the applicable effective interest rate. Royalty income Royalty income is recognized according to the agreed time and method by both parties in related contracts. Rental income Rental income from operating leases is recognized by the lesser in the income statement on a straight-line basis over the lease term. The contingent rents shall be recorded in the profits and losses of the period in which they actually arise. |
25. Government grants
| A government grant which is specified by the government documents to be used to purchase and construct the long-term assets shall be recognized as the government grant related to assets. A government grant which is not specified by the government documents shall be judged based on the basic conditions to obtain the government grant. The one whose basic condition was to purchase and construct the long-term assets shall be recognized as the government grant related to assets. |
| Government grants related to income to be used as compensation for future expenses or losses shall be recognized as deferred income and shall be charged to the current profit or loss or be used to write down the relevant loss, during the recognition of the relevant cost expenses or losses; or used as compensation for relevant expenses or losses already incurred by enterprises shall be directly charged to the profit and loss account in the current period or used to write down the relevant cost. The government grants related to assets shall be used to write down the book value of the relevant assets or be recognized as deferred income. The government grants related to assets, recognized as deferred income, shall be charged to the profit and loss reasonably and systematically in stages over the useful lives of the relevant assets. The government grants measured at nominal amount shall be directly charged to the current profit and loss. The remaining book value of the government grants related to assets should be charged to the profit and loss account in the current period when the relative assets sold, transferred, disposed or damaged. |
26. Income taxes
| Current income tax liabilities or assets for the current and prior periods, are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. For temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts, and temporary differences between the carrying amounts and the tax bases of items, the tax bases of which can be determined for tax purposes, but which have not been recognized as assets and liabilities, deferred taxes are provided using the liability method. A deferred tax liability is recognized for all taxable temporary differences, except: (1) to the extent that the deferred tax liability arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction which contains both of the following characteristics: the transaction is not a business combination and at the time of the transaction, it affects neither the accounting profit nor taxable profit or loss. (2) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in jointly-controlled enterprises, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. A deferred tax asset is recognized for deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized except: (1) where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and (2) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, according to the requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects at the balance sheet date, to recover the assets or settle the liabilities. At the balance sheet date, the Group reviews the book value of deferred tax assets. If it is probable that sufficient taxable income cannot be generated to use the tax benefits of deferred tax assets, the book value of deferred tax assets should be reduced. When it is probable that sufficient taxable income can be generated, |
27. Leases
the amount of such reduction should be reversed. When it is probable that sufficient taxable income can begenerated, the amount of such reduction should be reversed.
| A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. An operating lease is a lease other than a finance lease. The Group recording the operating lease as a lessee Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and either included in the cost of another related asset or charged to the income statement for the current period. The contingent rents shall be recorded in the profits and losses of the period in which they actually arise. The Group recording the operating lease as a lessor Rental income from operating leases is recognized by the lesser in the income statement on a straight-line basis over the lease term. The contingent rents shall be recorded in the profits and losses of the period in which they actually arise. |
28. Profit distribution
| The cash dividend of the Group is recognized as liabilities after the approval of general meeting of stockholders. |
29. Safety fund
| The safety fund extracted by the Group shall be recognized as the cost of the related products or income statement, while be recognized as special reserve. When using safety fund, it shall be distinguished whether it will form fixed assets or not. The expenditure shall write down the special reserve; the capital expenditure shall be recognized as fixed assets when meet the expected conditions for use, and write down the special reserve while recognizing accumulated depreciation with the same amount. |
30. Fair value measurement
| All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly; Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. |
31. Significant accounting judgments and estimates
| The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the amounts and disclosures of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the balance sheet date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future. Judgments In the process of applying the Group’s accounting policies, management has made the following judgments which have significant effect on the financial statements: Operating leases - as lessor The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases. Uncertainty of accounting estimates The crucial assumptions of significant accounting estimates in future and other crucial sources of estimated uncertainty, which may result in the significant adjustments to the book value of the subsequent accounting period, are as the following: Impairment of available-for-sale The Group classifies certain assets as available for sale and recognises movements of their fair values in equity. When the fair value declines, management makes assumptions about the decline in value to determine whether there is an impairment that should be recognized in the income statement Impairment of non-current assets other than financial assets (goodwill excluded) The Group assesses at each reporting date whether there is an indication that non-current assets other than financial assets may be impaired. If there is any sign of possible assets impairment, the assets concerned should be subject to impairment test. When the carrying amount of an asset or the relevant assets group exceeds its recoverable amount which is the higher one of the net amount of the fair value of the asset minus the disposal expenses and the present value of the expected future cash flow of the asset, the asset is considered impaired. The fair value minus the disposal expenses is determined by reference to the recent market transactions price or observed market price less any directly attributable expenditure for disposing. When making an estimate of the present value of the future cash flow of an asset, the Group should estimate the future cash flows of the asset or the relevant assets group, with the appropriate discount rate selected to reflect the present value of the future cash flows. Bad debt provisions Provisions are made under the allowance method. For each individually significant receivable, the impairment test should be conducted individually. Where there is evidence that indicates impairment, the loss should be |
| Inventory impairment based on the net realizable value According to accounting policy, inventories shall be measured at the lower of cost and the net realizable value. Provision for inventories is recognized in the income statement when the cost is higher than the net realizable value and when the inventories are obsolete and slow-moving. The Group will reassess whether a single inventory is obsolete, slow-moving or whether the net realizable value is lower than the inventories’ cost at end of each year. Development expenditures When determining the capitalization amount, management should make assumptions such as the expected cash flows of the assets related, the applicable discount rate and expected benefit period. Deferred tax assets The Group should recognize the deferred income tax assets arising from all the existing unutilized tax deficits and deductible temporary differences to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary differences. Enormous accounting judgments, as well as the tax planning are compulsory for management to estimate the time and amount of prospective taxable profits and thus determine the appropriate amount of the deferred tax assets concerned. Warranty The Group provides warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Factors that influence estimation of related warranty claim include: 1) renewal of laws and regulations; 2) quality promotion of Group products; 3) change of parts and labour cost. In general, the Group records warranty based on selling volume and estimated compensatory unit warranty cost, deduction multi-agreed compensation from suppliers. As at balance sheet day, the Group launches retrospective analysis on warranty carrying amount in consideration of accrual warranty payment during relative warranty period, and recent trends of product renovation and replacement, and further adjustment if necessary. Any increase or decrease in the provision would affect profit or loss in future years. Depreciation and amortization The Group’s management determines the estimated useful lives and residual value of fixed assets and intangible assets. This estimate is based on the historical experience of actual useful lives of fixed assets and intangible assets of similar nature and functions. Management will increase the depreciation and amortization charges where useful lives are less than previously estimated. |
32. Changes in accounting policies and estimates
| According to the MOF's Interpretation of Related Issues on Format of 2018 Annual Financial Statements for General Business Enterprises, when preparing the statement of cash flows, the cash flows originally classified as cash flows from [investing] and [financing] activities are classified as cash flows from operating activities. The Group adjusted the comparative amounts retrospectively. These changes in accounting policies reduced the net cash flows from [investing/financing] activities in the consolidated and company statements of cash flows and increased the net cash flows from operating activities by the same amount, but had no effects on the net increase in cash and cash equivalents. |
The cumulative effect of retrospective adjustments caused by the above changes in accounting policies are statedas follows:
| 31 December 2017 | ||
| Consolidated balance sheet | Before | After |
| Notes receivable | 29,156,481,085.20 | - |
| Accounts receivable | 1,806,807,193.04 | - |
| Notes receivable and accounts Receivable | - | 30,963,288,278.24 |
| Interest receivable | 42,184,263.88 | - |
| Other receivables | 1,645,276,455.04 | 1,687,460,718.92 |
| Fixed assets disposal | 4,716.98 | - |
| Fixed assets | 19,044,528,950.70 | 19,044,533,667.68 |
| Notes payable | 18,002,926,579.81 | - |
| Accounts payable | 21,902,826,194.15 | - |
| Notes receivable and accounts receivable | - | 39,905,752,773.96 |
| Dividend payables | 79,742.80 | - |
| Other payables | 2,599,013,410.98 | 2,599,093,153.78 |
| Special payable | 290,607,151.02 | - |
| Long-term prepaid expenses | - | 290,607,151.02 |
| 2017 | ||
| Consolidated profit sheet | Before | After |
| expenses | 5,280,296,493.52 | 2,663,645,058.45 |
| expenses | - | 2,616,651,435.07 |
| 2017 | ||
| Consolidated cash flow | Before | After |
| operating activities | 3,504,386,075.81 | 3,750,492,075.81 |
| investing activities | 246,106,000.00 | - |
IV TAXES
1. The major categories of taxes and surcharges
| Categories of taxes and surcharges | Basis of tax | Tax rate |
| Value added tax (“VAT”) | Levy on the taxable sales and rendering of services, deducted the deductible input VAT. | 5%, 6% , 10%(11%)or 16%(17%) |
| Consumption tax | Taxable sales | 1%,3% or 5% |
| City maintenance and construction tax | The turnover taxes paid | 5% or 7% |
| Educational surcharge | The turnover taxes paid | 3% |
| Local educational surcharge | The turnover taxes paid | 2% |
| Corporate income tax | Taxable income | 15% or 25% |
2. Tax benefits
| In accordance to Circular for Further Implementation of Tax Incentives In the Development of Western Regions (Cai Shui [2011] No. 58) collectively issued by the ministry of Finance, the Customs General Administration and the National Taxation Bureau of PRC, from 1 January 2011 to 31 December 2020, enterprises located in the Western Region and engaged in encouraged business would be entitled to a preferential CIT rate of 15%. For the year ended 2017, the Company, Changan Special Sales and Chongqing Changan Automobile Supporting are qualified to the requirement and acquired permission of the preferential tax rate of 15% from Chongqing Jiangbei National Tax Bureau (refer to Jiang Fa Gai Ti[2015] No. 135). In accordance to Circular of the Administrative Measures for the Certification of New and High Technology Enterprises (Guo Ke Fa Huo [2016] No. 32) and Circular of the Working Guidance on the Recognition of Hi-tech Enterprises (Guo Ke Fa Huo [2016] No. 195), the subsidiary of Hefei Changan Automobile Co., Ltd. obtained the certificate of new and high technology enterprise on 21 October 2016 and is subjected to the preferential tax rate of 15% from 2016 to 2018. In accordance to Circular of the Administrative Measures for the Certification of New and High Technology Enterprises (Guo Ke Fa Huo [2016] No. 32) and Circular of the Working Guidance on the Recognition of Hi-tech Enterprises (Guo Ke Fa Huo [2016] No. 195), the subsidiaries of Hebei Changan Automobile Co., Ltd. and Hebei Baoding Changan Bus Co., Ltd. obtained the certificate of new and high technology enterprise on 21 July 2017 and on 27 October 2017, and are subjected to the preferential tax rate of 15% from 2017 to 2019. |
V NOTES TO THE CONSOLIDATED FINANCIALSTATEMENTS
1. Cash
| Item | 2018 | 2017 |
| Cash | 14,374.84 | 33,089.31 |
| Cash at bank | 9,648,139,239.96 | 21,451,272,001.22 |
| Other cash | 332,390,911.34 | 1,180,231,406.00 |
| Total | 9,980,544,526.14 | 22,631,536,496.53 |
As at 31 December 2018, the book value of restricted cash and cash equivalents is RMB332,390,911.34 (As at 31December 2017: RMB1,180,231,406.00), which was mainly restricted for the issuance of acceptance bill.
As at 31 December 2017, the cash at bank oversea is equivalent to RMB329,881,255.11 (As at 31 December 2017:
RMB82,961,261.21).
Cash at banks earns interest at floating rates based on daily bank deposit rates. Notice deposits are made forperiods of 7 days, and short-term deposits are made for periods of 3 months to 12 months, depending on the cashrequirements of the Group, and earn interest at respective deposit rates.
2. Notes receivable and accounts receivable
| 2018 | 2017 | |
| Notes receivable | 20,561,625,805.24 | 29,156,481,085.20 |
| Accounts receivable | 1,409,419,600.50 | 1,806,807,193.04 |
| Total | 21,971,045,405.74 | 30,963,288,278.24 |
Notes receivable
(1) Classification of notes receivable
| Type | 2018 | 2017 |
| Commercial acceptance bill | 6,687,321,419.20 | 9,142,240,884.70 |
| Bank acceptance bill | 13,874,304,386.04 | 20,014,240,200.50 |
| Total | 20,561,625,805.24 | 29,156,481,085.20 |
(2) Pledged notes receivable
| Type | 2018 | 2017 |
| Commercial acceptance bill | 384,462,570.00 | - |
| Bank acceptance bill | 85,160,000.00 | 287,427,970.00 |
| Total | 469,622,570.00 | 287,427,970.00 |
As at 31 December 2018 and 2017, notes receivable with above carrying amount were pledged to issue notespayable.
(3) Endorsed or discounted but unexpired notes receivable as at the end of reporting period are as follow:
| 2018 | 2017 | |||
| Derecognition | Un-derecognition | Derecognition | Un-derecognition | |
| Commercial acceptance bill | 147,853,740.00 | - | 70,962,210.00 | - |
| Bank acceptance bill | 1,498,687,956.97 | - | 1,198,514,460.00 | - |
| Total | 1,646,541,696.97 | - | 1,269,476,670.00 | - |
(4) As at 31 December 2018,notes transferred to accounts receivable due to the non-acceptance was
RMB29,079,401.00. (As at 31 December 2017: Nil)
Accounts receivable
(1) Aging analysis of the accounts receivable as at 31 December 2018 is as follows:
| Aging | 2018 | 2017 |
| Within 1 year | 1,147,795,158.16 | 1,375,775,524.93 |
| 1 to 2 years | 96,258,167.82 | 320,269,522.88 |
| 2 to 3 years | 112,117,946.39 | 106,193,915.65 |
| Over 3 years | 143,862,648.03 | 40,598,751.89 |
| Total | 1,500,033,920.40 | 1,842,837,715.35 |
| Provision | (90,614,319.90) | (36,030,522.31) |
| 1,409,419,600.50 | 1,806,807,193.04 |
The movements in provision for impairment of accounts receivable are as follows:
| Beginning balance | Addition | Deduction | Ending balance | |||
| Provision | Other | Reversal | Write-off | |||
| 2018 | 36,030,522.31 | 13,490,022.81 | 42,008,512.00 | 832,031.73 | 82,705.49 | 90,614,319.90 |
| 2017 | 30,946,126.28 | 8,587,659.49 | - | 3,058,543.46 | 444,720.00 | 36,030,522.31 |
(2) Analysis of accounts receivable by category as at 31 December 2018 is as follows:
| Item | 2018 | 2017 | ||||||
| Balance | Provision | Balance | Provision | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Individually significant items and analyzed individually for provision | 858,892,602.36 | 57.26 | 44,226,423.35 | 5.15 | 734,064,982.48 | 39.83 | - | - |
| Accounts receivable analyzed as groups for provision | ||||||||
| Group 1. Accounts receivable analyzed for provision according to aging analysis | 427,323,980.23 | 28.48 | 29,225,702.47 | 6.84 | 811,522,470.21 | 44.04 | 22,765,588.74 | 2.81 |
| Group 2. Accounts receivable from related parties | 185,492,616.70 | 12.37 | - | - | 283,985,329.09 | 15.41 | - | - |
| Group subtotal | 612,816,596.93 | 40.85 | 29,225,702.47 | 4.77 | 1,095,507,799.30 | 59.45 | 22,765,588.74 | 2.08 |
| Individually insignificant items but analyzed individually for | 28,324,721.11 | 1.89 | 17,162,194.08 | 60.59 | 13,264,933.57 | 0.72 | 13,264,933.57 | 100 |
| provision | ||||||||
| Total | 1,500,033,920.40 | 100 | 90,614,319.90 | 6.04 | 1,842,837,715.35 | 100 | 36,030,522.31 | 1.96 |
In groups, accounts receivable were analyzed for provision by aging:
| Aging | 2018 | 2017 | ||||
| Balance | Provision | Balance | Provision | |||
| Amount | % | Amount | % | |||
| Within 6 months | 355,306,650.92 | 83.15 | - | 753,965,095.69 | 92.91 | - |
| 6 to 12 months | 1,374,930.80 | 0.32 | 68,746.54 | 18,262,202.43 | 2.25 | 913,110.11 |
| Within 1 year subtotal | 356,681,581.72 | 83.47 | 68,746.54 | 772,227,298.12 | 95.16 | 913,110.11 |
| 1 to 2 years | 34,680,938.03 | 8.12 | 3,468,093.80 | 12,198,268.67 | 1.50 | 1,219,826.87 |
| 2 to 3 years | 11,214,542.66 | 2.62 | 3,364,362.80 | 1,451,653.80 | 0.18 | 435,496.14 |
| 3 to 4 years | 1,106,688.03 | 0.26 | 553,344.02 | 10,368,508.00 | 1.28 | 5,184,254.00 |
| 4 to 5 years | 9,345,372.38 | 2.19 | 7,476,297.90 | 1,319,200.00 | 0.16 | 1,055,360.00 |
| Over 5 years | 14,294,857.41 | 3.34 | 14,294,857.41 | 13,957,541.62 | 1.72 | 13,957,541.62 |
| Total | 427,323,980.23 | 100 | 29,225,702.47 | 811,522,470.21 | 100 | 22,765,588.74 |
In groups, accounts receivable was analyzed for provision by other methods:
| Group | 2018 | 2017 | ||
| Balance | Provision | Balance | Provision | |
| Accounts receivable from related parities | 185,492,616.70 | - | 283,985,329.09 | - |
As at 31 December 2018 and 2017, there are no individually significant items analyzed individually for provision.
(3) In 2018, provision for accounts receivable amounted to RMB13,490,022.81 has been accrued (2017:
RMB8,587,659.49). Provision for accounts receivable amounted to RMB832,031.73 has been reversed(2017: RMB3,058,543.46). Due to the acquisition of Changan Suzuki, the provision for bad debtsincreased by RMB 42,008,512.00 (Note VI, changes in the scope of consolidation)
(4) As at 31 December 2018, Provision for accounts receivable amounted to RMB82,705.49 has been
write-off (2017: RMB444,720.00).
(5) As at 31 December 2018, accounts receivable from Top 5 clients amounted to RMB564,688,036.12,
accounted for 37.65% of the total accounts receivable (2017：RMB553,166,995.66，accounted for 30.02%of the total amount).
(6) There was no accounts receivable derecognized due to transfer of financial assets during 2018 (2017: Nil).
3. Prepayments
(1) Aging analysis of the prepayments is as follows:
| Aging | 2018 | 2017 | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 781,698,728.24 | 90.25 | 1,099,772,284.11 | 99.78 |
| 1 to 2 years | 77,209,604.94 | 8.91 | 447,067.45 | 0.04 |
| 2 to 3 years | 5,320,836.56 | 0.61 | 1,485,647.87 | 0.13 |
| Over 3 years | 2,020,579.77 | 0.23 | 534,931.90 | 0.05 |
| Total | 866,249,749.51 | 100 | 1,102,239,931.33 | 100 |
(2) As at 31 December 2018, prepayments to Top 5 suppliers amounted to RMB692,025,641.94, which
accounted for 79.89% of the total prepayments (2017: RMB993,006,069.80, which accounted for 90.09%of the total amount ).
4. Other receivables
| Item | 2018 | 2017 |
| Interest Receivable | 17,432,805.54 | 42,184,263.88 |
| Other Receivables | 3,233,020,118.16 | 1,645,276,455.04 |
| Total | 3,250,452,923.70 | 1,687,460,718.92 |
Interest Receivables
As of December 31, 2018, the Group's interest receivable for time deposits was RMB 17,432,805.54 (December31, 2017: RMB 42,184,263.88)
Other receivables
(1) Aging analysis of other receivables as at 31 December 2018 is as follows:
| 2018 | 2017 | |
| Within 1 year | 1,959,280,906.55 | 1,414,935,792.12 |
| 1 to 2 years | 1,185,294,003.76 | 212,077,835.97 |
| 2 to 3 years | 73,740,285.90 | 6,624,999.32 |
| Over 3 years | 22,553,085.53 | 15,794,423.31 |
| Total | 3,240,868,281.74 | 1,649,433,050.72 |
| Provision | (7,848,163.58) | (4,156,595.68) |
| 3,233,020,118.16 | 1,645,276,455.04 |
Movements of provisions for other receivables are as follows:
| Beginning balance | Addition | Deduction | Ending balance | |||
| Provision | Other addition | Reversal | Write-off | |||
| 2018 | 4,156,595.68 | 576,587.36 | 4,348,209.00 | 1,176,673.66 | 56,554.80 | 7,848,163.58 |
| 2017 | 4,120,282.27 | 1,231,570.84 | - | 1,109,854.82 | 85,402.61 | 4,156,595.68 |
(2) Analysis of other receivables by category as at 31 December 2017 is as follows:
| Item | 2018 | 2017 | ||||||
| Balance | Provision | Balance | Provision | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Individually significant items and analyzed individually for provision | 2,780,889,774.62 | 85.80 | - | - | 1,404,077,945.42 | 85.12 | - | - |
| Other receivables analyzed as groups for provision | ||||||||
| Group 1. Other receivables analyzed for provision according to aging analysis | 323,279,832.19 | 9.98 | 1,212,982.16 | 0.38 | 201,199,672.08 | 12.20 | 1,177,852.02 | 0.59 |
| Group 2. Other receivables from related parties | 126,128,653.39 | 3.89 | - | - | 41,176,689.56 | 2.50 | - | - |
| Group subtotal | 449,408,485.58 | 13.87 | 1,212,982.16 | 0.27 | 242,376,361.64 | 14.70 | 1,177,852.02 | 0.49 |
| individually insignificant items but analyzed individually for provision | 10,570,021.54 | 0.33 | 6,635,181.42 | 62.77 | 2,978,743.66 | 0.18 | 2,978,743.66 | 100 |
| Total | 3,240,868,281.74 | 100 | 7,848,163.58 | 0.24 | 1,649,433,050.72 | 100 | 4,156,595.68 | 0.25 |
In groups, other receivables were analyzed for provision by aging:
| Aging | 2018 | 2017 | ||||
| Balance | Provision | Balance | Provision | |||
| Amount | % | Amount | % | |||
| Within 6 months | 311,733,721.34 | 96.42 | - | 194,289,589.40 | 96.57 | - |
| 6 to 12 months | 5,807,829.40 | 1.80 | 290,391.47 | 5,512,392.58 | 2.74 | 275,619.62 |
| Within 1 year subtotal | 317,541,550.74 | 98.22 | 290,391.47 | 199,801,981.98 | 99.31 | 275,619.62 |
| 1 to 2 years | 5,113,633.10 | 1.58 | 511,363.31 | 405,884.15 | 0.20 | 40,588.42 |
| 2 to 3 years | 253,452.00 | 0.08 | 76,035.60 | 48,000.00 | 0.02 | 14,400.00 |
| 3 to 4 years | 34,672.34 | 0.01 | 17,336.17 | 193,123.94 | 0.10 | 96,561.97 |
| 4 to 5 years | 93,342.00 | 0.03 | 74,673.60 | - | - | - |
| Over 5 years | 243,182.01 | 0.08 | 243,182.01 | 750,682.01 | 0.37 | 750,682.01 |
| Total | 323,279,832.19 | 100 | 1,212,982.16 | 201,199,672.08 | 100 | 1,177,852.02 |
As at 31 December 2018, there are no individually significant items analyzed individually for provision (2017:
Nil).
(3) For the year ended 31 December 2018, provision for other receivables amounted to RMB576,587.36 have
been accrued (2017: RMB1,231,570.84). Provision for other receivables amounted to RMB1,176,673.66has been reversed (2017: RMB1,109,854.82). Due to the acquisition of Changan Suzuki, the provision forbad debts increased by RMB 4,348,209.00 (Note VI, changes in scope of consolidation)
(4) For the year ended 31 December 2018, provision for impairment of other receivables amounted to
RMB56,554.80 has been written off (2017: RMB85,402.61).
(5) An analysis of the other receivables by nature is as follows:
| Nature | 2018 | 2017 |
| Energy-saving and new energy subsidy | 2,847,788,412.50 | 1,356,575,528.00 |
| Petty Cash | 85,243,135.73 | 93,960,780.74 |
| Security Deposit | 16,370,802.38 | 12,526,804.36 |
| Export rebates | 11,523,570.20 | 19,865,767.18 |
| Others | 272,094,197.35 | 162,347,574.76 |
| Total | 3,233,020,118.16 | 1,645,276,455.04 |
(6) As at 31 December 2018, top five debtors of other receivables are as follows:
| Debtors | Amount | Nature | Aging | Proportion of total other receivables (%) | Provision |
| First | 1,667,483,759.60 | New energy subsidy | Within four years | 51.45 | - |
| Second | 538,567,705.00 | New energy subsidy | Within four years | 16.62 | - |
| Third | 414,492,285.00 | New energy subsidy | Within three years | 12.79 | - |
| Fourth | 124,312,677.94 | Commission processing | Within one year | 3.84 | - |
| Fifth | 107,479,260.00 | New energy subsidy | Within one year | 3.32 | - |
| Total | 2,852,335,687.54 | 88.02 | - |
As at 31 December 2017, top five debtors of other receivables are as follows:
| Debtors | Amount | Nature | Aging | Proportion of total other receivables (%) | Provision |
| First | 1,080,007,000.00 | Energy-saving and new energy subsidy | Within three years | 65.48 | - |
| Second | 230,157,128.00 | New energy subsidy | Within three years | 13.95 | - |
| Third | 40,784,896.53 | Disposal of assets | two to three year | 2.47 | - |
| Fourth | 25,358,400.00 | New energy subsidy | one to two year | 1.54 | - |
| Fifth | 21,053,000.00 | New energy subsidy | Within one year | 1.28 | - |
| Total | 1,397,360,424.53 | 84.72 | - |
(7) For the year ended 2018, there is no accounts receivable derecognized due to transfer of financial assets.
(2017: Nil).
5. Inventories
(1) Classification of inventories
| Item | 2018 | 2017 | ||||
| Balance | Provision | Net value | Balance | Provision | Net value | |
| Raw materials | 2,029,706,541.33 | 181,897,353.27 | 1,847,809,188.06 | 461,911,233.10 | 33,713,007.05 | 428,198,226.05 |
| Material in transit | 318,420,244.84 | - | 318,420,244.84 | 511,912,371.36 | - | 511,912,371.36 |
| Work in progress | 1,413,892,484.38 | 35,473,526.73 | 1,378,418,957.65 | 633,181,546.29 | 32,329,369.55 | 600,852,176.74 |
| Finish goods | 1,292,509,122.51 | 76,519,657.33 | 1,215,989,465.18 | 3,154,147,791.47 | 103,902,330.06 | 3,050,245,461.41 |
| Consigned processing material | 110,310,364.86 | - | 110,310,364.86 | 26,530,300.45 | - | 26,530,300.45 |
| Consumables | 46,472,236.60 | - | 46,472,236.60 | 48,444,885.79 | - | 48,444,885.79 |
| Total | 5,211,310,994.52 | 293,890,537.33 | 4,917,420,457.19 | 4,836,128,128.46 | 169,944,706.66 | 4,666,183,421.80 |
(2) Provision for inventories
2018
| Type | Beginning balance | Additions | Deduction | Ending balance | |
| Provision | Other | Reversal Or Written off | |||
| Raw materials | 33,713,007.05 | 163,124,568.33 | 161,591,998.30 | 176,532,220.41 | 181,897,353.27 |
| Work in progress | 32,329,369.55 | 6,303,861.08 | 1,985,609.60 | 5,145,313.50 | 35,473,526.73 |
| Finish goods | 103,902,330.06 | 68,184,792.87 | 17,456,727.63 | 113,024,193.23 | 76,519,657.33 |
| Total | 169,944,706.66 | 237,613,222.28 | 181,034,335.53 | 294,701,727.14 | 293,890,537.33 |
2017
| Type | Beginning balance | Provision | Deduction | Ending balance |
| Reversal Or Written off | ||||
| Raw materials | 57,482,949.30 | 17,808,606.07 | 41,578,548.32 | 33,713,007.05 |
| Work in progress | 53,155,331.21 | 7,166,686.01 | 27,992,647.67 | 32,329,369.55 |
| Finish goods | 91,631,171.89 | 76,579,038.73 | 64,307,880.56 | 103,902,330.06 |
| Total | 202,269,452.40 | 101,554,330.81 | 133,879,076.55 | 169,944,706.66 |
Note for the inventory
(3) Note for inventory provision
The Group assesses whether the cost of inventory is higher than the net realizable value and makes provision ofthe difference. Net realizable value is the estimated by selling price in the ordinary course of business deductestimated costs in further production to sell and estimated necessary distribution expense and tax expense. Thereversal of inventory provisions is due to price rebound of previous impaired inventories by net realizable valuetest, while written off of inventory provisions are due to selling off of previous impaired inventories in currentyear. Other additions in the year were due to the acquisition of Changan Suzuki (Note 6) Changes in the scope ofconsolidation.
6. Other current assets
| Item | 2018 | 2017 |
| Input VAT to be deducted | 2,227,386,063.11 | 1,699,621,114.17 |
| Others | 179,290.12 | 6,289,416.26 |
| Total | 2,227,565,353.23 | 1,705,910,530.43 |
7. Available-for-sale financial assets
| Item | 2018 | 2017 | ||||
| Book value | Provision | Net value | Book value | Provision | Net value | |
| Available-for-sale equity instrument | ||||||
| value | 1,557,441,311.31 | 27,120,000.00 | 1,530,321,311.31 | 191,485,000.00 | 27,120,000.00 | 164,365,000.00 |
| historical cost | 429,361,274.00 | 1,809,274.00 | 427,552,000.00 | 379,361,274.00 | 1,809,274.00 | 377,552,000.00 |
| Total | 1,986,802,585.31 | 28,929,274.00 | 1,957,873,311.31 | 570,846,274.00 | 28,929,274.00 | 541,917,000.00 |
Available-for-sale financial assets measured at fair value:
As at 31 December 2018, the available-for-sale equity securities instrument measured at fair value is 35.50 millionordinary shares of Southwest Securities Co., Ltd. (31 December 2017: 35.50 million ordinary shares of SouthwestSecurities Co., Ltd.), and 23 million restricted shares of Contemporary Amperex Technology Co., Ltd.(31December 2017: Nil).
| Item | 2018 | 2017 |
| Cost of equity instrument | 1,050,000,821.00 | 50,000,000.00 |
| Fair value | 1,530,321,311.31 | 164,365,000.00 |
| Accumulated amount of change in fair value recorded in other comprehensive income | 349,824,952.31 | 141,485,000.00 |
| Provision | 27,120,000.00 | 27,120,000.00 |
7. Available-for-sale financial assets (continued)
Available-for-sale financial assets measured at historical cost:
2018
| Item | Book value | Provision | Ratio (%) | Cash dividend in current year | ||||||
| Beginning balance | Addition | Disposal | Ending balance | Beginning balance | Addition | Disposal | Ending balance | |||
| China South Industry Group Finance Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - | - | - | 3.83 | 48,909,006.75 |
| Chongqing Ante trading Co., Ltd | 3,000,000.00 | - | - | 3,000,000.00 | - | - | - | - | 10.00 | - |
| Sichuan Glass Co., Ltd. | 1,809,274.00 | - | - | 1,809,274.00 | 1,809,274.00 | - | - | 1,809,274.00 | 0.64 | - |
| Zhong Fa Lian Investment Co., Ltd. | 21,000,000.00 | - | - | 21,000,000.00 | - | - | - | - | 10.00 | - |
| CAERI(Beijing) automobile Lightweight Technology Research Institution Co., Ltd. | 3,000,000.00 | - | - | 3,000,000.00 | - | - | - | - | 6.89 | - |
| Guoqi Automobile Power Cell Research Co., Ltd. | 40,000,000.00 | - | - | 40,000,000.00 | - | - | - | - | 7.41 | 449,438.20 |
| United Prosperity Investment (ShenZhen) Co., Ltd | 30,552,000.00 | - | - | 30,552,000.00 | - | - | - | - | 5.00 | - |
| Corun Hybrid Power Technology Co. Ltd | 200,000,000.00 | - | - | 200,000,000.00 | - | - | - | - | 9.24 | - |
| Guoqi (Beijing) Intelligent Network Association Automotive Research Institute Co., Ltd. | - | 50,000,000.00 | - | 50,000,000.00 | - | - | - | - | 5.56 | - |
| Total | 379,361,274.00 | 50,000,000.00 | - | 429,361,274.00 | 1,809,274.00 | - | - | 1,809,274.00 | 49,358,444.95 | |
2017
| Item | Book value | Provision | Ratio (%) | Cash dividend in current year | ||||||
| Beginning balance | Addition | Disposal | Ending balance | Beginning balance | Addition | Disposal | Ending balance | |||
| China South Industry Group Finance Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - | - | - | 3.83 | 46,814,239.43 |
| Chongqing Ante trading Co., Ltd | 3,000,000.00 | - | - | 3,000,000.00 | - | - | - | - | 10.00 | - |
| Sichuan Glass Co., Ltd. | 1,809,274.00 | - | - | 1,809,274.00 | - | 1,809,274.00 | 1,809,274.00 | 0.64 | - | |
| Zhong Fa Lian Investment Co., Ltd. | 21,000,000.00 | - | - | 21,000,000.00 | - | - | - | - | 10.00 | - |
| CAERI(Beijing) automobile Lightweight Technology Research Institution Co., Ltd. | 3,000,000.00 | - | - | 3,000,000.00 | - | - | - | - | 6.89 | - |
| Guoqi Automobile Power Cell Research Co., Ltd. | 40,000,000.00 | - | - | 40,000,000.00 | - | - | - | - | 7.41 | - |
| United Prosperity Investment (ShenZhen) Co., Ltd | 30,552,000.00 | - | - | 30,552,000.00 | - | - | - | - | 5.00 | - |
| Corun Hybrid Power Technology Co. Ltd | - | 200,000,000.00 | - | 200,000,000.00 | - | - | - | 9.24 | - | |
| Total | 179,361,274.00 | 200,000,000.00 | 379,361,274.00 | - | 1,809,274.00 | - | 1,809,274.00 | - | 46,814,239.43 | |
The impairment provision for available-for-sale financial assets is as follows:
2018
| Provision for available-for-sale financial assets | Beginning balance | Addition | Disposal | Ending balance |
| Available-for-sale financial assets measured at fair value | 27,120,000.00 | - | - | 27,120,000.00 |
| Available-for-sale financial assets measured at historical cost | 1,809,274.00 | - | - | 1,809,274.00 |
| Total | 28,929,274.00 | - | - | 28,929,274.00 |
2017
| Provision for available-for-sale financial assets | Beginning balance | Addition | Disposal | Ending balance |
| Available-for-sale financial assets measured at fair value | 27,120,000.00 | - | - | 27,120,000.00 |
| Available-for-sale financial assets measured at historical cost | - | 1,809,274.00 | - | 1,809,274.00 |
| Total | 27,120,000.00 | 1,809,274.00 | - | 28,929,274.00 |
8. Long-term equity investments
2018
| Investee | Beginning balance | Addition | Investment income under equity method | Other comprehensive income | Other equity variation | Cash dividends declared | Other Deduction | Provision | Book value ending balance | Provision ending balance |
| Joint Venture | ||||||||||
| Chongqing Changan Suzuki Automobile Co., Ltd. | 1,190,705,710.43 | - | (595,756,652.13) | - | - | - | (594,949,058.30) | - | - | - |
| Jiangling Holding Co., Ltd. | 2,907,749,943.37 | - | (409,453,173.08) | (706,228.88) | (3,835,625.88) | - | - | - | 2,493,754,915.53 | - |
| Changan Ford Automobile Co., Ltd. | 4,125,426,104.20 | - | (415,641,597.09) | - | - | - | - | - | 3,709,784,507.11 | - |
| Changan Mazda Automobile Co., Ltd. | 2,439,429,811.02 | - | 1,263,196,852.39 | - | - | (1,230,000,000.00) | - | - | 2,472,626,663.41 | - |
| Changan Ford Mazda Engine Co., Ltd. | 903,838,395.08 | - | 38,465,362.88 | - | - | (114,500,000.00) | - | - | 827,803,757.96 | - |
| Changan PSA Automobiles Co., Ltd. | 93,561,126.76 | 1,800,000,000.00 | (437,042,058.02) | - | - | - | - | - | 1,456,519,068.74 | - |
| Automobile Technology Co., Ltd. | - | 49,000,000.00 | (4,934,486.09) | - | - | - | 44,065,513.91 | |||
| Subtotal | 11,660,711,090.86 | 1,849,000,000.00 | (561,165,751.14) | (706,228.88) | (3,835,625.88) | (1,344,500,000.00) | (594,949,058.30) | - | 11,004,554,426.66 | - |
| Associates | ||||||||||
| Chongqing Changan Kuayue Automobile Co., Ltd. | 101,399,892.43 | - | 28,908,342.54 | - | - | (13,720,000.00) | - | - | 116,588,234.97 | - |
| Chongqing Changan Kuayue Automobile Sales Co., Ltd. (note1) | - | - | - | - | - | - | - | - | - | - |
| Beijing Fang’an cresent taxi Co., Ltd. (note1) | - | - | - | - | - | - | - | - | - | - |
| Changan Automobile Financing Co.,Ltd | 1,817,669,991.73 | - | 212,947,165.68 | - | - | - | - | - | 2,030,617,157.41 | - |
| Zhenjiang Demao Hairun equity investment fund partnership (limited partnership)(note2) | 518,742,921.95 | - | (239,867.54) | 77,231,613.62 | - | - | (595,734,668.03) | - | - | - |
| Hainan Anxinxing Information Technology Co., Ltd. | - | 6,000,000.00 | (463,444.79) | - | - | - | - | - | 5,536,555.21 | - |
| Nanjing Chelai Travel Technology Co., Ltd. | - | 2,000,000.00 | (186,383.86) | - | - | - | - | 1,813,616.14 | - | |
| Hunan Guoxin Semiconductor Technology Co., Ltd. | - | 25,000,000.00 | - | - | - | - | - | 25,000,000.00 | - | |
| Beijing Wutong Chelian Technology Co., Ltd. | - | 98,000,000.00 | (12,143,147.43) | - | - | - | - | 85,856,852.57 | - | |
| Anhe (Chongqing) Equity Investment Fund Management Co., Ltd. | - | 2,500,000.00 | - | - | - | - | - | 2,500,000.00 | - | |
| Hangzhou Chelizi Intelligent Technology Co., Ltd. | - | 2,243,750.00 | 459,525.87 | - | - | 2,703,275.87 | - | |||
| Subtotal | 2,437,812,806.11 | 135,743,750.00 | 229,282,190.47 | 77,231,613.62 | - | (13,720,000.00) | (595,734,668.03) | - | 2,270,615,692.17 | - |
| Total | 14,098,523,896.97 | 1,984,743,750.00 | (331,883,560.67) | 76,525,384.74 | (3,835,625.88) | (1,358,220,000.00) | (1,190,683,726.33) | - | 13,275,170,118.83 | - |
8. Long-term equity investments(continued)
Note1: As at 31 December 2018, the Group is not responsible for extra loss from Chongqing Changan Kuayue Automobile Sales Co., Ltd. and Beijing Fang’an cresent taxi Co., Ltd.
Therefore, when excess losses of these two associates occurred, the Group just reduced its correspondent long-term equity investment to zero, and did not recognize contingentliabilities accordingly.
Note2: In 2018, Chongqing Changan Suzuki Automobile Co., Ltd. and Zhenjiang Demao Hairun Equity Investment Fund Partnership (Limited Partnership) were changed to be
subsidiaries of the Company. For details, please refer to Note VI. Changes in Consolidation Scope.
2017
| Investee | Beginning balance | Addition | Deduction | Investment income under equity method | Other comprehensive income | Other equity variation | Cash dividends declared | Provision | Book value ending balance | Provision ending balance |
| Joint Venture | ||||||||||
| Chongqing Changan Suzuki Automobile Co., Ltd. | 1,230,836,876.85 | - | - | (42,413,558.40) | - | 2,282,391.98 | - | - | 1,190,705,710.43 | - |
| Jiangling Holding Co., Ltd. | 2,991,207,303.06 | - | - | (86,461,777.56) | (248,641.80) | 3,253,059.67 | - | - | 2,907,749,943.37 | - |
| Changan Ford Automobile Co., Ltd. | 5,663,808,819.68 | - | - | 6,039,117,284.52 | - | - | (7,577,500,000.00) | - | 4,125,426,104.20 | - |
| Changan Mazda Automobile Co., Ltd. | 2,146,340,500.42 | - | - | 1,268,089,310.60 | - | - | (975,000,000.00) | - | 2,439,429,811.02 | - |
| Changan Ford Mazda Engine Co., Ltd. | 908,715,700.67 | - | - | 119,122,694.41 | - | - | (124,000,000.00) | - | 903,838,395.08 | - |
| Changan PSA Automobiles Co., Ltd. | 647,839,655.26 | - | - | (554,278,528.50) | - | - | - | - | 93,561,126.76 | - |
| Subtotal | 13,588,748,855.94 | - | - | 6,743,175,425.07 | (248,641.80) | 5,535,451.65 | (8,676,500,000.00) | - | 11,660,711,090.86 | - |
| Associates | ||||||||||
| Chongqing Xiyi Automobile Linkage Rod Co., Ltd.（note1） | 7,556,448.42 | - | (6,005,819.20) | (1,550,629.22) | - | - | - | - | - | - |
| Chongqing Changan Kuayue Automobile Co., Ltd. | 83,406,464.16 | - | - | 17,993,428.27 | - | - | - | - | 101,399,892.43 | - |
| Chongqing Changan Kuayue Automobile Sales Co., Ltd. (note2) | - | - | - | - | - | - | - | - | - | - |
| Beijing Fang’an cresent taxi Co., Ltd. (note2) | - | - | - | - | - | - | - | - | - | - |
| Changan Automobile Financing Co.,Ltd | 1,063,655,241.51 | 650,000,000.00 | - | 95,278,795.38 | - | 8,735,954.84 | - | - | 1,817,669,991.73 | - |
| Zhenjiang Demao Hairun equity investment fund partnership (limited partnership) | - | 518,743,029.48 | - | (107.53) | - | - | - | - | 518,742,921.95 | - |
| Subtotal | 1,154,618,154.09 | 1,168,743,029.48 | (6,005,819.20) | 111,721,486.90 | - | 8,735,954.84 | - | - | 2,437,812,806.11 | - |
| Total | 14,743,367,010.03 | 1,168,743,029.48 | (6,005,819.20) | 6,854,896,911.97 | (248,641.80) | 14,271,406.49 | (8,676,500,000.00) | - | 14,098,523,896.97 | - |
9. Investment property
Cost Model
2017
| Item | Builidings | |
| 2018 | 2017 | |
| Original cost | ||
| Beginning and Ending | 10,050,100.00 | 10,050,100.00 |
| Accumulated depreciation and amortization | ||
| Beginning | 2,493,827.16 | 2,267,115.60 |
| Accrual | 226,711.56 | 226,711.56 |
| Ending | 2,720,538.72 | 2,493,827.16 |
| Impairment Provision | ||
| Beginning and Ending | - | - |
| Carrying amount | ||
| Ending | 7,329,561.28 | 7,556,272.84 |
| Beginning | 7,556,272.84 | 7,782,984.40 |
The investment property is rented to third parties in the form of operating lease.
As at 31 December 2018, there is no investment property without property certificate (As at 31 December 2017:
Nil).
10. Fixed assets
| 2018 | 2017 | |
| Fixed assets | 22,161,054,058.31 | 19,044,528,950.70 |
| fixed assets disposal | - | 4,716.98 |
| Total | 22,161,054,058.31 | 19,044,533,667.68 |
(1) Details of fixed assets
2018
| Item | Buildings | Machinery | Vehicles | Other Equipments | Total |
| Original cost | |||||
| Beginning | 7,588,350,429.43 | 17,780,317,915.84 | 758,168,041.39 | 4,965,243,303.05 | 31,092,079,689.71 |
| Purchase | 23,926,779.57 | 23,571,882.60 | 3,099,101.17 | 26,846,795.56 | 77,444,558.90 |
| Transfer from Construction in progress | 1,327,900,008.98 | 756,278,671.99 | 432,279,275.46 | 1,379,046,064.13 | 3,895,504,020.56 |
| Other addition | 954,716,283.23 | 3,602,516,085.77 | 24,428,654.75 | 1,329,694,549.68 | 5,911,355,573.43 |
| Disposal | 5,313,985.87 | 235,304,285.38 | 4,751,373.21 | 56,765,383.96 | 302,135,028.42 |
| Ending | 9,889,579,515.34 | 21,927,380,270.82 | 1,213,223,699.56 | 7,644,065,328.46 | 40,674,248,814.18 |
| Accumulated depreciation |
| Beginning | 1,585,639,930.24 | 7,183,157,682.85 | 207,356,765.94 | 2,190,616,451.00 | 11,166,770,830.03 |
| Accrual | 293,956,868.75 | 1,410,740,403.02 | 181,011,982.63 | 448,572,044.96 | 2,334,281,299.36 |
| Other addition | 269,696,084.63 | 2,650,379,521.25 | 20,023,995.95 | 1,165,493,091.83 | 4,105,592,693.66 |
| Disposal | 2,086,226.30 | 218,149,664.89 | 2,872,163.13 | 30,936,659.24 | 254,044,713.56 |
| Ending | 2,147,206,657.32 | 11,026,127,942.23 | 405,520,581.39 | 3,773,744,928.55 | 17,352,600,109.49 |
| Impairment provision | |||||
| Beginning | 83,371,676.72 | 673,609,726.30 | 223,852.23 | 123,574,653.73 | 880,779,908.98 |
| Accrual | 400,000.00 | 87,862,065.28 | 36,048,119.83 | 17,301,545.17 | 141,611,730.28 |
| Other addition | 708,576.48 | 149,779,328.80 | - | 6,351,188.48 | 156,839,093.76 |
| Disposal | 2,028,003.69 | 15,333,552.42 | - | 1,274,530.53 | 18,636,086.64 |
| Ending | 82,452,249.51 | 895,917,567.96 | 36,271,972.06 | 145,952,856.85 | 1,160,594,646.38 |
| Carrying amount | |||||
| Ending | 7,659,920,608.51 | 10,005,334,760.63 | 771,431,146.11 | 3,724,367,543.06 | 22,161,054,058.31 |
| Beginning | 5,919,338,822.47 | 9,923,550,506.69 | 550,587,423.22 | 2,651,052,198.32 | 19,044,528,950.70 |
2017
| Item | Buildings | Machinery | Vehicles | Other Equipments | Total |
| Original cost | |||||
| Beginning | 6,585,025,213.48 | 14,656,950,077.02 | 635,870,396.01 | 4,254,426,806.07 | 26,132,272,492.58 |
| Purchase | 93,109,589.36 | 229,213,269.80 | 18,636,091.12 | 53,700,062.46 | 394,659,012.74 |
| Transfer from Construction in progress | 914,913,063.52 | 3,335,754,582.56 | 112,909,603.35 | 876,084,376.68 | 5,239,661,626.11 |
| Disposal | 4,697,436.93 | 441,600,013.54 | 9,248,049.09 | 218,967,942.16 | 674,513,441.72 |
| Ending | 7,588,350,429.43 | 17,780,317,915.84 | 758,168,041.39 | 4,965,243,303.05 | 31,092,079,689.71 |
| Accumulated depreciation | |||||
| Beginning | 1,333,083,905.82 | 6,198,699,998.91 | 93,947,322.89 | 2,017,878,519.69 | 9,643,609,747.31 |
| Accrual | 254,351,666.72 | 1,209,909,941.02 | 120,844,400.33 | 329,677,458.08 | 1,914,783,466.15 |
| Disposal | 1,795,642.30 | 225,452,257.08 | 7,434,957.28 | 156,939,526.77 | 391,622,383.43 |
| Ending | 1,585,639,930.24 | 7,183,157,682.85 | 207,356,765.94 | 2,190,616,451.00 | 11,166,770,830.03 |
| Impairment provision | |||||
| Beginning | 84,183,751.00 | 793,157,069.89 | 268,506.89 | 130,568,903.50 | 1,008,178,231.28 |
| Accrual | - | 64,328,680.40 | - | 15,651,081.91 | 79,979,762.31 |
| Disposal | 812,074.28 | 183,876,023.99 | 44,654.66 | 22,645,331.68 | 207,378,084.61 |
| Ending | 83,371,676.72 | 673,609,726.30 | 223,852.23 | 123,574,653.73 | 880,779,908.98 |
| Carrying amount | |||||
| Ending | 5,919,338,822.47 | 9,923,550,506.69 | 550,587,423.22 | 2,651,052,198.32 | 19,044,528,950.70 |
| Beginning | 5,167,757,556.66 | 7,665,093,008.22 | 541,654,566.23 | 2,105,979,382.88 | 15,480,484,513.99 |
(2) Fixed assets that are temporarily unused
2018
| Item | Original cost | Accumulated depreciation | Impairment provision | Carrying amount |
| Buildings | 224,485,202.11 | 125,177,360.10 | 77,423,503.00 | 21,884,339.01 |
| Machinery | 1,976,159,790.51 | 1,347,119,942.38 | 615,716,084.44 | 13,323,763.69 |
| Vehicles | 1,879,595.78 | 1,578,167.36 | 275,067.08 | 26,361.34 |
| Other Equipments | 434,967,988.89 | 312,070,125.63 | 119,315,817.56 | 3,582,045.70 |
| Total | 2,637,492,577.29 | 1,785,945,595.47 | 812,730,472.08 | 38,816,509.74 |
2017
| Item | Original cost | Accumulated depreciation | Impairment provision | Carrying amount |
| Buildings | 150,631,017.32 | 76,892,209.89 | 52,199,841.54 | 21,538,965.89 |
| Machinery | 1,826,830,449.60 | 1,259,936,903.19 | 555,048,275.37 | 11,845,271.04 |
| Vehicles | 110,256.41 | 32,307.39 | 77,949.02 | - |
| Other Equipments | 155,250,949.58 | 100,552,513.98 | 54,387,445.40 | 310,990.20 |
| Total | 2,132,822,672.91 | 1,437,413,934.45 | 661,713,511.33 | 33,695,227.13 |
(3) The book value of fixed assets which are rented out under operating leases is as follow:
| Item | 2018 | 2017 |
| Machinery | 1,908,531.51 | 10,288,642.35 |
(4) Fixed assets without property certificate as at 31 December 2018 are as follow:
| Item | Carrying amount | Reason for incomplete certificate of title |
| Painting plant | 419,331,763.92 | In process |
| Assemble plant | 322,045,403.28 | In process |
| Welding workshop | 225,139,093.22 | In process |
| Yu Zui Auto City | 181,989,820.09 | In process |
| H plant Phase IV | 152,185,927.80 | In process |
| Stamping Workshop | 113,216,645.84 | In process |
| Other facilities | 70,383,604.89 | In process |
| S Engine plant | 63,312,939.19 | In process |
| Second foundry plant | 45,000,481.79 | In process |
| Other plant | 39,454,029.99 | In process |
| EA Casting workshop Phase I | 36,396,378.71 | In process |
| Second plant and public building | 35,794,778.68 | In process |
| Office building | 10,512,738.16 | In process |
| Engine workshop | 9,603,986.86 | In process |
| Staff cafeteria | 8,139,861.57 | In process |
| Technology center workshop | 7,047,659.65 | In process |
| Buildings in testing projects of Dianjiang | 4,795,691.00 | In process |
11. Construction in progress
(1) Details of construction in progress
| Item | 2018 | 2017 | ||||
| Balance | Provision | Carrying amount | Balance | Provision | Carrying amount | |
| Mini-bus production equipment | 815,889,070.57 | - | 815,889,070.57 | 997,340,616.73 | - | 997,340,616.73 |
| Yuzui motor city project | 51,962,876.25 | - | 51,962,876.25 | 247,220,662.88 | - | 247,220,662.88 |
| Car production equipment | 181,137,313.03 | - | 181,137,313.03 | 165,767,240.81 | - | 165,767,240.81 |
| Engine plant | 1,458,726,257.58 | - | 1,458,726,257.58 | 341,191,269.61 | - | 341,191,269.61 |
| Vehicle research institution | 854,570,879.08 | - | 854,570,879.08 | 401,869,572.35 | - | 401,869,572.35 |
| Vehicle moulds | 420,284,566.37 | - | 420,284,566.37 | 365,419,879.40 | - | 365,419,879.40 |
| Light vehicle technical transformation project of Baoding Changan bus | 83,207,252.58 | - | 83,207,252.58 | 28,393,497.74 | - | 28,393,497.74 |
| Plant for vehicle test project | 6,643,182.68 | - | 6,643,182.68 | 6,052,888.00 | - | 6,052,888.00 |
| Beijing vehicle construction project | 98,585,664.59 | - | 98,585,664.59 | 163,600,842.58 | - | 163,600,842.58 |
| Engine Base of Nanjing | 499,150.94 | - | 499,150.94 | 3,201,929.85 | - | 3,201,929.85 |
| Yuzui Refitting factory | 12,276,085.40 | - | 12,276,085.40 | 30,880,135.49 | - | 30,880,135.49 |
| Car production Project Of Hefei Changan | 872,832,482.14 | - | 872,832,482.14 | 156,409,567.96 | - | 156,409,567.96 |
| Others | 576,544,644.42 | 49,315,394.88 | 527,229,249.54 | 326,825,052.12 | - | 326,825,052.12 |
| Total | 5,433,159,425.63 | 49,315,394.88 | 5,383,844,030.75 | 3,234,173,155.52 | - | 3,234,173,155.52 |
(2) Significant movements of construction in progress in 2018
| Project | (RMB0,000) | Beginning balance | Addition | Transfer to fixed assets | The project investments’ proportion of budget | Progress of construction | Source of funds | Ending balance |
| Mini-bus production equipment | 523,977.00 | 997,340,616.73 | 822,003,529.66 | 1,003,455,075.82 | 67% | 67% | Raised | 815,889,070.57 |
| Yuzui motor city project | 564,027.00 | 247,220,662.88 | 284,256,842.83 | 479,514,629.46 | 78% | 78% | Raised | 51,962,876.25 |
| Car production equipment | 735,202.00 | 165,767,240.81 | 525,824,999.59 | 510,454,927.37 | 28% | 28% | Raised | 181,137,313.03 |
| Engine plant | 827,789.00 | 341,191,269.61 | 1,350,482,008.58 | 232,947,020.61 | 92% | 92% | Raised | 1,458,726,257.58 |
| Vehicle research institution | 226,830.00 | 401,869,572.35 | 637,783,509.21 | 185,082,202.48 | 86% | 86% | raised | 854,570,879.08 |
| Vehicle moulds | 225,550.00 | 365,419,879.40 | 365,375,476.56 | 310,510,789.59 | 92% | 92% | raised | 420,284,566.37 |
| Light vehicle technical transformation project of Baoding Changan Bus | 92,867.00 | 28,393,497.74 | 99,638,888.18 | 44,825,133.34 | 57% | 57% | raised | 83,207,252.58 |
| Plant for vehicle test project | 157,122.00 | 6,052,888.00 | 738,615.94 | 148,321.26 | 85% | 85% | raised | 6,643,182.68 |
| Beijing vehicle construction project | 513,262.53 | 163,600,842.58 | 177,445,536.24 | 242,460,714.23 | 72% | 72% | raised | 98,585,664.59 |
| Engine Base of Nanjing | 19,699.00 | 3,201,929.85 | 29,209.40 | 2,731,988.31 | 37% | 37% | raised | 499,150.94 |
| Yuzui Refitting factory | 29,977.00 | 30,880,135.49 | 649,930.99 | 19,253,981.08 | 27% | 27% | raised | 12,276,085.40 |
| Car production project of Hefei Changan | 412,108.00 | 156,409,567.96 | 920,575,058.27 | 204,152,144.09 | 48% | 48% | raised | 872,832,482.14 |
| Changan Suzuki Factory Reconstruction Project | - | 31,744,997.89 | - | - | - | raised | 31,744,997.89 | |
| Others | 326,825,052.12 | 828,626,292.45 | 659,967,092.92 | - | - | raised | 495,484,251.65 | |
| Total | 3,234,173,155.52 | 6,045,174,895.79 | 3,895,504,020.56 | 5,383,844,030.75 |
Note: The original value of construction in progress increased by RMB81,060,392.77 was due to the acquisition of Changan Suzuki this year, and the impairment provision forconstruction in progress increased by RMB49,315,394.88 (Note VI, changes in scope of consolidation).
(2) Significant movements of construction in progress in 2017：
| Project | (RMB0,000) | Beginning balance | Addition | Transfer to fixed assets | The project investments’ proportion of budget | Progress of construction | Source of funds | Ending balance |
| Mini-bus production equipment | 469,453.00 | 332,011,471.05 | 904,259,078.63 | 238,929,932.95 | 58% | 58% | Raised | 997,340,616.73 |
| Yuzui motor city project | 550,852.00 | 1,670,075,876.73 | 921,385,775.94 | 2,344,240,989.79 | 75% | 75% | Raised and issued | 247,220,662.88 |
| Car production equipment | 720,457.00 | 68,289,153.08 | 557,341,566.08 | 459,863,478.35 | 21% | 21% | Raised | 165,767,240.81 |
| Engine plant | 819,089.00 | 749,552,604.51 | 694,207,595.61 | 1,102,568,930.51 | 77% | 77% | Raised and issued | 341,191,269.61 |
| Vehicle research institution | 213,052.00 | 119,918,357.19 | 353,047,362.80 | 71,096,147.64 | 62% | 62% | Raised | 401,869,572.35 |
| Vehicle moulds | 180,742.00 | 446,423,242.75 | 196,116,894.76 | 277,120,258.11 | 95% | 95% | Raised | 365,419,879.40 |
| Plant for vehicle test project | 157,122.00 | 16,109,878.08 | 22,263,068.71 | 32,320,058.79 | 85% | 85% | Raised | 6,052,888.00 |
| Yubei Factory | 56,223.00 | 107,961,718.09 | 47,568,382.24 | 155,384,927.15 | 28% | 28% | Raised | 145,173.18 |
| Beijing vehicle construction project | 524,466.53 | 47,364,971.59 | 213,262,827.72 | 97,026,956.73 | 67% | 67% | Raised | 163,600,842.58 |
| Light vehicle technical transformation project of Baoding Changan Bus | 80,403.00 | 39,361,192.09 | 55,351,921.20 | 66,319,615.55 | 54% | 54% | Raised | 28,393,497.74 |
| Engine Base of Nanjing | 19,699.00 | 809,483.55 | 4,100,655.47 | 1,708,209.17 | 37% | 37% | Raised | 3,201,929.85 |
| Yuzui Refitting factory | 29,977.00 | 29,200,422.80 | 5,775,934.52 | 4,096,221.83 | 27% | 27% | Raised | 30,880,135.49 |
| Car production project of Hefei Changan | 389,601.00 | 2,414,375.90 | 164,546,124.65 | 10,550,932.59 | 27% | 27% | Raised | 156,409,567.96 |
| Others | 192,211,083.37 | 512,903,762.52 | 378,434,966.95 | 326,679,878.94 | ||||
| Total | 3,821,703,830.78 | 4,652,130,950.85 | 5,239,661,626.11 | 3,234,173,155.52 |
12. Intangible assets
Details of intangible assets
2018
| Item | Land use rights | Software use rights | Trademark use rights | Non-patent technology | Total |
| Original cost | |||||
| Beginning | 2,384,260,724.00 | 440,803,454.31 | 211,784,400.00 | 4,120,145,819.00 | 7,156,994,397.31 |
| Purchase | - | 123,109,392.52 | - | - | 123,109,392.52 |
| Internal research and development | - | - | - | 1,297,212,770.58 | 1,297,212,770.58 |
| Other additions | 368,821,666.28 | 68,505,763.43 | - | 211,578,548.29 | 648,905,978.00 |
| Ending | 2,753,082,390.28 | 632,418,610.26 | 211,784,400.00 | 5,628,937,137.87 | 9,226,222,538.41 |
| Accumulated amortization | |||||
| Beginning | 280,991,802.54 | 396,959,100.18 | 153,453,466.62 | 2,054,012,177.29 | 2,885,416,546.63 |
| Accrual | 49,968,327.29 | 56,772,368.14 | 17,500,000.00 | 641,523,542.56 | 765,764,237.99 |
| Other additions | 72,494,154.20 | 56,771,593.55 | - | 198,187,446.75 | 327,453,194.50 |
| Ending | 403,454,284.03 | 510,503,061.87 | 170,953,466.62 | 2,893,723,166.60 | 3,978,633,979.12 |
| Impairment provision | |||||
| Beginning | - | 21,319,804.81 | - | 202,312,916.20 | 223,632,721.01 |
| Accrual | - | - | - | 3,414,167.12 | 3,414,167.12 |
| Other additions | 2,298,118.36 | - | - | - | 2,298,118.36 |
| Ending | 2,298,118.36 | 21,319,804.81 | - | 205,727,083.32 | 229,345,006.49 |
| - | - | - | |||
| Carrying amount | |||||
| Ending | 2,347,329,987.89 | 100,595,743.58 | 40,830,933.38 | 2,529,486,887.95 | 5,018,243,552.80 |
| Beginning | 2,103,268,921.46 | 22,524,549.32 | 58,330,933.38 | 1,863,820,725.51 | 4,047,945,129.67 |
2017
| Item | Land use rights | Software use rights | Trademark use rights | Non-patent technology | Total |
| Original cost | |||||
| Beginning | 2,355,850,569.93 | 400,653,507.92 | 211,784,400.00 | 2,857,526,071.81 | 5,825,814,549.66 |
| Purchase | 28,410,154.07 | 40,149,946.39 | - | 838,679.23 | 69,398,779.69 |
| Internal research and development | - | - | - | 1,261,781,067.96 | 1,261,781,067.96 |
| Ending | 2,384,260,724.00 | 440,803,454.31 | 211,784,400.00 | 4,120,145,819.00 | 7,156,994,397.31 |
| Accumulated amortization | |||||
| Beginning | 232,965,494.61 | 364,220,086.22 | 135,950,586.62 | 1,504,959,094.21 | 2,238,095,261.66 |
| Accrual | 48,026,307.93 | 32,739,013.96 | 17,502,880.00 | 549,053,083.08 | 647,321,284.97 |
| Ending | 280,991,802.54 | 396,959,100.18 | 153,453,466.62 | 2,054,012,177.29 | 2,885,416,546.63 |
| Impairment provision | |||||
| Beginning | - | 21,319,804.81 | - | 121,448,808.16 | 142,768,612.97 |
| Accrual | - | - | - | 80,864,108.04 | 80,864,108.04 |
| Ending | - | 21,319,804.81 | - | 202,312,916.20 | 223,632,721.01 |
| Carrying amount | |||||
| Ending | 2,103,268,921.46 | 22,524,549.32 | 58,330,933.38 | 1,863,820,725.51 | 4,047,945,129.67 |
| Beginning | 2,122,885,075.32 | 15,113,616.89 | 75,833,813.38 | 1,231,118,169.44 | 3,444,950,675.03 |
Other additions were due to the acquisition of Changan Suzuki this year (Note 6, Changes in the scope ofconsolidation).
As at 31 December 2018, the intangible assets from internal research and development account for 50.41% of totalintangible assets (as at 31 December 2017: 46.04%).
As at 31 December 2018, there is no land use right with no certificate (As at 31 December 2016: Nil).
13. Development expenditure
2018
| Item | Beginning balance | Addition | Deduction | Ending balance | |
| Internal research and development | Recognized as intangible assets | Charged to income Statement of the current year | |||
| Automobile Development | 836,638,328.10 | 1,279,944,707.42 | 1,297,212,770.58 | 29,772,649.34 | 789,597,615.60 |
2017
| Item | Beginning balance | Addition | Deduction | Ending balance | |
| Internal research and development | Recognized as intangible assets | Charged to income Statement of the current year | |||
| Automobile Development | 1,111,176,453.49 | 1,014,802,796.47 | 1,261,781,067.96 | 27,559,853.90 | 836,638,328.10 |
14. Goodwill
2018 and 2017
| Investee | Beginning balance | Addition | Deduction | Ending balance |
| Business combination under common control | Disposal | |||
| Hebei Changan Automobile Co., Ltd. | 9,804,394.00 | - | - | 9,804,394.00 |
| Nanjing Changan Automobile Co., Ltd. | - | - | - | - |
| Total | 9,804,394.00 | - | - | 9,804,394.00 |
Movement of provision for goodwill is as follow:
2018 and 2017
| Investee | Beginning | Addition | Deduction | Ending balance |
| balance | Accrual | Disposal | ||
| Nanjing Changan Automobile Co., Ltd. | 73,465,335.00 | - | - | 73,465,335.00 |
Due to the accumulated losses of Nanjing Changan Automobile Co., Ltd., provision for related goodwill has beenfully accrued amounted to RMB73,465,335.00.
15. Long-term deferred expenses
2018
| Item | Beginning balance | Addition | Amortization | balance |
| Long-term deferred expenses | 13,545,589.39 | 7,475,597.77 | 3,916,585.49 | 17,104,601.67 |
During the year, the long-term deferred expenses increased by RMB 4,118,573.15 due to the acquisition ofChangan Suzuki. (Note 6, Changes in the scope of consolidation)2017
| Item | Beginning balance | Addition | Amortization | balance |
| Long-term deferred expenses | 13,448,409.63 | 662,532.39 | 565,352.63 | 13,545,589.39 |
16. Deferred tax assets and liabilities
| Item | 2018 | 2017 | ||
| Deferred tax assets： | Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets |
| Assets provision | 1,192,875,928.31 | 178,931,389.28 | 1,125,450,484.06 | 168,817,572.61 |
| Accrued expenses and contingent liabilities | 5,755,288,762.17 | 863,293,314.33 | 5,127,444,400.38 | 769,116,660.06 |
| Unpaid tech development expense and advertisement expense | 477,578,425.86 | 71,636,763.88 | 519,329,094.71 | 77,899,364.21 |
| Deferred income | 3,116,680,509.64 | 467,502,076.45 | 3,195,940,607.31 | 479,391,091.10 |
| Unpaid salary and bonus and others | 494,605,966.69 | 74,190,894.95 | 257,554,155.44 | 38,633,123.29 |
| Total | 11,037,029,592.67 | 1,655,554,438.89 | 10,225,718,741.90 | 1,533,857,811.27 |
| Item | 2018 | 2017 | ||
| Deferred tax liabilities： | Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities |
| Available-for-sale financial assets on the changes in fair value recorded in capital | 507,440,490.31 | 76,116,073.54 | 141,485,000.00 | 21,222,750.00 |
| reserve | ||||
| Fair value adjustment of business combination not under common control | 394,100,647.03 | 59,115,097.05 | - | - |
| Total | 901,541,137.34 | 135,231,170.59 | 141,485,000.00 | 21,222,750.00 |
Unrecognized deductible temporary differences and tax losses of unrecognized are as follows:
| Item | 2018 | 2017 |
| The deductible temporary difference | 2,438,545,953.61 | 908,825,383.95 |
| The deductible tax loss | 4,871,204,656.42 | 2,128,637,423.38 |
| Total | 7,309,750,610.03 | 3,037,462,807.33 |
Note: Due to the uncertainty of whether there will be enough taxable profit in future to utilize the above
deductible loss, no deferred tax assets have been recognized accordingly.
Maturity period for unrecognized deductible tax losses:
| Year | 2018 | 2017 |
| 2018 | - | 149,359,690.13 |
| 2019 | 659,281,850.63 | 699,253,694.79 |
| 2020 | 348,563,349.93 | 292,774,189.16 |
| 2021 | 103,219,695.88 | 104,062,642.15 |
| 2022 | 898,588,459.22 | 883,187,207.15 |
| 2023 | 2,861,551,300.76 | - |
| Total | 4,871,204,656.42 | 2,128,637,423.38 |
17. Provision for the impairment of assets
2018
| Item | Beginning | Addition | Deduction | Ending | ||
| provision | Other addition | Reversal | Write-off | |||
| I. Bad debt provision | 40,187,117.99 | 14,066,610.17 | 46,356,721.00 | 2,008,705.39 | 139,260.29 | 98,462,483.48 |
| II. Provision for inventory | 169,944,706.66 | 237,613,222.28 | 181,034,335.53 | 156,142,459.77 | 138,559,267.37 | 293,890,537.33 |
| III. Provision for fixed assets | 880,779,908.98 | 141,611,730.28 | 156,839,093.76 | - | 18,636,086.64 | 1,160,594,646.38 |
| IV. Provision for construction in progress | - | - | 49,315,394.88 | - | - | 49,315,394.88 |
| V. Provision for intangible assets | 223,632,721.01 | 3,414,167.12 | 2,298,118.36 | - | - | 229,345,006.49 |
| Ⅵ. Provision for goodwill | 73,465,335.00 | - | - | - | - | 73,465,335.00 |
| Ⅶ. Provision for available-for-sale financial assets | 28,929,274.00 | - | - | - | - | 28,929,274.00 |
| Total | 1,416,939,063.64 | 396,705,729.85 | 435,843,663.53 | 158,151,165.16 | 157,334,614.30 | 1,934,002,677.56 |
Note: Accrued provision for inventory is mainly due to the cost of some types of vehicles and engines is lower
than the net realizable value.
Accrued provision for fixed assets is mainly due to the abandoned factory and impairment of machineryand moulds for the discontinued productions this year.
Accrued provision for intangible assets is mainly due to the impairment of the non-patent technology forthe discontinued productions.
Accrued provision for available-for-sales assets is due to the impairment of the Sichuan Glass Co., Ltd.,which went bankrupt.
Other increases were due to the acquisition of Changan Suzuki this year (Note 6, Changes in the scope ofconsolidation).
2017
| Item | Beginning | Addition | Deduction | Ending | |
| Reversal | Write-off | ||||
| I. Bad debt provision | 35,066,408.55 | 9,819,230.33 | 4,168,398.28 | 530,122.61 | 40,187,117.99 |
| II. Provision for inventory | 202,269,452.40 | 101,554,330.81 | 18,341,152.61 | 115,537,923.94 | 169,944,706.66 |
| III. Provision for fixed assets | 1,008,178,231.28 | 79,979,762.31 | - | 207,378,084.61 | 880,779,908.98 |
| IV. Provision for intangible assets | 142,768,612.97 | 80,864,108.04 | - | - | 223,632,721.01 |
| V. Provision for goodwill | 73,465,335.00 | - | - | - | 73,465,335.00 |
| VI. Provision for available-for-sale financial assets | 27,120,000.00 | 1,809,274.00 | - | - | 28,929,274.00 |
| Total | 1,488,868,040.20 | 274,026,705.49 | 22,509,550.89 | 323,446,131.16 | 1,416,939,063.64 |
18. Short-term loans
Classification of short-term loans：
| Item | 2018 | 2017 |
| Mortgage loans | 40,000,000.00 | 175,000,000.00 |
| guaranteed loan | - | 10,000,000.00 |
| Credit loans | 150,000,000.00 | - |
| Total | 190,000,000.00 | 185,000,000.00 |
As at 31 December 2018, the interest rates of the above loans were 4.35%-5.20% (as at 31 December 2017:
4.35%-5.22%).
As at 31 December 2018, there is no overdued short-term loan (as at 31 December 2017: Nil).
For the year ended 31 December 2018, the Group obtained short-term loan of RMB40,000,000.00 from ChinaSouth Industry Group Finance Co., Ltd. The credit was secured by the land use rights amounted toRMB18,499,267.20.
For the year ended 31 December 2017, the Group obtained short-term loan of RMB175,000,000.00 from ChinaSouth Industry Group Finance Co., Ltd. The credit was secured by the land use rights amounted toRMB45,862,242.27.
19. Notes payable and Accounts payable
| 2018 | 2017 | |
| Notes payable | 14,807,862,262.39 | 18,002,926,579.81 |
| Accounts payable | 13,916,201,276.95 | 21,902,826,194.15 |
| Total | 28,724,063,539.34 | 39,905,752,773.96 |
Notes payable
| Item | 2018 | 2017 |
| Commercial acceptance bill | 2,946,482,019.96 | 1,585,249,372.80 |
| Bank acceptance bill | 11,861,380,242.43 | 16,417,677,207.01 |
| Total | 14,807,862,262.39 | 18,002,926,579.81 |
As at 31 December 2018, there is no overdued unpaid notes payable (as at 31 December 2017: Nil)
Accounts payable
As at 31 December 2018, there is no significant accounts payable aged over one year (as at 31 December 2017:
Nil).
20. Advances from customers
(1) Advances from customers
| Item | 2018 | 2017 |
| Advances from customers | 1,556,482,278.92 | 3,878,382,556.43 |
(2) As at 31 December 2018, advances from customers of RMB216,726,918.21 aged over one year is mainly
credit guarantee charged to dealers (as at 31 December 2017: RMB182,862,326.57).
21. Payroll payable
2018
| Item | Beginning | Addition | Deduction | Ending |
| Short term salary benefits | 1,567,656,287.03 | 5,281,251,280.32 | 5,577,445,725.00 | 1,271,461,842.35 |
| Defined contribution plans | 68,156,035.30 | 566,571,969.66 | 550,317,569.75 | 84,410,435.21 |
| Early retirement benefits | 5,073,000.00 | 10,387,769.63 | 8,337,769.63 | 7,123,000.00 |
| Total | 1,640,885,322.33 | 5,858,211,019.61 | 6,136,101,064.38 | 1,362,995,277.56 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Short term salary benefits | 1,778,345,189.08 | 5,013,582,936.94 | 5,224,271,838.99 | 1,567,656,287.03 |
| Defined contribution plans | 59,207,286.15 | 515,800,516.74 | 506,851,767.59 | 68,156,035.30 |
| Early retirement benefits | 2,395,000.00 | 5,609,000.00 | 2,931,000.00 | 5,073,000.00 |
| Total | 1,839,947,475.23 | 5,534,992,453.68 | 5,734,054,606.58 | 1,640,885,322.33 |
Short term salary benefits：
2018
| Item | Beginning | Addition | Deduction | Ending |
| Salary, bonus, | 1,207,501,206.86 | 4,488,234,330.21 | 4,618,287,959.38 | 1,077,447,577.69 |
| and subsidy | ||||
| Employee benefit | 207,402,348.95 | 88,951,550.95 | 250,742,309.29 | 45,611,590.61 |
| Social insurance | (174,158.92) | 307,202,837.90 | 303,649,309.32 | 3,379,369.66 |
| Medical insurance | 559,230.30 | 272,234,008.27 | 272,260,383.69 | 532,854.88 |
| insurance | (3,096,589.29) | 32,563,345.54 | 28,029,010.20 | 1,437,746.05 |
| Maternity insurance | 2,363,200.07 | 2,405,484.09 | 3,359,915.43 | 1,408,768.73 |
| Housing accumulation fund | 59,222,161.27 | 258,334,142.47 | 308,133,626.16 | 9,422,677.58 |
| education fund | 93,704,728.87 | 138,528,418.79 | 96,632,520.85 | 135,600,626.81 |
| Total | 1,567,656,287.03 | 5,281,251,280.32 | 5,577,445,725.00 | 1,271,461,842.35 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| and subsidy | 1,422,437,552.40 | 4,027,904,589.37 | 4,242,840,934.91 | 1,207,501,206.86 |
| Employee benefit | 199,134,921.94 | 324,516,943.52 | 316,249,516.51 | 207,402,348.95 |
| Social insurance | 911,790.47 | 272,656,058.22 | 273,742,007.61 | (174,158.92) |
| Medical insurance | 80,386.21 | 234,753,565.07 | 234,274,720.98 | 559,230.30 |
| insurance | (514,009.35) | 25,238,863.73 | 27,821,443.67 | (3,096,589.29) |
| Maternity insurance | 1,345,413.61 | 12,663,629.42 | 11,645,842.96 | 2,363,200.07 |
| Housing accumulation fund | 82,224,632.32 | 272,664,886.79 | 295,667,357.84 | 59,222,161.27 |
| education fund | 73,636,291.95 | 115,840,459.04 | 95,772,022.12 | 93,704,728.87 |
| Total | 1,778,345,189.08 | 5,013,582,936.94 | 5,224,271,838.99 | 1,567,656,287.03 |
21. Payroll payable (continued)
Defined contribution plans：
2018
| Item | Beginning | Addition | Deduction | Ending |
| Basic retirement security | 60,088,662.53 | 551,646,640.84 | 535,218,133.47 | 76,517,169.90 |
| Unemployment insurance | 8,067,372.77 | 14,925,328.82 | 15,099,436.28 | 7,893,265.31 |
| Total | 68,156,035.30 | 566,571,969.66 | 550,317,569.75 | 84,410,435.21 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Basic retirement security | 51,342,643.25 | 501,577,268.72 | 492,831,249.44 | 60,088,662.53 |
| Unemployment insurance | 7,864,642.90 | 14,223,248.02 | 14,020,518.15 | 8,067,372.77 |
| Total | 59,207,286.15 | 515,800,516.74 | 506,851,767.59 | 68,156,035.30 |
The salary, bonus, allowance and subsidy, employee benefits and other social insurances mentioned above arepaid in time according to related laws and regulations and sets of the Group.
22. Taxes payable
| Item | 2018 | 201 |
| Value-added tax | 9,641,450.47 | 20,724,979.91 |
| Consumption tax | 658,869,177.63 | 315,331,520.62 |
| Corporate income tax | (19,968,952.37) | (5,866,525.85) |
| Individual Income tax | 655,007.28 | 3,496,728.45 |
| City maintenance and construction tax and Education surcharge | 9,333,772.54 | 48,364,770.61 |
| Others | 10,786,031.70 | 12,269,923.40 |
| Total | 669,316,487.25 | 394,321,397.14 |
23. Other payables
| 2018 | 2017 | |
| Dividend payable | 79,742.80 | 79,742.80 |
| Other payables | 3,079,669,273.01 | 2,599,013,410.98 |
| 合计 | 3,079,749,015.81 | 2,599,093,153.78 |
Dividend payable
| Item | 2018 | 2017 |
| minority interests | 79,742.80 | 79,742.80 |
Other payables
| Item | 2018 | 2017 |
| Deposits of dealer and supplier | 133,434,563.54 | 64,938,552.00 |
| Maintenance fees | 205,714,188.51 | 166,703,421.92 |
| Advertisement fees | 750,771,372.18 | 345,922,021.86 |
| Warehousing and transport fees | 123,222,758.15 | 169,100,711.73 |
| Integrated service charges and miscellaneous expenses | 110,960,485.47 | 140,284,047.51 |
| Project funds | 1,271,262,272.32 | 1,499,489,207.73 |
| Others | 484,303,632.84 | 212,575,448.23 |
| Total | 3,079,669,273.01 | 2,599,013,410.98 |
24. Contingent liabilities
2018
| Item | Beginning | Addition | Deduction | Ending |
| Warranty | 2,423,958,274.70 | 712,598,648.92 | 525,776,105.50 | 2,610,780,818.12 |
| Supplier compensation | - | 634,541,926.00 | - | 634,541,926.00 |
| Total | 2,423,958,274.70 | 1,347,140,574.92 | 525,776,105.50 | 3,245,322,744.12 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Warranty | 2,010,153,951.87 | 941,896,851.28 | 528,092,528.45 | 2,423,958,274.70 |
Note: Warranty is the estimated repair expenses for the sold vehicles within warranty period.
25. Other current liabilities
| Item | 2018 | 2017 |
| Accrued utilities | 36,910,207.22 | 59,634,137.49 |
| Accrued transportation fee | 537,462,389.91 | 540,328,536.56 |
| Accrued labor service fee | 37,723,105.48 | 55,133,842.44 |
| Accrued technology royalty | 128,055,835.93 | 164,331,878.15 |
| Accrued commercial discount payable | 2,883,344,577.38 | 1,928,754,888.23 |
| Accrued market development expense | 443,397,362.38 | 578,090,324.55 |
| Accrued lease fee | 98,306,892.29 | 96,417,863.95 |
| Accrued consulting fee | 43,982,256.70 | 45,510,193.20 |
| Others | 116,258,525.32 | 93,952,981.25 |
| Total | 4,325,441,152.61 | 3,562,154,645.82 |
26. Current portion of non-current liabilities
| Item | 2018 | 2017 |
| Long-term loan within 1 year(NoteV.27) | 6,594,120.00 | 13,151,946.67 |
27. Long-term Loan
| Item | 2018 | 2017 |
| Credit loan | 6,594,120.00 | 19,727,920.00 |
| Deduction: Loan within 1 year | (6,594,120.00) | (13,151,946.67) |
| Total | - | 6,575,973.33 |
As at 31 December 2018, the interest rates of the above loans were 3.044% (as at 31 December 2017: 3.044%).
As at 31 December 2018, there is no overdued long-term loans (as at 31 December 2017: Nil).
28. Long-term payables
| 2018 | 2017 | |
| Special payables | 303,590,824.69 | 290,607,151.02 |
Special payables:
2018
| Item | Beginning | Addition | Deduction | Ending |
| New vehicle product | 7,808,326.58 | 22,360,900.00 | 9,484,306.29 | 20,684,920.29 |
| Changan automobile E class Gasoline engine cylinder block, cylinder head production line project | 67,480,246.95 | - | 44,495,551.31 | 22,984,695.64 |
| Land relocation compensation | 55,350,709.40 | - | - | 55,350,709.40 |
| industrialization of C206 pure electric cars | 14,582,280.58 | - | 11,136,000.00 | 3,446,280.58 |
| project | 45,455,157.40 | 79,908,937.74 | 20,580,469.16 | 104,783,625.98 |
| automobile structure | 63,564,705.20 | 1,300,829.00 | 11,974,695.49 | 52,890,838.71 |
| Others | 36,365,724.91 | 28,760,473.84 | 21,676,444.66 | 43,449,754.09 |
| 合计 | 290,607,151.02 | 132,331,140.58 | 119,347,466.91 | 303,590,824.69 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| New vehicle product | 5,821,883.01 | 6,820,000.00 | 4,833,556.43 | 7,808,326.58 |
| Changan automobile E class Gasoline engine cylinder block, cylinder head production line project | 60,347,217.64 | 8,190,000.00 | 1,056,970.69 | 67,480,246.95 |
| Land relocation compensation | 55,350,709.40 | - | - | 55,350,709.40 |
| Development and industrialization of C206 pure electric cars | (32,666,228.71) | 120,000,000.00 | 72,751,490.71 | 14,582,280.58 |
| Intelligent manufacturing project | 61,526,291.76 | 1,683,000.00 | 17,754,134.36 | 45,455,157.40 |
| Lightweight design of automobile structure | 30,075,234.45 | 54,150,000.00 | 20,660,529.25 | 63,564,705.20 |
| Others | 37,042,433.25 | 16,930,780.00 | 17,607,488.34 | 36,365,724.91 |
| 合计 | 217,497,540.80 | 207,773,780.00 | 134,664,169.78 | 290,607,151.02 |
29. Long-term payroll payable
| Item | 2018 | 2017 |
| Net obligation of defined benefit plan | 33,534,000.00 | 100,782,000.00 |
| Early retirement | 20,303,000.00 | 12,230,000.00 |
| Total | 53,837,000.00 | 113,012,000.00 |
In addition to basic retirement security and unemployment insurance, which are managed by local government,the Group offers different kinds of overall pension and annual compensation to some retired employees until theirdeath. The group provides subsidies to former military personnel who participated in specific wars and offers largemedical treatment insurance for all retired personnel. The group also offered early-retired salary, social insurancesand housing accumulation fund with different standards until their formal retirement (Male: Age 60; Female: Age50 or 55). These amounts of social insurances and housing accumulation fund are based on cost base and statutoryproportion.
The present value of the defined benefits plans is valued by expected cumulative welfare units determination,which was ensured by Aon Hewitt China at 31 December 2018.
As at balance sheet day, key actuarial assumptions are as follows:
| 2018 | 2017 | |
| Discount rate | ||
| Retirement Staff | 3.25% | 4.1%-4.2% |
| Early retirement staff | 3.00% | 3.8%-3.9% |
| Retirement age | ||
| Male | 60 | 60 |
| Female | 50/55 | 50/55 |
| Increase rate of key benefits | ||
| Retired employees | 0.0%-6.0% | 0.0%-6.0% |
| Early retired employees | 0.0%-4.0% | 0.0%-4.0% |
The future mortality rate is based on China experience life table of life insurance (2010-2013) “CL (2010-2013)”,the table is a public statistic in PRC.
The sensitive analyses of key assumption are as follows:
2018
| % | Increase/(Decrease) in the obligation of defined benefits plan | % | Increase/(Decrease) in the obligation of defined benefits plan | |
| Discount rate | 0.5% | (1,907,000.00) | 0.5% | 2,061,000.00 |
| Increase rate of key benefits | 0.5% | 2,101,000.00 | 0.5% | (1,922,000.00) |
| Mortality rate | 5% | (476,000.00) | 5% | 501,000.00 |
2017
| % | Increase/(Decrease) in the obligation of defined benefits plan | Decrease % | Increase/(Decrease) in the obligation of defined benefits plan | |
| Discount rate | 0.5% | (6,270,000.00) | 0.5% | 6,672,000.00 |
| key benefits | 0.5% | 6,615,000.00 | 0.5% | (6,281,000.00) |
| Mortality rate | 5% | (1,955,000.00) | 5% | 1,839,000.00 |
The sensitive analysis above is based on the deduction to reasonable change of key assumption as at the balancesheet date. Sensitive analysis is resulted from fluctuation of main assumptions with other assumptions unchanged.As all assumptions are not isolated from each other, sensitive analysis shall not represent actual result ofobligation of defined benefits plan.
The related costs of the defined benefit plan charged to income statement are as follows：
| 2018 | 2017 | |
| Service costs- current period | (79,656,000.00) | 41,000.00 |
| Net interest | 4,110,000.00 | 3,266,000.00 |
| Post employment benefits, net | (75,546,000.00) | 3,307,000.00 |
| Recorded in general administrative expenses | (75,546,000.00) | 3,307,000.00 |
Movement of present value of defined benefits plan is as follows:
| Defined Benefit Plan Obligation | ||
| 2018 | 2017 | |
| Beginning balance | 100,782,000.00 | 96,591,000.00 |
| Charged to income Statement of the current period | ||
| Service costs- current period | (79,656,000.00) | 41,000.00 |
| Interest expense, net | 4,110,000.00 | 3,266,000.00 |
| Actuarial losses charged to other comprehensive income | 13,214,000.00 | 6,201,000.00 |
| Benefits Payment | (4,916,000.00) | (5,317,000.00) |
| Ending balance | 33,534,000.00 | 100,782,000.00 |
30. Deferred income
2018
| Item | Beginning | Addition | Deduction | Ending |
| Government grants related to assets | 2,825,085,486.08 | 258,126,338.83 | 211,279,599.54 | 2,871,932,225.37 |
| Government grants related to gains | 754,048,245.36 | 302,298,761.19 | 382,592,006.71 | 673,754,999.84 |
| Others | 48,683,687.61 | 142,238,902.00 | 53,301,280.09 | 137,621,309.52 |
| Total | 3,627,817,419.05 | 702,664,002.02 | 647,172,886.34 | 3,683,308,534.73 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Government grants related to assets | 2,762,931,782.46 | 246,106,000.00 | 183,952,296.38 | 2,825,085,486.08 |
| Government grants related to gains | - | 900,000,000.00 | 145,951,754.64 | 754,048,245.36 |
| Others | 22,953,843.91 | 25,729,843.70 | - | 48,683,687.61 |
| Total | 2,785,885,626.37 | 1,171,835,843.70 | 329,904,051.02 | 3,627,817,419.05 |
As at 31 December 2018, details of liabilities related to government grants are as follows:
| Item | Beginning | Addition | Recorded to non-operating income | Ending | Relates to asset/gain |
| Funds for Beijing Changan project | 1,202,042,715.17 | - | 35,654,140.96 | 1,166,388,574.21 | Relates to asset |
| Subsidies for the automobile comprehensive testing ground project | 487,903,583.27 | - | 28,199,166.67 | 459,704,416.60 | Relates to asset |
| Subsidies for the construction of Hefei new plants | 328,769,680.06 | 44,876,000.00 | 46,757,429.50 | 326,888,250.56 | Relates to asset |
| Funds for Yuzui motor city project | 238,714,285.60 | - | 5,683,673.52 | 233,030,612.08 | Relates to asset |
| New energy subsidy | 27,738,250.00 | 134,157,000.00 | 28,986,933.47 | 132,908,316.53 | Relates to asset |
| Light vehicle technical transformation project of Baoding Changan Bus | 135,160,610.02 | - | 6,820,018.48 | 128,340,591.54 | Relates to asset |
| Engine production restructure program | 100,000,000.00 | - | 9,022,556.49 | 90,977,443.51 | Relates to asset |
| Industry upgrading project for small displacement engine and technological transformation project for CB type engine production line | 92,654,027.88 | - | 15,965,833.29 | 76,688,194.59 | Relates to asset |
| Changan automobile E class Gasoline engine cylinder block, cylinder head production line project | - | 45,344,600.00 | - | 45,344,600.00 | Relates to asset |
| Expansion of production capacity project | 42,133,118.34 | - | 4,686,606.83 | 37,446,511.51 | Relates to asset |
| Funds for H series engine | 37,333,333.40 | - | 5,333,333.32 | 32,000,000.08 | Relates to asset |
| Changan service platform project of Whole industry chain | 25,000,000.00 | - | 2,343,750.00 | 22,656,250.00 | Relates to asset |
| Funds for technology innovation | 16,150,000.00 | - | - | 16,150,000.00 | Relates to asset |
| Funds for expansion of production capacity of auto mold | 16,258,666.64 | - | 580,666.68 | 15,677,999.96 | Relates to asset |
| Subsidies for the construction of Hebei new plant | 14,485,000.00 | - | 2,740,000.00 | 11,745,000.00 | Relates to asset |
| Premium rebate from Dingzhou local bureau of finance | 10,464,785.71 | - | 218,016.36 | 10,246,769.35 | Relates to asset |
| Others | 50,277,429.99 | 33,748,738.83 | 18,287,473.97 | 65,738,694.85 | Relates to asset |
| Subtotal | 2,825,085,486.08 | 258,126,338.83 | 211,279,599.54 | 2,871,932,225.37 | |
| Subsidy of Nanjing new energy research and development | 600,000,000.00 | - | - | 600,000,000.00 | Relates to gains |
| Research and development fund subsidy of Hefei Changan | 154,048,245.36 | 300,000,000.00 | 382,592,006.71 | 71,456,238.65 | Relates to gains |
| New energy power system research and development subsidy | - | 2,298,761.19 | - | 2,298,761.19 | Relates to gains |
| Subtotal | 754,048,245.36 | 302,298,761.19 | 382,592,006.71 | 673,754,999.84 | |
| Total | 3,579,133,731.44 | 560,425,100.02 | 593,871,606.25 | 3,545,687,225.21 |
As at 31 December 2017, details of liability related to government grants are as follows：
| Item | Beginning | Addition | Recorded to non-operating income | Ending | Relates to asset/gain |
| Funds for Beijing Changan project | 1,082,156,856.13 | 155,540,000.00 | 35,654,140.96 | 1,202,042,715.17 | Relates to asset |
| Subsidies for the automobile comprehensive testing ground project | 516,102,750.02 | - | 28,199,166.75 | 487,903,583.27 | Relates to asset |
| Subsidies for the construction of Hefei new plants | 375,527,109.56 | - | 46,757,429.50 | 328,769,680.06 | Relates to asset |
| Funds for Yuzui motor city project | 244,397,959.12 | - | 5,683,673.52 | 238,714,285.60 | Relates to asset |
| Light vehicle technical transformation project of Baoding Changan Bus | 141,980,628.51 | - | 6,820,018.49 | 135,160,610.02 | Relates to asset |
| Engine production restructure program | 100,000,000.00 | - | - | 100,000,000.00 | Relates to asset |
| Industry upgrading project for small displacement engine and technological transformation project for CB type engine production line | 108,619,861.17 | - | 15,965,833.29 | 92,654,027.88 | Relates to asset |
| Expansion of production capacity project | 46,819,725.17 | - | 4,686,606.83 | 42,133,118.34 | Relates to asset |
| Funds for H series engine | 42,666,666.72 | - | 5,333,333.32 | 37,333,333.40 | Relates to asset |
| New energy subsidy | - | 40,845,000.00 | 13,106,750.00 | 27,738,250.00 | Relates to asset |
| Changan service platform project of Whole industry chain | - | 25,000,000.00 | - | 25,000,000.00 | Relates to asset |
| Funds for expansion of production capacity of auto mold | 16,839,333.32 | - | 580,666.68 | 16,258,666.64 | Relates to asset |
| Funds for technology innovation | 16,150,000.00 | - | - | 16,150,000.00 | Relates to asset |
| Subsidies for the construction of Hebei new plant | 17,220,000.00 | - | 2,735,000.00 | 14,485,000.00 | Relates to asset |
| Premium rebate from Dingzhou local bureau of finance | 10,682,802.07 | - | 218,016.36 | 10,464,785.71 | Relates to asset |
| New industrialization subsidy funds | 16,282,876.64 | - | 7,245,839.60 | 9,037,037.04 | Relates to asset |
| Others | 27,485,214.03 | 24,721,000.00 | 10,965,821.08 | 41,240,392.95 | Relates to asset |
| Subtotal | 2,762,931,782.46 | 246,106,000.00 | 183,952,296.38 | 2,825,085,486.08 | |
| Subsidy of Nanjing new energy research and development | - | 600,000,000.00 | - | 600,000,000.00 | Relates to gains |
| Research and development fund subsidy of Hefei Changan | - | 300,000,000.00 | 145,951,754.64 | 154,048,245.36 | Relates to gains |
| Subtotal | - | 900,000,000.00 | 145,951,754.64 | 754,048,245.36 | |
| Total | 2,762,931,782.46 | 1,146,106,000.00 | 329,904,051.02 | 3,579,133,731.44 |
31. Share capital
2018
| movement | ||||||||
| 31 December 2017 | Issuance of shares | Stock dividend | Transfer of reserve to common shares | Others | Sub-total | 31 December 2018 | ||
| I. | Restricted shares | |||||||
| 1 | Shares held by state-owned legal persons | 139,762,403 | - | - | - | - | - | 139,762,403 |
| 2 | Shares held by domestic natural person | 18,900 | - | - | - | - | - | 18,900 |
| Total of restricted shares | 139,781,303 | - | - | - | - | - | 139,781,303 | |
| II. | Unrestricted shares | |||||||
| 1 | RMB ordinary shares | 3,760,881,066 | - | - | - | - | - | 3,760,881,066 |
| 2 | Foreign-funded shares listed domestically | 901,986,142 | - | - | - | - | - | 901,986,142 |
| Total of unrestricted shares | 4,662,867,208 | - | - | - | - | - | 4,662,867,208 | |
| III. | Total shares | 4,802,648,511 | - | - | - | - | - | 4,802,648,511 |
2017
| Movement | ||||||||
| 31 December 2016 | Issuance of shares | Stock dividend | Transfer of reserve to common shares | Others | Sub-total | 31 December 2017 | ||
| I. | Restricted shares | |||||||
| 1 | Shares held by state-owned legal persons | 139,762,403 | - | - | - | - | - | 139,762,403 |
| 2 | Shares held by domestic natural person | 18,900 | - | - | - | - | - | 18,900 |
| Total of restricted shares | 139,781,303 | - | - | - | - | - | 139,781,303 | |
| II. | Unrestricted shares | |||||||
| 1 | RMB ordinary shares | 3,760,881,066 | - | - | - | - | - | 3,760,881,066 |
| 2 | Foreign-funded shares listed domestically | 901,986,142 | - | - | - | - | - | 901,986,142 |
| Total of unrestricted shares | 4,662,867,208 | 4,662,867,208 | ||||||
| III. | Total shares | 4,802,648,511 | 4,802,648,511 | |||||
32. Capital reserves
2018
| Item | Beginning | Addition | Deduction | Ending |
| Share premium | 4,969,218,884.37 | - | 30,889,053.43 | 4,938,329,830.94 |
| Share-based payment | 32,697,000.00 | 11,014,600.00 | 19,749,700.00 | 23,961,900.00 |
| Capital reserve transferred arising from the old standards | 44,496,899.00 | - | - | 44,496,899.00 |
| Restricted capital reserve of equity investments | 17,015,985.20 | - | - | 17,015,985.20 |
| Others(Note) | 35,977,188.37 | - | 2,539,363.34 | 33,437,825.03 |
| Total | 5,099,405,956.94 | 11,014,600.00 | 53,178,116.77 | 5,057,242,440.17 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Share premium | 4,969,218,884.37 | - | - | 4,969,218,884.37 |
| Share-based payment | 13,715,900.00 | 18,981,100.00 | - | 32,697,000.00 |
| Capital reserve transferred arising from the old standards | 44,496,899.00 | - | - | 44,496,899.00 |
| Restricted capital reserve of equity investments | 17,015,985.20 | - | - | 17,015,985.20 |
| Others(Note) | 40,853,863.98 | 8,735,954.84 | 13,612,630.45 | 35,977,188.37 |
| Total | 5,085,301,532.55 | 27,717,054.84 | 13,612,630.45 | 5,099,405,956.94 |
Note1: The change in the share premium of 2018 is the acquisition of 35% of the minority shareholder of
Chongqing Changan New Energy Automobile Co., Ltd., a subsidiary of the Company, which is includedin RMB 30,889,053.43.
Note2: The decrease in other capital reserve in 2018 is the change in the capital reserve of the joint venture
Jiangling Holdings Co., Ltd., which is included in RMB 2,539,363.34.
33. Other comprehensive income
Accumulated other comprehensive income in balance sheet attributable to parent company is as follows:
| 1 January 2017 | Movement | 31 December 2017 | Movement | 31 December 2018 | |
| Change in net liability or assets from defined benefit plan | 8,188,000.00 | 6,201,000.00 | 14,389,000.00 | (13,214,000.00) | 1,175,000.00 |
| Comprehensive income which can not be reclassified into profit and loss under equity method | (1,133,197.32) | (248,641.80) | (1,381,839.12) | (706,228.88) | (2,088,068.00) |
| Fair value change generated from available for sale financial assets | 195,699,749.99 | (75,437,500.00) | 120,262,249.99 | 177,088,959.46 | 297,351,209.45 |
| Foreign currency translation difference | (61,273,644.44) | 10,963,657.41 | (50,309,987.03) | (10,618,223.98) | (60,928,211.01) |
| Total | 141,480,908.23 | (58,521,484.39) | 82,959,423.84 | 152,550,506.60 | 235,509,930.44 |
Current occurrence amount of other comprehensive income in income statement attributable to parent company:
2018
| Amount before tax | Deduct: amounts transferred to income statement which were recognized in other comprehensive income in prior period | Deduct: Income tax | Amount attributable to owners | Amount attributable to minority interests | |
| Other comprehensive income not to be reclassified to profit or loss in subsequent period | |||||
| Change in net liability or assets from defined benefit plan | (13,214,000.00) | - | - | (13,214,000.00) | - |
| Comprehensive income which can not be reclassified into profit and loss under equity method | (706,228.88) | - | - | (706,228.88) | - |
| Subtotal | (13,920,228.88) | - | - | (13,920,228.88) | - |
| Other comprehensive income will be reclassified to profit or loss in subsequent period | |||||
| Fair value change of available for sale financial assets | 208,339,952.31 | - | 31,250,992.85 | 177,088,959.46 | - |
| Foreign currency translation difference | (10,618,223.98) | - | - | (10,618,223.98) | - |
| Subtotal | 197,721,728.33 | - | 31,250,992.85 | 166,470,735.48 | - |
| Total | 183,801,499.45 | - | 31,250,992.85 | 152,550,506.60 | - |
2017
| Amount before tax | Deduct: amounts transferred to income statement which were recognized in other comprehensive income in prior period | Deduct: Income tax | Amount attributable to owners | Amount attributable to minority interests | |
| Other comprehensive income not to be reclassified to profit or loss in subsequent period | |||||
| Change in net liability or assets from defined benefit plan | 6,201,000.00 | - | - | 6,201,000.00 | - |
| Comprehensive income which can not be reclassified into profit and loss under equity method | (248,641.80) | - | - | (248,641.80) | - |
| Subtotal | 5,952,358.20 | - | - | 5,952,358.20 | - |
| Other comprehensive income will be reclassified to profit or loss in subsequent period | |||||
| Fair value change of available for sale financial assets | (88,750,000.00) | - | (13,312,500.00) | (75,437,500.00) | - |
| Foreign currency translation difference | 10,963,657.41 | - | - | 10,963,657.41 | - |
| Subtotal | (77,786,342.59) | - | (13,312,500.00) | (64,473,842.59) | - |
| Total | (71,833,984.39) | - | (13,312,500.00) | (58,521,484.39) | - |
34. Special reserves
2018
| Item | Beginning | Addition | Deduction | Ending |
| Safety fund | 28,279,733.06 | 83,826,318.58 | 70,883,682.54 | 41,222,369.10 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Safety fund | 16,349,485.65 | 69,130,921.26 | 57,200,673.85 | 28,279,733.06 |
The Group accrued safety fund according to the circular of <the Guidance of Safety Fund Accrual and Usage> (CaiQi [2012] No. 16) issued by the Ministry of Finance and the State Administration of work safety on 14 February2012.
35. Surplus reserves
2018
| Item | Beginning | Addition | Deduction | Ending |
| Statutory surplus | 2,401,324,255.50 | - | - | 2,401,324,255.50 |
2017
| Item | Beginning | Addition | Deduction | Ending |
| Statutory surplus | 2,401,324,255.50 | - | - | 2,401,324,255.50 |
The Company appropriated statutory surplus reserves based on profit after tax. When statutory surplus reservesaccount for 50% of paid-in capital, no further surplus reserve will be appropriated.
36. Retained earnings
| Item | 2018 | 2017 |
| Retained earnings at beginning of the year | 35,184,073,061.94 | 31,126,707,710.94 |
| Add: Profits attributable to parent company for the current year | 680,728,392.03 | 7,137,234,723.47 |
| Less: Appropriation to statutory surplus reserves | - | - |
| Less: Ordinary share dividend of cash | 2,157,790,283.66 | (3,079,869,372.47) |
| Retained earnings at the end of year | 33,707,011,170.31 | 35,184,073,061.94 |
According to the resolution of the 49th meeting of the seventh session of the Board of Directors, the profitdistribution plan of 2018 is as follows: on the base of the existing share capital of 4,802,648,511 shares, the Group
will issue cash dividends of RMB0.18 per 10 shares, RMB 86,447,673.20 in total (tax included). This profitdistribution plan should be approved by the annual general meeting.
37. Operating revenue and cost
(1) Operating revenue and cost
| Item | 2018 | 2017 | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 64,490,487,252.71 | 55,116,734,739.05 | 78,501,538,830.04 | 68,427,473,075.45 |
| Other business | 1,807,783,137.06 | 1,466,733,630.09 | 1,510,666,352.33 | 935,559,665.40 |
| Total | 66,298,270,389.77 | 56,583,468,369.14 | 80,012,205,182.37 | 69,363,032,740.85 |
(2) Operating revenue listed as follows:
| Item | 2018 | 2017 |
| Sale of goods | 66,276,054,153.09 | 79,980,063,484.58 |
| Outsourcing processing | 22,216,236.68 | 32,141,697.79 |
| Total | 66,298,270,389.77 | 80,012,205,182.37 |
38. Tax and surcharges
| Item | 2018 | 2017 |
| Consumption tax | 1,887,596,418.76 | 2,408,112,724.61 |
| City maintenance and construction tax | 121,084,067.02 | 264,492,830.21 |
| Educational surcharge | 107,471,391.03 | 201,515,531.59 |
| Others | 189,766,107.53 | 199,901,923.01 |
| Total | 2,305,917,984.34 | 3,074,023,009.42 |
39. Operating expenses
| Item | 2018 | 2017 |
| Payroll and welfare | 326,700,194.59 | 306,321,124.09 |
| and Sales service fee | 2,981,253,072.70 | 1,252,184,595.24 |
| Transportation expenses | 1,728,743,073.33 | 2,093,762,247.10 |
| Travelling expenses | 82,924,351.46 | 87,609,625.71 |
| Package expenses | 18,172,933.96 | 22,441,698.92 |
| Consulting fee | 20,414,125.10 | 66,038,123.17 |
| Training fee | 58,950,405.11 | 77,532,792.04 |
| Others | 66,097,190.23 | 72,234,653.38 |
| Total | 5,283,255,346.48 | 3,978,124,859.65 |
40. General and administrative expenses
| Item | 2018 | 2017 |
| Payroll and welfare | 1,230,385,974.33 | 1,211,108,800.21 |
| Administrative expenses | 378,467,226.08 | 237,923,264.06 |
| Depreciation and amortization | 885,825,775.24 | 747,392,544.90 |
| Miscellaneous service charges | 53,961,042.11 | 178,864,213.05 |
| Traffic expenses | 65,664,475.92 | 68,944,235.42 |
| Travelling expenses | 54,238,378.61 | 44,956,439.22 |
| Others | 114,212,659.18 | 174,455,561.59 |
| Total | 2,782,755,531.47 | 2,663,645,058.45 |
41. Research and development expenses
| Item | 2018 | 2017 |
| Payroll and welfare | 1,432,753,634.55 | 1,543,773,391.52 |
| Material fee | 241,258,297.80 | 153,279,883.54 |
| Subcontract fee | 201,398,428.01 | 294,019,866.67 |
| Survey and traffic expenses | 128,375,837.23 | 105,647,858.39 |
| Test fee | 146,093,293.23 | 186,021,484.40 |
| Depreciation and amortization | 179,382,713.42 | 131,473,043.75 |
| Others | 214,003,174.88 | 202,435,906.80 |
| Total | 2,543,265,379.12 | 2,616,651,435.07 |
42. Financial income
| Item | 2018 | 2017 |
| Interest income | 476,922,766.94 | 609,804,833.96 |
| Less: Foreign exchange gain or loss | 14,802,579.62 | 7,812,127.89 |
| Interest expense | 11,700,010.25 | 48,334,684.86 |
| Others | 23,358,142.01 | 28,684,060.19 |
| Total | 427,062,035.06 | 524,973,961.02 |
43. Impairment loss on assets
| Item | 2018 | 2017 |
| I. Bad debt loss | 12,057,904.78 | 5,650,832.05 |
| II. Impairment of inventory | 81,470,762.51 | 83,213,178.20 |
| III. Impairment of fixed assets | 141,611,730.28 | 79,979,762.31 |
| IV. Impairment of intangible assets | 3,414,167.12 | 80,864,108.04 |
| V．Impairment of available-for-sale financial assets | - | 1,809,274.00 |
| Total | 238,554,564.69 | 251,517,154.60 |
44. Other income
| Item | 2018 | 2017 | Amount recognized in 2018 |
| as non-recurring profit and loss | |||
| Other income | 2,873,192,102.56 | 1,613,343,216.59 | 2,873,192,102.56 |
Government grants recognized as current income are as follows:
| Item | 2018 | 2017 | Relates to asset/gain |
| Subsidies for the construction of Hefei new plants | 46,757,429.50 | 46,757,429.50 | Relates to asset |
| Funds for Beijing Changan project | 35,654,140.96 | 35,654,140.96 | Relates to asset |
| New energy subsidy | 28,986,933.47 | 13,106,750.00 | Relates to asset |
| Comprehensive testing field program | 28,199,166.67 | 28,199,166.75 | Relates to asset |
| Industry upgrading project for small displacement engine and technological transformation project for CB type engine production line | 15,965,833.29 | 15,965,833.29 | Relates to asset |
| Engine capacity structure adjustment project | 9,022,556.49 | - | Relates to asset |
| Light vehicle technical transformation project of Baoding Changan Bus | 6,820,018.48 | 6,820,018.49 | Relates to asset |
| Funds for Yuzui motor city project | 5,683,673.52 | 5,683,673.52 | Relates to asset |
| Funds for H series engine | 5,333,333.32 | 5,333,333.32 | Relates to asset |
| Expansion of production capacity project | 4,686,606.83 | 4,686,606.83 | Relates to asset |
| Subsidies for the construction of Hebei new plant | 2,740,000.00 | 2,735,000.00 | Relates to asset |
| Fund for Changan Automobile Industry Chain Service Platform Project | 2,343,750.00 | - | Relates to asset |
| Finance fund for Automobile mold expansion technology project | 580,666.68 | 580,666.68 | Relates to asset |
| Premium rebate from Dingzhou local bureau of finance | 218,016.36 | 218,016.36 | Relates to asset |
| Others | 18,287,473.97 | 18,211,660.68 | Relates to asset |
| Subtotal | 211,279,599.54 | 183,952,296.38 | |
| Hefei Changan R & D funding subsidies | 382,592,006.71 | 325,951,754.63 | Relates to gain |
| Energy saving subsidies | 11,080,000.00 | 43,889,509.96 | Relates to gain |
| Subsidies and rewards for career training | 32,571,452.85 | 28,645,153.77 | Relates to gain |
| Nanjing Changan R & D funding subsidies | 151,000,000.00 | 500,000,000.00 | Relates to gain |
| Enterprise development fund | 478,596,700.00 | 131,864,400.00 | Relates to gain |
| New product subsidy | 150,000,000.00 | 128,049,000.00 | Relates to gain |
| Government grants for technology research expenses | 1,426,333,900.00 | 208,010,700.00 | Relates to gain |
| Others | 29,738,443.46 | 62,980,401.85 | Relates to gain |
| Subtotal | 2,661,912,503.02 | 1,429,390,920.21 | Relates to gain |
| Total | 2,873,192,102.56 | 1,613,343,216.59 |
45. Investment income
| Item | 2018 | 2017 | Amount recognized in 2018 as non-recurring profit and loss |
| Long-term equity investment income under equity method | (331,883,560.67) | 6,854,896,911.97 | - |
| Investment income generated by disposition of long-term equity investment | - | 1,063,780.80 | - |
| Gains generated by business combinations not under common | 209,443,337.73 | - | 209,443,337.73 |
| control(note) | |||
| Investment income during holding period from available-for-sale financial assets | 51,133,446.15 | 50,364,239.43 | - |
| Total | (71,306,776.79) | 6,906,324,932.20 | 209,443,337.73 |
Note: Gains generated by business combinations not under common contro ,please refer to Note VI. Changes inConsolidation Scope.
46. Gain on disposal of assets
| Item | 2018 | 2017 | Amount recognized in 2018 as non-recurring profit and loss |
| Gain on disposal of fixed-assets (losses”-“) | 8,561,074.73 | (42,423,660.98) | 8,561,074.73 |
| Gain on disposal of Intangible assets | - | 84,198,113.21 | - |
| Total | 8,561,074.73 | 41,774,452.23 | 8,561,074.73 |
47. Non-operating income
| Item | 2018 | 2017 | Amount recognized in 2018 as non-recurring profit and loss |
| Gains generated by business combinations not under common control | 811,377,936.28 | - | 811,377,936.28 |
| Fines, penalties and others | 104,841,288.40 | 104,330,128.12 | 104,841,288.40 |
| Total | 916,219,224.68 | 104,330,128.12 | 916,219,224.68 |
48. Non-operating expenses
| Item | 2018 | 2017 | Amount recognized in 2017 as non-recurring profit and loss |
| Donation | 27,582,524.12 | 31,310,130.00 | 27,582,524.12 |
| Vehicle premium | 5,098,810.00 | 214,986.42 | 5,098,810.00 |
| Fines and penalties | 3,860,473.32 | 9,370,376.77 | 3,860,473.32 |
| Others | 20,013,743.50 | 34,172,564.09 | 20,013,743.50 |
| Total | 56,555,550.94 | 75,068,057.28 | 56,555,550.94 |
49. Income tax expense
| Item | 2018 | 2017 |
| Current income tax expense | 59,356,673.11 | 58,702,819.44 |
| Deferred income tax expense | (124,490,731.15) | (86,250,532.29) |
| Total | (65,134,058.04) | (27,547,712.85) |
The relationship between income tax expense and profit before tax is as follows:
| Item | 2018 | 2017 |
| Profit before tax | 658,225,323.83 | 7,180,889,557.21 |
| Tax at the applicable tax rate | 98,733,798.57 | 1,077,133,433.58 |
| Impact of different tax rates of subsidiaries | (21,467,247.81) | 404,092,024.03 |
| Adjustments to current income tax of previous period | (4,629,283.01) | (13,742,364.78) |
| Profit or loss attributable to joint ventures and associates | 66,960,893.21 | (1,370,979,382.39) |
| Non-taxable income | (163,680,879.95) | (15,239,846.00) |
| Non-deductible tax expense | 3,836,286.40 | 15,026,313.78 |
| Usage previous deductible losses | (19,645,340.05) | (123,846,927.16) |
| Unrecognized deductible temporary differences and deductible losses | 317,040,456.24 | 154,597,285.95 |
| Additional deduction arising from research and development expense | (342,288,741.64) | (154,588,249.86) |
| Tax expense under actual tax rate of the Group | (65,134,058.04) | (27,547,712.85) |
50. Earnings per share (“EPS”)
The basic EPS is calculated by dividing the net profit of the current period attributable to the ordinary shareholdersof the Company by the weighted average number of outstanding ordinary shares. In accordance with the specificterms and clauses of the issuance contract, the number of newly issued ordinary shares shall be calculated anddetermined as of the date of receiving the consideration (generally the date of issuance).
The Company has no dilutive potential ordinary shares.
| 2018 | 2017 | |
| Earnings | ||
| Net profit attributable to ordinary shareholders | 680,728,392.03 | 7,137,234,723.47 |
| Shares | ||
| Weighted average ordinary shares | 4,802,648,511.00 | 4,802,648,511.00 |
Note: In 2018, no change in the number of ordinary shares or potential common shares has occurred. Therefore,
the total share capital is 4,802,648,511 shares. The EPS for reporting period is calculated based on thisnumber of shares.
From the balance sheet day and to the approval date of reporting, there is no event that may causes changes inordinary shares or potential ordinary shares.
51. Notes to cash flow statement
(1) Items of cash received relating to other operating activities are as follows:
| Item | 2018 | 2017 |
| Interest income | 476,922,766.94 | 586,938,708.97 |
| Government grants related to operating activities | 2,972,076,736.91 | 2,637,318,945.57 |
| Others | 1,319,095,385.38 | 526,234,421.27 |
| Total | 4,768,094,889.23 | 3,750,492,075.81 |
(2) Items of cash paid relating to other operating activities are as follows:
| Item | 2018 | 2017 |
| Selling expense | 4,309,012,845.31 | 4,204,915,189.82 |
| Administrative expense | 666,543,781.90 | 814,466,183.05 |
| Research and development expenses | 689,870,733.35 | 788,125,116.26 |
| Others | 1,104,054,021.14 | 481,574,065.34 |
| Total | 6,769,481,381.70 | 6,289,080,554.47 |
(3) Items of cash received relating to other investing activities are as follows:
| Item | 2018 | 2017 |
| Net cash received from business combinations | 1,036,263,749.91 | - |
(4) Items of cash received relating to other financing activities are as follows:
| Item | 2018 | 2017 |
| Withdraw for deposit of bill | 855,280,377.20 | 978,689,175.66 |
(5) Items of cash paid relating to other financing activities are as follows:
| Item | 2018 | 2017 |
| Payment for deposit of bill | - | 369,848,096.27 |
| Acquisition of minority shareholders' equity | 30,344,195.00 | - |
| Others | - | 110,146.05 |
| Total | 30,344,195.00 | 369,958,242.32 |
52. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
| Supplementary information | 2018 | 2017 |
| 1．Cash flows from operating activities calculated by adjusting the net profit | ||
| Net profit | 723,359,381.87 | 7,208,437,270.06 |
| Add: impairment provision for assets | 238,554,564.69 | 251,517,154.60 |
| Depreciation of fixed assets | 2,334,281,299.36 | 1,914,783,466.15 |
| Depreciation and amortization of investment property | 226,711.56 | 226,711.56 |
| Amortization of intangible assets | 765,764,237.99 | 647,321,284.97 |
| Amortization of long-term deferred | 3,916,585.49 | 565,352.63 |
| expense | ||
| Amortization of deferred income | 52,824,676.85 | (83,798,051.02) |
| Disposal loss on fixed assets, intangible assets and others long-term assets | (8,561,074.73) | (41,774,452.23) |
| Financial expense | 11,700,010.25 | 48,334,684.86 |
| Investment income | 71,306,776.79 | (6,906,324,932.20) |
| Increase in deferred tax assets | (121,696,627.62) | (86,250,532.29) |
| Decrease(Increase) in inventory | 162,147,313.89 | 2,554,710,222.61 |
| Deferred income tax liabilities increased | (2,794,103.52) | - |
| Increase in operating receivables | 7,012,744,770.54 | (2,178,353,076.04) |
| Increase in operating payables | (14,321,540,062.30) | (4,478,567,770.20) |
| Others | (809,709,763.55) | 25,701,889.71 |
| Net cash flows from operating activities | (3,887,475,302.44) | (1,123,470,776.83) |
| 2．Movement of cash and cash equivalents | ||
| Ending balance of cash | 9,648,153,614.80 | 21,451,305,090.53 |
| Less: beginning balance of cash | 21,451,305,090.53 | 22,993,432,067.05 |
| Increase in cash and cash equivalents | (11,803,151,475.73) | (1,542,126,976.52) |
(2) The major non-cash investing and financing activities:
| Item | 2018 | 2017 |
| Endorsed bank acceptance received by sales and providing service | 3,032,518,773.00 | 4,385,282,036.50 |
(3) Cash and cash equivalents
| Item | 2018 | 2017 |
| I. Cash | ||
| Including: Cash on hand | 14,374.84 | 33,089.31 |
| Bank deposits that can be readily used | 9,648,139,239.96 | 21,451,272,001.22 |
| II. Cash equivalents | - | - |
| III. Ending balance of cash and cash equivalents | 9,648,153,614.80 | 21,451,305,090.53 |
Note: The restricted cash and cash equivalents of the Group are not included in the cash and cash equivalents.
53. The assets with ownership or right restricted
| Item | 2018 | 2017 | Notes |
| Cash and cash equivalents | 332,390,911.34 | 1,180,231,406.00 | Note 1 |
| Notes receivable and Accounts receivable | 469,622,570.00 | 287,427,970.00 | Note 2 |
| Intangible assets | 18,499,267.20 | 45,862,242.27 | Note 3 |
Note 1: As at 31 December 2018, the Group has restricted cash at banks for the issuance of bank acceptance bill.
Note 2: As at 31 December 2018, notes receivable with a book value of RMB469,622,570.00 (31 December
2017: RMB287,427,970.00) has been pledged to issue bank acceptance bills.
Note 3: As at 31 December 2018, land use right with book value of RMB18,499,267.20 has been pledged to
obtain RMB40,000,000.00 short-term loan from China South Industry Group Finance Co., Ltd. Theamortization of the land use right in 2018 is RMB418,851.36.
54. Foreign Monetary Item
| Item | 2018 | 2017 | ||||
| Original Currency | Exchange Rate | Translated to RMB | Original Currency | Exchange Rate | Translated to RMB | |
| Cash | ||||||
| USD | 8,751,966.06 | 6.8632 | 60,066,493.46 | 4,420,601.04 | 6.5342 | 28,885,091.32 |
| GBP | 2,373,542.00 | 8.6762 | 20,593,325.10 | 5,214,513.52 | 8.7792 | 45,779,257.09 |
| EUR | 4,048,438.85 | 7.8023 | 31,587,134.44 | 873,368.30 | 7.8023 | 6,814,281.49 |
| JPY | 64,912,028.43 | 0.0619 | 4,018,054.56 | 99,652,227.00 | 0.0579 | 5,769,863.94 |
| SUR | 239,651,676.87 | 0.0990 | 23,725,516.01 | 148,035,845.87 | 0.1135 | 16,802,068.51 |
| BRL | 553,990.20 | 1.8287 | 1,013,081.88 | 534,493.53 | 1.9650 | 1,050,279.79 |
| Accounts receivable | ||||||
| USD | 14,372,769.49 | 6.8632 | 98,643,191.56 | 42,208,456.93 | 6.5342 | 275,798,499.27 |
| GBP | - | 8.6762 | - | 7,044,658.64 | 8.7792 | 61,846,467.13 |
| EUR | - | 7.8023 | - | 6,354,896.12 | 7.8023 | 49,582,806.00 |
| Other receivables | ||||||
| USD | 2,876,923.86 | 6.8632 | 19,744,903.84 | 193,596.84 | 6.5342 | 1,265,000.47 |
| JPY | 16,387,327.63 | 0.0619 | 1,014,375.58 | 16,317,989.00 | 0.0579 | 944,811.56 |
| EUR | 3,514,473.56 | 7.8023 | 27,420,977.06 | 2,840,750.58 | 7.8023 | 22,164,388.25 |
| SUR | 1,243,071.00 | 8.6762 | 10,785,132.61 | - | - | - |
| BRL | 14,146.87 | 1.8287 | 25,870.38 | - | - | - |
| Accounts Payable | ||||||
| USD | 868,583.12 | 6.8632 | 5,961,259.67 | 31,190,199.07 | 6.5342 | 203,802,998.76 |
| JPY | 20,635,052.40 | 0.0619 | 1,277,309.74 | 22,631,013.00 | 0.0579 | 1,310,335.65 |
| EUR | 2,451,927.12 | 7.8023 | 19,130,670.97 | 1,628,974.37 | 7.8023 | 12,709,746.73 |
| GBP | 965,218.00 | 8.6762 | 8,374,424.41 | 3,087,973.61 | 8.7792 | 27,109,937.92 |
| Other Payables | ||||||
| USD | 777,462.07 | 6.8632 | 5,335,877.68 | 40,116.00 | 6.5342 | 262,125.97 |
| EUR | - | 7.8023 | - | 40,966.63 | 7.8023 | 319,633.94 |
| GBP | 1,760,110.00 | 8.6762 | 15,271,066.38 | 145,431.19 | 8.7792 | 1,276,769.50 |
VI Business combinations not under common control in the current
period
Acquisition of 50% equity interest in Changan Suzuki
The company originally held a 50% stake in Chongqing Changan Suzuki Automobile Co., Ltd. (hereinafterreferred to as “Changan Suzuki”), which can be jointly controlled and accounted for using the equity method.According to the agreement reached between the Company and Changan Suzuki's foreign shareholder, JapanSuzuki Co., Ltd. in 2018, the company acquired 50% of its shares in Changan Suzuki in cash of RMB1, and thepurchase date was determined to be November 2018. 1st. After the completion of the acquisition, the companyholds a 100% equity interest in Changan Suzuki.
(1) The recognition of the combination cost and goodwill is as follows:
currency: RMB
| Changan Suzuki | |
| The fair value of the identifiable net assets of Changan Suzuki obtained | 1,534,967,578.99 |
| Less: acquisition consideration | 1.00 |
| The fair value of the original 50% equity of Changan Suzuki on the purchase date prior to the purchase date | 767,483,789.49 |
| The merger cost is less than the fair value of the identifiable net assets acquired (operating income) | 767,483,788.50 |
(2) The re-measurement of 50% equity of Changan Suzuki originally held by the Company at fair value is asfollows
currency: RMB
| Changan Suzuki | |
| Book value of the original 50% equity interest in Changan Suzuki before the purchase date | 594,949,058.30 |
| The fair value of the original 50% equity of Changan Suzuki on the purchase date prior to the purchase date | 767,483,789.49 |
| The gain from re-measurement is recognized as investment income | 172,534,731.19 |
Acquisition of 50% equity interest in Changan Suzuki(continued)
(3) The fair value and book value of Changan Suzuki's identifiable assets and liabilities at the date of purchaseare as follows:
currency: RMB
| consolidated date | Book value on consolidated date | |
| Assets: | ||
| Current assets | 1,036,263,750.91 | 1,036,263,750.91 |
| accounts Receivable | 535,228,159.28 | 535,228,159.28 |
| Other receivables | 3,592,183.18 | 3,592,183.18 |
| Prepayments | 55,061,469.01 | 55,061,469.01 |
| Inventories | 494,855,111.78 | 453,950,664.34 |
| Other current assets | 9,246,498.92 | 9,246,498.92 |
| Fixed assets | 1,648,923,786.01 | 1,472,003,200.28 |
| progress | 31,706,835.38 | 8,799,566.27 |
| Intangible assets | 319,154,665.14 | 162,246,628.12 |
| expenses | 4,118,573.15 | 4,140,728.63 |
| Total assets | 4,138,151,032.76 | 3,740,532,848.94 |
| Liabilities: | ||
| accounts payable | 902,711,773.50 | 902,711,773.50 |
| Receipts in advance | 79,840,143.45 | 79,840,143.45 |
| payable | 154,353,926.99 | 154,353,926.99 |
| payable | 9,736,342.00 | 9,736,342.00 |
| Other payables | 490,347,322.71 | 490,347,322.71 |
| Long-term payables | 58,390,577.00 | 58,390,577.00 |
| Provisions | 843,227,728.71 | 843,227,728.71 |
| Deferred income | 2,666,438.83 | 17,776,258.87 |
| liabilities | - | 30,452,416.72 |
| Deferred tax liabilities | 61,909,200.58 | - |
| Total liabilities | 2,603,183,453.77 | 2,586,836,489.95 |
| Net assets | 1,534,967,578.99 | 1,153,696,358.99 |
Acquisition of 50% equity interest in Changan Suzuki(continued)
(4) The operating results and cash flows of Changan Suzuki from the date of purchase to the end of the year areas follows:
| Between November 1 and December 31, 2018 | |
| Operating income | 301,710,895.07 |
| Net profit | 5,786,113.17 |
| Net cash flow | (31,706,679.89) |
Acquisition of 51% shares of Zhenjiang Demao
The company used to hold 49% of the equity of Zhenjiang Demao hairun equity investment fund partnership(limited partnership)(hereinafter referred to as "Zhenjiang Demao"), which can have a significant impact on itsoperation and shall be calculated according to the equity method. According to the agreement reached between thecompany and Zhenjiang Demao's other shareholder Suzhou Jin sheng shuo zhang investment center (limitedpartnership) in 2018, the company has obtained 51% of its shareholding with cash of RMB 534,187,376.88, andthe purchase date is set as September 3, 2018. After the completion of the acquisition, the company holds a total ofZhenjiang Demao 100% equity.
(1) The recognition of the combined cost and goodwill is as follows:
currency: RMB
| Zhenjiang Demao | |
| obtained | 1,133,493,185.61 |
| Less: acquisition consideration | 534,187,376.88 |
| The fair value of the original 49% equity of Zhenjiang Demao on the purchase date prior to the purchase date | 555,411,660.95 |
| The merger cost is less than the fair value of the identifiable net assets acquired (operating income) | 43,894,147.78 |
Acquisition of 51% shares of Zhenjiang Demao(continued)
(2) The re-measurement of 49% equity of Zhenjiang Demao originally held by the Company at fair value is asfollows:
currency: RMB
| Zhenjiang Demao | |
| Book value of the original 49% equity interest in Zhenjiang Demao before the purchase date | 595,734,668.03 |
| Before the purchase date, the fair value of the 49% equity interest in Zhenjiang Demao on the purchase date | 555,411,660.95 |
| The difference arising from the re-measurement is recognized as investment loss | (40,323,007.08) |
| Changes in the fair value of available-for-sale financial assets that were originally included in other comprehensive income are transferred to investment income | 77,231,613.62 |
| Investment income (net) | 36,908,606.54 |
(3) The fair value and book value of Zhenjiang Demao's identifiable assets and liabilities at the date of purchaseare as follows:
currency: RMB
| consolidated date | consolidated date | |
| Assets: | ||
| Current assets | 19,157.31 | 19,157.31 |
| assets | 1,157,616,359.00 | 1,157,616,359.00 |
| Total assets | 1,157,635,516.31 | 1,157,635,516.31 |
| Liabilities: | ||
| Other payables | 500,000.00 | 500,000.00 |
| Deferred tax liabilities | 23,642,330.70 | - |
| Total liabilities | 24,142,330.70 | 500,000.00 |
| Net assets | 1,133,493,185.61 | 1,157,135,516.31 |
(4) The operating results and cash flows of Zhenjiang Demao from the date of purchase to the end of the yearhave no significant impact on the Group's consolidated financial statements.
VII Shares in other entities
1. Shares in subsidaries
The subsidiaries of the Company are as follows：
| Company name | Main operating place | Registered place | Nature of business | Registered capital (0,000) | Total proportion of shareholders (%) | |
| direct | indirect | |||||
| I. The subsidiary formed by establish or investment | ||||||
| Hebei Changan Automobile Co., Ltd. (note 1) | Dingzhou | Dingzhou | Manufacturing | 46,469 | 94.22 | - |
| Chongqing Changan International Automobile Sales Co., Ltd.(note 2) | Chongqing | Chongqing | sales | 1,376 | 100.00 | - |
| Chongqing Changan Connected Car Technology Co., Ltd. | Chongqing | Chongqing | lease | 8,850 | 100.00 | - |
| Chongqing Changan Special Automobile Co., Ltd (note 3) | Chongqing | Chongqing | sales | 500 | 50.00 | - |
| Chongqing Changan Automobile Supporting Service Co., Ltd. | Chongqing | Chongqing | sales | 3,000 | 99.00 | 1.00 |
| Chongqing Changan New Energy Automobile Co. Ltd. | Chongqing | Chongqing | R&D | 2,900 | 100.00 | - |
| Chongqing Changan Europe Design Academy Co., Ltd. | Turin, Italy | Turin, Italy | R&D | EUR1,738.36 | 100.00 | - |
| Changan United Kingdom R&D Center Co., Ltd. | Nottingham, United Kingdom | Nottingham, United Kingdom | R&D | GBP2,482 | 100.00 | - |
| Beijing Changan R&D Center Co., Ltd. | Beijing | Beijing | R&D | 100 | 100.00 | - |
| Changan Japan Designing Center Co.,Ltd. | Yokohama, Japan | Yokohama, Japan | R&D | JPY2,000 | 100.00 | - |
| Changan United States R&D Center Co., Ltd. | Troy, United states | Detriot, United states | R&D | USD154 | 100.00 | - |
| Changan Automobile Russia Co., Ltd. | Moscow, Russia | Moscow, Russia | Sales | USD20 | 100.00 | - |
| Changan Brazil Holdings Limited | St. Paul, Brazil | St. Paul, Brazil | Sales | BRL100 | 100.00 | - |
| Shenzhen Changan New energy automobile service Co., Ltd. | Shenzhen | Shenzhen | Sales | 5,000 | 100.00 | - |
| Hangzhou Changan Yixing Technology Co., Ltd. | Hangzhou | Hangzhou | Lease | 500 | 100.00 | - |
| Hefei Changan Yixing Technology Co., Ltd. | Hefei | Hefei | Lease | 500 | 100.00 | - |
| Nanjing Changan Connected Car Technology Co., Ltd. | Nanjing | Nanjing | Lease | 500 | 100.00 | - |
| Beijing Changan Connected Car Technology Co., Ltd. | Beijing | Beijing | Lease | 500 | 100.00 | - |
| Haikou Changan Connected Car Technology Co., Ltd. | Haikou | Haikou | Lease | 500 | 100.00 | - |
| Changan Connected Car (Shanghai)Technology Co., Ltd | Shanghai | Shanghai | Lease | 500 | 100.00 | - |
| Tianjin Changan Connected Car Technology Co., Ltd. | Tianjin | Tianjin | Lease | 500 | 100.00 | - |
| Nanjing Changan New Energy Automobile Sales & Service Co., Ltd. | Nanjing | Nanjing | Sales | 5,000 | 100.00 | - |
| Fuzhou Fuqing Changan New Energy Automobile Sales Co., | Fuzhou | Fuzhou | Sales | 200 | 100.00 | - |
1. Shares in subsidiaries (continued)
Note 1: The Company's voting rights for Nanjing Changan Automobile Co., Ltd. and Hebei Changan Automobile
Co., Ltd. are 93.79% and 95.70% respectively. The reason for the inconsistent ratio of shareholdingratio to voting rights is that some minority shareholders entrust the company to exercise voting rights.
Note 2: On May 17, 2018, the Company acquired a 35% equity interest in Chongqing Changan New Energy
Automobile Co., Ltd. from the company controlled by the same ultimate holding company, SouthernIndustrial Asset Management Co., Ltd. After the completion of the acquisition, the company'sshareholding ratio was changed from 65% to 100%.
Note 3: The remaining shareholders of Chongqing Changan Special Purpose Vehicle Co., Ltd. signed the
“Consensus Action People Agreement” with the company, and they all agreed to vote according to thevoting intention of the company. Therefore, the company can control it, so it will be included in theconsolidated financial The scope of the report.
Note 4: Shenzhen Changan New Energy Automobile Service Co., Ltd. was renamed Changan Automobile
Investment (Shenzhen) Co., Ltd. in 2018.
As at 31 December 2018, the Group has no subsidiaries with important minority interests.
Ltd.
Company name
| Company name | Main operating place | Registered place | Nature of business | Registered capital (0,000) | Total proportion of shareholders (%) | |
| direct | indirect | |||||
| I. The subsidiary formed by establish or investment | ||||||
| Xiamen Changan New Energy Automobile Sales & Service Co., Ltd. | Xiamen | Xiamen | Sales | 200 | 100.00 | - |
| Guangzhou Changan New Energy Automobile Sales & Service Co., Ltd. | Guangzhou | Guangzhou | Sales | 400 | 100.00 | - |
| Chongqing Changan New Energy Automobile Technology Co., Ltd. | Chongqing | Chongqing | Sales | 9,900 | 100.00 | - |
| II. The subsidiary formed by business combination not under common control | ||||||
| Nanjing Changan Automobile Co., Ltd.(note1) | Nanjing | Nanjing | Manufacturing | 60,181 | 84.73 | - |
| Chongqing Changan Suzuki Automobile Co., Ltd. | Chongqing | Chongqing | Manufacturing | 133,764 | 100.00 | - |
| Zhenjiang Demao Hairun Equity Investment Fund Partnership (Limited Partnership) | Zhenjiang | Zhenjiang | finance | 150,001 | 100.00 | - |
| III. The subsidiary formed by business combination under common control | ||||||
| Hebei Baoding Changan Bus Co., Ltd. | Dingzhou | Dingzhou | Manufacturing | 3,000 | 100.00 | - |
| Hefei Changan Automobile Co.,Ltd. | Hefei | Hefei | Manufacturing | 77,500 | 100.00 | - |
2. Shares in joint ventures and associates
Note1: Changan Ford Mazda Engine Co., Ltd. was renamed Changan Mazda Engine Co., Ltd. in January 2019
and remains a joint venture of the company.
| Company name | Main operating place | Registered place | Nature of business | Registered capital (0,000) | Total proportion of shareholders (%) | Accounting treatment | |
| direct | indirect | ||||||
| I. Joint ventures | |||||||
| Jiangling Holding Co., Ltd. | Nanchang | Nanchang | Manufacture and sale of automobiles, and components | 200,000 | 50.00 | - | Equity |
| Changan Ford Automobile Co., Ltd. | Chongqing | Chongqing | Manufacture and sale of automobiles, and components | USD24,100 | 50.00 | - | Equity |
| Changan Mazda Automobile Co., Ltd. | Nanjing | Nanjing | Manufacture and sale of automobiles, and components | USD11,097 | 50.00 | - | Equity |
| Changan Ford Mazda Engine Co., Ltd.(Note) | Nanjing | Nanjing | Manufacture and sale of automobiles, and components | USD20,996 | 50.00 | - | Equity |
| Changan PSA Automobiles Co., Ltd. | Shenzhen | Shenzhen | Manufacture and sale of automobiles, and components | 760,000 | 50.00 | - | Equity |
| Changan Weilai New Energy Automobile Technology Co., Ltd. | Nanjing | Nanjing | Manufacture and sale of automobiles, and components | 9,800 | 50.00 | - | Equity |
| II. Associates | |||||||
| Chongqing Changan Kuayue Automobile Co., Ltd. | Chongqing | Chongqing | Develop, product and sale of automobile and components; import and export goods. | 6,533 | 34.30 | - | Equity |
| Chongqing Changan Kuayue Automobile Sales Co., Ltd. | Chongqing | Chongqing | Sale of Changan Kuayue’ s automobile and agricultural cars and components. Technical advisory services for automobile | 300 | 34.30 | - | Equity |
| Beijing Fang’an cresent taxi Co., Ltd. | Beijing | Beijing | Regional taxi operation | 2,897.96 | 20.70 | - | Equity |
| Changan Automobile Finacing Co., Ltd. | Chongqing | Chongqing | Provide car loan; provide vehicle loans and operating equipment loans to car dealers, including the construction loans of exhibition hall,spare parts loans and maintenance equipment loans, etc. | 476,843.10 | 28.66 | - | Equity |
| Hainan Anxinxing Information Technology Co., Ltd. | Chengmai | Chengmai | Software and hardware technology development, technical consulting, auto parts sales | 3,000 | 30.00 | - | Equity |
| Nanjing Chelai Travel Technology Co., Ltd. | Nanjing | Nanjing | Car sales, leasing, software technology development, technical services | 10,000 | 10.00 | - | Equity |
| Hunan Guoxin Semiconductor Technology Co., Ltd. | Zhuzhou | Zhuzhou | Technology development consulting, technical services, technology transfer in the field of power semiconductors | 50,000 | 25.00 | - | Equity |
| Beijing Wutong Chelian Technology Co., Ltd. | Beijing | Beijing | Technology development, technical consulting, technical services, technology transfer | 20,000 | - | 49.00 | Equity |
| Anhe (Chongqing) Equity Investment Fund Management Co., Ltd. | Chongqing | Chongqing | Equity investment management | 1,000 | - | 25.00 | Equity |
| Hangzhou Chelizi Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou | Car travel service | 630 | - | 20.00 | Equity |
Changan Ford Automobile Co., Ltd. is the important joint venture to the Group and makes great influence in theshare of profit and loss in joint venture and associates, the Group adopts equity method to deal with the investmentto it.
The table below shows the financial status of Changan Ford Automobile Co., Ltd., and all the information has beenadjusted to eliminate the difference of the accounting policies.
| 2018 | 2017 | |
| Current assets | 13,008,234,449.00 | 18,809,741,660.00 |
| Of which: cash and cash equivalent | 2,276,585,106.00 | 8,711,501,769.00 |
| Non-current assets | 29,167,707,557.00 | 26,516,644,244.00 |
| Total assets | 42,175,942,006.00 | 45,326,385,904.00 |
| Current liabilities | 29,971,079,402.00 | 34,485,401,852.00 |
| Non-current liabilities | 4,587,988,735.00 | 2,402,328,204.00 |
| Total liabilities | 34,559,068,137.00 | 36,887,730,056.00 |
| Minority interests | 78,302,490.00 | 66,800,070.00 |
| Equity attributable to owners | 7,538,571,379.00 | 8,371,855,778.00 |
| Net asset owned according to share proportion | 3,769,285,689.50 | 4,185,927,889.00 |
| Adjustment | (59,501,182.39) | (60,501,784.80) |
| Book value of investment | 3,709,784,507.11 | 4,125,426,104.20 |
| Operating revenue | 49,754,282,303.00 | 106,027,523,250.00 |
| Financial expenses- interest income | 65,983,748.00 | 175,167,770.00 |
| Financial expenses- interest expense | 243,439,266.00 | 9,284,431.00 |
| Income tax expense | (185,229,789.00) | 2,480,443,915.00 |
| Net profit | (792,490,479.00) | 12,171,169,510.00 |
| Net profit attributable to owners | (803,992,899.00) | 12,159,242,595.00 |
| Net profit owned according to share proportion | (401,996,449.50) | 6,079,621,297.50 |
| Adjustment | (13,645,147.59) | (40,504,012.98) |
| Book value of investment income | (415,641,597.09) | 6,039,117,284.52 |
| Dividend | - | 7,577,500,000.00 |
The table below shows the financial status of the less important joint ventures and associates:
| 2018 | 2017 | |
| Joint venture | ||
| Total book value of the | 7,294,769,919.55 | 7,535,284,986.66 |
| investment | ||
| Total amount calculated by shareholding proportion | ||
| Net profit | (145,524,154.05) | 704,058,140.55 |
| Other comprehensive income | (706,228.88) | (248,641.80) |
| Total comprehensive income | (146,230,382.93) | 703,809,498.75 |
| Total book value of the investment | 2,270,615,692.17 | 2,437,812,806.11 |
| Total amount calculated by shareholding proportion | ||
| Net profit | 229,282,190.47 | 111,721,486.90 |
| Other comprehensive income | 77,231,613.62 | - |
| Total comprehensive income | 306,513,804.09 | 111,721,486.90 |
As at 31 December 2018, since the Group has no obligation to undertake the extra loss of Chongqing ChanganKuayue Automobile Sales Co., Ltd and Beijing Fang’an cresent taxi Co., Ltd, when extra loss occurs, the Groupwrites down the long-term investment to zero without recognizing the extra loss.
VIII Risks associated with financial instruments
1. Classification of financial instruments
As at balance sheet day, the book values of financial instruments are as follows:
Financial assets
| 2018 | Loans and accounts receivable | Available-for-sale financial assets | Total |
| Cash | 9,980,544,526.14 | - | 9,980,544,526.14 |
| Notes receivable and Accounts receivable | 21,971,045,405.74 | - | 21,971,045,405.74 |
| Other receivables | 3,250,452,923.70 | - | 3,250,452,923.70 |
| Available-for-sale financial assets | - | 1,957,873,311.31 | 1,957,873,311.31 |
| Total | 35,202,042,855.58 | 1,957,873,311.31 | 37,159,916,166.89 |
| 2017 | Loans and accounts receivable | Available-for-sale financial assets | Total |
| Cash | 22,631,536,496.53 | - | 22,631,536,496.53 |
| Notes receivable and Accounts receivable | 30,963,288,278.24 | - | 30,963,288,278.24 |
| Other receivables | 1,687,460,718.92 | - | 1,687,460,718.92 |
| Available-for-sale financial assets | - | 541,917,000.00 | 541,917,000.00 |
| Total | 55,282,285,493.69 | 541,917,000.00 | 55,824,202,493.69 |
Financial liabilities
| Other financial liabilities | ||
| 2018 | 2017 | |
| Short-term loans | 190,000,000.00 | 185,000,000.00 |
| Notes payable and Accounts payable | 28,724,063,539.34 | 39,905,752,773.96 |
| Other payables | 3,079,749,015.81 | 2,599,093,153.78 |
| Long-term loan | 6,594,120.00 | 19,727,920.00 |
| Total | 32,000,406,675.15 | 42,709,573,847.74 |
2. Transfer of financial assets
The transferred financial assets that entirely derecognized but continuing involved
As at 31 December 2018, the Group has endorsed bank acceptance bill with a carrying amount ofRMB1,473,189,956.97(2017: RMB1,050,643,090.00) to suppliers to settle the accounts payable. The maturities ofthe notes are between 1 to 6 months. According to the relevant provisions of the "law of negotiable instruments", ifthe banks refuse the payment, the holder has the right of recourse to the Group (the "continuing involvement"). TheGroup holds the view that almost all the risks and rewards concerned have been transferred; therefore, the bookvalue of the accounts payable should be derecognized. The maximum loss and the undiscounted cash flow of thecontinuing involvement and repurchase is equal to its book value, the Group regards the fair value of thecontinuing involvement is not significant.
In 2018, the Group didn’t recognize profit or loss on the transferring date. No revenue or expense should berecognized in accordance with the continuing involvement in the current period. The indorsement occurred flatlyin this period.
3. Risks of financial instruments
The Group’s principal financial instruments, except for derivatives, include bank loans, bonds payable, cash, etc.The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group hasvarious other financial assets and liabilities such as accounts receivable and accounts payable, which arise directlyfrom its operations.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk. TheGroup’s risk management policies are summarized below:
Credit risk
The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers whowish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances aremonitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. Fortransactions that do not occur in the country of the relevant operating unit, the Group does not offer credit termswithout the approval of the special department of credit control.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cashequivalents, available-for-sale financial assets, other receivables, dividend receivables and certain derivativesfinancial instruments, the Group’s exposure to credit risk arising from default of the counterparty, with a maximumexposure equal to the carrying amount of these instruments, listed as book value of financial assets in consolidatedfinancial statements. In 2018, there was no credit risk arising from financial guarantee.
No gage is required since the Group trades only with recognized, creditworthy third parties. Credit risks aremanaged by clients and industries collectively. As at 31 December 2018, among the Group’s collections withspecific credit risk, 37.65% (2017: 30.02%) of accounts receivables of the Group are due from top five clients. TheGroup does not hold any gage from or enhance credit limit to these clients.
As at the end of the year, the maturity analysis for the Group’s financial assets not impaired is as follows:
2018
| Total | Neither overdue nor impaired | Overdue but not impaired | |||
| Within 3 months | 3 months to 1 year | Over 1 year | |||
| Cash | 9,980,544,526.14 | 9,980,544,526.14 | - | - | - |
| Notes receivable and accounts Receivable | 21,971,045,405.74 | 21,928,253,778.90 | 389,425.26 | 24,957,342.82 | 17,444,858.76 |
| Other receivables | 3,250,452,923.70 | 3,240,119,795.01 | 336,474.29 | 6,170,515.96 | 3,826,138.44 |
| financial assets | 1,957,873,311.31 | 1,957,873,311.31 | - | - | - |
2017
| Total | Neither overdue nor impaired | Overdue but not impaired | |||
| Within 3 months | 3 months to 1 year | Over 1 year | |||
| Cash | 22,631,536,496.53 | 22,631,536,496.53 | - | - | - |
| Notes receivable and accounts Receivable | 30,963,288,278.24 | 30,928,496,492.46 | 7,479,861.25 | 18,392,420.88 | 8,919,503.65 |
| Other receivables | 1,687,460,718.92 | 1,681,728,488.26 | 4,478,714.96 | 833,762.70 | 419,753.00 |
| financial assets | 541,917,000.00 | 541,917,000.00 | - | - | - |
As at 31 December 2018 and 2017, the balance of accounts receivable which is neither overdued nor impaired ismainly due to the customers who have no default records recently.
As at 31 December 2018 and 2017, overdued but not impaired accounts receivable are related to independentclients with satisfactory transaction records with the Group. Based on previous experience, since credit quality hasno significant changes and the receivables can be fully recovered, the Group considers no impairment provisionshould be made to them. The Group does not hold any gage from or enhance credit limit to these clients.
Liquidity risk
The Group adopts cycle liquidity planning instrument to manage capital shortage risks. The instrument takes intoconsideration the maturity date of financial instruments plus estimated cash flow from the Group’s operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility and sufficient cash tosupport operating capital through financing functions by the use of bank loans, debentures, etc.
The table below summarizes the maturity profile of the Group’s financial liabilities based on the non-discountedcash flow of the contracts:
2018
| Within 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Total | |
| Short-term loans | 730,835.62 | 1,367,369.86 | 195,641,035.62 | - | 197,739,241.10 |
| Notes payable and Accounts payable | 8,340,360,709.93 | 11,658,516,886.83 | 8,725,185,942.58 | - | 28,724,063,539.34 |
| Other payable | 1,835,725,519.62 | 1,003,480,426.18 | 240,543,070.01 | - | 3,079,749,015.81 |
| Long-term loan | 25,605.43 | 6,601,553.83 | - | - | 6,627,159.26 |
| Total | 10,176,842,670.60 | 12,669,966,236.70 | 9,161,370,048.21 | - | 32,008,178,955.51 |
2017
| Within 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Total | |
| Short-term loans | 10,681,519.86 | 156,059,552.74 | 20,503,408.22 | - | 187,244,480.82 |
| Notes payable and Accounts payable | 12,383,468,835.37 | 17,270,085,556.46 | 10,252,198,382.13 | - | 39,905,752,773.96 |
| Other payable | 1,546,734,431.45 | 721,527,064.67 | 330,831,657.66 | - | 2,599,093,153.78 |
| Long-term loan | 49,649.96 | 6,648,538.66 | 6,800,216.57 | 6,597,797.49 | 20,096,202.68 |
| Total | 13,940,934,436.64 | 18,154,320,712.53 | 10,610,333,664.58 | 6,597,797.49 | 42,712,186,611.24 |
Market risk
Interest rate risk
The Group’s revenue and operating cash flows are seldomly influenced by the interest fluctuation. As at 31December 2018, the Group’s loans are bearing fixed interest rate and the Group is not hedging the risk currently.
Foreign currency risk
The Group’s exposures to fluctuation in foreign currency exchange rate mainly arise from operating activitieswhere transactions are settled in currencies other than the units' functional currency and net investment to offshoresubsidiary.
In 2018, the Group only has transactional currency exposures of 3.55% (2017: 2.08%) of its total revenue that isvalued in currencies other than the units' functional currency. Since most of the Group’s businesses are operated inChina mainland, the estimated influence of fluctuation of foreign currency is insignificant; therefore, the Grouphasn’t carried out large amount of hedging to reduce the risk.
Equity instruments investment price risk
The Group is exposed to equity price risk arising from individual equity investments classified as available-for-saleinvestments (Note V 7) as at 31 December 2018. The Group’s listed investments are listed on the Shanghai andShenzhen stock exchanges and valued at quoted market prices at the end of the reporting period. The followingtable demonstrates the sensitivity to every 5% change (based on the carrying amount as at the end of reportingperiod) in the Group’s net profit and fair value of the equity investments, with all other variables held constant,based on their carrying amounts at the end of the reporting period.
| Carrying amount of equity investments | Change in fair value | (decrease) in net profit | Increase/(decrease) in equity | |
| 2018 | ||||
| Shanghai- Available for sale | 123,540,000.00 | 5% | 5,250,450.00 | 5,250,450.00 |
| Shanghai- Available for sale | 123,540,000.00 | (5%) | (5,250,450.00) | (5,250,450.00) |
| Shenzhen- Available for sale | 1,406,781,311.31 | 5% | 59,788,205.73 | 59,788,205.73 |
| Shenzhen- Available for sale | 1,406,781,311.31 | (5%) | (59,788,205.73) | (59,788,205.73) |
| 2017 | ||||
| Shanghai- Available for sale | 164,365,000.00 | 5% | 6,985,512.50 | 6,985,512.50 |
| Shanghai- Available for sale | 164,365,000.00 | (5%) | (6,985,512.50) | (6,985,512.50) |
4. Capital management
The main goal of the Group’s capital management is to ensure that the ability of continuous operation, andmaintain a healthy capital ratios in order to support business development, and to maximize shareholder value.
The Group manages the capital structure and adjusts it with the change of economy trend and the risk feature of theassets. To maintain or adjust the capital structure, the Group can rectify dividend distribution, return capital toshareholders or issue new shares. The Group is not subject to external mandatory capital requirements constraints.The goal, principle and procedure of capital management stay the same in 2017 and 2018.
The Group’s leverage ratio on the balance sheet date is as follows:
31 December 2018 31 December 2017
Leverage ratio 50.63% 55.28%
IX Disclosure of fair value
1. Assets and liabilities measured at fair value
2018
| Input measured at fair value | ||||
| (The first level) | Important and observable input(The second level） | Important but unobservable input(The third level) | Total | |
| Available-for-sale financial assets- equity instruments | 123,540,000.00 | 1,406,781,311.31 | - | 1,530,321,311.31 |
2017
| Input measured at fair value | ||||
| (The first level) | Important and observable input(The second level） | Important but unobservable input(The third level) | Total | |
| Available-for-sale financial assets- equity instruments | 164,365,000.00 | - | - | 164,365,000.00 |
2. Fair value estimation
Fair value of financial instruments
Management has assessed and concluded accounts, including cash, notes receivableandaccounts receivable, otherreceivables, short-term loans, other payables, notes payable and accounts payable and so on, whose fair valueequals to book value because of its short term to overdue.
Financial assets and financial liabilities are measured at the amount that an asset could be exchanged for or bywhich a liability could be incurred or settled by knowledged, willing parties in a current arm’s-length transaction,other than liquidation or unwilling sales. Methods and hypothesis followed are used for determining fair value.
Long-term loans and long-term loans within 1 year use discounted cash flow method to determine its fair value,with discount rate in accordance with market return of other financial instruments based on similar terms, creditrisks and remaining terms. As at 31 December 2018, the default risk of long-term loans and long-term loans within1 year was considered immaterial.
The equity instruments listed by the Company include unrestricted ordinary shares and restricted shares. Theunrestricted ordinary shares investment determines the fair value by market quotation, and the restricted stockinvestment uses the discounted valuation model to estimate the fair value. The Group believes that the fair valueand its changes estimated by valuation techniques are reasonable and are also the most appropriate value on thebalance sheet date.
X Related party relationships and transactions
1. Parent company
| Parent | Place of registration | Registered capital | Nature of the business | Proportion of shares in the Company | Proportion of voting rights in the company |
| China Changan Automobile Group Co ,Ltd. | Beijing | 4,582,373,700.00 | Manufacture and sale of automobiles, engine, and components | 22.53% | 22.53% |
The ultimate holding company is China South Industries Group Corporation.
The registered capital and paid-up capital of the parent company was unchanged in 2018.
2. Subsidiaries
Refer to Note VII 1 for details of the Group’s subsidiaries.
3. Joint ventures and associates
Refer to Note VII 2 for details of the Group’s joint ventures and associates.
4. Other related parties
| Related parties | Relationship |
| China Changan Automobile Co., Ltd. – Chongqing Tsingshan Transmission Branch (hereafter referred to as “CSIA-Chongqing Tsingshan Transmission Branch”) | Controlled by the same ultimate holding company |
| Sichuan Jian'an Industrial Co.,Ltd. – Chengdu Jian'an Automobile Bridge Branch (hereafter referred to as “Sichuan Jian’an Industrial Chengdu Jian'an Automobile Bridge Branch) | Controlled by the same ultimate holding company |
| Sichuan Jian'an Industrial Co., Ltd | Controlled by the same ultimate holding company |
| Chengdu Huachuan Electric Equipment Co., Ltd. | Controlled by the same ultimate holding company |
| Harbin Dongan Auto Engine Co., Ltd. | Controlled by the same ultimate holding company |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | Controlled by the same ultimate holding company |
| Harbin Hafei Automobile Industry Group Co.,Ltd. | Controlled by the same ultimate holding company |
| Sichuan Ningjiang Shanchuan Machinery Co, Ltd. | Controlled by the same ultimate holding company |
| Longchang Shanchuan Shock-absorbing Vehicles Parts Co., Ltd. | Controlled by the same ultimate holding company |
| Wanyou Automobile Investment Co., Ltd. | Controlled by the same ultimate holding company |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Anfu Automobile Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Automobile Air-conditioner Co., Ltd. | Controlled by the same ultimate holding company |
| The Automobile Trade Service Co. Ltd.(changed from Chengdu Wanyou Economic Technological Development Co., Ltd.) | Controlled by the same ultimate holding company |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Nanning Wanyou Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Wanyou Economic Development Co., Ltd. | Controlled by the same ultimate holding company |
| Chengdu Wanyou Trading Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Wanyou Zunda Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Panzhihua Wanyou Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Ya'an Wanyou Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Related parties | Relationship |
| Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Wanyou Xingjian Auto Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Luzhou Wanyou Automobile Service Co., Ltd. | Controlled by the same ultimate holding company |
| Dali Wanling Auto Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Kunming Wanling Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Bazhong Wanyou Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Liangshan Wanyou Automobile Sales & Service Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Changfeng Jiquan Machinery Co., Ltd. | Controlled by the same ultimate holding company |
| Beijing Beiji Mechanical and Electrical Industry Co., Ltd. | Controlled by the same ultimate holding company |
| China South Industry Group Finance Co., Ltd; | Controlled by the same ultimate holding company |
| Chengdu Guangming Tianzhong Environmental Protection Technology Co., Ltd | Controlled by the same ultimate holding company |
| Chengdu Jialing Huaxi Optical & Precision Machinery Co., Ltd. | Controlled by the same ultimate holding company |
| Chengdu Lingchuan Vehicle Oil Tank Co., Ltd. | Controlled by the same ultimate holding company |
| Chengdu Lingchuan Special Industry Co., Ltd. | Controlled by the same ultimate holding company |
| Chengdu Wanyou Filter Co., Ltd. | Controlled by the same ultimate holding company |
| Hubei Xiaogan Huazhong Automobile Light Co., Ltd. | Controlled by the same ultimate holding company |
| Sichuan Hongguang Machinery and Electrics Co., Ltd. | Controlled by the same ultimate holding company |
| Yunnan Xiyi Industries Co., Ltd. | Controlled by the same ultimate holding company |
| Yunnan Xiangyu Auto Sales and Service Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Dajiang Jiexin Forging Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Dajiang Xinda Vehicles Shares Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Dajiang Yuqiang Plastic Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Jialing Yimin Special Equipment Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Jianshe Automobile Air-conditioner Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Qingshan Transmission Sales Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Changan Property Management Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Yihong Engineering Plastic Products Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Changan Real Estate Development Co., Ltd. | Controlled by the same ultimate holding company |
| Related parties | Relationship |
| Chongqing Changan Industries Group Co. Ltd. | Controlled by the same ultimate holding company |
| Chongqing Changan Construction Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Changrong Machinery Co., Ltd. | Controlled by the same ultimate holding company |
| Harbin Botong Auto Parts Co.,LTD. | Controlled by the same ultimate holding company |
| Southwest Ordnance Industry Corporation | Controlled by the same ultimate holding company |
| Chongqing Xiyi Automobile Connecting Rod Co., Ltd. | Controlled by the same ultimate holding company |
| Chengdu Ningxing Automobile Spring Co., Ltd. | Controlled by the same ultimate holding company |
| Chongqing Wanyou Construction Co., Ltd. | Controlled by the same ultimate holding company |
| Southern Industrial Asset Management Co., Ltd. | Controlled by the same ultimate holding company |
| South Tianhe Chassis System Co., Ltd. | Participated by the Ultimate holding company |
| South Inter Air-conditioner Co.,Ltd. | Participated by the Ultimate holding company |
| Chengdu Ningjiang Zhaohe Automobile Components Co., Ltd. | Participated by the Ultimate holding company |
| Southern Fojiya Auto Parts Co., Ltd. | Participated by the Ultimate holding company |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | Participated by the Ultimate holding company |
| Chongqing Nexteer Steering System Co., Ltd. | Participated by the Ultimate holding company |
5. Major transactions between the Group and its related parties
(1) Transactions of goods and services
Purchases of goods and services from related parties
| Related parties | Nature of the transaction | 2018 | 2017 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | Purchase of spare parts and transportation fee | 1,389,088,291.94 | 1,351,597,111.16 |
| CSIA-Chongqing Tsingshan Transmission Branch | Purchase of spare parts | 1,284,085,746.55 | 1,920,824,540.34 |
| Sichuan Jian'an Industrial Co., Ltd | Purchase of spare parts | 747,672,263.03 | 952,596,664.63 |
| Harbin Dongan Auto Engine Co., Ltd. | Purchase of spare parts | 729,821,616.79 | 1,043,649,785.91 |
| South Tianhe Chassis System Co., Ltd. | Purchase of spare parts | 601,959,455.32 | 722,807,300.20 |
| Chongqing Nexteer Steering System Co.,Ltd. | Purchase of spare parts | 579,242,368.51 | 324,469,905.26 |
| South Inter Air-conditioner Co, .Ltd. | Purchase of spare parts | 490,615,574.48 | 572,728,698.23 |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | Purchase of spare parts and accept service | 382,752,767.69 | 1,685,162,025.13 |
| Related parties | Nature of the transaction | 2018 | 2017 |
| Chongqing Wanyou Economic Development Co., Ltd. | Purchase of spare parts | 329,624,797.32 | 180,138,574.78 |
| Chengdu Huachuan Electric Equipment Co., Ltd. | Purchase of spare parts | 279,083,119.39 | 275,908,197.18 |
| Chongqing Dajiang Yuqiang Plastic Co., Ltd. | Purchase of spare parts | 276,123,847.99 | 74,700,158.09 |
| Southern Fojiya Auto Parts Co., Ltd. | Purchase of spare parts | 251,772,521.47 | - |
| Chongqing Dajiang Xinda Vehicles Shares Co., Ltd. | Purchase of spare parts | 175,538,307.43 | 56,922,952.53 |
| Chengdu Wanyou Filter Co., Ltd. | Purchase of spare parts | 142,276,990.69 | 145,873,367.68 |
| Jiangling Holding Co., Ltd. | Purchase of cars and spare parts | 114,120,282.00 | 548,265,973.00 |
| Chongqing Jianshe Automobile Air-conditioner Co., Ltd. | Purchase of spare parts | 110,293,645.11 | 138,880,769.27 |
| Sichuan Ningjiang Shanchuan Machinery Co, Ltd. | Purchase of spare parts | 105,758,408.84 | 165,599,788.86 |
| Yunnan Xiyi Industries Co., Ltd. | Purchase of spare parts | 88,997,586.25 | 88,056,763.21 |
| Hubei Xiaogan Huazhong Automobile Light Co., Ltd. | Purchase of spare parts | 87,329,310.10 | 90,534,101.05 |
| Chengdu Ningjiang Zhaohe Automobile Components Co., Ltd. | Purchase of spare parts | 75,867,551.80 | 30,603,270.36 |
| Chengdu Lingchuan Vehicle Oil Tank Co., Ltd. | Purchase of spare parts | 74,135,330.06 | 62,073,927.72 |
| Chongqing Changan Kuayue Automobile Co., Ltd. | Accept service | 67,598,856.98 | 66,952,800.00 |
| Changan Ford Automobile Co., Ltd. | Purchase of spare parts and accept processing services | 57,461,801.63 | 101,320,721.57 |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | Purchase of spare parts | 47,857,427.57 | 71,513,288.68 |
| Changan Industries Group Co. Ltd. | Purchase of spare parts and accept service | 46,447,919.42 | 58,803,886.18 |
| Longchang Shanchuan Shock-absorbing Vehicles Parts Co., Ltd. | Purchase of spare parts | 37,353,791.80 | 52,955,838.01 |
| Chengdu Lingchuan Special Industry Co., Ltd. | Purchase of spare parts | 24,507,845.13 | 20,759,869.43 |
| Chongqing Changfeng Jiquan Machinery Co., Ltd. | Purchase of spare parts | 22,462,283.98 | 38,663,332.17 |
| Chongqing Yihong Engineering Plastic Products Co., Ltd. | Purchase of spare parts | 20,730,680.31 | 44,957,884.97 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | Purchase of spare parts and accept processing services | 19,420,028.65 | 156,019,997.92 |
| Chongqing Changrong Machinery Co., Ltd. | Purchase of spare parts | 18,795,175.93 | 31,920,181.87 |
| Chengdu Jialing Huaxi Optical & Precision Machinery Co., Ltd. | Purchase of spare parts | 14,592,213.03 | 14,759,612.09 |
| Sichuan Hongguang Machinery and Electrics Co., Ltd. | Purchase of spare parts | 8,969,159.75 | 8,847,938.92 |
| Changan PSA Automobiles Co., Ltd. | Accept service | 6,309,145.00 | - |
| Chongqing Qingshan Transmission Sales Co., Ltd. | Purchase of spare parts | 5,943,733.67 | 6,687,785.88 |
| Related parties | Nature of the transaction | 2018 | 2017 |
| Chongqing Changan Property Management Co., Ltd. | Accept service | 5,410,948.67 | 4,644,858.72 |
| Harbin Botong Auto Parts Co.,LTD. | Accept service | 4,908,486.65 | 11,639,993.11 |
| Chongqing Changan Construction Co., Ltd. | Accept service | 2,849,308.36 | 1,392,469.91 |
| Chongqing Dajiang Jiexin Forging Co., Ltd. | Accept service | 2,392,326.57 | 4,303,952.13 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | Accept service | 1,610,572.58 | - |
| Beijing Beiji Mechanical and Electrical Industry Co., Ltd. | Accept service | 1,496,100.00 | 153,855.09 |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | Accept service | 1,158,331.89 | - |
| Chongqing Wanyou Xingjian Auto Sales & Service Co., Ltd. | Accept service | 729,801.70 | - |
| The Automobile Trade Service Co. Ltd. | Accept service | 675,086.70 | - |
| Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd. | Accept service | 472,699.15 | - |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | Accept service | 406,387.74 | - |
| Ya'an Wanyou Automobile Sales & Service Co., Ltd. | Accept service | 211,018.21 | - |
| Yunnan Xiangyu Auto Sales and Service Co., Ltd. | Accept service | 205,055.66 | - |
| Nanning Wanyou Auto Sales and Service Co., Ltd. | Accept service | 167,618.87 | - |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | Accept service | 134,307.83 | - |
| Chengdu Wanyou Trading Co., Ltd. | Accept service | 37,072.74 | - |
| Panzhihua Wanyou Automobile Sales & Service Co., Ltd. | Accept service | 34,680.85 | - |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | Accept service | 34,151.89 | - |
| Luzhou Wanyou Automobile Service Co., Ltd. | Accept service | 32,522.83 | - |
| Bazhong Wanyou Automobile Sales & Service Co., Ltd. | Accept service | 28,253.30 | - |
| Liangshan Wanyou Automobile Sales & Service Co., Ltd. | Accept service | 15,943.40 | - |
| Chongqing Changan Real Estate Development Co., Ltd. | Accept service | 8,962.26 | - |
| China Changan Automobile Group Co ,Ltd. | Accept service | - | 310,385.23 |
| Chongqing Xiyi Automobile Connecting Rod Co., Ltd. | Accept service | - | 116,398.24 |
| Chengdu Ningxing Automobile Spring Co., Ltd. | Purchase of spare parts | - | 17,404,696.45 |
| Chongqing Wanyou Construction Co., Ltd. | Accept service | - | 257,144.54 |
| Total | 8,737,629,483.46 | 11,145,780,765.70 |
The price of the Group’s purchase from related parties is based on contracts agreed by both parties.
Sales of goods and services to related parties
| Related parties | Nature of the transaction | 2018 | 2017 |
| Chongqing Wanyou Economic Development Co., Ltd. | Sales of cars and spare parts | 1,335,816,637.76 | 1,561,916,357.55 |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | Sales of cars | 958,757,083.78 | 975,719,318.04 |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | Sales of cars and spare parts | 808,716,796.96 | 1,003,042,141.84 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | Sales of cars and spare parts | 675,259,160.22 | 841,434,091.94 |
| Wanyou Automobile Investment Co., Ltd. | Sales of cars | 507,090,525.03 | 614,678,667.25 |
| The Automobile Trade Service Co. Ltd. | Sales of cars and spare parts | 479,559,227.33 | 824,993,835.42 |
| Chongqing Wanyou Zunda Automobile Sales & Service Co., Ltd. | Sale of spare parts | 383,849,283.30 | - |
| Changan Ford Automobile Co., Ltd. | Sale of spare parts and providing service | 165,787,061.88 | 15,775,360.36 |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | Sales of cars | 157,624,228.55 | 142,472,640.19 |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | Sales of cars and spare parts | 129,352,559.19 | 238,569,478.33 |
| Yunnan Xiangyu Auto Sales and Service Co., Ltd. | Sales of cars | 125,126,513.10 | 108,897,440.96 |
| Jiangling Holding Co., Ltd. | Sale of spare parts and providing service technical service | 108,745,038.01 | 95,243,193.28 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | Sale of spare parts and providing service | 82,883,629.96 | 1,843,499.57 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | Sales of spare parts and providing service | 31,641,044.87 | 15,123,607.10 |
| Nanning Wanyou Auto Sales and Service Co., Ltd. | Sales of cars | 32,422,600.95 | 61,999,048.73 |
| Chongqing Anfu Automobile Co., Ltd. | Sales of cars | 20,526,466.23 | 37,806,005.09 |
| Hangzhou Chelizi Intelligent Technology Co., Ltd. | Providing service | 16,714,615.80 | |
| China South Industry Group Finance Co., Ltd. | Providing service | 9,335,874.00 | 57,440,875.44 |
| Harbin Dongan Auto Engine Co., Ltd. | Sale of spare parts and provind service | 7,754,379.22 | 35,076,218.15 |
| Yunnan Xiyi Industries Co., Ltd. | Sale of spare parts | 6,605,219.44 | 7,277,992.45 |
| Chongqing Changan Kuayue Automobile Co., Ltd. | Sales of cars and spare parts | 6,483,396.23 | 4,377,088.40 |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | Sales of cars, spare parts and providing service | 2,295,518.58 | 30,161,181.98 |
| Sichuan Hongguang Machinery and Electrics Co., Ltd. | Sale of spare parts | 2,151,388.40 | 2,738,185.98 |
| Changan Mazda Automobile Co., Ltd. | Sale of spare parts and provind service | 1,095,230.99 | - |
| Kunming Wanling Automobile Sales & Service Co., Ltd. | Sales of cars | 1,754,335.49 | - |
| Chengdu Lingchuan Special Industry Co., Ltd. | Sale of spare parts | 311,546.13 | 4,708,798.64 |
| Related parties | Nature of the transaction | 2018 | 2017 |
| Chongqing Wanyou Ducheng Automobile Sales Service Co., Ltd. | Sales of cars | 196,879.96 | - |
| Chongqing Wanyou Xingjian Auto Sales & Service Co., Ltd. | Sales of cars | 177,344.51 | - |
| CSIA-Chongqing Tsingshan Transmission Branch | Providing service | 95,988.68 | 292,252.09 |
| Chongqing Changan Real Estate Development Co., Ltd. | Providing service | 62,735.85 | - |
| Luzhou Wanyou Automobile Service Co., Ltd. | Sales of cars | 58,264.92 | - |
| Chongqing Nexteer Steering System Co.,Ltd. | Providing service | 53,411.32 | - |
| Chongqing Jianshe Automobile Air-conditioner Co., Ltd. | Providing service | 49,056.61 | - |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | Sale of spare parts | 47,075.48 | 21,667.92 |
| Chongqing Changan Construction Co., Ltd. | Providing service | 33,018.87 | - |
| Changan Ford Mazda Engine Co., Ltd. | Providing service | 30,132.08 | - |
| Ya'an Wanyou Automobile Sales & Service Co., Ltd. | Sales of cars | 16,589.56 | - |
| Panzhihua Wanyou Automobile Sales & Service Co., Ltd. | Sales of cars | 11,045.54 | - |
| South Inter Air-conditioner Co, .Ltd. | Providing service | 4,708.49 | 11,931.13 |
| South Tianhe Chassis System Co., Ltd. | Providing service | 3,754.72 | 72,181.13 |
| Chengdu Wanyou Filter Co., Ltd. | Sale of spare parts | 3,754.72 | 48,120.75 |
| Sichuan Jian'an Industrial Co., Ltd | Providing service | 3,754.72 | - |
| Sichuan Ningjiang Shanchuan Machinery Co, Ltd. | Providing service | 3,754.72 | - |
| Chongqing Changrong Machinery Co., Ltd. | Providing service | 3,754.72 | - |
| Harbin Hafei Automobile Industry Group Co.,Ltd. | Providing technical service | - | 7,058,479.96 |
| Chengdu Huachuan Electric Equipment Co., Ltd. | Providing service and provding service | - | 140,610.18 |
| Chongqing Dajiang Xinda Vehicles Shares Co., Ltd. | Sale of spare parts | - | 50,513.21 |
| Hubei Xiaogan Huazhong Automobile Light Co., Ltd | Sale of spare parts | - | 4,722.22 |
| Chongqing Changfeng Jiquan Machinery Co., Ltd. | Providing service | - | 1,240.17 |
| Total | 6,058,514,386.87 | 6,688,996,745.45 |
The price of the Group’s sales to related parties is based on contracts agreed by all parties.
Other major related-party transactions
The price of the Group’s other major related-party transactions is based on contracts agreed by all parties.
Expenses of integrated service charges
| Related parties | Nature of the transaction | 2018 | 2017 |
| Changan Industries Group Co. Ltd. | Payment of utilities | 93,054,489.94 | 108,837,168.01 |
| Changan Industries Group Co. Ltd. | Payment of land rental fees | 28,534,520.71 | 26,975,981.43 |
| Changan Industries Group Co. Ltd. | Payment of building rental fees | 4,640,196.56 | 11,056,294.32 |
| Changan Industries Group Co. Ltd. | Others | 12,063,769.15 | 10,364,865.24 |
| Changan Industries Group Co. Ltd. | Payment of firefighting fees | - | 2,740,000.00 |
| Harbin Hafei Automobile Industry Group Co.,Ltd. | Intergrated service | - | 79,555,300.00 |
| Total | 138,292,976.36 | 239,529,609.00 |
Purchase of project materials
| Related parties | 2018 | 2017 |
| Chongqing Changan Construction Co., Ltd. | 559,607,524.21 | 429,275,229.02 |
| Chongqing Wanyou Construction Co., Ltd. | 49,273,687.28 | 68,047,748.98 |
| Total | 608,881,211.49 | 497,322,978.00 |
Staff expenses for technical supporting
| Related parties | 2018 | 2017 |
| Changan Ford Automobile Co., Ltd. | 46,422,643.97 | 42,372,915.44 |
| Changan Mazda Automobile Co., Ltd. | 21,299,423.79 | 21,187,776.74 |
| Changan Ford Mazda Engine Co., Ltd. | 16,698,952.77 | 16,318,922.12 |
| Chongqing Changan Kuayue Automobile Co., Ltd. | 4,592,281.32 | 2,784,811.32 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | 3,944,312.91 | 46,491,980.31 |
| Jiangling Holding Co., Ltd. | 640,737.47 | 1,497,727.68 |
| Changan PSA Automobiles Co., Ltd. | - | (1,424,129.38) |
| Chongqing Xiyi Automobile Linkage Rod Co., Ltd. | - | 281,990.59 |
| Total | 93,598,352.23 | 129,511,994.82 |
Capital occupied income
| Related parties | 2018 | 2017 |
| Chongqing Wanyou Economic Development Co., Ltd. | 894,864.11 | 501,588.89 |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | 559,068.24 | 81,722.22 |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | 414,834.46 | 659,937.61 |
| The Automobile Trade Service Co. Ltd. | 369,869.50 | 1,544,802.57 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | 353,401.43 | 1,118,742.73 |
| Wanyou Automobile Investment Co., Ltd. | 337,044.19 | 705,979.48 |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | 127,362.28 | 128,670.08 |
| Yunnan Xiangyu Auto Sales and Service Co., Ltd. | 46,192.24 | 14,478.64 |
| Nanning Wanyou Auto Sales and Service Co., Ltd. | 32,994.83 | 1,392.31 |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | 32,328.30 | - |
| Total | 3,167,959.58 | 4,757,314.53 |
Equity trading between related parties
| Related parties | Type of transaction | 2018 | 2017 |
| Southern Industrial Asset Management Co., Ltd. | Purchase of minority interests in subsidiaries (Note VII, 1) | 30,344,195.00 | - |
| Yunnan Xiyi Industries Co., Ltd. | Disposal the shares of joint venture | - | 7,069,600.00 |
| Changan Industries Group Co. Ltd. | Acquisition subsidiary’s minority stake | - | 1.00 |
(2) Lease between related parties
Rent assets to related parties
| Lessees | Type of leased assets | 2018 | 2017 |
| Jiangling Holding Co., Ltd. | Equipment | 8,799,965.67 | 1,889,756.41 |
| Changan Industries Group Co. Ltd. | Building | 6,566,747.42 | - |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | Building | 2,283,720.00 | 1,903,400.00 |
| Total | 17,650,433.09 | 3,793,156.41 |
Rent assets from related parties
| Lessors | Type of leased assets | 2018 | 2017 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | Storage | 12,081,172.58 | - |
| Chongqing Changan Real Estate Development Co., Ltd. | Office building and storage | 2,824,308.00 | 2,766,244.60 |
| Changan Industries Group Co. Ltd. | Land | 2,320,669.33 | 68,571.44 |
| Chongqing Changan Property Management Co., Ltd. | Building | 164,505.72 | 518,193.00 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | Storage | - | 734,293.28 |
| Harbin Hafei Automobile Industry Group Co., Ltd. | Land | - | 435,600.00 |
| Total | 17,390,655.63 | 4,522,902.32 |
(3) Deposits and loan interest from related parties
Deposits interest income
| Related party | Type of transaction | 2018 | 2017 |
| China South Industry Group Finance Co., Ltd. | Interest income | 74,940,739.77 | 76,630,292.88 |
| Changan Automobile Financing Co.,Ltd | Interest income | 62,300,000.00 | 39,150,000.00 |
| Total | 137,240,739.77 | 115,780,292.88 |
Loan interest expense
| Related party | Type of transaction | 2018 | 2017 |
| China South Industry Group Finance Co., Ltd. | Interest expense | 9,008,290.98 | 6,950,091.68 |
(4) Other related party transaction
| Item | 2018 | 2017 |
| Compensation of key management personal | 10,748,878.64 | 13,599,300.00 |
6. Amounts due from/to related parties
Notes receivable
| Related parties | 2018 | 2017 |
| Wanyou Automobile Investment Co., Ltd. | 1,588,720,000.00 | 2,676,220,000.00 |
| Chongqing Wanyou Economic Development Co., Ltd. | 9,050,000.00 | 2,000,000.00 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | 5,000,000.00 | 17,000,000.00 |
| Changan Ford Automobile Co., Ltd. | 2,128,658.11 | |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | - | 37,824,480.00 |
| The Automobile Trade Service Co. Ltd. | - | 16,900,000.00 |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | - | 2,000,000.00 |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | - | 1,500,000.00 |
| Total | 1,604,898,658.11 | 2,753,444,480.00 |
Accounts receivable
| Related parties | 2018 | 2017 |
| Jiangling Holding Co., Ltd. | 54,670,170.21 | 30,661,901.66 |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | 32,628,379.07 | 43,541,400.14 |
| Changan Ford Automobile Co., Ltd. | 26,562,801.86 | 22,529,864.32 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | 24,295,732.61 | - |
| Chongqing Changan Kuayue Automobile Co., Ltd. | 13,567,425.09 | 10,887,572.26 |
| Changan PSA Automobiles Co., Ltd. | 9,377,634.60 | 22,926,567.86 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | 8,494,704.49 | 4,700,833.08 |
| The Automobile Trade Service Co. Ltd. | 5,610,252.52 | 1,311,647.66 |
| Hangzhou Chelizi Intelligent Technology Co., Ltd. | 5,564,800.00 | - |
| Changan Mazda Automobile Co., Ltd. | 4,228,792.00 | 10,185,773.13 |
| Changan Automobile Financing Co.,Ltd. | 426,120.00 | - |
| Chongqing Wanyou Zunda Automobile Sales & Service Co., Ltd. | 65,804.25 | - |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 135,914,168.09 |
| Related parties | 2018 | 2017 |
| Changan Industries Group Co. Ltd. | - | 1,325,600.89 |
| Total | 185,492,616.70 | 283,985,329.09 |
Prepayments
| Related parties | 2018 | 2017 |
| Changan PSA Automobiles Co., Ltd. | 8,826,473.38 | - |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | 124,497.13 | - |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 295,474.25 |
| Total | 8,950,970.51 | 295,474.25 |
Other recievables
| Related party | 2018 | 2017 |
| Changan Ford Automobile Co., Ltd. | 124,312,677.99 | - |
| Harbin Hafei Automobile Industry Group Co., Ltd. | 1,500,000.00 | - |
| Harbin Dongan Auto Engine Co., Ltd. | 268,000.00 | 268,000.00 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | 47,975.40 | 123,793.03 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 40,784,896.53 |
| Total | 126,128,653.39 | 41,176,689.56 |
Notes payable
| Related parties | 2018 | 2017 |
| Harbin Dongan Auto Engine Co., Ltd. | 460,430,000.00 | 617,420,000.00 |
| Chongqing Changan Construction Co., Ltd. | 298,387,280.00 | 332,992,262.00 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | 221,925,743.41 | 198,023,651.37 |
| South Inter Air-conditioner Co, .Ltd. | 149,430,000.00 | 182,640,000.00 |
| CSIA-Chongqing Tsingshan Transmission Branch | 130,270,000.00 | 214,270,000.00 |
| Chongqing Dajiang Yuqiang Plastic Co., Ltd. | 127,940,000.00 | - |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | 112,940,000.00 | 479,180,000.00 |
| Chongqing Jianshe Automobile Air-conditioner Co., Ltd. | 50,060,000.00 | 27,120,000.00 |
| Chengdu Wanyou Filter Co., Ltd. | 23,950,000.00 | 14,960,000.00 |
| Southern Fojiya Auto Parts Co., Ltd. | 22,090,000.00 | |
| Hubei Xiaogan Huazhong Automobile Light Co., Ltd. | 13,860,000.00 | 9,950,000.00 |
| Sichuan Ningjiang Shanchuan Machinery Co, Ltd. | 9,160,000.00 | 20,580,000.00 |
| Sichuan Jian'an Industrial Co., Ltd | 8,650,000.00 | 5,910,000.00 |
| Chengdu Lingchuan Special Industry Co., Ltd. | 8,000,000.00 | 170,000.00 |
| Chongqing Changfeng Jiquan Machinery Co., Ltd. | 7,900,000.00 | 5,510,000.00 |
| Chengdu Jialing Huaxi Optical & Precision Machinery Co., Ltd. | 7,270,000.00 | 7,690,000.00 |
| Chongqing Yihong Engineering Plastic Products Co., Ltd. | 4,500,000.00 | 5,310,000.00 |
| Chengdu Huachuan Electric Equipment Co., Ltd. | 2,490,000.00 | 2,190,000.00 |
| Sichuan Hongguang Machinery and Electrics Co., Ltd. | 2,240,000.00 | 2,030,000.00 |
| Changan Ford Automobile Co., Ltd. | 1,749,094.40 | 65,536,197.82 |
| Longchang Shanchuan Shock-absorbing Vehicles Parts Co., Ltd. | 1,370,000.00 | - |
| Related parties | 2018 | 2017 |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | 1,150,000.00 | - |
| Chongqing Dajiang Jiexin Forging Co., Ltd. | 1,120,000.00 | - |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 189,532,516.13 |
| South Tianhe Chassis System Co., Ltd. | - | 1,370,000.00 |
| Chongqing Wanyou Construction Co., Ltd. | - | 52,786,747.00 |
| Chengdu Ningxing Automobile Spring Co., Ltd. | - | 1,110,000.00 |
| Total | 1,666,882,117.81 | 2,436,281,374.32 |
Accounts payable
| Related parties | 2018 | 2017 |
| Chongqing Nexteer Steering System Co.,Ltd. | 249,837,358.48 | 176,288,268.39 |
| Harbin Dongan Auto Engine Co., Ltd. | 161,417,419.68 | 345,797,944.98 |
| South Tianhe Chassis System Co., Ltd. | 106,558,182.07 | 199,363,707.33 |
| CSIA-Chongqing Tsingshan Transmission Branch | 104,125,292.03 | 207,968,397.78 |
| Sichuan Jian'an Industrial Co., Ltd | 80,657,220.16 | 117,078,608.55 |
| South Inter Air-conditioner Co, .Ltd. | 76,175,712.19 | 171,872,351.49 |
| Chongqing Wanyou Economic Development Co., Ltd. | 66,540,872.82 | 54,096,010.02 |
| Jiangling Holding Co., Ltd. | 53,715,373.73 | 191,084,011.75 |
| Chongqing Dajiang Yuqiang Plastic Co., Ltd. | 46,084,064.75 | 26,019,486.15 |
| Chongqing Dajiang Xinda Vehicles Shares Co., Ltd. | 45,780,498.50 | 30,253,807.17 |
| Harbin Dongan Automotive Engine Manufacturing Co., Ltd. | 44,767,814.32 | 155,247,645.33 |
| Southern Fojiya Auto Parts Co., Ltd. | 41,239,427.48 | |
| Chengdu Huachuan Electric Equipment Co., Ltd. | 33,208,038.95 | 4,332,585.36 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | 27,674,139.19 | 37,085,168.07 |
| Chongqing Jianshe Automobile Air-conditioner Co., Ltd. | 27,597,844.39 | 21,933,236.63 |
| Chengdu Ningjiang Zhaohe Automobile Components Co., Ltd. | 24,826,794.96 | 2,976,243.85 |
| Hubei Xiaogan Huazhong Automobile Light Co., Ltd. | 21,513,647.99 | 18,068,182.67 |
| Chengdu Wanyou Filter Co., Ltd. | 21,426,685.22 | 42,372,755.39 |
| Chengdu Lingchuan Vehicle Oil Tank Co., Ltd. | 17,663,383.80 | 25,415,872.54 |
| Sichuan Ningjiang Shanchuan Machinery Co, Ltd. | 17,161,138.52 | 5,527,769.06 |
| Chongqing Changfeng Jiquan Machinery Co., Ltd. | 9,917,256.01 | 14,806,992.88 |
| Longchang Shanchuan Shock-absorbing Vehicles Parts Co., Ltd. | 9,586,665.78 | 4,093,547.21 |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | 9,100,420.32 | 12,633,188.89 |
| Chengdu Lingchuan Special Industry Co., Ltd. | 8,664,902.18 | 3,626,071.14 |
| Yunnan Xiyi Industries Co., Ltd. | 6,535,900.15 | 5,574,383.25 |
| Chongqing Qingshan Transmission Sales Co., Ltd. | 5,262,876.71 | 548.02 |
| Changan Ford Automobile Co., Ltd. | 4,085,436.29 | 89,646,556.61 |
| Chengdu Jialing Huaxi Optical & Precision Machinery Co., Ltd. | 2,709,675.36 | 5,431,628.68 |
| Chongqing Changrong Machinery Co., Ltd. | 2,686,306.64 | 3,524,818.39 |
| Chongqing Yihong Engineering Plastic Products Co., Ltd. | 2,524,005.52 | 8,669,550.54 |
| Chongqing Changan Industries Group Co. Ltd. | 2,215,125.47 | 10,548,846.45 |
| Chongqing Changan Kuayue Automobile Co., Ltd. | 1,263,841.59 | 93,727,399.68 |
| Sichuan Hongguang Machinery and Electrics Co., Ltd. | 1,187,095.50 | 1,939,534.94 |
| Related parties | 2018 | 2017 |
| Harbin Hafei Automobile Industry Group Co.,Ltd. | 661,117.68 | 661,117.68 |
| Chongqing Dajiang Jiexing Forging Co., Ltd. | 282,878.46 | 605,591.85 |
| Chongqing Automobile Air-conditioner Co., Ltd. | 177,312.15 | 205,041.51 |
| Chongqing Changan Construction Co., Ltd. | 119,514.45 | 271,400.31 |
| Chongqing Jialing Yimin Special Equipment Co., Ltd. | 104,496.50 | 104,496.50 |
| Chengdu Guangming Tianzhong Environmental Protection Technology Co., Ltd. | 85,473.47 | 88,689.65 |
| Chongqing Xiyi Automobile Connecting Rod Co., Ltd. | 67,466.78 | 70,136.39 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 77,082,367.50 |
| Beijing Beiji Mechanical and Electrical Industry Co., Ltd. | - | 26,382.70 |
| Sichuan Jian'an Industrial Co., Ltd – Chengdu Jian'an Automobile Bridge Branch | - | 20,257.22 |
| Chengdu Ningxing Automobile Spring Co., Ltd. | - | 8,808,787.49 |
| Total | 1,335,208,676.24 | 2,174,949,387.99 |
Advances from customers
| Related parties | 2018 | 2017 |
| Chongqing Wanyou Economic Development Co., Ltd. | 30,602,220.89 | 147,992,787.85 |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | 24,770,462.88 | 93,966,433.63 |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | 23,961,768.86 | 149,605,982.46 |
| Chongqing Changan Kuayue Automobile Co.,Ltd. | 9,833,525.00 | - |
| China Changan Automobile Group Tianjin Sales Co., Ltd. | 7,694,948.94 | 8,262,589.55 |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | 6,741,068.88 | 56,027,446.21 |
| Chongqing Changan Industries Group Co. Ltd. | 5,289,712.91 | - |
| Changan Ford Mazda Engine Co., Ltd. | 3,347,884.03 | 3,202,789.69 |
| Chongqing Wanyou Zunda Automobile Sales & Service Co., Ltd. | 2,874,902.88 | - |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | 2,031,019.64 | 10,218,258.22 |
| Chongqing Anfu Automobile Co., Ltd. | 1,764,144.00 | 119,144.00 |
| The Automobile Trade Service Co. Ltd.(changed from Chengdu Wanyou Economic Technological Development Co., Ltd.) | 1,031,647.35 | 28,665,986.30 |
| Nanning Wanyou Auto Sales and Service Co., Ltd. | 1,000,769.87 | 3,049,999.16 |
| Yunnan Xiangyu Auto Sales and Service Co., Ltd. | 820,739.67 | 13,152,733.90 |
| Harbin Hafei Automobile Industry Group Co., Ltd. | 670,500.00 | 670,500.00 |
| Wanyou Automobile Investment Co., Ltd. | 394,254.00 | 33,392,271.43 |
| Kunming Wanling Automobile Sales & Service Co., Ltd. | 36,548.04 | - |
| Chongqing Shangfang Automobile Fittings Co., Ltd. | 3,980.00 | - |
| Dali Wanling Auto Sales & Service Co., Ltd. | 2,037.62 | - |
| Luzhou Wanyou Automobile Service Co., Ltd. | 121.00 | - |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | - | 361,998.32 |
| Southwest Ordnance Industry Corporation | - | 113,420.00 |
| South Inter Air-conditioner Co, .Ltd. | - | 4,991.00 |
| Total | 122,872,256.46 | 548,807,331.72 |
Other payables
| Related parties | 2018 | 2017 |
| Chongqing Changan Min Sheng Logistics Co., Ltd. | 105,930,160.43 | 159,507,227.79 |
| China South Industries Group Corporation | 29,580,000.00 | - |
| Changan PSA Automobiles Co., Ltd. | 26,007,857.90 | - |
| Chongqing Changan Construction Co., Ltd. | 13,471,837.97 | 23,746,341.39 |
| Chongqing Changan Industries Group Co. Ltd. | 8,784,882.05 | 4,841,997.36 |
| Related parties | 2018 | 2017 |
| Chongqing Changan Property Management Co., Ltd. | 2,252,567.36 | 2,470,202.68 |
| Chongqing Wanyou Zunda Automobile Sales & Service Co., Ltd. | 550,000.00 | - |
| CSIA-Chongqing Tsingshan Transmission Branch | 439,120.00 | - |
| Chongqing Changan Real Estate Development Co., Ltd. | 277,907.42 | - |
| Guizhou Wanyou Auto Sales and Service Co., Ltd. | 218,604.28 | 159,500.00 |
| Chongqing Anfu Automobile Co., Ltd. | 200,000.00 | 100,000.00 |
| Changan Ford Mazda Engine Co., Ltd. | 144,115.79 | 144,115.79 |
| Chengdu Wanyou Filter Co., Ltd. | 120,000.00 | 120,000.00 |
| Chongqing Wanyou Economic Development Co., Ltd. | 111,551.22 | 450,057.20 |
| Chengdu Wanyou Xiangyu Auto Sales and Service Co., Ltd. | 75,330.00 | - |
| Chongqing Dajiang Xinda Vehicles Shares Co., Ltd. | 50,000.00 | - |
| South Inter Air-conditioner Co, .Ltd. | 35,844.50 | - |
| Yunnan Wanyou Auto Sales and Service Co., Ltd. | 26,100.00 | 182,607.80 |
| Harbin Hafei Automobile Industry Group Co., Ltd. | - | 640,668.85 |
| Chongqing Changan Suzuki Automobile Co., Ltd. | - | 330,432.00 |
| The Automobile Trade Service Co. Ltd.(changed from Chengdu Wanyou Economic Technological Development Co., Ltd.) | - | 191,979.64 |
| Guangxi Wanyou Auto Sales and Service Co., Ltd. | - | 150,000.00 |
| Chongqing Wanyou Construction Co., Ltd. | - | 2,278,297.00 |
| Total | 188,275,878.92 | 195,313,427.50 |
7. Cash deposited in related party
| Related party | 2018 | 2017 |
| China South Industry Group Finance Co., Ltd. | 3,312,617,903.21 | 4,449,345,493.13 |
| Changan Automobile Financing Co.,Ltd | 1,000,000,000.00 | 1,500,000,000.00 |
| Total | 4,312,617,903.21 | 5,949,345,493.13 |
In 2018, deposit rates in related party are 0.35% to 3.915%, deposit terms are 0 to 12 months. (in 2017, deposit ratewas 0.35% to 3.915%, terms are 0 to 12 months.)
X Related party relationships and transactions
8. Loans from related parties
Short-term loans
| Related parties | 2018 | 2017 |
| China South Industry Group Finance Co., Ltd. | 190,000,000.00 | 175,000,000.00 |
Refer to Note V 18 for the details of the interest rates of the short-term loan.
XI Share-based payments
1. General information
| 2018 | 2017 | |
| The total amount of the employee services as a result of the share-based payments | 23,961,900.00 | 32,697,000.00 |
The equity settled share based payments are as follows:
| 2018 | 2017 | |
| The accumulated amount of equity settled share-based payments included in capital reserve | 23,961,900.00 | 32,697,000.00 |
| The amount of equity settled share-based payments included in current year expense | (8,735,100.00) | 18,981,100.00 |
2. Share-based payment scheme
On 23 September 2016, the share option was approved to be granted on 23 September 2016 by the 12th meeting ofthe seventh session of the Board of Directors and the 8th meeting of the seventh session of Board of Supervisors.According to the share option scheme, the Company granted 29,140,000 options to 202 employees, conferringrights to purchase 1 A share of Changan Automobile for each option before the expiration date. Share options aregranted to directors, chief executive officers and key technical and management personnel.
The share option will expire in 5 years. After the vesting period of 24 month since the grant date, the option shallbe exercised in three periods. In each exercise period, 1/3 of the total options could be exercised when theprescribed performance conditions are met. The exercise price is RMB13.478 per share. The options granted shallbe exercised before the expiration date. The share should not be exercised unless the prescribed conditions are met.The exercisable shares not exercised in above periods will be written off by the Company.
The performance indicators of the share option includes:
(1) Return on equity (ROE)
(2) Net profit growth rate attributable to owners(3) Economic value added (EVA), and(4) The ratio of prime operating revenue to operating revenue
The above net profit and ROE are based on net profit and weighted average net assets attributable to ownersdeducting non-recurring gains and losses.
The exercise terms of share options:
| Exercise Period | Exercise Ratio | Exercise Time | Exercise Terms |
| The 1st exercise period | 1/3 | The 1st trading day since 24 month after the grant date to the last trading day since 36 month after the grant date | ROE≥15% The above indicators≥benchmark average, and ≥75 quartile △EVA>0; The ratio of prime operating revenue to operating revenue≥95% |
| The 2nd exercise period | 1/3 | The 1st trading day since 36 month after the grant date to the last trading day since 48 month after the grant date | ROE≥15% The above indicators≥benchmark average, and ≥75 quartile △EVA>0; The ratio of prime operating revenue to operating revenue≥95% |
| The 3rd exercise period | 1/3 | The 1st trading day since 48 month after the grant date to the last trading day since 60 month after the grant date | ROE≥15% The above indicators≥benchmark average, and ≥75 quartile △EVA>0; The ratio of prime operating revenue to operating revenue≥95% |
2. Share-based payment scheme (continued)
The fair value of the equity-settled share option is determined using Black-Scholes model based on the estimate inaccordance with the terms and conditions of the share options. The input variables are as follows:
| Valuation factors | 23 September 2016 |
| Dividend rate (%) | 0% |
| Expected volatility (%) | 29.78% |
| Historical volatility (%) | 29.78% |
| Risk-free rate (%) | 2.4987% |
| Expected duration (year) | 4 |
| Share price as at the grant date (yuan) | 15.43 |
The expected duration of the option is based on the historical data of the past, which is not necessarily reflected inthe exercise of the right in future. The expected volatility is based on the assumption that the historical volatilityreflects the future trend, but not necessarily the actual results.
On the date of granting, the fair value of share options granted amounted to RMB139,527,600. Due the fact thatthe first and second prescribed performance conditions of the share option is not achieved and 19 employees haveterminated the labor contract with the company and were no longer granted the options, the Board of Directors ofthe Company approved to cancel 20,330,000 shares of the share option. After cancellation, the number of the stockoption issued by the company under the plan is 8,810,000 with the fair value of RMB42,183,885.90.
XII Contingencies and commitments
1. Commitments
Contracted, but not provided for
| Item | 2018 | 2017 |
| Capital commitments | 18,178,474,088.33 | 16,723,740,000.00 |
| Investment commitments | 1,600,000,000.00 | 49,000,000.00 |
2. Contingencies
As at 31 December 2018, no material contingencies needed to be disclosed.
XIII Events after the balance sheet date
1. The dividends after balance sheet date
| Profits or dividends to be allocated | Refer to Note V 36. |
2. Other events after the balance sheet date
XIV Other important event
1. Leasing arrangements
According to the lease contracts signed with the lessor, the minimum leases payments under non-cancellable leasesare as follows:
On 15 March 2019, according to the resolution of the 48th meeting of the seventh board of directors, the board ofdirectors approved the proposal for the establishment of Nanjing Leadership Equity Investment Partnership(Limited Partnership). The company intends to invest RMB 1.6 billion, accounting for 16.39%, as a limitedpartner. As of the approval date of the financial statement, the above investment has not been completed.
As of the approval date of financial statement, no other significant event after balance sheet date was noted.Item
| Item | 2018 | 2017 |
| Less than 1 year (including 1 year) | 21,731,575.60 | 15,795,702.31 |
| 1 to 2 years (including 2 years) | 18,988,604.18 | 5,067,570.60 |
| 2 to 3 years (including 3 years) | 14,221,234.39 | 7,038,573.12 |
| Over 3 years | 3,844,972.29 | 2,583,750.00 |
| Total | 58,786,386.46 | 30,485,596.03 |
2. Segment report
| The Group identifies operating segments based on the internal organization structure, managerial requirements and internal reporting system, and identifies reportable segments based on operating segments and discloses segment information by operating segment. An operating segment is a component of the Group that meets all the following conditions: (1) it engages in business activities from which it may earn revenues and incur expenses; (2) its operating results are regularly reviewed by the Company’s management to make decisions about resources to be allocated to the segment and assess its performance; and (3) the Group is able to obtain relevant accounting information such as its financial position, operating results and cash flows. If two or more segments have similar economic characteristics and meet certain conditions, they can be aggregated into a single operating segment. The revenue and profit of the Group mainly consist of the automobile manufacturing and domestic sales. The Group’s principal assets are in China. The operating performance of the Group has been evaluated as a whole by the management. So the segment report has not been prepared for this year. |
3. Comparative Data
As stated in Note III 32, according to the Notice on Revising and Issuing Format of 2018 Annual FinancialStatements for General Business Enterprises (Cai Kuai [2018] No.15) and the MOF's Interpretation of RelatedIssues on Format of 2018 Annual Financial Statements for General Business Enterprises, the accounting treatment,presentation and amount of a certain number of items in the financial statements have been revised to meet the newrequirements. Accordingly, the data for 2017 have been adjusted, and the comparative data for 2017 have beenre-classified and restated to ensure the presentation and accounting treatments are in conformity with therequirements for current year.
XV Notes to the Company’s financial statements
1. Notes Receivable and Accounts Receivable
| 2018 | 2017 | |
| Notes Receivable | 19,391,160,283.70 | 29,010,848,480.70 |
| Accounts Receivable | 5,679,160,679.69 | 4,991,996,591.00 |
| Total | 25,070,320,963.39 | 34,002,845,071.70 |
(1) Classification of Notes Receivable
| 2018 | 2017 | |
| Commercial Acceptance Bill | 6,045,651,669.20 | 8,797,054,230.70 |
| Bank Acceptance Bill | 13,345,508,614.50 | 20,213,794,250.00 |
| Total | 19,391,160,283.70 | 29,010,848,480.70 |
(2) On December 31, 2018, no bank pledges were issued for the issuance of bills payable.( December 31, 2017,
Nil)
(3) The notes receivable that have been endorsed or discounted but have not expired on the balance sheet date
are as follows:
| 2018 | 2017 | |||
| Termination confirmation | Not confirmed | Termination confirmation | Not confirmed | |
| Bank acceptance bill | 685,573,750.00 | - | 1,012,669,140.00 | - |
(4) On December 31, 2018, the amount of notes converted into accounts receivable due to the inability of the
drawer to perform was RMB 22,574,581 (December 31, 2017: Nil).
Accounts Receivable
(1) Aging analysis of accounts receivable as at 31 December 2018 is as follows:
| Aging | 2018 | 2017 |
| Within 1 year | 3,595,148,552.67 | 3,184,481,577.60 |
| 1 to 2 years | 1,225,896,003.03 | 1,508,834,126.68 |
| 2 to 3 years | 616,246,477.50 | 201,227,844.24 |
| Over 3 years | 257,429,428.54 | 110,700,935.91 |
| Total | 5,694,720,461.74 | 5,005,244,484.43 |
| Provision | (15,559,782.05) | (13,247,893.43) |
| 5,679,160,679.69 | 4,991,996,591.00 |
Movements of provision for accounts receivable are as follows:
| Beginning | Addition | Reduction | Ending Balance | ||
| Reversal | Write-off | ||||
| 2018 | 13,247,893.43 | 2,311,888.62 | - | - | 15,559,782.05 |
| 2017 | 11,776,256.96 | 1,471,636.47 | - | - | 13,247,893.43 |
(2) Analysis of the accounts receivable by category as at 31 December 2018 is as follows:
| Item | 2018 | 2017 | ||||||
| Balance | Provision | Balance | Provision | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Individually significant items and analyzed individually for provision | 74,433,396.10 | 1.31 | - | - | - | - | - | - |
| Accounts receivable analyzed as groups for provision | ||||||||
| Group 1. Accounts receivable analyzed for provision according to aging analysis | 50,150,446.67 | 0.88 | 15,559,782.05 | 31.03 | 336,704,741.88 | 6.73 | 13,247,893.43 | 3.93 |
| Group 2. Accounts receivable from related parties | 5,570,136,618.97 | 97.81 | - | - | 4,668,539,742.55 | 93.27 | - | - |
| Group subtotal | 5,620,287,065.64 | 98.69 | 15,559,782.05 | 0.28 | 5,005,244,484.43 | 100 | 13,247,893.43 | 0.26 |
| Individually insignificant items but analyzed individually for provision | - | - | - | - | - | - | - | - |
| Total | 5,694,720,461.74 | 100 | 15,559,782.05 | 0.27 | 5,005,244,484.43 | 100 | 13,247,893.43 | 0.26 |
In groups, accounts receivable were analyzed for provision by aging:
| Aging | 2018 | 2017 | ||||
| Balance | Provision | Balance | Provision | |||
| Amount | % | Amount | % | |||
| Within 6 months | 13,595,739.51 | 27.11 | - | 308,058,891.27 | 91.50 | - |
| 6 to 12 months | 26.00 | 0.00 | 1.30 | 11,052,418.43 | 3.28 | 552,620.92 |
| Within 1 year subtotal | 13,595,765.51 | 27.11 | 1.30 | 319,111,309.70 | 94.78 | 552,620.92 |
| 1 to 2 years | 19,562,282.40 | 39.00 | 1,956,228.24 | 5,432,400.00 | 1.61 | 543,240.00 |
| 2 to 3 years | 4,838,400.00 | 9.65 | 1,451,520.00 | 2,836.67 | 0.00 | 851.00 |
| 3 to 4 years | - | - | - | 14,028.00 | 0.00 | 7,014.00 |
| 4 to 5 years | 9,831.25 | 0.02 | 7,865.00 | - | - | - |
| Over 5 years | 12,144,167.51 | 24.22 | 12,144,167.51 | 12,144,167.51 | 3.61 | 12,144,167.51 |
| Total | 50,150,446.67 | 100.00 | 15,559,782.05 | 336,704,741.88 | 100.00 | 13,247,893.43 |
In groups, accounts receivable were analyzed for provision with other methods:
| Group | 2018 | 2017 | ||
| Balance | Provision | Balance | Provision | |
| Accounts receivable from related parities | 5,570,136,618.97 | - | 4,668,539,742.55 | - |
As at 31 December 2018, there was no individually significant items but analyzed individually for provision (2017:
Nil).
(3) For the year ended 2018, no provision for accounts receivable has been reversed (2017: RMB
Nil).
(4) For the year ended 2018, no write-offs for accounts receivable provision (2017: RMB Nil ).
(5) As at 31 December 2018, accounts receivable from top 5 clients amounted to
RMB4,575,962,128.25, accounted for 80.35% of the total amount (2017：
RMB3,973,737,026.11, accounted for 79.39% of the total amount).
(6) There is no accounts receivable derecognized due to transference of financial assets during
2018 (2017: Nil).
2. Other receivables
| 2018 | 2017 | |
| Interest Receivable | 17,432,805.54 | 42,184,263.88 |
| Other Receivables | 2,326,885,353.29 | 1,723,723,602.89 |
| Total | 2,344,318,158.83 | 1,765,907,866.77 |
Interest Receivable
| 2018 | 2017 | |
| Interest on deposits | 17,432,805.54 | 42,184,263.88 |
Other receivables
(1) Aging analysis of other receivables as at 31 December 2018 is as follows:
| Aging | 2018 | 2017 |
| Within 1 year | 1,924,149,413.17 | 1,683,813,894.71 |
| 1 to 2 years | 377,568,132.71 | 26,899,001.97 |
| 2 to 3 years | 14,030,436.00 | 6,170,910.10 |
| Over 3 years | 11,740,802.81 | 7,928,129.93 |
| Total | 2,327,488,784.69 | 1,724,811,936.71 |
| Provision | (603,431.40) | (1,088,333.82) |
| Net Value | 2,326,885,353.29 | 1,723,723,602.89 |
Movements of provisions for other receivables are as follows:
| Opening Balance | Addition | Deduction | Ending Balance | ||
| Reversal | Write-off | ||||
| 2018 | 1,088,333.82 | - | 484,902.42 | - | 603,431.40 |
| 2017 | 995,559.54 | 92,774.28 | - | - | 1,088,333.82 |
(2) Analysis of other receivables by category as at 31 December 2018 is as follows:
| Item | 2018 | 2017 | ||||||
| Balance | Provision | Balance | Provision | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Individually significant items and analyzed individually for provision | 1,720,350,524.62 | 73.91 | - | - | 1,127,509,417.42 | 65.37 | - | - |
| Other receivables analyzed as groups for provision | ||||||||
| Group 1. Other receivables analyzed for provision according to aging analysis | 118,981,025.65 | 5.12 | 603,431.40 | 0.51 | 125,520,423.39 | 7.28 | 1,088,333.82 | 0.87 |
| Group 2. Other receivables from related parties | 488,157,234.42 | 20.97 | - | - | 471,782,095.90 | 27.35 | - | - |
| Group subtotal | 607,138,260.07 | 26.09 | 603,431.40 | 0.10 | 597,302,519.29 | 34.63 | 1,088,333.82 | 0.18 |
| Individually insignificant items but analyzed individually for provision | - | - | - | - | - | - | - | - |
| Total | 2,327,488,784.69 | 100 | 603,431.40 | 0.03 | 1,724,811,936.71 | 100 | 1,088,333.82 | 0.06 |
In groups, other receivables were analyzed for provision by aging:
| Aging | 2018 | 2017 | ||||
| Balance | Provision | Balance | Provision | |||
| Amount | % | Amount | % | |||
| Within 6 months | 113,310,739.93 | 95.23 | - | 119,053,084.31 | 94.85 | - |
| 6 to 12 months | 5,233,386.34 | 4.40 | 261,669.32 | 5,512,392.58 | 4.39 | 275,619.62 |
| Within 1 year subtotal | 118,544,126.27 | 99.63 | 261,669.32 | 124,565,476.89 | 99.24 | 275,619.62 |
| 1 to 2 years | 65,703.03 | 0.06 | 6,570.30 | 76,250.15 | 0.06 | 7,625.02 |
| 2 to 3 years | - | - | - | 48,000.00 | 0.04 | 14,400.00 |
| 3 to 4 years | 34,672.34 | 0.03 | 17,336.17 | 80,014.34 | 0.06 | 40,007.17 |
| 4 to 5 years | 93,342.00 | 0.08 | 74,673.60 | - | - | - |
| Over 5 years | 243,182.01 | 0.20 | 243,182.01 | 750,682.01 | 0.60 | 750,682.01 |
| Total | 118,981,025.65 | 100 | 603,431.40 | 125,520,423.39 | 100 | 1,088,333.82 |
(3) For the year ended 2018, the amount of other receivables transferred back to the provision
for bad debts was RMB484,902.42 (2017: Nil).
(4) For the year ended 2018, there was no write-off for other receivable provision (2017:Nil ).
(5) Analysis of other receivables by nature is as follows:
| Nature | 2018 | 2017 |
| Energy-saving and new energy subsidy | 1,667,483,759.60 | 1,080,007,000.00 |
| Technical royalties | 3,935,124.21 | 179,848,570.43 |
| Disposal income of assets | 119,142,595.23 | 137,053,901.49 |
| Loans to third parties | 200,000,000.00 | 124,782,800.00 |
| Pretty cash | 83,196,870.08 | 92,067,567.52 |
| Others | 253,127,004.17 | 109,963,763.45 |
| Total | 2,326,885,353.29 | 1,723,723,602.89 |
(6) As at 31 December 2018, top five debtors of other receivables are as follows:
| Debtors | Amount | Aging | Proportion of total other receivables (%) | Ending balance of provision |
| First | 1,667,483,759.60 | Within 4years | 71.64 | - |
| Second | 200,000,000.00 | Within 1 year | 8.59 | - |
| Third | 124,312,677.99 | Within 1 year | 5.34 | - |
| Forth | 68,155,043.85 | Within 1 year | 2.93 | - |
| Fifth | 21,593,411.66 | 1 to 2 year | 0.93 | - |
| Total | 2,081,544,893.10 | 89.43 | - |
(7) There is no other receivables derecognized due to transfer of financial assets during 2018 (2017: Nil).
3. Long-term investments
2018
| Investee | Opening Balance | Addition | Deduction | Investment income/loss nder equity method | Other comprehensive income | Other movements of equity | Dividend of cash declared | Other deduction | Provision | Ending Balance of book value | Ending Balance of provision |
| Joint ventures | |||||||||||
| Chongqing Changan Suzuki Automobile Co., Ltd. | 1,190,705,710.43 | - | - | (595,756,652.13) | - | - | - | (594,949,058.30) | - | - | - |
| Jiangling Holding Co., Ltd. | 2,907,749,943.37 | - | - | (409,453,173.08) | (706,228.88) | (3,835,625.88) | - | - | - | 2,493,754,915.53 | - |
| Changan Ford Automobile Co., Ltd. | 4,125,426,104.20 | - | - | (415,641,597.09) | - | - | - | - | - | 3,709,784,507.11 | - |
| Changan Mazda Automobile Co., Ltd. | 2,439,429,811.02 | - | - | 1,263,196,852.39 | - | - | (1,230,000,000.00) | - | - | 2,472,626,663.41 | - |
| Changan Ford Mazda Engine Co., Ltd. | 903,838,395.08 | - | - | 38,465,362.88 | - | - | (114,500,000.00) | - | - | 827,803,757.96 | - |
| Automobiles Co., Ltd. | 93,561,126.76 | 1,800,000,000.00 | - | (437,042,058.02) | - | - | - | - | - | 1,456,519,068.74 | - |
| Changan Weilai New Energy Automobile Technology Co., Ltd. | - | 49,000,000.00 | - | (4,934,486.09) | - | - | - | - | - | 44,065,513.91 | - |
| Subtotal | 11,660,711,090.86 | 1,849,000,000.00 | - | (561,165,751.14) | (706,228.88) | (3,835,625.88) | (1,344,500,000.00) | (594,949,058.30) | - | 11,004,554,426.66 | - |
| Associates | |||||||||||
| Chongqing Changan Kuayue Automobile Co., Ltd. | 101,399,892.43 | - | - | 28,908,342.54 | - | - | (13,720,000.00) | - | - | 116,588,234.97 | - |
| Chongqing Changan Kuayue Automobile Sales Co., Ltd. | - | - | - | - | - | - | - | - | - | - | - |
| Beijing Fang’an taxi Co., Ltd. | - | - | - | - | - | - | - | - | - | - | - |
| Changan Automobile Financing Co.,Ltd | 1,817,669,991.73 | - | - | 212,947,165.68 | - | - | - | - | - | 2,030,617,157.41 | - |
| Zhenjiang Demao Hairun equity investment Co., Ltd. | 518,742,921.95 | - | - | (239,867.54) | 77,231,613.62 | - | - | (595,734,668.03) | - | - | - |
| Hainan Anxinxing Information Technology Co., Ltd. | - | 6,000,000.00 | - | (463,444.79) | - | - | - | - | - | 5,536,555.21 | - |
| Nanjing Chelai Travel Technology Co., Ltd. | - | 2,000,000.00 | - | (186,383.86) | - | - | - | - | - | 1,813,616.14 | - |
| Hunan Guoxin Semiconductor Technology Co., Ltd. | - | 25,000,000.00 | - | - | - | - | - | - | - | 25,000,000.00 | - |
| Subtotal | 2,437,812,806.11 | 33,000,000.00 | - | 240,965,812.03 | 77,231,613.62 | - | (13,720,000.00) | (595,734,668.03) | - | 2,179,555,563.73 | - |
| Subsidiaries |
| Investee | Opening Balance | Addition | Deduction | Investment income/loss nder equity method | Other comprehensive income | Other movements of equity | Dividend of cash declared | Other deduction | Provision | Ending Balance of book value | Ending Balance of provision |
| Nanjing Changan Automobile Co., Ltd. | 422,533,259.00 | - | - | - | - | - | - | - | - | 422,533,259.00 | - |
| Hebei Changan Automobile Co., Ltd. | 438,223,236.00 | - | - | - | - | - | - | - | - | 438,223,236.00 | - |
| Chongqing Changan International Automobile Sales Co., Ltd. | 13,068,581.00 | - | - | - | - | - | - | - | - | 13,068,581.00 | - |
| Chongqing Changan Automobile supporting service Co., Ltd. | 29,700,000.00 | - | - | - | - | - | - | - | - | 29,700,000.00 | - |
| Chongqing Changan Connected Car Technology Co., Ltd. | 88,500,000.00 | - | - | - | - | - | - | - | - | 88,500,000.00 | - |
| Chongqing Changan Automobile sales subsidiaries | 3,150,000.00 | - | (3,150,000.00) | - | - | - | - | - | - | - | - |
| Chongqing Changan Special Automobile sales Co., Ltd. | 2,500,000.00 | - | - | - | - | - | - | - | - | 2,500,000.00 | - |
| Chongqing Changan Europe Design Academy Co., Ltd. | 155,469,913.50 | - | - | - | - | - | - | - | - | 155,469,913.50 | - |
| Chongqing Changan new Engergy Automobile Co. Ltd. | 18,850,000.00 | 30,344,195.00 | - | - | - | - | - | - | - | 49,194,195.00 | - |
| Changan United Kingdom R&D Center Co., Ltd. | 236,387,395.40 | - | - | - | - | - | - | - | - | 236,387,395.40 | - |
| Beijing Changan R&D Center Co., Ltd. | 1,000,000.00 | - | - | - | - | - | - | - | - | 1,000,000.00 | - |
| Harbin Changan R&D Center Co., Ltd. | 1,000,000.00 | - | (1,000,000.00) | - | - | - | - | - | - | - | - |
| Shanghai Changan R&D Center Co., Ltd. | 1,000,000.00 | - | (1,000,000.00) | - | - | - | - | - | - | - | - |
| Changan Japan Designing Center Co., Ltd. | 1,396,370.15 | - | - | - | - | - | - | - | - | 1,396,370.15 | - |
| Changan United States R&D Center Co., Ltd. | 10,243,460.00 | - | - | - | - | - | - | - | - | 10,243,460.00 | - |
| Hebei Baoding Changan Bus Co., Ltd. | 176,002,613.18 | - | - | - | - | - | - | - | - | 176,002,613.18 | - |
| Hefei Changan Automobile Company Ltd. | 35,367,765.23 | - | - | - | - | - | - | - | - | 35,367,765.23 | - |
| Changan Automobile Russia Co., Ltd. | 1,242,589.15 | - | - | - | - | - | - | - | - | 1,242,589.15 | - |
| Changan Brazil Holdings Limited | 2,584,556.97 | - | - | - | - | - | - | - | - | 2,584,556.97 | - |
| Changan Automobile Investment (Shenzhen) Co., Ltd. | 50,000,000.00 | 98,000,000.00 | - | - | - | - | - | - | - | 148,000,000.00 | - |
| Investee | Opening Balance | Addition | Deduction | Investment income/loss nder equity method | Other comprehensive income | Other movements of equity | Dividend of cash declared | Other deduction | Provision | Ending Balance of book value | Ending Balance of provision |
| Nanjing Changan New Energy Automobile Sales & Service Co., Ltd. | - | 50,000,000.00 | - | - | - | - | - | - | - | 50,000,000.00 | - |
| Fuzhou Fuqing Changan New Energy Automobile Sales Co., Ltd. | - | 2,000,000.00 | - | - | - | - | - | - | - | 2,000,000.00 | - |
| Xiamen Changan New Energy Automobile Sales & Service Co., Ltd. | - | 2,000,000.00 | - | - | - | - | - | - | - | 2,000,000.00 | - |
| Guangzhou Changan New Energy Automobile Sales & Service Co., Ltd. | - | 4,000,000.00 | - | - | - | - | - | - | - | 4,000,000.00 | - |
| Chongqing Changan New Energy Automobile Technology Co., Ltd. | - | 1,238,742,571.54 | - | - | - | - | - | - | - | 1,238,742,571.54 | - |
| Changan Suzuki Automobile Co., Ltd. | - | 594,949,059.30 | - | - | - | - | - | - | - | 594,949,059.30 | - |
| Zhenjiang Demao Hairun Equity Investment Fund Partnership (Limited Partnership) | - | 1,129,922,044.91 | - | - | - | - | - | - | - | 1,129,922,044.91 | - |
| Subtotal | 1,688,219,739.58 | 3,149,957,870.75 | (5,150,000.00) | - | - | - | - | - | - | 4,833,027,610.33 | - |
| Total | 15,786,743,636.55 | 5,031,957,870.75 | (5,150,000.00) | (320,199,939.11) | 76,525,384.74 | (3,835,625.88) | (1,358,220,000.00) | (1,190,683,726.33) | - | 18,017,137,600.72 | - |
2017
| Investee | Opening Balance | Addition | Deduction | Investment income/loss nder equity method | Other comprehensive income | Other movements of equity | Dividend of cash declared | Provision | Ending Balance of book value | Ending Balance of provision |
| Joint ventures | ||||||||||
| Chongqing Changan Suzuki Automobile Co., Ltd. | 1,230,836,876.85 | (42,413,558.40) | - | 2,282,391.98 | - | 1,190,705,710.43 | - | |||
| Jiangling Holding Co., Ltd. | 2,991,207,303.06 | (86,461,777.56) | (248,641.80) | 3,253,059.67 | - | 2,907,749,943.37 | - | |||
| Changan Ford Automobile Co., Ltd. | 5,663,808,819.68 | 6,039,117,284.52 | - | - | (7,577,500,000.00) | 4,125,426,104.20 | - | |||
| Changan Mazda Automobile Co., Ltd. | 2,146,340,500.42 | 1,268,089,310.60 | - | - | (975,000,000.00) | 2,439,429,811.02 | - | |||
| Changan Ford Mazda Engine Co., Ltd. | 908,715,700.67 | 119,122,694.41 | - | - | (124,000,000.00) | 903,838,395.08 | - | |||
| Automobiles Co., Ltd. | 647,839,655.26 | (554,278,528.50) | - | - | - | 93,561,126.76 | - | |||
| Subtotal | 13,588,748,855.94 | - | - | 6,743,175,425.07 | (248,641.80) | 5,535,451.65 | (8,676,500,000.00) | - | 11,660,711,090.86 | - |
| Associates | ||||||||||
| Chongqing Xiyi Automobile Linkage Rod Co., Ltd. | 7,556,448.42 | - | (6,005,819.20) | (1,550,629.22) | - | - | - | - | - | - |
| Chongqing Changan Kuayue Automobile Co., Ltd. | 83,406,464.16 | - | - | 17,993,428.27 | - | - | - | - | 101,399,892.43 | - |
| Chongqing Changan Kuayue Automobile Sales Co., Ltd. | - | - | - | - | - | - | - | - | - | - |
| Beijing Fang’an taxi Co., Ltd. | - | - | - | - | - | - | - | - | - | - |
| Changan Automobile Financing Co.,Ltd | 1,063,655,241.51 | 650,000,000.00 | - | 95,278,795.38 | - | 8,735,954.84 | - | - | 1,817,669,991.73 | - |
| Zhenjiang Demao Hairun equity investment fund partnership (limited partnership) | - | 518,743,029.48 | - | (107.53) | - | - | - | - | 518,742,921.95 | - |
| Subtotal | 1,154,618,154.09 | 1,168,743,029.48 | (6,005,819.20) | 111,721,486.90 | - | 8,735,954.84 | - | - | 2,437,812,806.11 | - |
| Subsidiaries | ||||||||||
| Nanjing Changan Automobile Co., Ltd. | 422,533,259.00 | - | - | - | - | - | - | - | 422,533,259.00 | - |
| Hebei Changan Automobile Co., Ltd. | 438,223,236.00 | - | - | - | - | - | - | - | 438,223,236.00 | - |
| Chongqing Changan International Automobile | 13,068,580.00 | 1.00 | - | - | - | - | - | - | 13,068,581.00 | - |
| Sales Co., Ltd. | ||||||||||
| Chongqing Changan Automobile supporting service Co., Ltd. | 29,700,000.00 | - | - | - | - | - | - | - | 29,700,000.00 | - |
| Chongqing Changan Connected Car Technology Co., Ltd. | 88,500,000.00 | - | - | - | - | - | - | - | 88,500,000.00 | - |
| Chongqing Changan Automobile sales subsidiaries | 5,600,000.00 | - | (2,450,000.00) | - | - | - | - | - | 3,150,000.00 | - |
| Chongqing Changan Special Automobile sales Co., Ltd. | 2,500,000.00 | - | - | - | - | - | - | - | 2,500,000.00 | - |
| Chongqing Changan Europe Design Academy Co., Ltd. | 155,872,524.00 | (402,610.50) | - | - | - | - | - | - | 155,469,913.50 | - |
| Chongqing Changan new Engergy Automobile Co. Ltd. | 18,850,000.00 | - | - | - | - | - | - | - | 18,850,000.00 | - |
| Changan United Kingdom R&D Center Co., Ltd. | 236,387,395.40 | - | - | - | - | - | - | - | 236,387,395.40 | - |
| Beijing Changan R&D Center Co., Ltd. | 1,000,000.00 | - | - | - | - | - | - | - | 1,000,000.00 | - |
| Harbin Changan R&D Center Co., Ltd. | 1,000,000.00 | - | - | - | - | - | - | - | 1,000,000.00 | - |
| Shanghai Changan R&D Center Co., Ltd. | 1,000,000.00 | - | - | - | - | - | - | - | 1,000,000.00 | - |
| Changan Japan Designing Center Co., Ltd. | 1,396,370.15 | - | - | - | - | - | - | - | 1,396,370.15 | - |
| Changan United States R&D Center Co., Ltd. | 1,317,720.00 | 8,925,740.00 | - | - | - | - | - | - | 10,243,460.00 | - |
| Hebei Baoding Changan Bus Co., Ltd. | 176,002,613.18 | - | - | - | - | - | - | - | 176,002,613.18 | - |
| Hefei Changan Automobile Company Ltd. | 35,367,765.23 | - | - | - | - | - | - | - | 35,367,765.23 | - |
| Changan Automobile Russia Co., Ltd. | 1,242,589.15 | - | - | - | - | - | - | - | 1,242,589.15 | - |
| Changan Brazil Holdings Limited | 2,584,556.97 | - | - | - | - | - | - | - | 2,584,556.97 | - |
| Shenzhen Changan New Energy Automobile Service Co., Ltd. | 50,000,000.00 | - | - | - | - | - | - | - | 50,000,000.00 | - |
| Subtotal | 1,682,146,609.08 | 8,523,130.50 | (2,450,000.00) | - | - | - | - | - | 1,688,219,739.58 | - |
| Total | 16,425,513,619.11 | 1,177,266,159.98 | (8,455,819.20) | 6,854,896,911.97 | (248,641.80) | 14,271,406.49 | (8,676,500,000.00) | - | 15,786,743,636.55 | - |
4. Operating revenue and cost
(1) Operating revenue, operating cost
| Item | 2018 | 2017 | ||
| Revenue | Cost | Revenue | Cost | |
| Primary Operation | 60,779,233,113.82 | 53,517,880,999.83 | 75,808,523,264.79 | 68,132,068,016.71 |
| Other Operation | 2,600,231,648.38 | 991,067,244.30 | 1,949,953,122.72 | 600,493,843.34 |
| Total | 63,379,464,762.20 | 54,508,948,244.13 | 77,758,476,387.51 | 68,732,561,860.05 |
(2) Revenue listed by products are as follows:
| Item | 2018 | 2017 | ||
| Revenue | Cost | Revenue | Cost | |
| Sales of goods | 63,173,489,211.84 | 54,268,833,774.82 | 77,539,745,872.67 | 68,427,035,082.82 |
| Outsourcing processing | 205,975,550.36 | 240,114,469.31 | 218,730,514.84 | 305,526,777.23 |
| Total | 63,379,464,762.20 | 54,508,948,244.13 | 77,758,476,387.51 | 68,732,561,860.05 |
5. Investment income
(1) Details of investment income
| Item | 2018 | 2017 |
| Long-term equity investment income under cost method | 628,650,000.00 | - |
| Long-term equity investment income under equity method | (320,199,939.11) | 6,854,896,911.97 |
| Investment income during holding period of available-for-sale financial assets | 51,133,446.15 | 50,364,239.43 |
| Others | 23,539,707.32 | 2,802,352.95 |
| Total | 383,123,214.36 | 6,908,063,504.35 |
(2) Available-for-sale financial assets under cost method
| Investee | 2018 | 2017 |
| Cash dividend received from China South Industry Group Finance Co., Ltd. | 48,909,006.75 | 46,814,239.43 |
| Guolian Automotive Power Battery Research Institute Co., Ltd. | 449,438.20 | - |
| Total | 49,358,444.95 | 46,814,239.43 |
(3) Long-term equity investment income under equity method
| Investee | 2018 | 2017 | Reason for the fluctuation |
| Changan Ford Automobile Co., Ltd. | (415,641,597.09) | 6,039,117,284.52 | Decrease in profit due to sales derease |
| Changan Mazda Automobile Co., Ltd. | 1,263,196,852.39 | 1,268,089,310.60 | |
| Chongqing Changan Suzuki Automobile Co., Ltd. | (595,756,652.13) | (42,413,558.40) | Decrease in profit due to sales derease |
| Changan Ford Mazda Engine Co., Ltd. | 38,465,362.88 | 119,122,694.41 | Decrease in profit due to sales derease |
| Jiangling Holding Co., Ltd. | (409,453,173.08) | (86,461,777.56) | Decrease in profit due to sales derease |
| Chongqing Xiyi Automobile Linkage Rod Co., Ltd. | - | (1,550,629.22) | Decrease in profit due to sales derease |
| Changan PSA Automobiles Co., Ltd. | (437,042,058.02) | (554,278,528.50) | Decrease in profit due to low sales |
| Chongqing Changan Kuayue Automobile Co.,Ltd. | 28,908,342.54 | 17,993,428.27 | Increase in profit due to sales expansion |
| Changan Automobile Financing Co.,Ltd | 212,947,165.68 | 95,278,795.38 | Increase in profit due to sales expansion |
| Zhenjiang Demao Hairun equity investment fund partnership (limited partnership) | (239,867.54) | (107.53) | |
| Changan Weilai New Energy Automobile Technology Co., Ltd. | (4,934,486.09) | - | Early establishment, operating loss |
| Hainan Anxinxing Information Technology Co., Ltd. | (463,444.79) | - | Early establishment, operating loss |
| Nanjing Chelai Travel Technology Co., Ltd. | (186,383.86) | - | Early establishment, operating loss |
| Total | (320,199,939.11) | 6,854,896,911.97 |
1. Schedule of non-recurring profit and loss
| Item | 2018 |
| Gain and loss arising from disposal of non-current assets (including writing-off of accrued impairment loss on assets) | 8,561,074.73 |
| Government grants (excluding the grants closely related to enterprise business, which the Group enjoyed according to the allotment standards or quantitative criteria of the country) | 2,873,192,102.56 |
| The investment cost of the enterprise to obtain subsidiaries, joint ventures and joint ventures is less than the gain from the fair value of the identifiable net assets of the investee when the investment is obtained. | 1,020,821,274.01 |
| Other non-operating income and expenses | 29,303,167.73 |
| Capital occupied income from non-financial entities | 48,285,737.46 |
| Effect on income tax | (82,007,701.31) |
| Effect on minority shareholders (after tax) | (52,356,990.94) |
| Total | 3,845,798,664.24 |
Note: the non-recurring profit and loss were presented with amount before tax.
The Group disclosed non-recurring profit and loss items in accordance with the regulations issued by China Security RegulationCommission, No 1 Regulation of Information Disclosure of Public Companies-Non-recurring Profit and Loss <CSRC 2008(43)>
2. Return on equity and earnings per share
2018
| Profit | Weighted average return on equity (%) | Earnings per share | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to the Company’s ordinary shareholders | 1.45 | 0.14 | N/A |
| Net profit attributable to the Company’s ordinary shareholders after deducting non-recurring profit and loss | (6.75) | (0.66) | N/A |
2017
| Profit | Weighted average return on equity (%) | Earnings per share | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to the Company’s ordinary shareholders | 15.65 | 1.49 | N/A |
| Net profit attributable to the Company’s ordinary shareholders after deducting non-recurring profit and loss | 12.53 | 1.19 | N/A |
In accordance with the regulations issued by China Security Regulation Commission, Regulation of Information Disclosure of PublicCompanies—the Calculation and Disclosure of Return of Net Assets and Earning per Share (2010 Revision), the Group disclosed thereturn of net assets and earnings per share in the reporting period.
Chapter 11 Documents for Future Reference
1. Financial reports with signatures and stamps of the legal representative, the chief accountant and the chief ofaccounting organization.
2. The original copy of audit report with the stamp of the CPA firm and the signature and stamp of the CertifiedPublic Accountant.
3. All the original documents and manuscripts of the Company which has been disclosed in the reporting period inthe newspapers designated by China Securities Regulatory Commission.
Annual reports disclosed in other securities markets.
Chairman of the Board: General Manager:
Mr.Zhang Baolin Mr. Zhu Huarong
Chongqing Changan Automobile Co., Ltd.
23 April, 2019