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长安汽车: 2007年年度报告（英文版）
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Chongqing Changan Automobile
Company Limited
2007 Annual Report
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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
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XI. Financial Statements 50-145
XII. Documents for Inspection 146
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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: cazqc@changan.com.cn
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: cazqc@changan.com.cn
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.
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III. Extracts of Accounting and Operating Data
1.The Company’s accounting data forthe 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 netprofit 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 taxon 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
Before After 2005 end
end
adjustment adjustment
Total assets 14,352,917,72
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
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4 .According to China securities supviser commette <> 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
0.34 0.41 0.26 0.14
share
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
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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
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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 interest0.6 RMB (including tax). All the shareholders gets the agreement at 2006 sharehold
th th nd
meeting on 15 May 2007. A share interest rights registrate date is 29 Jun.2007, Ex. Right and ex.dividend date is 2
th nd th
Jul,2007.B share final dealing date is 29 Jun, 2007, ex dividend date is 2 Jul, 2007, registry date is 4 Jul 2007,the total
assets up to 1,945,019,040.
3.Information about the shareholders
(1) The ten largest shareholders information
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Total number of shareholders Totaled 127,105, of which 95,360were A share shareholders and 31,745 were B share shareholders.
The ten largest shareholders
Non-circulated
Name of shareholders Nature of % of total Shares held at shares held at the Pledged/ Frozen
Shareholders shares the year-end shares
year-end
CHINA SOUTH INDUSTRY
State-owned 45.55% 885,906,240 885,906,240 0
AUTOMOBILE COMPANY LIMITED
CREDIT SUISSE (HONG KONG) Foreign 3.27% 63,522,278
LIMITED
CMBLSA RE FTIF TEMPLETON ASIAN
Foreign 1.93% 37,612,561 0 Unknown
GRW FD GTI5496
YULONG SECURITIES INVESTMENT Unknown
other 1.45% 28,242,088 0
FUND
BANK OF COMMUNICATIONS—BOSHI Unknown
XINYE AFFUENCE SHARES TYPE other 1.18% 22,999,877 0
INVESTMENT FUND
Unknown
BOSHI VALUE ADDED SECURITIES other 1.13% 21,999,346 0
INVESTMENT FUND
INDUSTRIAL AND COMMERCIAL BANK Unknown
OF CHINA –JINSHUN GREE WALL
SEPARATION FINANCIAL SHARES other 0.81% 15,819,876 0
TYPE SECURITIES INVESTMENT
FUND
XINGYE BANK COMPANY LIMITED – Unknown
XINGYE TREND INVESTMENT MIX
TYPE SECURITIES INVESTMENT other 0.72% 14,045,323 0
FUND
CONSTRUCTION BANK OF CHINA – Unknown
TAITA HOLLAND BANK MARKET
VALUE SEPARATION SHARES TYPE other 0.72% 14,003,138 0
SECURITIES INVESTMENT FUND
INDUSTRIAL AND COMMERCIAL BANK Unknown
OF CHINA –YIFANGDA VALUE
AFFUENCE MIX TYPE SECURITIES Other 0.71% 13,873,432 0
INVESTMENT FUND
The ten largest circulated shareholders
Name of shareholders Shares at the year end Type of shares
CREDIT SUISSE (HONG KONG) LIMITED 63,522,278 RMB Ordinary share
CMBLSA RE FTIF TEMPLETON ASIAN GRW
FD GTI5496 37,612,561 RMB Ordinary share
YULONG SECURITIES INVESTMENT FUND 28,242,088 RMB Ordinary share
BANK OF COMMUNICATIONS—BOSHI
XINYE AFFUENCE SHARES TYPE 22,999,877 RMB Ordinary share
INVESTMENT FUND
BOSHI VALUE ADDED SECURITIES
INVESTMENT FUND 21,999,346 RMB Ordinary share
INDUSTRIAL AND COMMERCIAL BANK OF
CHINA –JINSHUN GREE WALL SEPARATION
FINANCIAL SHARES TYPE SECURITIES 15,819,876 RMB Ordinary share
INVESTMENT FUND
XINGYE BANK COMPANY LIMITED –XINGYE
TREND INVESTMENT MIX TYPE 14,045,323 RMB Ordinary share
SECURITIES INVESTMENT FUND
CONSTRUCTION BANK OF CHINA –TAITA
HOLLAND BANK MARKET VALUE
SEPARATION SHARES TYPE SECURITIES 14,003,138 RMB Ordinary share
INVESTMENT FUND
INDUSTRIAL AND COMMERCIAL BANK OF
CHINA –YIFANGDA VALUE AFFUENCE MIX 13873,432 RMB Ordinary share
TYPE SECURITIES INVESTMENT FUND
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BANK OF CHINA—JINSHUN GREAT WALL
HIGH PROFIT SHARES TYPE OPEN 13,765,485 RMB Ordinary share
SECURITIES INVESTMENT FUND
Among the largest ten share holders, the state-owned legal person shareholder China South Industry
Automobile Co., Ltd. had no relationship with other share holders, and nor was the party who agreed to act
alike as stipulated inAdministrative Measures on Information Disclosure Concerning Changes in
Explanation on the relationship and the action Shareholdings of Listed Companies. The company did not know whether there was relationship among
alike of above shareholders
the large ten circulated shareholders , and nor knew whether they were the parties who agreed to act alike
as stipulated inAdministrative Measures on Information Disclosure Concerning Changes in
Shareholdings of Listed Companies.
2. The controlling shareholder
Controlling shareholder: China South Industry Automobile Co.Ltd
Legal representative: Xu Bin
th
Date of establishment: Dec 26 , 2005
Registered capital: RMB 4,582,373,700 Yuan
Business scope and major products: Automobile, motorcycle, Engine of automobile and motorcycle, designing, development,
manufacture, and sales of automotive and motor cycle components and 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.
3.The ultimate parent of the controlling shareholder
The ultimate parent of the Company: China South Industries Group Corp.
Legal representative: Xu Bin
Date of establishment: June 29, 1999
Registered capital: RMB 12,645,210,000 Yuan
Business scope and major products: investment and management of state-owned assets; manufacturing of guns and firearms;
engineering prospecting, designing, construction, contracting, construction supervision; equipment installation, etc.
4.Relationship among the Company and its controlling shareholders:
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State-owned Assets Supervision and
Administration Commission of the State
C
100%
China South Industries Group Corp
100%
China South Industry Automobile Co.Ltd
45.55%
Chongqing Changan Automobile Co., Ltd.
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V. Information about Directors, Supervisors, Senior Management and Employees
1.Information about directors, supervisors and senior management
Name Position Term of office Shares held at Shares a
tReasons for
Gender Age
year-beginning year-end change
Yin Jiaxu Chairman M 51 2006.05-2009.05 6,653 6,653 Distributed shares
Xu Liuping Vice Chairman, M 43 2006.05-2009.05 0 0
Zhang Baolin Director, General M 0
manager 45 2006.05-2009.05 0
Deng Tengjiang Director M 51 2006.05-2009.05 0 0
Wang Tingwei Director M 36 2006.05-2009.05 0 0
Deng Zhiyou Director M 44 2006.05-2009.05 0 0
Wang Chongsheng Director M 49 2006.05-2009.05 6,653 7,984 Share out bonus
Zou Wenchao Director, Executive Vice M 0
President of Changan 44 2006.05-2009.05 0
Ford Mazda Automobile
Co.
Ma Jun Director M 48 2006.05-2009.05 0 0
Cui Yunjiang Director, Senior Deputy M 0
General Manager, Board 44 2006.05-2009.05 0
Secretary
Guo Konghui Independent Director M 72 2006.05-2009.05 0 0
Xia Donglin Independent Director M 46 2006.05-2009.05 0 0
Gao Zhikai Independent Director M 45 2006.05-2009.05 0 0
Wen Zongyu Independent Director M 44 2006.05-2009.05 0 0
Liu Wei Independent Director M 43 2006.05-2009.05 0 0
Shi Yubao Organizer of the Board of M 0
Supervisors 54 2006.05-2009.05 0
Cui Xiaomei Supervisor F 52 2006.05-2009.05 0 0
Cao Dongping Supervisor F 54 2006.05-2009.05 0 0
Xiong Huilin Supervisor F 48 2006.05-2009.05 0 0
Zhu Zhiping Supervisor M 45 2006.05-2009.05 0 0
Hua zhanbiao Supervisor M 40 2006.05-2009.05 0 0
Fu Xiangyu Supervisor F 52 2006.05-2009.05 0 0
Ying Zhanwang Senior Deputy General M 0
Manager 48 2006.05-2009.05 0
Zhu Huarong Senior Deputy General M 0
Manager 42 2006.05-2009.05 0
Huang Zhongqiang Senior deputy general M 0
manager 39 2006.05-2009.05 0
Zou Yi Senior Deputy General M 0
manager 44 2006.05-2009.05 0
Ren Qiang Senior Deputy General M 2,662 Share out bonus
manager 47 2006.05-2009.05 2,218
Song Jia Senior Deputy General M 0
manager 42 2006.05-2009.05 0
Luo Minggang Senior Deputy General M 0
manager 44 2006.05-2009.05 0
ZhangZhao Deputy general manager M 39 2008.01-2009.05 0 0
Li Jun Board Secretary F 38 2006.05-2009.05 0 0
Note: Positions of the Directors and Supervisors in the shareholder companies are as below:
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Name Shareholder Company Position Term of office
Yin Jiaxu China South Industry Automobile Co., Ltd Executive Director, President 2005.12-
Executive Director, Senior Vice
Xu Liuping China South Industry Automobile Co., Ltd President 2005.12-
Deng Tengjiang 2005.12-
China South Industry AutomobileCo., Ltd Non-executive Director 2007.1.5
Deng Zhiyou China South Industry Automobile Co.,Ltd Executive Director, Vice President 2005.12-
Wang Tingwei 2005.12-
China South Industry Automobile Co., Ltd Executive Director 2007.1.5
Zhang Baolin China South Industry Automobile Co., Ltd Executive Director 2007.1-
2.Major work experiences and positions in entities other than the share holder of the Directors, Supervisors and the senior
management:
(1) Directors
Mr. Yin Jiaxu, Board Chairman, was born in 1956. With a master’s degree, he is a researcher and senior engineer. He used
to be Manager of Yuzhou Gear Factory, Director of the Administrative Office and Deputy General Director of South-west
Industries Bureau of China Industries Company, andVice Chairman of the Board, Deputy General Manager ，General
Manager of CAC and the Secretary of Party Committee.. He currently holds the positions of Vice General Manager and
Deputy Secretary of Party Committee of China South Industries Group, Executive Board Director and President of China
South Industry Automobile Co., Ltd,
Mr. Xu Liuping, Vice Board Chairman, was born in 1964. With a doctor’s degree, he is a researcher and senior engineer. He
used to be Vice Director of Planning department, Director of Automobile department and Assistant of General manager
in China South Industries Group Corp. He currently holdsthe positions of Deputy General Manager, Member of the
Party Committee of China South Industries Group Corp, and Executive Director, Senior Vice President of China South
Industry Automobile Co, Ltd, President and Secretary of the Party Committee of CAC, and Senior Deputy General
Manager of the Company.
Mr. Zhang Baolin, Director and General Manager, was born in 1962, he has obtained a postgraduate degree, a senior
economist. 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 theParty Committee of Chongqing Changfeng Machinery Factory,
Senior Deputy General Manager and General Manager ofChengdu Wanyou Company, Director and Vice President of
CAC, and Senior Deputy General Manager of the Company.
Mr. Deng Tengjiang, Director, was born in 1956. He has obtained a post-graduate degree and professorship and used to be
Department Head and School Vice Dean at Chongqing Industries College. He also used to be Vice General Manager
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of North Industry Finance Co. of China Industries Company, Vice General Director of South-west Industries Bureau in
China South Industries Group Corp., and Vice General Manager, General Manager of Jianshe Industries Group Corp,
and Director of the Audit Department of China South Industries Group Corp. He currently serves as Director of Financial
department in China South Industries Group Corp, and Non-Executive Director of China South Industry Automobile Co.,
Ltd.
Mr. Wang Tingwei, Director, was born in 1971. He has a doctor’s degree and the title of Senior Accountant. He used to be
Vice Director of Financial department in Administration and Management Bureau of China North Industries (Group)
Company, and Section chief and Vice Director of Financial department in China South Industries Group Corp. He
currently serves as Director of Capital operating department in China South Industries Group Corp, Executive Director
and Vice President of China South Industry Automobile Co. ,Ltd, and General Manager of China South Industries Estate
Management Company.
Mr. Deng Zhiyou, Director, was born in 1963. He has a Master’s Degree in Engineering, EMBA, is a senior engineer. He
used to serve as Workshop Director, Assistant to Plant director, Chief Finance Officer, Vice Director of Plant, Deputy
General Manager, and General Manager of Chongqing Qsingshan Industries Co.,Ltd., Vice Director and Director of
Business Operation Department, Director of South-west Department, Director of Automobile Department of China South
Industries Group Corp. He currently serves as Executive Director , Vice President and General manager of
Management Department of China South Industries Automobile Ltd.Co., Director, Board Chairman , Secretary of
Party Committee and General Manager of Taiyuan South Heavy Vehicle Ltd. Co.
Mr. Wang Chongsheng, Director, is a senior economist with post-graduate qualifications. Born in 1958, he used to be
Secretary of the League Committee of Changan Machinery Factory, Vice Secretary of the Party Committee and
Secretary of the Discipline Committee of 5023 Factory, Head of Marketing Department of the Automobile Bureau in
China Industries Company, Director of the General Manager’s Office of CAC. Currently he is Vice President and Vice
Secretary of the Party Committee of CAC.
Mr. Zou Wenchao, Director, and Executive Vice President of Changan Ford Mazda Automobile Co. He has a Master’s
Degree in Engineering, is a senior engineer. Born in 1963, he used to serve as Vice Director of Workshop No.22 and
Vice Director of Vehicle Development Institute in Jiangling Machinery Factory, Vice Director of Planning Department of
Automobile Bureau in China Industries Company, Section Chief and Vice Director of Planning Department , Assistant to
General Manager, Vice President of CAC and Secretary of Party Committee.
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Mr. Ma Jun, Director, was born in 1959. He has obtained master’s degree in engineering and is a senior engineer. He used to
be Vice Head of the Technical Department of Changan Machinery Factory, Head of the Technical Department Two,
Head of the Standardized Information Department, Vice Director of the General Administration Office, Assistant to
President, Director of the General Administration Office, Deputy Director and Director of the Information Center of CAC.
He currently serves as Vice President, Director of the Information Center of CAC.
Mr. Cui Yunjiang, Director, Senior Deputy General Manager,Board Secretary and Controller of Finance Department, was
born in 1963. He has obtained master’s degree and is a senioraccountant. He used to be Vice Director of the Finance
Department of Changan Machinery Factory, Director of the Finance Department of Changan Suzuki Automobile
Company, Director of the Securities Department, and Director of Finance Department.
Mr. Guo Konghui, Independent Director, was born in 1935. He used to be Chief Engineer of Changchun Automobile
Research Academy, and Vice President of Jilin Industries University. He is currently Honorary Dean of the Automobile
School of Jilin University, Director of National Key Laboratory of Automotive Dynamic Simulations at Jilin University,
Deputy Chairman of China Association of Automobile Manufacturers, Member of China Academy of Engineering,
Professor, and Tutor of doctor.
Mr. Xia Donglin, Independent Director, was born in 1961. He hasdoctor’s degree and is a certified public accountant. He used
to be tutor and vice-professor at Jiangxi University of Finance and Economics, Manager of China Consultants of
Accounting and Financial Management Company, and Directorof Accounting Department at School of Economics and
Management, Tsinghua University. He is currently professor and tutor of doctor of Economics and Management School
at Tsinghua University.
Mr. Gao Zhikai, the Independent Director, has a doctor’s degree of Law from Yale University， was born in 1962, he is the
Senior Vice President of PCCW China, Secretary, Chief Consulter of Laws, and the international director of the Asia
Association. He used to serve as executive director in HongKong telecom Yingke(China) Co. Ltd., the vice president in
Morgenstanley Investment Bank, Counsellor about Chineseaffairs of Hongkong Security and Futures Commission,
and Executive President of China Finance Investment Company .He is currently the General Manager of Board of
Houpu Investment and Management Company, Chairman of China Association for International Relation and the
International Chairman of Asia Association and the Law Consultant of China Mayor Association
Mr. Wen Zongyu, Independent Director, was born in 1963. He has obtained doctor’s degree and used to work in the State-
owned Assets Management Bureau, State-owned Assets Allocation Optimization Research Center of the Ministry of
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Finance and Financial Science Research Institute of Ministry of Finance. He is currently Director of the State-owned
Economy Department of Financial ScienceResearch Institute of Ministry of Finance, primarily involved in the research
areas of planning and management of budget of the State-ownedCapital, stated owned enterprise reformation, modern
property right management, capital operation, enterprise combination and group financial risk control. He has twelve
research papers and over three hundred articles which hasbeen published and with words more than six million. He also
had acquired the certificate of listed company Independent Director in October 2001.
Mr. Liu Wei, Independent Director, was born in 1964. He hasa doctor’s degree and used to work as tutor, Department Head
Assistant, Vice Dean and vice professor at Chongqing University. He is currently professor and tutor of doctor at
Chongqing University involved in strategy management, technical innovations and management studies. He is the
Independent Director of Chongqing Jianfeng Chemical Joint- stock Company .
(2) Supervisors
Mr. Shi Yubao, Organizer of the Board of Supervisors, was born in 1953. He has obtained master’s degree and is a senior
economist. He used to be Vice Director of the Party Council Office of CAC, and Secretary of the Party Committee,
Deputy Manager and Manager of Automobile Manufacturing Factory. He is currently Director, Vice Secretary of the Party
Committee and Chairman of the Labors’ Union of CAC.
Ms. Cui Xiaomei, Supervisor, was born in 1955. She has obtained two Bachelor’s Degrees, is a senior economist. She
used to serve as Vice Director of Final Assembly Workshop in Jiangling Machinery Plant, Plant Vice Director, Vice
Director of Planning Department, and Vice Director of Foreign Trade in Sub-Plant One, Party Secretary of Precision
Mechinery Plant in CAC, Senior Deputy General Managerand Party Secretary of Changan Automobile Sale Company,
Assistant to President of CAC, Deputy General Manager of Changan Suzuki Automobile Company, Deputy General
Manager of the Company. She currently serves as Deputy Secretary of the Party Committee and Secretary of the
Discipline Committee of CAC.
Ms. Cao Dongping, Supervisor, was born in 1953. She graduated from a junior college and obtained the title of senior
accountant. She used to be Head of theFinance Department of Jiangling EngineCompany, Vice Director and Director
of the Finance Department of CAC, She is currently the Secretary of Party Committee of the Finance Department of
CAC.
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Ms. Xiong Huilin, Supervisor, was born in 1959. She is a postgraduate and senior economist, and used to be Director of
Administrative Office of Automobile Manufacturing Factory of CAC, Chairman of the Labors’ Union of education’s
department of Changan Machinery Manufacturing Factory, Vice Chairman of the Labors’ Union of CAC. At present, she
serves as Chairman of the Labors’ Union and the Vice Secretary of Party Committee of Changan Suzuki Automobile
Company.
Mr. Zhu Zhiping, Supervisor, was born in 1962. He has obtainedmaster’s degree and is a senior economist. He used to be
Head of the Human Resource Department of Automobile Manufacturing Factory , Director of the Salary Management
and the Vice –Head and the Head of the Human Resource Department of the Company. He currently serves as
Deputy General Manager of Changan Suzuki Automobile Company
Mr. Hua Dubiao, Supervisor, was born in 1967. He is a graduate, and obtained the title of Accountant. He used to be Vice
Head and Head of the Audit Department of the Company, and Vice Head of Audit and Supervision Department of the
Company. He is currently Deputy Secretary of the Discipline Committee, and the Head ofAudit Department and Director
of Audit and Supervision Department of the Company.
Ms. Fu Xiangyu, Supervisor, was born in 1955. She graduatedfrom a junior college and has obtained the title of Accountant.
She used to be Vice Head and Head of the Finance Department at the Automobile Manufacturing Factory. She is
currently Head of the Cost and Price Department of the Company.
(3) Senior Management other than Directors and Supervisors:
Mr. Ying Zhanwang, Senior Deputy General Manager, Vice President of Changan Ford Mazda Automobile Company, and
General Manager of Plant Two of Changan Ford Mazda Automobile Company. Born in 1959, he has a Master’s Degree
in Engineering, a researcher and senior engineer. He used to serve as an engineer of the Engine Plant in Nanjing
Automobile Manufacturing Plant, Chief of Technology Office of Technology Institute in Changan Machinery Plant, Vice
Director of Technology Institute Two, Vice Director of Technical Department, Director of Planning Department, Assistant to
President, Vice President of CAC.
Mr. Zhu Huarong, Senior Deputy General Manager, was born in 1965. He has master’s degree in engineering and is a senior
engineer. He used to be Vice Director of the Engine Research Institute of Jiangling Machinery Factory, Vice Director of
Technical Department of CAC, Chief Engineer of the Automobile Manufacturing Factory of the Company, Assistant to
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General Manager, Director of Technical Center, Director of Technology Committee, Director of the Board and Vice President
of CAC.
Mr. Huang Zhongqiang, Senior Deputy General Manager of the Company and Deputy General Manager of Changan Suzuki
Automobile Company. He was born in 1968 and has a master’s degree in engineering. He is a senior engineer and used to
be Vice Director and Director of the General Manager’s Office of CAC, Director of the QualityControl Department, Assistant to
President, and Vice President of CAC.
Mr. Zou Yi, Senior Deputy General Manager, was born in 1963. He has a master’s degree and is a senior engineer. He used to
be Vice Head of Supplies Department of Changan Machinery Plant, Vice Head of Supplies Section of Purchase and Supplies
Department of CAC, Head of Supplies Department, Vice Chief Engineer and Director of the Civil Products Research Institute
of Changan Special Machinery Factory, Deputy Manager and Head of Purchase Department of Automobile Manufacturing
Factory of the Company, Manager of the Engine Companyof the Company, General Manager and Party Secretary of
Nanjing Changan Automobile Company, and Vice President of CAC.
Mr. Ren Qiang, Deputy General Manager, and Executive Vice President of Jiangling Holding Co., was born in 1960. He has a
Master’s Degree in Engineering, is a senior engineer. He used to serve as Vice Secretary of the Youth League Committee of
the No.2 Textile Machinery Plant at Shaoyang City,Hunan Province, Vice Chief of Non-standard Product Design Office and
Vice Director of General Design Institute of Changan Machinery Plant, Vice Director of Construction Institute, Vice Director and
Director of Development Planning Department of CAC, and Assistant to President of CAC, General Manager of Changan
Jinling Parts Company, and Vice President of CAC.
Mr. Song Jia, Deputy General Manager, and General Manager of Changan Automobile Sales Company, was born in 1965. He
has a Master’s Degree in Engineering, is a senior engineer. He used to serve as Vice Director of Civil Products Institute, Vice
Chief Engineer, Director of Automobile Institute, and Deputy Manager of Changjiang Electronics Plant, Deputy General
Manager of Changan Automobile Sales Company, General Manager of Hebei Changan Company, Assistant to President,
and Vice President of CAC.
Mr. Luo Minggang, Deputy General Manager, and Executive Vice President of Changan Ford Mazda Engine Company, was
born in 1963. He has a Master’s Degree in Engineering, is a senior engineer. He used to serve as Vice Director of Workshop
No.26, and Director of Technology Department of Jiangling Machinery Plant, Director of No.1Technology Institute of CAC,
Director of Engine Technology Department and Vice Chief Engineer of Automobile Manufacturing Factory, Vice Director of
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Technical Center, Deputy Manager of Engine Manufacturing Factory, Deputy Manager and Chief Engineer of Automobile
Manufacturing Factory, Vice Director of Changan AutomotiveEngineering Institute, Assistant to President of CAC.
MR. Zhang Zhao , Vice General Manager and Executive Vice President of Changan Ford Mazda Engine Company and
Secretary of Party Committee, was born in 1968.. He has a Master’s Degree in Engineering, is a senior engineer. He used to
serve as the engineer of the Changan Engine Technology Department , Vice Director of Workshop No.134 of Automobile
Manufacturing Factory, Director of Assembly Department No.2 of Engine Company and Secretary of Party Committee, Vice
Director and Director of Quality Control Department ,Vice Director of the General Manager’s Office, Manager and Secretary of
Party Committee of Purchase Department of Engine Manufacturing Factory , Director and Secretary of Party Committee of
Supplies Department, Director and Secretary of Party Committee of Business Operation Department, Assistant to President
of CAC.
Ms. Li Jun, Secretary of the Board and Head of the Capital Operations Department of the Company, was born in 1969. She is a
graduate, and obtained MBA degree and the title of Senior Accountant. She used to be Vice Head of the Securities
Department of the Company.
3.Remuneration of the year
In 2007, the annual remuneration for the directors, supervisors and senior management had been duly paid by month according tothe
relevant policy on management salary and by ranks and grades set by China South Industries Group.
Remuneration in 2007( In
Name Position
RMB 10 thousand)
Zhang Baolin Director, General Manager 42.07
Zou Wenchao Director, Executive Vice President of Changan Ford Mazda 41.70
Cui Yunjiang Director, Senior Deputy General Manager, and Board Secretary 36.14
Guo Konghui Independent Director 5
Xia Donglin Independent Director 5
Gao Zhikai Independent Director 5
Wen Zongyu Independent Director 5
Liu Wei Independent Director 5
Xiong Huilin Supervisor 12.57
Zhu Zhiping Supervisor 12.08
Hua Dubiao Supervisor 11.50
Fu Xiangyu Supervisor 10.71
Ying Zhanwang Senior Deputy General Manager 41.30
Zhu Huarong Senior Deputy General Manager 39.85
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Huang Zhongqiang Senior Deputy General Manager 40.42
Zou Yi Senior Deputy General Manager 35.21
Ren Qiang Senior Deputy General Manager 31.20
Song Jia Senior Deputy General Manager 30.36
Luo Minggang Senior Deputy General Manager 14.23
Zhang Zhao Deputy General Manager 15.58
Li Jun Board Secretary 7.61
Total 447.53
Remuneration for independent directors was RMB 50,000 (tax included) per person per year. Expenses incurred in the discharge of
responsibilities in attending board of directors meetings and shareholders’ general meetings and in connection with the Company’s
Article of Association werereimbursed by the Company.
During the reporting period, the leaders who get compensation from shareholders’ and related company are as follows:
Chairman: Yin Jiaxu, Vice Chairman: Xu Liuping, Directors:Deng Tengjiang, Wang Tingwei, Deng zhiyou, Wang Chongsheng and
Ma Jun, Organizer of the Board of Supervisors: Shi Yubao, Supervisor Cui Xiaomei, Cao Dongping.
4.During the reporting period, the directors, supervisors, and senior managers are not changed in their post:
The matters after the reporting period:: after taking a vote andpassing through the fourteenth session of the Board of Director’s fourth
meeting on January 25,2008, Mr. Jia Tingyue was no longer the Senior Deputy General Manager of the Company due to
employment change, Mr. Ren Qiang, Mr. SongJia , Mr. Luo Minggang were appointed to the position of the Senior Deputy General
Manager of the Company . Mr. Zhang Zhao was appointed to the position of the Deputy General Manager of the Company .
5.The Employees of the Company
By the end of the year, total headcount of the Company was at7,961, including 4,015production workers, 901salespersons,
2,009 technicians, 155 finance staff, and 638administrative staff, and 243 others. Of the total, there were 12 with doctorate degree,
174with master degree, 2,327 with bachelor degree, and1,311 with college education or above, 4,137 others..
The Company should pay the piperfor 1,970retired employees.
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VI Corporate Governance
1. Corporate Governance
The Company has been strictly complying with the relevant laws and regulations, including the Company Law, the Securities Law,the
Regulations for the Governance of Listed Companies, the Guidelines for the establishment of Independent Directors system in Listed
Companies, Regulations on Strengthening the Protection of Social and Public Shareholders’ Interests and continuously improvingthe
corporate governance structure of the Company, adopting modern best practices and standardizing the management and operations
of the Company. The Company drew up and executed a series ofdisciplines, including Articles of Association, Regulations on
Shareholders’ general meeting, Regulationson Board of Directors, Regulations on Board of Supervisors, Regulations on Guarantee,
and Management Regulations on Investment Relationship. The actual conditions of the Company’s corporate governance do not
differ substantially from those stipulated by the regulations oncorporate governance of listed companies issued by China Securities
Regulatory Commission.
In the report period, the Company has carried out the corporate governance and completed the three-phase work of the self-
inspection on the corporate governance of the Company, receiving the review from the public and the improvement & advancement
according to the China Securities Regulatory Commission Document ［2007］No.28 the Notice on Strengthening
theRelatedIssues of the Special Governance of Listed Companies and the Supervision Suggestions on the governance of
Changan Automobile Company issued by Chongqing Securities Regulatory Bureau , the China Securities Regulatory Commission
under the arrangement o f Chongqing SecuritiesRegulatory Bureau ,and Shenzhen Stock Exchange.
According to the plan of the self-inspection, the Company hasinspected completely and thoroughly the self-inspection items listed in
the Notice, and found out the factors effecting the corporategovernance. According to the self-inspection, the main problems to be
improved on the corporate governance as follows:
(1) The special committee under the Board of Directors is not perfect.. The salariesand remunerations of the Company and the
operation system of the assess committee need to be improved ;
(2) The accumulative voting system has not been adopted yet when the Company selects the directors and the supervisors;
(3) The Company’s interior control system establishment needs to be further strengthened, and some management regulations
needs to be improved
(4) The Management of Information Release of the Company needs to be strengthened.
The Report of the Corporate Governance and Self-Examination and the Improvement Plan were reviewed, discussed and
passed on the eighth session of The Board of Director’s fourth meeting on June 29,2007, and declared on China Securities,
Securities Daily, Hong kong Business and Juchao Consult Web on June 30.
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In the public comment and discussion period ,the Company publishedthe related documents of the Corporate Governance in the
Column of the Corporate Governance on the web of Shenzhen Stock Exchange (http : //www.szse.cn). The Company has
published the contact way for the public comment & discussion on the Corporate Governance so as to accept the opinion and
suggestions from the investors and social public.
In the improvement period, the Company has made improvement onsolving the problems existed in the Corporate Governance ,
the details are as follows:
(1) Establishing the Board of Auditors
The Work Detailed Rules of the Board of Auditors wasdrawn up by the Company’s Auditing & Supervision Department
according to the improvement plan .The proposal of setting up the Board of Auditors was passed through the ninth session ofthe
Board of the Director’s fourth meeting on August 24,2007, and the members of the First Board of Auditors were selected.
(2)Amendment of Articles of Association ,which specifies the accumulated voting system is adopted when the directors and
supervisors are selected.
According to the improvement plan, the Company has amended the Articles of Association in accordance with lawyers ‘ s opinions.
The proposal of amendment of Articles of Association was passed through the ninth session of the Board of Director’s fourth
meeting on August 24, 2007 and submitted to and passed through the 2007 second general meeting of the temporary
shareholders on Sep.21,2007
(3) .Amendment and improvement of the Standard of Interior Control .
According to the improvement plan, the Standard of InteriorControl was amended and improved by the Company’s Auditing &
Supervision Department. The System of Standard of Internal Control was further perfected and passed through the ninth session of
the Board of Director’s fourth meeting on August 24, 2007.
(4).Amendment of Detailed Rules of the General Managers and drawing up the Working Regulations o f Independent Directors
According to the improvement plan, the company amended and improved the Detailed Rules of the General Managers and drew
up the Working Regulations o f Independent Directors which were passed through ninth session of the Board of Director’s fourth
meeting on August 24, 2007.
(5).Establish the communication system of information releasefor the related company and strengthen the active information release.
According the improvement plan, the Company has established the communication system for the company to which the
confused information is easily made., specified the duty unitfor both parts, and designated the specially assigned persons for the
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information and working communication and has achieved the effect. The Company will further strengthen the Active Information
Release on the base of the specification of the Information Release
The Company will strictly carry out the Company’s Rules and the Interior Control System in accordance with the requirements ofthe
Notice on Strengthening the Related Work of the Special Corporate Governance of Listed Companies and Regulations for the
Corporate Governance of Listed Companies and improving the relevant exchange management, enhance the information
release and transparence of the company, and continuously improve the system of the Corporate Governance for the rapid and
healthy development of the Company.
2. The Independent Directors
There are 5 Independent Directors on the Board of the Company,which is in accordance with relevant regulations by the China
Securities Regulatory Commission. The independent directorsof the Board have been honest, diligent and industrious in fulfilling their
duties and expressed independent opinions on investment, relatedparty transactions, incentivesand other significant transactions in
accordance with “Guidance Instruction for Regulation on Independent Directors” , thus contributing to the improvement in the corporate
governance of the Company, the decision-making mechanism ofthe Company and the safeguard of the Company’s interest,
especially of the minority shareholders’ interests. The independent directors also made contributions in areas of innovation,
remuneration-system, corporate governance and financial management.
(1) Independent Directors’ Attendance of the Board Meetings:
Name of Independent Times of Attendance Times of Attendance in Times of Entrusted Times of Remarks
director Required Person Attendance Absence
Guo Konghiu 8 7 1
Xia Donglin 8 7 1
Wen Zongyu 8 7 1
Gao Zhikai 8 7 1
Liu Wei 8 8
(2) Negative opinions raised by the Independent Directors during the reporting period.
In the reporting period, no negative opinionis raised by the Independent Directors.
3. The 5 Areas of Segregation
(1) Operation:
The main business scope of the Company includes the development, manufacture and sale of automobiles, engines and automobile
related parts. The main business has been approved by government authorities and the Company does not solely rely on any other
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entity. The Company has the technology, production capacity and sales employees related to its business scope and can undertake
the operations independently.
(2) Assets:
The Company has necessary fixed assets, current assets, intangible assets and related departments to meet its operation needs,and
has developed a complete system.
(3) Employee:
The Company signed labor contracts with the employees based onthe registered employee list. It takes responsibilities for the
employees’ performance, salary, pension, housing fund and other welfare of the employees independently.
The Directors, Supervisors and senior managers are recommendedby China South Industry Automobile Company, the selection
and engagement of who are in conformity with Corporate Laws and Article of Association. The senior managers work for the
Company full time and received salary from the Company.
(4)Organization:
Each division and department of the Company is independent from the controlling shareholders and exercises their rights in
accordance with the relevant regulations.
(5) Finance:
The Company has its independent financial department, established independent accounting system and financial management
system.
4.Establishment and improvement of the Interior Control System
(1) Summarize o f the interior control system
In the report period , the company has been complyingwith the China Securities Regulatory Commission Document ［2007］No.28
the Notice on Strengthening the Related Issues of the SpecialCorporate Governance of Listed Companies and the Guidelines of
Interior Control System of the Listed Company issued byShengzhen Stock Exchange, aiming at the establishment , improvement
and implementation of the Interior Control System of the Company , emphasizing the implementing process supervision and further
improving the complete and strict Interior Control system of the Company on the base of the Articles of Association , the Standard of
the Interior Control System , Production Management System, finance System and Information Release system
(2)Organisation System of Interior Control of the Company
The Board of the Directors is responsible for the establishment ,supervision and implementation of the System of Interior Control of
the Company. The main duties : making decision and improvement of the policy and plan o f the Interior Control of the Company,
supervision of the execution ofthe Interior Control, approval of the audit plan, reviewing the interior audit report and the self-evaluating
report of inter control and making the improvement and countermeasures against the fatal control defect and risk.
The Company’s management echelon is responsible for the establishment and effective execution of the Interior Control of the
Company. The main duties: establishing and implementing the plan of the Interior Control System of the Company, guaranteeing the
effective execution of the Interior Control System ,approval of the self-inspection plan of the Interior Control System, organizing and
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carrying out the examination and evaluation of the Interior Control and reporting to the Board of the Directors, executing the
improvement and countermeasures made by the Board of the Directors against the fatal control defect and risk.
In order to accommodate the management of the production & business and development of operation, the perfect organization
system of Interior Control System isestablished at the Company’s management echelon .The three-level responsible system is
conducted for the Interior Control System of the Company. Each of the operation departments isresponsible for the execution of the
interior control of its unit; the Administrative Information Department is responsible for the ordinary management and maintenance of the
interior control ; The Company’s Audit & Supervision Department is responsible of the supervising and auditing the execute ofthe
interior control.
(3)Establishment of the Supervision Department of the Interior Control System of the Company
In order to establish and improve the interior control system of the Company and effectively execute the system in all the procedures of
the Company, the Audit Committee is established under the Board ofthe Directors. The Independent Director is appointed to the
position of the Head of the Audit Committee , and the Audit Committeeis composed of the professionals of Doctors, Masters , Certified
Public Accountant. The Audit Department is established in the Company and directly led by the General manager who is in chargeof
Audit Committee which includes the professionals of certified public account, account, engineer and cost engineer .
(4) Establishment of the interior control system of the Company and the results
The Management Information Department of the Company organized and conducted the checking and improvement of the
regulations of the Company according to the Guidelines of Interior Control System of the Listed Company , 56 regulations in the
aspects of finance, quality, human resource , new product development, the Group ‘s management & control, production &
management etc. have been supplemented, drawn up and improved. By the checking and improvement of the Company’s
regulations, the Interior Control System of the Company isstrengthened and improved in the main. The comprehending understood
by the leaders in all level and employee for the interior control management has been improved continuously , laying the foundation of
operation efficiency and countermeasures against the risk of business and operation .
(5)The important activities of the Interior Control of the Company
1.Management and control on the proprietary subsidiary company
In order to specify and standardize the relation to the proprietary subsidiary company , to enhance the support, guidance and
management to the company and promote the proprietary subsidiary company to operate inaccordance with the modern
enterprise’s regulations the Company manages the full-capital company under Changan and the proprietary subsidiary company in
the way of that the function departments make the operation guidance, supervision and approvalfor the connected departments of the
relevant proprietary subsidiary companies. For the management ofthe proprietary subsidiary company, the Company specifies the
Four Basic Principles that is the controls of personnel , information, system and risk , establishing the Group Management & Control
System participated by all the function departments on the platform of China-China Enterprise Management Office and the Joint
Venture & Corporation Management Office. The Group Management & Control System related to all the function departments
establishes and perfects the authorization system of the Group Management & Control System emphasizing on the personnel ,
finance, goods and materials and information. Meanwhile, the Company makes the detail specifications for the accreditation, duties
and review of the Directors and Supervisors of the proprietary company , ensuring the exercise of the functions and powers for the
Directors and Supervisors according to the laws and regulations .The company drew up the Regulations on Interior Report of
Important Finance Information which specifies the range, content and the procedure of the report on the important finance information,
effectively controlled the risk and ensured the truth and completness of the information release. On the regulation management, it is
specified by the Company that all the proprietary subsidiary companies must executethe Company’s unified accounting policy inthe
unified manner and operate in accordance with the Company’s general plan of running and operations. The Company unifies the
management of the organizations, manning, staff employment, training, staff adjustment and appointment & removal ensuring the
high degree of centralization on the operation management. For the risk management, the Company’s Audit & Supervision
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Department functioned as the main department for risk supervision and control, makes the routine and special auditing at regular or
not regular intervals, ensuring the Company’s policy of business and operation and all the regulations carried into execution and
implementation , effectively taking countermeasures against the risk..
2.The Interior Control of the Company’s Related Party Transaction
The Company drew up the Management of Related Party Transaction which makes the specifications in the aspects of the principles
of the related party transaction, the related person and the related relation, related party transaction, the policy –decisionprocess of the
related party transaction, and the release of the related partytransaction. The related party transaction occurred in the Company is
carried out in accordance with the Management Regulations of Related Party Transaction.
3.The Interior Control of the Company’s Information Release
The Company drew up and improved the Management Regulations ofInformation Release and the Regulations on Interior Report of
Important Finance Information , completely and effectively controlling and managing the Company’s opening information release and
the interior communication of important finance information. TheCompany set up the interior transfer system of the importantfinance
information, specified the range and contentof important finance information, the relevant control process in terms o f communication
method, content and the time limit among all the Departments according to the Regulations on Interior Report of Important Finance
Information. The principles, content, requirements and operating process of information release is specified by the Management
Regulations of Information Release, standardizing the Company’s operation and avoiding the omitted, false and misguiding
information.
(6)The problems and improved plan of the interior control of the Company
The following problem needs to be improved, though the Company has strengthened the interior control system and the
establishment of interior control regulations and got the preliminary effects in accordance with the Articles of Association and the
Guidelines for the Interior Control of Listed Company ;
1. With the rapid development of the Company’s major operation in the recent years and the new challenges on how to strengthen
the overall management , it is the most important issue forthe Company on how to ensure the management in line with the
development of the business and operation , so as to guarantee the sustainable development of the Company.
For the problems mentioned above, the company has been continuously enhanced the interior control and the training of the directors,
supervisors, senior managers and the employees , further improved the company’s corporate governance and the standard operation
according to Guidelines for the Interior Control of Listed Company .
2. The company has established the improved interior control system and the aspects of important matters have been effectively
executed. , But the implementation is not powerful enough in some respects , such as the inspection frequency on the
supervision is not enough.
For the problems , the Company will further enhance theimplementation and the force of the supervision and
inspection to ensure all the regulations are effectively executed.
(7) Self-Evaluation of the Company’s interior control
The current regulations of interior control have been established , improved basically and effectively carried out , fitting in with the
requirements and needs of the Company’s management and development, providing the guarantee of the true , generally
recognized and authorized financial statement and the good runningof all the Company’s operations & business ,the implementation
of the laws and regulations of the Stateand the unit’s interior regulations .
5..Performance Review System of the Senior Management
(1) Performance review system:
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According to the performance review management system of the Company, the Board is responsible for reviewing the performance
of the General Manager and other senior management. The performance review combines periodic and regular reviews, as well as
quantifying and qualifying reviews.
(2) Incentive system
The income of senior management comprises basic salary and performance-related pay. Performance-related pay is related to
performance reviews.
(3) Regulating system
The Company has signed Employment contracts with the senior management, and regulatesthe exercise of power, the limitations of
power and duties and responsibilities of the senior management.
(4) The establishment and implementation of the incentive system
The plan of appropriation of incentive fund was passed in the Annual General Meeting of the Company 2004, according to that a
certain rate, decided by the Board, of prior year’s consolidatednet profit is appropriated asincentive fund when the auditedRate of
Return on Shareholders’ Equity of the prior year reaches 10%. No such fund is appropriated when the audited Rate of Return on
Shareholders’ Equity is below 10%.
In 2007, the Company has not appropriated incentive fund due to the ratio for appropriation of incentive fund has not yet beenachieved.
Up to now, the remainingamount is RMB 2,245 million.
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VII. Shareholders’ general meeting
1. The Board of Directors announced the First Session of theTemporary Shareholders’ general meeting 2007 on June 5, 2007
through China Securities, Securities Daily and Hong Kong Business. The meeting was held on June 26, 2007 at multimedia
meeting room in Chongqing Changan science and technology building. The resolutions were announced on China Securities,
Securities Daily and Hong Kong Business on June 27, 2007.
2. The Board of Directors announced 2006 Shareholders’ general meeting on April 12, 2007 through China Securities, Securities
Daily and Hong Kong Business. The meeting was held on May 15, 2007 at multimedia meeting room in Chongqing Changan
science and technology building. The resolutions were announced on China Securities, Securities Daily and Hong Kong Business
on May 16, 2007.
3. The Board of Directors announced the Second Session ofthe Temporary Shareholders’ general meeting 2007 on August 24 ,
2007 through China Securities, Securities Daily and Hong KongBusiness. The meeting was held on September 21, 2007 at
multimedia meeting room in Chongqing Changan science and technology building. The resolutions were announced on China
Securities, Securities Daily and Hong Kong Business on September 22, 2007.
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VIII. Report of the Board of Directors
1. Review for the business in the reporting period
The Company was mainly engaged in the development, manufacture and sales of mini cars and vans, multifunction vehicles and
sedans including Changan Star mini-car series, Changan mini-van, Changan Benben,Joice, Changan Suzuki’s Alto mini sedans,
Lingyang, Swift and Suzuki SX4, Changan Ford’s Focus, Mondeo, Mazda 3, Mazda 2,SMAX and Volvo S40, Jiangling holding’s
Landwind multifunction vehicles and the manufactureand sales of various types of Jiangling brand engines.
In 2007, the Company totally produced 760,075 vehicles, a 25.17%increase from 2006. And a total number of 770,546 vehicles were
sold, a 24.54% increase from 2005, among which 682,028 passenger-vehicle were sold, 88,518 commercial vehicle sold (Including:
Changan headquarters, HebeiChangan, Nanking Changan, ChanganSUZUKI，Changan Ford Mazda and Jiangling holding，
and neutralize unfulfilled sale backlog in Changan headquarters).
In the reporting period, Changan Ford Mazda was first won honourof the top ten automotive manufacture enterprises in China (ranked
the ninth) by 213.1thousand sale and 4.51% of market share，among that Focux was ranked the seventh in the Top Ten Sedan
Brands of 2007 by 125 thousand sale, Changan Benben was ranked the ninth sale in the Independence-Development Sedan
Brands 2007 (above analytical data from: China Automotive Industry New-letter on automotive production and sale),which won a
position at independent development sedan field. Changan Star Ⅱachieved a great deal of production and sale goal.
(1). Overall business operations
Item 2007 2006 Variable ratio （%）
Operating income 1,372,230 1,215,377 12.91%
Operating cost 1,161,946 1,027,748 13.06%
Operating profit 68,691 49,908 37.64%
Net profit 66,689 51,944 28.39%
Operating income and operating profit increases comparing to the same period of 2006, mainly due to the auto sales of Changan
headquarters increased 6.03 ten thousand. Net profit and operating profit increases mainly due to the net profit of Changan Ford
Mazda increased 6.10 a hundred million, resulting in the increase of the Company’s investment earnings
a. The following table illustrates the Company’s sales and cost of sales by line of business and product category (in RMB ten thousand):
line of business
Sales Cost of sales Gross margin rate （%）
Line of business/product
Amount Fluctuation from Amount Fluctuation from Amount Fluctuation from 2006
2006 2006 （%）
Vehicle manufacturing 1,372,230.00 1,161,946.00 15.32% 12.91% 13.06% -0.74%
Main business
1.Passenger-vehicle 953,091.00 846,800.00 11.15% 11.81% 15.06% -18.33%
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2.Commerical
vehicle 216,792.00 165,891.00 23.48% 4.71% -1.01% 23.21%
3.Other 202,347.00 149,255.00 26.24% 29.75% 20.21% 28.75%
b. The following table illustrates the Company’s domestic and foreign sales and cost of sales (in RMB ten thousand):
Domestic/Foreign Sales Fluctuation from 2006
Domestic 1,311,325 12.27%
Foreign 60,905 28.59%
c. Major suppliers and clients
In 2007, gross purchase by the Company from the top five suppliers accounted for 206,460, 16.62% of total purchase of the year; and
gross revenue from the top five clients accounted for171,530 ,12.50% of the total revenue of the Company.
(2) The following table illustrates significant changes of the Company’s assets structure and analysis of causes
(in RMB Yuan)
Dec.31,2007 Dec.31,2006 （%）
Fluctuation of
total assets
Items
Amount Proportion in total Amount Proportion in
assets （%） total assets
（%）
Receivable
account 698,386,640 4.87% 486,109,473 3.36% 1.50%
Other
receivables 150,730,003 1.05% 171,706,209 1.19% 0.22%
Inventory
1,794,682,010 12.50% 1,842,787,884 12.74% -0.23%
Long-term equity
investment 4,141,477,746 28.85% 3,879,886,686 26.83% 2.08%
Fixed assets
3,381,795,003 23.56% 3,662,726,670 25.33% -1.77%
Construction in
progress 260,899,240 1.82% 57,000,723 0.39% 1.42%
short-term loan
175,700,000 1.22% 158,500,000 1.10% 0.13%
Long- term loan 950,000,000 6.57% -6.57%
2007 2006 Fluctuation
Operating
expenses 1,246,368,598 902,496,083 343,872,515
Management
expenses 673,492,043 673,921,698 -429,655
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Financial
expenses 47,105,949 71,245,323 -24,139,374
Income tax
19,966,287 29,859,341 -9,893,054
The Proportion of receivable account had a slight increase, accompanying with increase of sale and credit line. Long-term equity
investment had an increase due to the profits of Chang FordMazda. Fixed assets decreased mostly due to depreciation. The
investment of construction in progress increased due to the increasing investment of associated works to enlarge production ability of
Changan headquarters` complete vehicle. Long-term debt decreaseddue to refunding a long-term debt of 9.5 a hundred million Yuan.
Sale increase, resulting in increasing of transportation cost, advertising costs as well as three subcontract service fee caused a rising
selling cost. Financial expenses decreased mostly due to the interest expenditure decreased after repayment of loans. The adjustment
of deferred income tax according to new accounting standards resulted in the change of income tax expense.
(3) Cash flow analysis
(in RMB Yuan)
Items 2007 2006 Fluctuation
Cash flow of business activities
Cash inflow subtotal
11,695,584,940 10,584,219,987 1,111,364,953
Cash outflow subtotal
11,207,947,226 9,864,124,272 1,343,822,954
Net cash flow of business activities 487,637,714 720,095,715 -232,458,001
Cash flow of investment activities
Cash inflow subtotal
754,953,554 525,987,440 228,966,114
Cash outflow subtotal
390,651,701 1,397,571,128 -1,006,919,427
Net cash flow of investment activities 364,301,853 -871,583,688 1,235,885,541
Cash flow of financing
Cash inflow subtotal
1,717,609,795 1,170,203,000 547,406,795
Cash outflow subtotal
2,786,175,741 841,110,086 1,945,065,655
Net cash flow of financing -1,068,565,947 329,092,914 -1,397,658,861
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Net cash flow of business activities of 2.32 a hundred million Yuan, compared to the same period of 2006, caused by receiving bank
acceptance bill in receipted payment of 2007.The cash inflow risingof investment activities mostly due to receiving the cash bonus of
Changan Ford Mazda increased, cash outflow reduction mostly caused by increasing the investment of 10.15 ahundred million Yuan
of Changan Ford Mazda’s complete vehicle and engine. Net cash flow of financing decreased primarily due to refunding long-term
debt of 9.5 a hundred million in 2007.
(4) Business operation information and achievement analyses of main holding companies and share companies
a. Basic information of main holding companies and share companies
（in RMB ten thousand Yuan）
Registered
Equity Total assets Main operating Net profit
Name capital Main businesses
held income
Chongqing Changan 19,000 ten Production and sale of
Suzuki Automobile Co., thousand dollar 51% automobiles and parts 453,376 568,847 12,320
Ltd
28,263.9 ten Production and sale of
Changan Ford Mazda 2,873,36
thousand dollar 50% automobiles and parts 1,348,374 191,737
Motor Co., Ltd 6
60,181 ten Production and sale of
Nanjing Changan
thousand 71.86% automobiles and parts 95,592 81,969 -20,812
Automobile Co., Ltd.
Yuan
26,469 ten Production and sale of
Hebei Changan
thousand 77.72% automobiles and parts 120,351 393,659 1,448
Automobile Co., Ltd.
Yuan
200,000 ten Production and sale of
Jiangling Holding Co., Ltd. thousand 50% automobiles and parts 306,518 95,436 9,820
Yuan
13,920 ten Production and sale of
Changan Ford Mazda
thousand dollar 50% engine and parts 271,673 58,087 -29,862
Engine Co., Ltd
Chongqing Changan 3,490 ten Production and sale of
80%-
Automobile Sale thousand automobiles and parts 28,018 601,494 -1,278
100%
Subsidiary Company Yuan
Chongqing Chang 1,376 ten Automobile export, agent of
Automobile International thousand 95% import and export 34,911 60,905 -380
Sale Service Co., Ltd Yuan
Chongqing Chang 4,850 ten 100% Sale of automobiles and parts 5,922 8,789 71
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Automobile Sale Co.,Ltd. thousand
Yuan
Chongqing Changan 500 ten Production and sale of
Special Automobile Co., thousand 50% special automobiles and parts 4,766 14,241 133
Ltd. Yuan
Chongqing Changan 3,000 ten
Automobile Service Co., thousand 99% Sale of automobiles and parts 6,919 38,446 377
Ltd. Yuan
3,200 ten
Chongqing Anfu thousand 50% Sale of automobiles and parts 20,166 91,858 1,279
Automobile Co., Ltd. Yuan
5,000 ten
Manufacture and sale for
Chongqing Changan Die thousand 100% 9,770 3,802 -11
automobile die and jig
Manufacture Co.,Ltd. Yuan
⑵Subsidiaries or share companies, which operation results, compared to the same period of 2006, occurred greater fluctuation and
had significant influence on the combination operation result of the Company
Basic information of main holding companies and share companies
（in RMB ten thousand Yuan）
Net profit in Net profit in Variable
Name
2007 2006 ratio（%）
Chongqing Changan Suzuki Automobile Co., Ltd. 12,320 21,879 -43.69%
Changan Ford Mazda Motor Co., Ltd 191,737 130,721 46.68%
Changan Ford Mazda Engine Co., Ltd -29,862 -30,717 -2.78%
Nanjing Changan Automobile Co., Ltd. -22,419 -18,071 24.06%
Hebei Changan Automobile Co., Ltd. 1,449 4,799 -69.81%
Jiangxi Jiangling Holding Co., Ltd. 9,820 -2,619 -474.95%
The net profit of 2007, compared to the same period of 2006, was decreased greatly by a reduced 3900 vehicles sold by Changan
SUZUKI, meanwhile, resulting in an increased fixed allocated expense by large-scale production and sale of M series engine not
reached after putting into production and sales promotion by reduced price. The net profit of Changan Ford Mazda Company
increased due to its greater sale. Changan Ford Mazda Engine wasstill in deficit at earlier stage of operating. Due to resulting in a rising
fixed expenses by product dull sale, Nanking Changan lasted deficit. The profit of Hebei Changan shrank due to the adjustment of
deferred income tax according to new accounting standards. The increase of Jiangling holding`s net profit mostly depended on aprofit
growth of Jiangling Automobile.
2. Prospect for the further development
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A. Prospect for the further development
First, vehicle market still remains rapid growth. In 2008, Chinese economy will still keep a faster growth trend and 15% around growth
amplitude in vehicle market will maintain.
Secondly, more and more severe competition will appear, andcontinue to advance concentration. Profit from domestic medium-
grade vehicle and below has reduced largely. Some of bad management enterprises will be reformed or withdrawn out of market.
Thirdly, independent brand will face with keen-competition. Alongwith the more internationalization of domestic market, increasing of a
variety of domestic capital flooded into auto industry and continual increase invests from each enterprise, independent brand will be in
the face of big challenge
Fourthly, new energy will face with new chance. Future developmental direction is new energy automobile. Implementing new energy
auto production regulations will bring up more strict requirements for energy-saving and environmental protection of auto industry, and
also give new energy automotive development a favourable chance.
B. Operating Plan for 2008
On the base of macroeconomic position, auto industrydevelopment status and the Company’s actual conditions，in 2008, the
Company will carry out “better and faster” guideline, stick on“ Rapid Development Strategy”, further implement the Company’s
Business Leading Plan, push forward the Company’s “Two Actions and One Project” in a down-to-earth manner, push in
internationalization process in an all-round way
and further emancipate the mind and change concept.Therefore, under the norms based on strategy,clients, competition stake, by
insisting on“ development, adjustment and reformation ”guideline,taking customer requirements as guiding, brand as emphasis,
research and development as core, production-manufacturing asfoundation, supply chain and sale service as driving force,
management, manpower andculture as support, the Companywill push forward overseas strategy, endeavour to accelerate
internationalization step, sell 890,000 vehicles annually with RMB 163 billion Yuan sales revenue(Production and sale data according to
100% statistics scope, including: Changan headquarters, HebeiChangan, Nanking Changan, ChanganSUZUKI，Changan Ford
Mazda and Jiangling holding ).
C. Requirement for capital in 2008
For the operating and producing objective of 2007, it is estimated that liquidity in amount of 1.25 billion Yuan will be needed for running
every month. Annual capital outlays of 2,99 billion Yuan will be needed , therein, fixed assets investmentoutlays is 1,99 billion , equity
investment is 1 billion Yuan(including: an added investment of5 billion Yuan for Jiangling Holding in February,2008 and an added
investment of 29 million dollar for Changan Ford Mazda in February,2008 ). Part of these funds comes from it owned fund, share
bonus of joint venture and cash receipt of sales, and partof which comes from loan of bank or finance company.
D. The analysis about adverse factors for realization of the Company’s development strategy and operating objectives and effective
solution
In 2008, the primary risks which the Company will meet include:
a. Policy risk： since state’s macroscopic readjustment and control and tight monetary policy can result in weak consumed confidence
and slow demand acceleration, sale pressure will increase.
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b. Market risk: fluctuation of raw material and energy price as well as increment of labour cost result in rising of cost and reducing of profit
in future.
c. Interest rate and exchangerate risk: continual RMB added interest and anticipated appreciation result in increment of financing cost
and make abroad development face with big pressure and challenge.
The Company will take the measures below to minimize the impact of such risks:
a. Insist that guiding is based on clients, enhance market research, innovate sale mode and advance the ability of market development.
b. Future push in cost leading strategy.By“ taking product as core, process as main line ,and low cost and high benefit as clue, the
Company will enhance the cost control in product’s research and development, production-manufacturing and sale service links.
c. Reduce impact of change in interest and exchange rate on theCompany’s business by using synthetically all kinds of financial
means.
2 Investments of the Company in the reporting period
(1) Analysis of the Company’s investment
Up to Dec.31, 2007, the long term investment of the companyis 414,148 ten thousand, increased 26,159ten thousand than that oflast
year, See the business operation information and results ofthe major subsidiaries and joint-ventures for details.
(2) The use of proceeds from previous public offering
There is no use of proceeds from previous public offering.
(3) The use of proceeds other than from previous public offering (in 10 Thousand)
No. Investment project Funds injected Project stage Earnings
1 Complete vehicle project 17,162 In progress
2 Engine project 2,518 In progress
3 Technology Development Centre 6,281 In progress Included in the overall earnings of the
4 ERP project 405 In progress Company
5 Industry Zone 5,595 In progress
6 Others 2,086 In progress
Total
34,047
3. The work of the Board of the Directors
(1) The meetings of the Board and the resolutions in the year
During the reporting period, there are eight meetings of the Board of the Directors. Thirty-one proposals were deliberated andpassed.
The conditions of holding meetings were as follows:
A. The fifth session of the Board of the Directors' third meeting was held on Jan. 4, 2007, and the following proposals were passed
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through conference call:
a. The proposal of investing 50 million forestablishing Changan Die Manufacture Company
b. The proposal of accreditation of Hebei Changan and NanjingChangan, which are Changan’s major subsidiaries, entering the
financial network agreement for auto sales
c. The proposal of assets retirement for the 2007
d. The proposal of preparing for offsettinglong-term investment depreciation for the 2006
e. The proposal of holding the first temporary general meeting of share holders for the 2007
B. The sixth session of the Board of the Directors' fourth meeting was held on April. 10, 2007, and the following proposals were passed:
a. Report of the Board of the Directors for the year 2006
b. Report of the general manager for the year 2006
c. Annual financial report and the extract for the year 2006
d. Final financial settlement for the year 2006
e. Profit distribution scheme for the year 2006
f. The proposal of related party transaction for the year 2007
g. The proposal of "management system of disclosing information”
h. Notice of holding General Meeting for the year of 2006
C. The seventh session of the Board of the Directors' fourth meeting was held on April.27, 2007, and the following proposals were
passed through conference call:
a. The financial report for the quarter one of year 2007
b. The proposal of change of accounting policy and accounting estimation
D. The eighth session of the Board of the Directors' fourth meeting was held on June.29, 2007, and the proposal of the report on
administering self- examination and the reforming plan was passed.
E. The ninth session of the Board of the Directors' fourthmeeting was held on August. 24, 2007, and the following proposals were
passed:
a. The semi-annual financial report and the extract for the year 2006
b. Reappointment of the auditor for the year 2006
c. The proposal of establishing audit committee
d. The proposal of amendment of "articles of association"
e. The proposal of deliberation of "related party transaction management system"
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f. The proposal of deliberation of "collecting fund management system"
g. The proposal of deliberation of "internal control standard"
h. The proposal of deliberation of "independent director duty"
i. The proposal of deliberation of "shares held by director, supervisors and senior managements and change management system"
j. The proposal of amendment of "general manager’s job description"
k. Notice of holding the second temporarygeneral meeting of share holders for the 2007
F. The tenth session of the Board of theDirectors' fourth meeting was held on Octeber.30, 2007, and the following proposals were
passed through conference call:
a. The financial report for the third quarter of 2006
b. The report on enhancing to reform the special activity administered by the Company
G. The eleventh session of the Board of the Directors' fourth meeting was held on November.23, 2007, and the proposal 0f giving the
Southwest Stock’s interest held by the Company in exchange for the new increasing shares of Chongqing Changjiang Water
Transportation Company was passed through conference call.
H. The twelfth session of the Board of the Directors' fourth meeting was held on December.21, 2007, and the proposal 0f supplying
loan for Chongqing Chang Automobile International Sale ServiceCo., Ltd, which is the company’s subsidiary, was passed through
conference call.
(2) Accomplishment of resolution passed in the General Meeting:
During the reporting period, the Board ofthe Directors executed the resolution passedin the General Meeting strictly and the
following jobs were accomplished.
A. Profit distribution
Based on the profit distribution scheme passed in the GeneralMeeting on May 15, 2007, the Company’s Board of the Directors
announced the dividend distribution in , and on June 25,
2007 and execute the scheme accordingly.
B. Accrediting Hebei Changan and Nanjing Changan enter the financial network agreement for auto sales.
Based on the approval of the Shareholders’ general meeting heldon January 26, 2007, Accreditation of Hebei Changan and Nanjing
Changan entering the financial network agreement for auto sales, the company gave the suppliers of Hebei Changan and Nanjing
Changan the financing support by using Changan’s credit in ChinaAgriculture Bank, and thus promoted the sales of Hebei Changan
and Nanjing Changan effectively.
(3) The audit committee
A. The work of the audit committee
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There are 5 persons in the audit committee of director board, 3 persons of which are independent directors. The independent director
having accounting profession is the chairman of the committee. Based on the related provision of China Securities Regulatory
Commission and the executive regulations ofthe audit committee, the audit committee performed the following duty according tothe
assiduous and conscientious principle:
a. The audit committee reviewed earnestly the annual audit plan and related documentation for the 2007, and discussed and
determined the annual audit plan and requirements for the 2007 with the audit accountant in ERNST&YOUNG DA Ha CPA, in
charge of the Changan Company’s annual audit work.
b.The audit committee reviewed earnestly the financial accounting statement for the 2007 compiled by the Company’s managements
and the review of related party transaction for the 2007 and theforecast of related party transaction for the 2008 , agreed the forecast of
related party transaction for the 2008 and the appointing outsideauditor in 2008,and submitted them to the director board voting.
c. The audit committee reviewed earnestly the financial statements provided an initial audit opinion by the certified accountant after
annual audit, and exchanged views.
d. After the annual auditing report for the2007 provided by ERNST&YOUNG DA Ha CPA, the audit committee of director board held
a meeting. At the meeting, the annual audit work undertakenby ERNST&YOUNG DA Ha CPA was summarized and the annual
financial accounting statement and the proposal of appointing CPA Firm was voted through, and the resolution was formed.
B. The deliberating opinion，annual audit work report and related resolution of audit committee
a. The annual financial accounting statement submitted by the Company
Decision: the audit committee agreed the annual financial accounting statement compiled by the Company managements, and
decided to exchange views for the annual audit condition / result with ERNST&YOUNG DA Ha CPA.
b. The review of related party transaction for the 2007 and theforecast of related party transaction for the 2008 submitted by the
Company
Decision: the audit committee reviewed the review of related party transaction for the 2007 and the forecast of related party transaction
for the 2008, and suggested that it should be submitted to director board to review and approve.
c. The report on appointing outside auditor of the financial report for the 2008 submitted by the Company
Decision: the audit committee agreed that the concerned mattersof appointing outside auditor for the 2008 would be submitted to the
board director meeting held in August to discuss and make a decision.
4. The draft scheme for the profit distribution or transferring capital reserve into share capital of 2007
According to China Enterprise Accounting Standard and International Financial Report Standard,the draft scheme for distributable
profit of the Company in 2007 as follows:
Unit: RMB Yuan
China Enterprise Accounting Standard International Financial Report Standard
Undistributed profit on 31 Dec., 2006 2,475,105,128 2,361,174,258
net profit of 2007 666,893,972 601,913,381
Surplus extracted 0 0
Distributed dividend of 2006 421,420,792 421,420,792
Undistributed profit on 31 Dec., 2007 2,720,578,308 2,541,666,847
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According to the provision that the most distributed quota should be the lower value between China Enterprise Accounting Standard
and International Financial Report Standard,undistributed profit available to be distributed on 31 Dec., 2007 is RMB 2,541,666,847
Yuan.
Because of the State fund retrench and financing cost increasecaused by the tight monetary policy and the Company investment
for new products and product line technological transformation project in 2008, the draft schemefor transferring capital reserve into
share capital in stead of the profit distribution will be takenout in 2007. The proposal for transferring capital reserve into share capital of
2007 is: base on the total capital stock of 1,945,019,040 sharesin Dec. 31, 2007, the bonus share is 2 shares per 10 shares, and
then the total capital of the Company is increased to 2,334,022,848 shares.
This proposal will be put in the Shareholders’ general meeting for approval.
5. Other Matters
During the report period, the publication for information disclosure of the Company is China Securities, Securities Daily and Hong
Kong Business.
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IX Report of the Board of the Supervisors
1. The basic information of the meeting
During the reporting period, there are fourmeetings of the Board of the Supervisors
(1) The fourth session of the Board of the Supervisors’ fourth meeting was held on April 10, 2007 and the report of the Board of the
Supervisors for the year 2006, the annual financial report and the extract forthe year 2006, the final financial settlement for the year 2006,
and proposal of the related party transaction of 2007were discussed and passed.
(2) The fifth session of the Board of the Supervisors’ fourth meting was held on April 27, 2007 and the financial report of the first quarter
was passed through conference call.
(3) The sixth session of the Board of Supervisors’ fourth meeting was held on August 24, 2007 and the semi-annual financial report and
the extract were discussed and passed.
(4) The seventh session of the Board of the Supervisors’ fourth meting was held on Oct.30, 2007 and the financial report of the third
quarter was passed through conference call.
2. The working result ofthe Board of the Supervisors
During the reporting period, all the supervisors of the Company sat in all of the meetings of the Board of the Directors, givetheir
independent opinions and exercise the right of the supervision. In accordance with the Company Law and the Article of the Association,
the supervisors exercise following rights:
(1) Supervision of the compliance issues ofthe Company in its operation and management.
The Board of Supervisors performed its supervisory duties throughsitting in the meetings of Board of Directors. The Board of
Supervisors was of the view that the decision-making procedures of the Company were in compliance with the Company Law and
the Articles of Association, a proper internal control system had been established, and there had been no violations of the laws,
regulations and the Articles of Association and no acts harmfulto the interests of the Companyby the directors, supervisors and senior
managers in fulfilling their duties.
(2) Review of the financial status of the Company
Through its review, the Board of Supervisors was of the view that the financial statements of the Company had been in compliance
with relevant standards and regulations and truly reflected thefinancial status and operatingperformance of the Company. Theauditor
of the Company, ERNST&YOUNG DA Ha CPA issued an unqualified audit report.
(3) Supervision of the use of proceeds from the public offering
During the reporting period, the company has no public offerings being used during the reporting period.
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Through its review, the Board of Supervisors was of the view that the non-public capital was mainly invested in technology refresh of the
vehicle and engine production line and in the joint ventures.
(4) Supervision of the acquisition and disposal of the assets
Through its review, the Board ofthe Supervision was of the view that the priceof the acquisition and disposal of the assets was fair and
reasonable and there is no under-table transaction, no acts harmful to the interests of the shareholders or leading to the loss of
Company’s assets.
(5) Supervision of the related party transaction
Through its review, the Board of Supervisorswas of the view that all related party transactions had been conducted fairly with pricing
based on the market prices that are fair and therehad been no harm done to the interests of the Company.
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X. Important Matters
1. Major litigations and arbitrations of the year
There are no major litigations and arbitrations during the reporting year.
2. Major acquisition and disposal of asset, and merger and acquisition during the year
There are no major acquisition and disposal of asset, and merger and acquisition during the year.
3. Share status held by the Company in other listed companies, unlisted financial firms and the companies planning to list
(1) In the end of the reporting period, the Company held 15.39% shares of WeaponryEquipment Group Accounting Ltd, with initial
capital cost RMB80 million and book value RMB80 million.
(2) In the end of reporting period, the Company held 1.07%shares of South-western Securities Co., Ltd. (Hereafter referredto as "
South-western Securities ") with bookvalue RMB22.988 million.According to the requirement of Chongqing municipal government
on the Southwest Securities’ reform and recombination, the Company signedShare Entrustment Agreement with Chongqing Yufu
Asset Management Co. Ltd that is a state-owned company under the Chongqing municipal government, entrusting Chongqing
Yufu Asset Management Co. Ltd to manage the shares held by Changan in Southwest Securities.
At present Southwest Securities is planning to complete the listing of bond with shares increased by means of borrowing Chongqing
Changjiang Water Transportation Co., Ltd. (referred to as Changjiang Water Transportation). The Company exchange the new
shares of Changjiang Water Transportation with the shares of Southwest Securities held (total financial contribution RMB25 million
and 1.07% in registered capital before the restructuring of Southwest Securities). 2,570,277,139 new shares of Changjiang Water
Transportation are used to replace all shares of Southwest Securities, that is to say, stockholders of Southwest Securities can get 1.1
share of Changjiang Water Transportation for each RMB1 of Southwest Securities in return. Then after restructuring of Southwest
Securities, the Company becomes the stockholder of ChangjiangWater Transportation with 27,500,000 shares and 0.977% in
general capital. The above proposal is passed in the first temporary shareholder's meeting of Southwest Securities of 2007 andwill
be put in the China Securities Supervisory Management Committee and related departments for approval.
(3) During the reporting period, there are no recordsto trade other listed companies’ shares in the Company.
4. Significant related party transactions
In the reporting period,the information of the related party transactions with the accumulated amount over 30 million and 5% of the
net assets is as follows:
(1) Transaction Category——Purchase of materials and sales of automobile
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In the reporting period, the Company purchased automobile spareparts from Chongqing Changan Jinling Vehicles Parts Co., Ltd with
the market price. The total transaction amount is RMB391.19million， which comprises 3.66% of the total transaction amount with
same nature.
In the reporting period, the Company purchased automobile spareparts from Jianan, Lingjiang and Tsingshan of China South Industry
Automobile Co., Ltd. at market price. The total transactionamount is RMB 780.65million,, which comprises 7.30% of the total amount
of the same nature transaction.
In the reporting period, the Company sold automobile to Chengdu Wanyou Economic Technological Development Co., Ltd at market
price. The total transaction amount is RMB603.11million, which comprises4.40% of the total amount of the same nature transaction.
(2) Impact on the Company
Changan Jinling Vehicles Parts Co., Ltd and Jianan, Lingjiang, Tsingshan of China South Industry Automobile Co., Ltd. are the mass
producer of the automobile spare parts with the large capability and good quality, from whom the purchase could lower the costand be
good to the R&D of the new spare parts. The purchase from such related parties is necessary and will go on in the future.
Chengdu Wanyou Economic Technological Development Co.,Ltd. arethe dealers of automobile. Since all of them have established
mass sales system which is favourable for the sales of the Company’s product. The sale to such related parties is necessary and will
go on in the future.
The above transaction is dealt with the market price or the presumption price, and isfair and reasonable, which is necessary to the
Company’s business and no harm to the Company and the non-related parties’ benefits.
5. Major contracts and their fulfilment
(1) There were no major entrustment, contracting by the Company of the assets of other companies and there were no major
entrustment, contracting of the Company’s assets by other companies. The lease of theassets of other companies by the Company
and lease of the assets of the Company was shown as follows:
According to the production needs, the Company rented the office building of Changan Automobile Group Company’s Sales
Company, the total area is 4,560 square meters, the monthly rental is RMB 40 per sq. m., the remaining building is 37,158.1 square
meters and monthly rental is RMB 35 per sq. m. The Company rented land of CAC of 621,157.3 square meters, monthly rental is
RMB 15 per sq. m. The Company rented the production and office buildings of Cuntan Distribution Centre of Changan Automobile
Group Company, the area is 2803 square meters and monthly rental is RMB 35 per sq. m. The Company rented the Dashiba
production and office buildings of Changan Automobile Group Company, the area is 4863 square meters and monthly rental is RMB
35 per sq. m. The Company rented the land of Cuntan of Changan Automobile Group Company, the area is 216005 square meters
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and monthly rental is RMB 15 per sq. m.CAC rented the offices of 5th, 8th, 9th and 10th floors of the Science and Technology Building
of the Company due to office needs, the area is 9,056square meters and monthly rental is RMB 40 per sq. m.
(2) Major guarantee
In order to support the development of the dealers, better makeuse of the financial tools offered by the banks, expand the financing
channels, strengthen the ability of the dealers and promote the sales of the Company, the company signsthe Auto Sales Finance
Service Network Protocolwith China Everbright Bank, Citic Bank and Agriculture Bank. The banks mentioned above grant the
company with stated credit ability that isused only for opening accepted document forthe dealers. In order to promote the sales of
Hebei Changan and Nanjing Changan, the company authorizes Hebei Changan and Nanjing Changan to use part of the credit ability.
For Everbright Bank, Hebei Changan canuse RMB80 million while NanjingChangan can use RMB20 million. For Citic Bank, Hebei
Changan can use RMB120 million while Nanjing Changan can useRMB80 million. For Agriculture Bank, Hebei Changan can use
RMB340 million while Nanjing Changan can use RMB160 million. The dealers of Hebei Changan and Nanjing Changan can use
the acceptance opened under the protocol mentioned above to buy the vehicles of Hebei Changan and Nanjing Changan. When the
acceptance period expire, if the dealersof Hebei Changan or Nanjing Changan cannot hand in the amount of money got from the
bank, the sales period can be lengthened for three months. In case when the three months postpone period expire when the dealers
cannot sell the inventory vehicles, the company will buy the vehicles according to the repurchase price and deposit enough money to
the designated account of the bank in time. Hebei Changan and Nanjing Changan promise that if they should take the re-purchase
responsibility under the protocol, they would hand the amount ofmoney the company deposit to designated account of the bank within
three days and deal with the problems arising from the delay.
The amount of credit ability used by Hebei Changan and Nanjing Changan: during the reporting period, the dealers of Heibei Changan
used RMB186.92 million credit granting amount and drawn RMB464 million bank acceptance; the dealers of Nanjing Changan used
RMB76.08 million credit granting amount and drawn RMB93 million bankacceptance. By the end of the reporting period, the unsettle
acceptance of the Hebei Changan’s dealers is RMB156.3755 million while that of Nanjing’s dealers is RMB23.2045 million.
(3) Asset entrustment matters
There is no entrustment of cash management occurred in the reporting period or one, which occurred in the previous years and last in
the reporting period.
6. Commitment
Commitment of the controlling shareholder in the non-tradable shares reform:
(1) Comply with laws, rules and regulations, and perform legal duty of commitment.
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(2) Since the non-circulated shares are entitled to be circulated, they can’t be dealt with or transfer it within 24 months. At the expiration
of 24 months, the shareholders of non-circulated shares can sell the shares in exchange in amount of no more than 5% of total within
12 month, and no more than 10% of total within 24 months.
(3) After the reform of non-tradable shares, perform the scheme of incentive share awards for the management according to
government regulation.
7．According to the decision of the second temporary shareholder's meeting in September 21, 2007, the Company appointed
Anyong Dahua CPA Firm as the 2007 annual audit agency for the Company. At present the age limit ofaudit services supplied by the
agency for the Company is 1 year with RMB3.5 million audit fee. In the reporting year, the Company hasn't paid for the audit agency.
The former PricewaterhouseCoopers Zhongtian CPA has provided the audit service to the Company for six years.
8. During the reporting period, nor did the Company, the Board and its directors receive any audit and investigation, disciplinary
punishment, public criticism nor public censure from China Securities Regulatory Commission, and from the