Chongqing Changan Automobile Company Limited 2007 Annual Report I. Important notes and contents: Important notes The Board of Directors& Supervisors of Chongqing Changan Automobile Co., Ltd. (hereinafter referred to as “the Company”) , the directors, supervisors and senior management guarantee that the information contained in the annual report is free of false records, misguiding statements or significant omissions, and assume individual and joint liabilities for the truthfulness, accuracy and integrity of the annual report. No director has raised any disagreement with regard to the truthfulness, accuracy and completeness of the report. Directors absent from the meeting. Name of the Director Reasons for the absence Name of the consignee Wang Tingwei On Business Cui Yunjiang Xia Donglin On Business Gao Zhikai Wen Zongyu On Business Gao Zhikai The auditor of the Company, ERNST&YOUNG DA Ha Certified Public Accountants issued an unqualified audit report. Chairman Mr. Yin Jiaxu, General Manager Mr. Zhang Baolin,Chief Accountant Mr. Cui Yunjiang, and the Chief of Accountant department, Mr. Ni Erke, herein guarantee: guarantee the truthfulness and completeness of the financial statements of this semi-annual report. The report shall be presented in both Chinese and English, and should there be any conflicting understanding of the text, the Chinese version shall prevail. Content I. Important notes and contents 1 II. General Introduction to the Company 2 III. Extracts of Accounting and Operating Data 3 IV. Changes in Shareholdings and Information about Shareholders 6 V. Information about Directors, Supervisors, Senior Management and Employees 11 VI. Corporate Governance Structure 20 VII. Shareholders’ general meeting 27 VIII. Report by Board of Directors 28 IX. Report by Board of Supervisors 39 X. Important Issues 41 1 XI. Financial Statements 50-145 XII. Documents for Inspection 146 2 II. General Introduction to the Company 1. The Company’s legal Chinese name: 重庆长安汽车股份有限公司 The Company’s legal English name: Chongqing Changan Automobile Company Limited 2. Legal representative of the Company: Mr. Yin Jiaxu 3. Secretaries of the Board: Mr. Cui Yunjiang, Ms. Li Jun Address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing Telephone: (023) 67594009 Fax: (023) 67866055 Email address: [email protected] 4. Registered address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing Post code: 400023 Office Address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing Post code: 400023 Internet Website of the Company: http://www.changan.com.cn Email Address of the Company: [email protected] 5. Publications for information disclosure of the Company: China Securities, Securities Daily and Hong Kong Business Website for information disclosure of the Company: http://www.cninfo.com.cn Annual Report preparation: Office of the Board of Directors 6. Place of listing: Shenzhen Stock Exchange Abbreviated name of the stock: Changan Automobile Changan B Stock Code: 000625 200625 7. The Company was first registered on: October 31, 1996 Registered Address: No. 309, Nan Cheng Road, Nan An District, Chongqing Date of change in registration: September 27, 2004 Registered Address: No. 260, Jian Xin East Road, Jiang Bei District, Chongqing Business license number: Yu Zi 5000001805570 Taxation registration number: State Taxation Chong Zi 51021120286320X, Di Shui Zi 500112736570882 The name and address of the accounting firm for the reporting year: CPA firm: ERNST&YOUNG DA Ha CPA Address: 23th Floor Jingan District changle road No. 989 the centry commercing building the Shanghai. 3 III. Extracts of Accounting and Operating Data 1.The Company’s accounting data for the current year (RMB thousand): Sales profit 686,913,712 Total profit 653,939,067 Net profit of attributing to listed company shareholder s 666,893,972 Attribute to listed company shareholder net profit except unusual loss and profit 667,475,926 Net cash flow for sales 487,637,714 Cash and working things profit -216,626,380 Remarks : except unusually profit and loss project and cash Profit and loss arising from the disposal of non-current assets -18,807,055 Government grants 12,936,000 Donation expenditure on public welfare -2,881,743 Gain from penalty 1,149,228 Others -371,866 Effect of the non-recurring profit and loss on income tax 355,684 net effect on the profit and loss attributable to minority shareholders 7,037,798 TOTAL -581,954 2.Reconciliation of the net profits presented under the PRC accounting standards and International Financial Reporting Standards (“IFRS”) (RMB thousand) Accountant difference adjustment list Nov.31,2007 2007annual Net assets Net profits Workout accountant according to the enterprise accounting rule and 7,573,068,688 666,893,972 syatem under the PRC Adjustment of according to international accounting rules 1.Reduce corporation income tax on the basis of purchasing national -107,627,396 -64,980,591 equipments 2.Payment to currency shareholders of A share cash opposite price -71,284,065 Workout accountant according to the international finance report rules 7,394,157,227 601,913,381 3.Key accounting data and financial indicators of the recent three years 2006 2007 Before After 2005 adjustment adjustment Sales income 13,722,299,143 25,675,344,365 12,153,773,038 19,168,549,598 Total profit 653,939,067 861,099,955 503,800,840 365,759,322 Net profit of attributing to listed company shareholder 666,893,972 646,749,740 519,444,805 236,750,289 Attribute to listed company shareholder net profit except 667,475,926 661,805,091 515,011,929 228,720,842 unusual loss and profit net Cash flow for sales 487,637,714 2,113,850,121 720,095,715 1,361,892,206 Net Cash flow for per share 0.25 1.30 0.26 0.84 2006 end 2007 2005 end end Before After adjustment adjustment 14,352,917,72 Total assets 23,232,141,014 14,458,964,646 18,651,497,629 3 All right (for shareholder rights ) 7,573,068,688 7,306,779,344 6,972,513,900 6,731,716,798 Net per profit of attributing to listed company shareholders 3.89 4.51 3.58 4.15 Remarks:Not adjust 2005 data according to the new accounting rules 4 4 .According to China securities supviser commette <<NO . 9 open securities company information >> in reporting period assets net profit rate and profit per share. 2006 2007 Before After 2005 adjustment adjustment Basic profit per share 0.34 0.40 0.27 0.15 Reduct per profit 0.34 0.40 0.27 0.15 Basic profit per share except unusually profit and loss share 0.34 0.41 0.26 0.14 Apportion net profit rate 8.81% 8.85% 7.70% 3.52% Average net profit rate 9.20% 9.24% 7.70% 3.49% Apportion net profit rate except unusually profit and loss 8.81% 9.06% 7.39% 3.40% Average net profit rate except unusually profit and loss 9.22% 9.46% 7.63% 3.37% Remarks:Not adjust 2005 data according to the new accounting rules 5 IV. Changes in Shareholdings and Information about Shareholders 1. Changes in shareholdings (Unit:: share) (1).Changes in shareholdings (Unit:: share) Balance before current Addition and Deduction Balance after change change Quantity Rate Additional Bonus Transfer Others Subtotal Quantity Rate issued share from accumulated fund I. non-circulated 738,270,724 45.55% 147,654,146 -4658 147,649,488 885,920,212 45.55 shares % 1. State-owned shares 2. State-owned 738,255,200 45.55% 147,651,040 147,651,040 885,906,240 45.55 legal person % shares 3. Other domestic- 15,524 3,106 -4658 -1,552 13,972 holding shares , including: Domestic legal person shares Domestic natural 15,524 3,106 -4658 -1,552 13,972 person shares 4. Foreign-hold shares, including: Foreign legal person shares Foreign natural person shares II. Circulated 882,578,476 54.45% 176,515,694 4658 176,520,352 1,059,098,828 54.45 shares % 1. Domestic listed 462,578,476 28.54% 92,515,694 4658 92,520,352 555,098,828 28.54 RMB shares % 2.Domestic listed 420,000,000 25.91% 84,000,000 84,000,000 504,000,000 25.91 foreign shares % 3.Overseas listed foreign shares 4. Others III. Total shares 1,620,849,200 100% 324,169,840 324,169,840 1,945,019,040 100% Note: Domestic natural person shares refer to shares held by the Directors. (2) .Listing schedule of non-circulated shares: Shareholder name Non-circulated Non-circulated Additional non- Non-circulated Reason Date shares in early this shares this year circulated shares at the year shares end of year CHINA SOUTH INDUSTRY 36,912,760 7,382,552 44,295,312 acceptance 5.11,2008 AUTOMOBILE COMPANY LIMITED CHINA SOUTH INDUSTRY 36,912,760 7,382,552 44,295,312 acceptance 5.11,2009 AUTOMOBILE COMPANY 6 LIMITED CHINA SOUTH INDUSTRY 664,429,680 132,885,936 797,315,616 acceptance 5.11,2010 AUTOMOBILE COMPANY LIMITED YunJiaxu 6,653 1,996 1331 5,988 holding 5.18,2007 WangChongsheng 6,653 1,996 1,331 5,998 holding 5.18,2007 RenQiang 2,218 666 444 1,996 holding 5.18,2007 Total 738,270,725 4,658 147,654,146 888,920,212 2.Issue and Listing of Shares (1) Share issue in the three years up to the year of the report: (2) In the reporting period, our company come out 2006 profit plan. The basis of total shares 1,620,849,200 on 31th Dec. 2006, donating 2 share, gaving interest 0.6 RMB (including tax). All the shareholders gets the agreement at 2006 sharehold meeting on 15th May 2007.