##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 20-F/A
 (Amendment No. 1)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934ORþ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2007ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from  toORo
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 1-11412
 BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED
  Not Applicable
    
    Bermuda(Translation of Registrants name into English)
    
    (Jurisdiction of Incorporation or Organization)
 Suites 1602-05, Chater House, 8 Connaught Road Central, Hong Kong
  Securities registered or to be registered pursuant to Section 12(g) of the Act:
  
 Title of Class
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 Number of outstanding shares of each of the issuers classes of capital or common stock as of December 31, 2007:
    o þ
  o þ
  þ o
  o þ o
  þ
 o
 o
  o o
  o þ
   ii




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##### 



Table of Contents
 PageEXPLANATORY NOTE
    
    
    2Part IITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    3Part IIIITEM 18. FINANCIAL STATEMENTS
    
    
    20ITEM 19. EXHIBITS
    
    
    20EX-12.1 SECTION 302 CERTIFICATION OF CEOEX-12.2 SECTION 302 CERTIFICATION OF CFOEX-13.1 SECTION 906 CERTIFICATION OF CEO & CFO
  i




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##### Table of Contents



EXPLANATORY NOTE
  1.
    
    Item 5. Operating and Financial Review and Prospects  Results of Operations has been
amended to:
 (i)
    
    separately discuss the profitability of each of the registrants operating
segments; and(ii)
    
    disclose the impact of the registrants write-back of inventory on cost of sales
in 2007.
 2.
    
    Item 5. Operating and Financial Review and Prospects  Liquidity and Capital Resources has
been amended to expand the discussion of the registrants use of short-term financing.3.
    
    The last paragraph of the Report of Independent Registered Public Accounting Firm has been
revised to amend a clerical error.4.
    
    The registrants consolidated financial statements have been amended as follows:
 (i)
    
    Note 3(b) has been amended to include costs related to shipping and handling
costs incurred by the registrant;(ii)
    
    Note 3(l) has been amended to disclose the registrants accounting policy on
value-added tax;(iii)
    
    Note 13 has been amended to include information on the equity shares in the
income (loss) of associated companies and jointly controlled entities as of December 31,
2005;(iv)
    
    Note 30 has been amended to include business segment information for the year
ended December 31, 2005; and(v)
    
    Note 31 has been amended to include a full reconciliation of the ending balance
of Accumulated other comprehensive income at December 31, 2007.
  2




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PART I
 
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion should be read in conjunction with the rest of this annual report,
including the consolidated financial statements and notes thereto contained elsewhere in this
annual report. The results discussed below are not necessarily indicative of the results to be
expected in any future periods.
 Overview
   3




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4




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Production Volumes and Sales
   Costs and Expenses
    5




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Results of Operations
 Year ended December 31,2007
    
    2006
    
    2005(Rmb thousands)Sales to third parties
    
    
    10,994,675
    
    
    
    9,067,505
    
    
    
    3,859,151Sales to affiliated companies
    
    
    3,154,474
    
    
    
    1,417,249
    
    
    
    1,609,839Total Sales
    
    
    14,149,149
    
    
    
    10,484,754
    
    
    
    5,468,990Cost of sales
    
    
    (13,049,107
    )
    
    
    (9,960,587
    )
    
    
    (5,011,955
    )Gross profit
    
    
    1,100,042
    
    
    
    524,167
    
    
    
    457,035Selling, general and administrative expenses
    
    
    (1,535,695
    )
    
    
    (1,384,718
    )
    
    
    (1,195,336
    )Interest expense
    
    
    (203,263
    )
    
    
    (177,001
    )
    
    
    (182,354
    )Interest income
    
    
    125,470
    
    
    
    90,738
    
    
    
    60,189Equity in earnings of associated companies and jointly
controlled entities, net
    
    
    192,261
    
    
    
    149,320
    
    
    
    48,995Subsidy income
    
    
    140,081
    
    
    
    50,176
    
    
    
    3,139Other income, net
    
    
    179,706
    
    
    
    106,150
    
    
    
    43,650Impairment loss on intangible assets
    
    
    
    
    
    
    
    
    
    
    (173,000
    )Impairment loss on goodwill(1)
    
    
    
    
    
    
    (73,343
    )
    
    
    (257,720
    )(Loss) before taxation and minority interests
    
    
    (1,398
    )
    
    
    (714,511
    )
    
    
    (1,195,402
    )(Provision) for income taxes
    
    
    (45,208
    )
    
    
    (47,879
    )
    
    
    (101,884
    )Minority interests
    
    
    130,332
    
    
    
    376,282
    
    
    
    625,997Net income (loss)
    
    
    83,726
    
    
    
    (386,108
    )
    
    
    (671,289
    )
 
 (1)
    
    In 2006, an impairment loss on goodwill of Rmb 73.3 million in relation to one of Brilliance China Automotives jointly controlled entities was recognized. 6




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Manufactureand sale ofminibuses
    
    
    Manufactureand
    
    
    and sale of
    
    
    Manufactureautomotive
    
    
    Zhonghua
    
    
    and sale ofcomponents
    
    
    sedans
    
    
    BMW sedans
    
    
    Total*Rmb000
    
    
    Rmb000
    
    
    Rmb000
    
    
    Rmb0002007Total revenues from reportable segments
    
    
    5,729,289
    
    
    
    8,754,847
    
    
    
    
    
    
    
    14,484,136Elimination of intersegment revenues
    
    
    (334,987
    )
    
    
    
    
    
    
    
    
    
    
    (334,987
    )Revenues from external customers
    
    
    5,394,302
    
    
    
    8,754,847
    
    
    
    
    
    
    
    14,149,149Segment (loss) income before taxation
and minority interests
    
    
    194,986
    
    
    
    (286,223
    )
    
    
    142,227
    
    
    
    50,9902006Total revenues from reportable segments
    
    
    5,533,953
    
    
    
    5,190,129
    
    
    
    
    
    
    
    10,724,082Elimination of intersegment revenues
    
    
    (239,328
    )
    
    
    
    
    
    
    
    
    
    
    (239,328
    )Revenues from external customers
    
    
    5,294,625
    
    
    
    5,190,129
    
    
    
    
    
    
    
    10,484,754Segment (loss) income before taxation
and minority interests
    
    
    145,602
    
    
    
    (830,404
    )
    
    
    106,692
    
    
    
    (578,110
    )2005Total revenues from reportable segments
    
    
    4,837,379
    
    
    
    863,140
    
    
    
    
    
    
    
    5,700,519Elimination of intersegment revenues
    
    
    (231,529
    )
    
    
    
    
    
    
    
    
    
    
    (231,529
    )Revenues from external customers
    
    
    4,605,850
    
    
    
    863,140
    
    
    
    
    
    
    
    5,468,990Segment (loss) income before taxation
and minority interests
    
    
    (75,047
    )
    
    
    (970,603
    )
    
    
    32,250
    
    
    
    (1,013,400
    )
 
 *
    
    Please refer to Note 30 of the audited financial statements for a reconciliation of the above
totals to the consolidated financial statements. Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
    7




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8




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Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
    9




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Contingent Liabilities and Outstanding Guarantees
  
    
    Corporate guarantees of approximately Rmb 60 million (US$8.2 million) for revolving
bank loans and notes drawn by affiliated companies of Shanghai Shenhua. The guarantee
arose from the mutual negotiation between Shenyang Automotive and Shanghai Shenhua.
Associated with the corporate guarantee, Shanghai Shenhua also provided a cross
guarantee for the bank facilities of Shenyang Automotive. The
 11




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guarantee was for
revolving activities of Shanghai Shenhua and will be terminated upon mutual agreements
between Shenyang Automotive and Shanghai Shenhua. If
Shanghai Shenhua defaults on the repayment of its bank loans or notes when they fall
due, Shenyang Automotive is required to repay the outstanding balance. There is no
recourse or collateralization provision in the guarantee. Default by Shanghai Shenhua
and its affiliated companies is considered remote by management and therefore no
provision for the guarantors obligation under the guarantee was recorded as of December
31, 2007.
    
    Corporate guarantees of bank loans amounting to Rmb 200 million (US$27.4 million),
which is also the maximum potential amount of future payments under the guarantee as of
December 31, 2007, drawn by JinBei. Bank deposits of Rmb 213 million (US$29.2 million)
were pledged as a collateral for the corporate guarantees. However, default by JinBei
is considered remote by management and therefore no provision for the guarantors
obligation under the guarantee was recorded as of December 31, 2007.
  Liquidity and Capital Resources
  Payment due by period(Rmb thousands)MoreLess than
    
    
    
    
    
    
    
    
    
    
    than 5Contractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsNotes payable (1)
    
    
    2,828,373
    
    
    
    2,828,373
    
    
    
    
    
    
    
    
    
    
    
    Notes payable to affiliated companies (2)
    
    
    207,774
    
    
    
    207,774
    
    
    
    
    
    
    
    
    
    
    
    Convertible bonds (3)
    
    
    1,752,233
    
    
    
    
    
    
    
    1,752,233
    
    
    
    
    
    
    
    Financing from BMW Brilliance (4)
    
    
    174,373
    
    
    
    40,601
    
    
    
    16,445
    
    
    
    20,481
    
    
    
    96,846Operating lease obligations (relating to
offices and property)
    
    
    66,519
    
    
    
    16,367
    
    
    
    10,464
    
    
    
    8,392
    
    
    
    31,296Unconditional purchase obligations
    
    
    718,733
    
    
    
    718,733
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    5,748,005
    
    
    
    3,811,848
    
    
    
    1,779,142
    
    
    
    28,873
    
    
    
    128,142
 
 (1)
    
    Approximately Rmb 0.8 billion of the Rmb 2.8 billion notes payable had effective interest
rates of 3% to 4%. The remaining Rmb 2 billion notes payable were interest-free.(2)
    
    Notes payable to affiliated companies are non-interest bearing.(3)
    
    Included in the amount is a total accreted redemption premium payable on June 7, 2009 of
approximately Rmb 327.4 million (US$ 44.9 million). The accreted redemption premium as of
December 31, 2007 of approximately Rmb 162.3 million (US$ 22.2 million) was calculated based
on the outstanding principal of the convertible bonds using the effective interest method. 12




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(4)
    
    Accrued interest of approximately Rmb 68.0 million was calculated on the outstanding
principal using the compound interest method at an effective annual rate of 11.127% on a
quarterly basis. Cash Flows
    
    
    a net profit of Rmb83.7 million (US$11.5 million) in 2007 compared to a net loss of
Rmb 386.1 million in 2006; and
    
    an increase in notes and accounts payable in the amount of Rmb 2,689.1 million
(US$368.6 million) for the year ended December 31, 2007, as compared to an increase of
Rmb 1,487.9 million for the year ended December 31, 2006.
   13




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Debt Changes
    Capital Expenditures
  14




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Foreign Currency Requirements
   Research and Development, Patents and Licenses, etc.
  Trend information
  
    
    Increased Demand for Motor Vehicles. The rate of increase in Chinas gross domestic
product has been one of the highest in the world over the past decade, and this growth
has fueled demand for automobiles. In fact, demand in the Chinese automobile industry
has been growing over the past several years at a faster rate than the growth in Chinas
gross domestic product. This trend is expected to have a
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favorable impact on Brilliance China Automotives sales volume for both minibuses and sedans.
    
    Competition. As a result of Chinas accession to the WTO, domestic production of
automobiles (including minibuses and sedans) is expected to continue increasing,
particularly through Sino-foreign joint ventures that are being established for this
purpose. Formation of new Sino-foreign joint ventures and further investments by
foreign auto makers to increase the capacity of existing operations could result in
overcapacity and increased domestic competition for Brilliance China Automotive and
greater downward pressure on vehicle prices as competitors begin to employ a higher
ratio of domestically produced components and as more competitors achieve economies of
scale due to increased volume of production.
    
    Price. Retail prices in the automotive market are expected to continue to fall as a
result of the localization of production and sourcing of components as described
immediately above as well as increased competition. A decrease in average selling
prices may lower margins and cause industry-wide deterioration of profitability. Any
decline in vehicle prices will likely have an adverse effect on Brilliance China
Automotives sales revenue and profits.
    
    Growth, Consolidation and Development. On June 2, 2004, the NDRC issued a new
automotive policy for China to encourage consolidation in the industry and further the
development and sophistication of the automobile industry in areas such as consumer
financing and research and development. The policy acknowledges the success of Chinas
automobile industry and seeks to encourage this pillar industry to foster further
growth, particularly of domestically produced and branded products and research and
development, through consolidation of smaller, less-efficient manufacturers and
increased foreign and domestic investment. By encouraging industry consolidation and
establishing clearer guidelines for foreign investment, the policy encourages existing
players in the industry to grow and provides incentives for targeted investment from
both domestic and foreign sources. On December 26, 2006, the NDRC issued a circular to
assess the current PRC automobile industry and developments since the 2004 policy.
Consistent with the 2004 policy, the NDRC continues to stress the importance of stable
growth and preventing overcapacity in the automobile industry, and to encourage industry
consolidation and reorganization among sectors, in particular the components sector. The NDRC also encouraged more research and
development be focused on new products, such as environmental friendly models, in order
to enhance and upgrade domestic products. The NDRC also imposed, among other things, a
requirement that annual sales of automobile manufacturers in China must reach certain
levels in order for them to build new manufacturing plants. Given the high capacity
utilization rates already achieved at its production plants, Brilliance China Automotive
does not expect this policy to restrict its capacity expansion plans in the future.
    
    Improvements in Chinas Infrastructure. China continues to improve and expand its
roadway system. By making automobile travel a more practical and accessible mode of
transportation for motorists in China, such improvements in Chinas infrastructure will
likely add to demand for automobiles.
 16




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##### Table of Contents




    
    Rising Fuel Prices.Chinas fuel prices reached historical heights in June 2008 and
may continue to increase. Any further increases in fuel prices will likely have a
negative influence on Brilliance China Automotives sales volume.
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
    Revenue Recognition
   17




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Warranties
  Inventories
  Impairment of long-lived assets
  18




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Deferred Taxation
  Transactions with affiliated companies
  Recent Accounting Pronouncements
    19




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PART III
 
 ITEM 18. FINANCIAL STATEMENTS
 (a) Financial Statements and Supplemental Data
  (b) Financial Statement Schedules
 Schedule II  Valuation and Qualifying Accounts
  
 ITEM 19. EXHIBITS
  1.1
    
    Amended and Restated Bye-Laws of Brilliance China Automotive dated November 16,
2007.*1.2
    
    Amendments to Bye-Laws of Brilliance China Automotive dated June 20, 2008.*
 20




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2.1
    
    Trust Deed, dated June 7, 2006, between Brilliance China Finance Limited
(formerly known as Goldcosmos Investments Limited), Brilliance China Automotive and The
Bank of New York, London Branch relating to the zero coupon guaranteed convertible bonds
due 2011 issued by Brilliance China Finance Limited.**4.1
    
    Form of Service Agreement for Executive Director.**7.1
    
    Statement explaining how certain ratios were calculated in the annual report.*8.1
    
    List of significant subsidiaries, jointly controlled entities and associated
companies of Brilliance China Automotive as of December 31, 2007.*12.1
    
    Section 302 Certification of the Chief Executive Officer.12.2
    
    Section 302 Certification of the Chief Financial Officer.13.1
    
    Section 906 Certification of the Chief Executive Officer and Chief Financial Officer.
 
 *
    
    Incorporated by reference from the Registrants annual report on Form 20-F filed
with the SEC on June 27, 2008.**
    
    Incorporated by reference from the Registrants annual report on Form 20-F filed
with the SEC on June 26, 2006. 21




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SIGNATURE
  BRILLIANCE CHINA AUTOMOTIVE HOLDINGSLIMITED/s/ WU Xiao AnWU Xiao AnChairmanDate:  November 17, 2008 22




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INDEX TO FINANCIAL STATEMENTS
BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LIMITED AND SUBSIDIARIES
 PageReport of Independent Registered Public Accounting Firm of Grant
Thornton dated June 27, 2008
    
    
    F-2Consolidated Statements of Income and Comprehensive Income for the years
ended December 31, 2007, 2006 and 2005
    
    
    F-4Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    F-5Consolidated
Statements of Cash Flows for the years ended December 31, 2007,
2006 and 2005
    
    
    F-7Consolidated
Statements of Changes in Shareholders Equity for the years ended December
31, 2007, 2006 and 2005
    
    
    F-10Notes
to Consolidated Financial Statements for the years ended
December 31, 2007, 2006 and 2005
    
    
    F-11
 F-1




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Report of Independent Registered Public Accounting Firm
 To the Shareholders of
Brilliance China Automotive Holdings Limited
     Accounting for Uncertainty in Income TaxesAn
Interpretation of FASB Statement No. 109 Share-Based Payment.
  /s/ Grant Thornton
  
 F-2




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Report of Independent Registered Public Accounting Firm
 To the Shareholders of
Brilliance China Automotive Holdings Limited
    Moores Rowland Mazars  Chartered Accountants
Certified Public Accountants
 
 F-3




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Brilliance China Automotive Holdings Limited
 
 Consolidated Statements of Income and Comprehensive Income
  Year ended December 31,2007
    
    
    
    2006
    
    
    
    2005RMB000
    
    
    
    RMB000
    
    
    
    RMB000(except for share and ADS data)Net sales to third parties
    
    
    10,994,675
    
    
    
    9,067,505
    
    
    
    3,859,151Net sales to affiliated companies
    
    
    3,154,474
    
    
    
    1,417,249
    
    
    
    1,609,839Total sales
    
    
    14,149,149
    
    
    
    10,484,754
    
    
    
    5,468,990Cost of sales (including purchase of goods
and subcontracting charges from affiliated
companies) (2007: RMB3,620,835,000,
2006:RMB2,317,393,000, 2005: RMB1,174,732,000)
    
    
    (13,049,107
    )
    
    
    (9,960,587
    )
    
    
    (5,011,955
    )Gross profit
    
    
    1,100,042
    
    
    
    524,167
    
    
    
    457,035Selling, general and administrative expenses
    
    
    (1,535,695
    )
    
    
    (1,384,718
    )
    
    
    (1,195,336
    )Interest expenses
    
    
    (203,263
    )
    
    
    (177,001
    )
    
    
    (182,354
    )Interest income
    
    
    125,470
    
    
    
    90,738
    
    
    
    60,189Equity in earnings of associated companies
and jointly controlled entities, net
    
    
    192,261
    
    
    
    149,320
    
    
    
    48,995Subsidy income
    
    
    140,081
    
    
    
    50,176
    
    
    
    3,139Other income, net
    
    
    179,706
    
    
    
    106,150
    
    
    
    43,650Impairment loss on intangible assets
    
    
    
    
    
    
    
    
    
    
    (173,000
    )Impairment loss on goodwill
    
    
    
    
    
    
    (73,343
    )
    
    
    (257,720
    )Loss before taxation and minority interests
    
    
    (1,398
    )
    
    
    (714,511
    )
    
    
    (1,195,402
    )Provision for income taxes
    
    
    (45,208
    )
    
    
    (47,879
    )
    
    
    (101,884
    )Minority interests
    
    
    130,332
    
    
    
    376,282
    
    
    
    625,997Net income (loss)
    
    
    83,726
    
    
    
    (386,108
    )
    
    
    (671,289
    )Other comprehensive income (loss)Fair value adjustment for securities
available-for-sale
    
    
    2,393
    
    
    
    1,052
    
    
    
    (27,227
    )Share of a jointly controlled entitys
fair value adjustment for hedging
derivative
    
    
    31,275
    
    
    
    
    
    
    
    Comprehensive income (loss)
    
    
    117,394
    
    
    
    (385,056
    )
    
    
    (698,516
    )Basic earnings (loss) per share
    
    
    RMB0.0228
    
    
    
    RMB(0.1053
    )
    
    
    RMB(0.1830
    )Basic earnings (loss) per ADS
    
    
    RMB2.28
    
    
    
    RMB(10.53
    )
    
    
    RMB(18.30
    )Diluted earnings (loss) per share
    
    
    RMB0.0227
    
    
    
    RMB(0.1053
    )
    
    
    RMB(0.1830
    )Diluted earnings (loss) per ADS
    
    
    RMB2.27
    
    
    
    RMB(10.53
    )
    
    
    RMB(18.30
    )Weighted average number of shares outstanding
    
    
    3,669,022,064
    
    
    
    3,668,390,900
    
    
    
    3,668,390,900Weighted average number of ADSs outstanding
    
    
    36,690,221
    
    
    
    36,683,909
    
    
    
    36,683,909Net income (loss) adjusted for the dilutive
effect of convertible bonds
    
    
    83,726
    
    
    
    (386,108
    )
    
    
    (671,289
    )Weighted average number of shares
outstanding adjusted for dilutive effect of
stock options and convertible bonds
    
    
    3,679,572,569
    
    
    
    3,668,390,900
    
    
    
    3,668,390,900Weighted average number of ADSs outstanding
adjusted for dilutive effect of stock
options and convertible bonds
    
    
    36,795,726
    
    
    
    36,683,909
    
    
    
    36,683,909
  F-4




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Brilliance China Automotive Holdings Limited
 
 Consolidated Balance Sheets
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000AssetsCurrent assetsCash and cash equivalents
    
    
    1,373,416
    
    
    
    1,468,075Short-term bank deposits
    
    
    518,000
    
    
    
    616,787Pledged short-term bank deposits, restricted
    
    
    1,971,665
    
    
    
    1,625,149Deferred expenses  current portion
    
    
    6,283
    
    
    
    6,283Notes receivable
    
    
    416,495
    
    
    
    197,668Notes receivable from affiliated companies
    
    
    260,155
    
    
    
    81,477Accounts receivable, net
    
    
    805,187
    
    
    
    632,158Due from affiliated companies
    
    
    684,221
    
    
    
    953,637Dividend receivable from affiliated companies
    
    
    97,173
    
    
    
    97,173Inventories, net
    
    
    2,469,033
    
    
    
    1,346,843Other receivables
    
    
    491,237
    
    
    
    423,017Prepayments and other current assets
    
    
    273,828
    
    
    
    143,583Income tax recoverable
    
    
    18,482
    
    
    
    815Other taxes recoverable
    
    
    125,179
    
    
    
    117,830Advances to affiliated companies
    
    
    101,402
    
    
    
    58,085Total current assets
    
    
    9,611,756
    
    
    
    7,768,580Property, plant and equipment, net
    
    
    3,569,137
    
    
    
    3,865,210Intangible assets, net
    
    
    266,416
    
    
    
    420,978Interests in associated companies and jointly controlled entities
    
    
    1,615,917
    
    
    
    1,413,135Investment securities
    
    
    26,129
    
    
    
    23,736Goodwill
    
    
    339,710
    
    
    
    339,710Prepayment for a long-term investment
    
    
    600,000
    
    
    
    600,000Deferred expenses, net  non-current portion
    
    
    15,183
    
    
    
    21,466Long-term land lease prepayments, net
    
    
    118,720
    
    
    
    120,099Other long-term assets
    
    
    9,343
    
    
    
    7,450Total assets
    
    
    16,172,311
    
    
    
    14,580,364
 F-5




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 Consolidated Balance Sheets
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Liabilities and shareholders equityCurrent liabilitiesShort-term bank loans
    
    
    370,000
    
    
    
    500,000Notes payable
    
    
    2,828,373
    
    
    
    2,141,947Notes payable to affiliated companies
    
    
    207,774
    
    
    
    37,288Accounts payable
    
    
    3,421,891
    
    
    
    2,299,267Due to affiliated companies
    
    
    952,847
    
    
    
    983,293Customer advances
    
    
    150,354
    
    
    
    425,778Other payables
    
    
    419,710
    
    
    
    403,040Dividends payable
    
    
    3,087
    
    
    
    3,299Accrued expenses and other current liabilities
    
    
    152,150
    
    
    
    159,222Income tax payable
    
    
    9,555
    
    
    
    11,411Other taxes payable
    
    
    71,095
    
    
    
    81,841Advances from affiliated companies
    
    
    56,134
    
    
    
    55,389Total current liabilities
    
    
    8,642,970
    
    
    
    7,101,775Convertible bonds
    
    
    1,489,907
    
    
    
    1,486,568Deferred income
    
    
    81,555
    
    
    
    109,502Advances from affiliated companies
    
    
    133,772
    
    
    
    79,706Total liabilities
    
    
    10,348,204
    
    
    
    8,777,551Minority interests
    
    
    (93,116
    )
    
    
    36,900Shareholders equityCapital stockCommon stock (8,000,000,000 and 5,000,000,000
shares of US$0.01 each authorized as of
December 31, 2007 and 2006, respectively, and
3,669,765,900 and 3,668,390,900 shares of
US$0.01 each issued and outstanding as of
December 31, 2007 and 2006, respectively)
    
    
    303,488
    
    
    
    303,388Additional paid-in capital
    
    
    2,327,697
    
    
    
    2,325,690Accumulated other comprehensive income
    
    
    75,140
    
    
    
    41,472Dedicated capital
    
    
    193,356
    
    
    
    184,193Capital reserve
    
    
    120,000
    
    
    
    120,000Share option reserve
    
    
    43,090
    
    
    
    11,281Retained earnings
    
    
    2,854,452
    
    
    
    2,779,889Total shareholders equity
    
    
    5,917,223
    
    
    
    5,765,913Total liabilities and shareholders equity
    
    
    16,172,311
    
    
    
    14,580,364
  F-6




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 
 Consolidated Statements of Cash Flows
  Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Cash flows from operating activities:Net income (loss)
    
    
    83,726
    
    
    
    (386,108
    )
    
    
    (671,289
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Deferred income tax
    
    
    
    
    
    
    
    
    
    
    114,005Depreciation of property, plant and equipment
    
    
    593,263
    
    
    
    601,045
    
    
    
    399,744Amortization of long-term land lease prepayments
    
    
    3,439
    
    
    
    4,058
    
    
    
    3,886Amortization of intangible assets
    
    
    161,219
    
    
    
    181,444
    
    
    
    204,009Amortization of deferred expenses
    
    
    6,283
    
    
    
    24,962
    
    
    
    8,920Minority interests in net loss of consolidated
subsidiaries
    
    
    (130,332
    )
    
    
    (376,282
    )
    
    
    (625,998
    )Provision for doubtful debts and write off of bad
debts
    
    
    5,269
    
    
    
    28,196
    
    
    
    48,244Provision for impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    173,000Provision for impairment of property, plant and
equipment
    
    
    836
    
    
    
    29,160
    
    
    
    48,299Provision for impairment of investment in a
jointly controlled entity
    
    
    
    
    
    
    73,343
    
    
    
    179,030Provision for impairment of goodwill in a
subsidiary
    
    
    
    
    
    
    
    
    
    
    78,690Provision for inventories, net
    
    
    (130,185
    )
    
    
    21,264
    
    
    
    65,827Gain on disposal of property, plant and equipment
    
    
    (2,428
    )
    
    
    (3,055
    )
    
    
    (341
    )Gain on disposal of land lease prepayment
    
    
    (1,399
    )
    
    
    
    
    
    
    Write off of property, plant and equipment
    
    
    4,198
    
    
    
    8,251
    
    
    
    Gain on disposal of a jointly controlled entity
    
    
    
    
    
    
    
    
    
    
    (2,098
    )Government grant recognized
    
    
    (140,081
    )
    
    
    (1,850
    )
    
    
    (941
    )Unrealized exchange gain
    
    
    (100,043
    )
    
    
    (69,259
    )
    
    
    (40,829
    )Equity in earnings of associated companies and
jointly controlled entities, net
    
    
    (192,261
    )
    
    
    (149,320
    )
    
    
    (48,995
    )Amortisation of finance costs of convertible bonds
    
    
    103,170
    
    
    
    68,419
    
    
    
    12,419Write off of other non-current assets
    
    
    
    
    
    
    1,798
    
    
    
    Share option costs
    
    
    32,243
    
    
    
    11,281
    
    
    
    Gain on disposal of an associate
    
    
    
    
    
    
    (384
    )
    
    
    Loss on disposal of an associate
    
    
    
    
    
    
    709
    
    
    
    Gain on buy back of convertible bonds due 2008
    
    
    
    
    
    
    (10,733
    )
    
    
    
 F-7




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 Consolidated Statements of Cash Flows
 Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000(Increase) decrease in operating assets:Accounts receivable
    
    
    (173,094
    )
    
    
    (521,656
    )
    
    
    (69,974
    )Notes receivable
    
    
    (218,827
    )
    
    
    179,837
    
    
    
    243,394Notes receivable from affiliated companies
    
    
    (178,678
    )
    
    
    257,493
    
    
    
    306,173Due from affiliated companies
    
    
    886,193
    
    
    
    (191,724
    )
    
    
    (79,804
    )Inventories
    
    
    (991,935
    )
    
    
    (321,608
    )
    
    
    464,059Other receivables
    
    
    (73,424
    )
    
    
    75,113
    
    
    
    7,278Prepayments and other current assets
    
    
    (130,245
    )
    
    
    (85,876
    )
    
    
    69,374Increase (decrease) in operating liabilities:Notes and accounts payable
    
    
    2,689,050
    
    
    
    1,487,870
    
    
    
    (333,250
    )Due to affiliated companies
    
    
    (622,386
    )
    
    
    363,459
    
    
    
    171,871Notes payable to affiliated companies
    
    
    170,486
    
    
    
    (36,804
    )
    
    
    (47,070
    )Customer advances
    
    
    (275,424
    )
    
    
    106,800
    
    
    
    53,486Other payables
    
    
    4,442
    
    
    
    25,566
    
    
    
    43,423Accrued expenses and other current liabilities
    
    
    (7,072
    )
    
    
    (106,686
    )
    
    
    (8,277
    )Import tariff and taxes payable
    
    
    (37,618
    )
    
    
    (143,155
    )
    
    
    117,152Net cash provided by operating activities
    
    
    1,338,385
    
    
    
    1,145,568
    
    
    
    883,417Cash flows from investing activities:Capital expenditures
    
    
    (308,425
    )
    
    
    (304,152
    )
    
    
    (558,028
    )Proceeds from disposal of property, plant and
equipment
    
    
    6,921
    
    
    
    3,314
    
    
    
    9,487Proceeds from disposal of land lease prepayment
    
    
    6,618
    
    
    
    
    
    
    
    Decrease (Increase) in short-term bank deposits
    
    
    98,787
    
    
    
    437,045
    
    
    
    (45,230
    )Decrease(Increase) in pledged short-term bank
deposits, restricted
    
    
    (346,516
    )
    
    
    307,500
    
    
    
    844,542(Increase) in advances to affiliated companies
    
    
    (43,317
    )
    
    
    (12,944
    )
    
    
    (8,729
    )(Increase) Decrease in other non-current assets
    
    
    (1,893
    )
    
    
    1,719
    
    
    
    12,866Decrease in interests in associated companies and
jointly controlled entities
    
    
    
    
    
    
    
    
    
    
    11,517Dividends received from associated companies and
jointly controlled entities
    
    
    21,000
    
    
    
    81,000
    
    
    
    72,000Proceeds received from disposal of investment in
associated companies
    
    
    
    
    
    
    1,350
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (566,825
    )
    
    
    514,832
    
    
    
    338,425
 F-8




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 Consolidated Statements of Cash Flows
 Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Cash flows from financing activities:Proceeds from short-term bank loans
    
    
    430,000
    
    
    
    650,000
    
    
    
    501,202Repayment of short-term bank loans
    
    
    (560,000
    )
    
    
    (646,500
    )
    
    
    (4,702
    )Issuance of notes payable
    
    
    2,420,000
    
    
    
    4,530,000
    
    
    
    7,934,900Repayment of notes payable
    
    
    (3,300,000
    )
    
    
    (5,532,500
    )
    
    
    (10,106,000
    )Increase (decrease) in advances from affiliated
companies
    
    
    29,974
    
    
    
    102,480
    
    
    
    (9,434
    )Dividends paid
    
    
    
    
    
    
    
    
    
    
    (19,450
    )Proceeds from issuance of convertible bonds due
2011
    
    
    
    
    
    
    1,460,779
    
    
    
    Payment of direct expenses incurred in connection
with the issuance of convertible bonds due 2011
    
    
    
    
    
    
    (31,414
    )
    
    
    Buy back and redemption of convertible bonds due
2008
    
    
    
    
    
    
    (1,598,320
    )
    
    
    Issue of share capital by exercise of share options
    
    
    1,673
    
    
    
    
    
    
    
    Receipts of government grants
    
    
    112,134
    
    
    
    29,750
    
    
    
    80,543Net cash used in financing activities
    
    
    (866,219
    )
    
    
    (1,035,725
    )
    
    
    (1,622,941
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (94,659
    )
    
    
    624,675
    
    
    
    (401,099
    )Cash and cash equivalents, beginning of year
    
    
    1,468,075
    
    
    
    843,400
    
    
    
    1,244,499Cash and cash equivalents, end of year
    
    
    1,373,416
    
    
    
    1,468,075
    
    
    
    843,400
  F-9




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 
 Consolidated Statements of Changes in Shareholders Equity
  Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Share
    
    
    
    
    
    
    otherNumber of
    
    
    
    
    
    
    paid-in
    
    
    Dedicated
    
    
    option
    
    
    Capital
    
    
    comprehensive
    
    
    Retainedshares issued
    
    
    Amount
    
    
    capital
    
    
    capital
    
    
    reserve
    
    
    reserve
    
    
    income
    
    
    earnings
    
    
    TotalRMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000Balance as of December 31,
2004
    
    
    3,668,390,900
    
    
    
    303,388
    
    
    
    2,325,690
    
    
    
    158,352
    
    
    
    
    
    
    
    120,000
    
    
    
    67,647
    
    
    
    3,882,577
    
    
    
    6,857,654Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (671,289
    )
    
    
    (671,289
    )Transfer to dedicated capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,279
    )
    
    
    Net unrealized loss on
marketable equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,227
    )
    
    
    
    
    
    
    (27,227
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,450
    )
    
    
    (19,450
    )Balance as of December 31,
2005
    
    
    3,668,390,900
    
    
    
    303,388
    
    
    
    2,325,690
    
    
    
    167,631
    
    
    
    
    
    
    
    120,000
    
    
    
    40,420
    
    
    
    3,182,559
    
    
    
    6,139,688Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (386,108
    )
    
    
    (386,108
    )Share option costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,281Transfer to dedicated capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,562
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,562
    )
    
    
    Net unrealized gain on
marketable equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,052
    
    
    
    
    
    
    
    1,052Balance as of December 31,
2006
    
    
    3,668,390,900
    
    
    
    303,388
    
    
    
    2,325,690
    
    
    
    184,193
    
    
    
    11,281
    
    
    
    120,000
    
    
    
    41,472
    
    
    
    2,779,889
    
    
    
    5,765,913Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,726
    
    
    
    83,726Transfer to dedicated capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,163
    )
    
    
    Issue of share capital
    
    
    1,375,000
    
    
    
    100
    
    
    
    1,602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,702Premium arising from
exercise of employee share
option
    
    
    
    
    
    
    
    
    
    
    405
    
    
    
    
    
    
    
    (434
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )Share option costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,243
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,243Net unrealized gain on
marketable equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,393
    
    
    
    
    
    
    
    2,393Share of a jointly
controlled entitys fair
value adjustment for hedging
derivative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,275
    
    
    
    
    
    
    
    31,275Balance as of December 31,
2007
    
    
    3,669,765,900
    
    
    
    303,488
    
    
    
    2,327,697
    
    
    
    193,356
    
    
    
    43,090
    
    
    
    120,000
    
    
    
    75,140
    
    
    
    2,854,452
    
    
    
    5,917,223
  F-10




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 
 Notes to Consolidated Financial Statements
  1.
    
    ORGANIZATION, PRINCIPAL ACTIVITIES AND OPERATING ENVIRONMENT
    Percentage of effectivePlace of
    
    equity interest/votingestablishment/
    
    right attributable toName
    
    incorporation
    
    the Company
    
    Principal activitiesDirectly
    
    IndirectlyShenyang Brilliance JinBei
Automobile Co., Ltd. (Shenyang
Automotive)
    
    Shenyang, the PRC
    
    
    51
    %
    
    
    
    
    
    Manufacture,
assembly and sale
of minibuses and
sedansNingbo Yuming Machinery
Industrial Co., Ltd. (Ningbo
Yuming)
    
    Ningbo, the PRC
    
    
    
    
    
    
    100
    %
    
    Manufacture and
sale of automotive
componentsShenyang XingYuanDong
Automobile Component Co., Ltd.
(Xing Yuan Dong)
    
    Shenyang, the PRC
    
    
    100
    %
    
    
    
    
    
    Manufacture and
trading of
automotive
componentsNingbo Brilliance Ruixing Auto
Components Co., Ltd. (Ningbo
Ruixing)
    
    Ningbo, the PRC
    
    
    100
    %
    
    
    
    
    
    Manufacture and
trading of
automotive
componentsMianyang Brilliance Ruian
Automotive Components Co., Ltd.
(Mianyang Ruian)
    
    Mianyang, the PRC
    
    
    100
    %
    
    
    
    
    
    Manufacture and
trading of
automotive
componentsShenyang Brilliance Dongxing
Automotive Component Co., Ltd.
(Dongxing Automotive)
    
    Shenyang, the PRC
    
    
    
    
    
    
    100
    %
    
    Manufacture and
trading of
automotive
components and
remodeling
minibuses and
sedansShenyang Jindong Development
Co., Ltd.
    
    Shenyang, the PRC
    
    
    
    
    
    
    75.5
    %
    
    Trading of
automotive
componentsBrilliance China Finance Limited
    
    British Virgin
Islands
    
    
    100
    %
    
    
    
    
    
    FinancingShenyang ChenFa Automobile
Component Co., Ltd.
    
    Shenyang, the PRC
    
    
    100
    %
    
    
    
    
    
    Development,
manufacture and
sale of engines
components
 F-11




---



##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 1.
    
    ORGANIZATION, PRINCIPAL ACTIVITIES AND OPERATING ENVIRONMENT (CONTINUED)
 Percentage of effectivePlace of
    
    equity interest/votingestablishment/
    
    right attributable toName
    
    incorporation
    
    the Company
    
    Principal activitiesDirectly
    
    IndirectlyBrilliance China Automotive Finance Limited
    
    British Virgin Islands
    
    
    100
    %
    
    
    
    
    
    InactiveShenyang XinJinBei
Investment and
Development Co.,
Ltd. (SXID)
    
    Shenyang, the PRC
    
    
    
    
    
    
    100
    %
    
    Investment holdingShenyang JinBei
Automotive Industry
Holdings Co., Ltd.
(SJAI)
    
    Shenyang, the PRC
    
    
    
    
    
    
    99
    %
    
    Investment holdingShanghai Hidea Auto
Design Co., Ltd
    
    Shenyang, the PRC
    
    
    
    
    
    
    63.25
    %
    
    Design of automotiveShenyang Brilliance
Power Train
Machinery Co., Ltd
    
    Shenyang, the PRC
    
    
    49
    %
    
    
    26.01
    %
    
    Manufacture and
sale of power train
   2.
    
    BASIS OF PRESENTATION
   
    
    Reclassification of certain items, designated as construction-in-progress in the statutory
financial statements, as property, plant and equipment;
    
    Reclassification of certain items, designated as long-term land lease prepayments, from
property, plant and equipment in the statutory financial statements;
    
    Reclassification of certain items, designated as reserves appropriated from net income in
the statutory financial statements, as charges to income;
    
    Recognition of deferred income taxes;
    
    Recognition of provision for impairment loss of long-lived assets;
 F-12




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 2.
    
    BASIS OF PRESENTATION (CONTINUED)
 
    
    Write-off of certain research and development expenditures which are recgonised as intangible
assets in the statutory financial statements; and
    
    Recognition of stock-based compensation.
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a)
    
    Basis of consolidation
     F-13




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (a)
    
    Basis of consolidation (Continued)
  (b)
    
    Sales
   (c)
    
    Account receivables
  (d)
    
    Cash, cash equivalents and short-term bank deposits
   (e)
    
    Inventories
   F-14




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 (f)
    
    Property, plant and equipment and long-term land lease prepayments
   F-15




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (f)
    
    Property, plant and equipment and long-term land lease prepayments (Continued)
 Buildings
    
    
    5
    %Machinery and equipment (excluding special tools and moulds)
    
    
    10
    %Furniture, fixtures and office equipment
    
    
    20
    %Motor vehicles
    
    
    20
    %
     (g)
    
    Intangible assets
  (h)
    
    Impairment of long-lived assets
  (i)
    
    Goodwill
   F-16




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (i)
    
    Goodwill (Continued)
  (j)
    
    Investments in associated companies and jointly controlled entities
  (k)
    
    Investment securities
   F-17




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (l)
    
    Taxation
 Income Tax
        F-18




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (l)
    
    Taxation (Continued)
 Income Tax (Continued)
     Value Added Tax (VAT) and Consumption Tax
   (m)
    
    Deferred taxation
   F-19




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (n)
    
    Foreign currency translation
   (o)
    
    Warranty
    2007
    
    
    2006RMB000
    
    
    RMB000Balance as of January 1,
    
    
    27,348
    
    
    
    22,460Accrual for warranties issued during the year
    
    
    73,832
    
    
    
    42,102Settlement made during the year
    
    
    (72,690
    )
    
    
    (37,214
    )Balance as of December 31,
    
    
    28,490
    
    
    
    27,348
 (p)
    
    Advertising expenses
  F-20




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (q)
    
    Research and development expenses
  (r)
    
    Operating leases
   (s)
    
    Stock-based compensation
     F-21




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (t)
    
    Earnings (Loss) per share and earnings (loss) per ADS
    Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Net income (loss) during the year
    
    
    83,726
    
    
    
    (386,108
    )
    
    
    (671,289
    )
  Year ended December 31,2007
    
    
    2006
    
    
    2005Weighted average number of
shares of common stock used in
calculation of basic earnings
(loss) per share
    
    
    3,669,022,065
    
    
    
    3,668,390,900
    
    
    
    3,668,390,900Dilutive effect of stock options
    
    
    10,550,504
    
    
    
    
    
    
    
    Weighted average number of
shares of common stock adjusted
for dilutive effect of stock
options and convertible bonds
used in calculation of diluted
(loss) earnings per share
    
    
    3,679,572,569
    
    
    
    3,668,390,900
    
    
    
    3,668,390,900
    F-22




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (t)
    
    Earnings (Loss) per share and earnings (loss) per ADS (Continued)
     Year ended December 31,2007
    
    
    2006
    
    
    2005Weighted average number of ADSs
used in calculation of basic
earnings (loss) per ADS
    
    
    36,690,221
    
    
    
    36,683,909
    
    
    
    36,683,909Dilutive effect of stock options
    
    
    105,505
    
    
    
    
    
    
    
    Weighted average number of ADSs
adjusted for dilutive effect of
stock options and convertible
bonds used in calculation of
diluted earnings (loss) per ADS
    
    
    36,795,726
    
    
    
    36,683,909
    
    
    
    36,683,909
 (u)
    
    Segmental information
  (v)
    
    Comprehensive income
   F-23




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (w)
    
    Convertible bonds
  (x)
    
    Guarantees
  (y)
    
    Allowance for doubtful accounts
  (z)
    
    Fair value of financial instruments
  (aa)
    
    Use of estimates
  (ab)
    
    Other new accounting pronouncements
  F-24




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (ab)
    
    Other new accounting pronouncements (Continued)
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of SFAS No. 115
   4.
    
    SUBSIDY INCOME
  5.
    
    INCOME TAXES
  F-25




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 5.
    
    INCOME TAXES (CONTINUED)
  Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Current taxation
    
    
    (45,208
    )
    
    
    (47,879
    )
    
    
    12,121Deferred taxation
    
    
    
    
    
    
    
    
    
    
    (114,005
    )(45,208
    )
    
    
    (47,879
    )
    
    
    (101,884
    )
  Year ended December 31,2007
    
    
    2006
    
    
    2005%
    
    
    %
    
    
    %Average statutory tax rate
(including state and local income
tax)
    
    
    (5,650.24
    )
    
    
    5.17
    
    
    
    10.25Effect of statutory tax holiday
    
    
    4,048.63
    
    
    
    5.87
    
    
    
    3.07Effect of non-deductible expenses
    
    
    (2,111.20
    )
    
    
    (7.02
    )
    
    
    (2.62
    )Effect of valuation allowances
    
    
    1,378.32
    
    
    
    (8.77
    )
    
    
    (22.93
    )Others, not individually significant
    
    
    (909.32
    )
    
    
    (1.95
    )
    
    
    3.71Effective tax rate
    
    
    (3,243.81
    )
    
    
    (6.70
    )
    
    
    (8.52
    )
   As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Deferred tax asset:Research and development costs
    
    
    88,814
    
    
    
    62,008Provisions and accruals
    
    
    37,065
    
    
    
    56,893Provision for impairment of property, plant and equipment
    
    
    3,023
    
    
    
    7,541Amortization and provision for impairment of intangible assets
    
    
    118,378
    
    
    
    116,737Tax losses carry forward
    
    
    127,248
    
    
    
    144,671374,528
    
    
    
    387,850Valuation allowance (Note)
    
    
    (374,528
    )
    
    
    (387,850
    )Net deferred tax assets
    
    
    
    
    
    
    
 F-26




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 5.
    
    INCOME TAXES (CONTINUED)
 
 Note:
    
    At December 31, 2007, valuation allowances of approximately RMB127.2 million (2006: RMB144.7
million) and RMB247.3 million (2006: RMB243.2 million) were made for deferred tax assets recognized
in respect of the unused tax losses and deductible temporary differences because it is more likely
than not that the tax benefit will not be realized in the foreseeable future. The temporary
differences do not expire under current legislation but the unrecognized tax losses of RMB238.1
million (2006: RMB354.2 million), RMB610.2 million (2006: RMB610.2 million) will expire in 2009 and
2010 respectively.
 6.
    
    PLEDGED SHORT-TERM BANK DEPOSITS, RESTRICTED
  7.
    
    ACCOUNTS RECEIVABLE, NET
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Accounts receivable
    
    
    868,075
    
    
    
    694,981Less: Allowance for doubtful debts
    
    
    (62,888
    )
    
    
    (62,823
    )805,187
    
    
    
    632,158
  2007
    
    
    2006RMB000
    
    
    RMB000Balance as of January 1,
    
    
    62,823
    
    
    
    48,367Additional provision
    
    
    83
    
    
    
    14,456Write-back of provision
    
    
    (18
    )
    
    
    Balance as of December 31,
    
    
    62,888
    
    
    
    62,823
  Percentage of total sales for the year2007
    
    2006
    
    2005Customer A
    
    
    23
    %
    
    
    7
    %
    
    NilCustomer B
    
    
    7
    %
    
    
    8
    %
    
    
    26
    %
 F-27




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
  Percentage of accounts receivableDecember 31,2007
    
    2006
    
    2005Major customers receivable balances
    
    
    42
    %
    
    
    42
    %
    
    
    30
    %
 8.
    
    NOTES RECEIVABLE
  9.
    
    OTHER RECEIVABLES
  10.
    
    INVENTORIES, NET
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Inventories consist of:Raw materials
    
    
    806,580
    
    
    
    598,970Work-in-progress
    
    
    226,476
    
    
    
    174,328Finished goods
    
    
    1,435,977
    
    
    
    573,5452,469,033
    
    
    
    1,346,843
  F-28




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 11.
    
    PROPERTY, PLANT AND EQUIPMENT, NET
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Buildings
    
    
    1,262,157
    
    
    
    1,238,713Machineries and equipment
    
    
    4,578,375
    
    
    
    4,439,080Motor vehicles
    
    
    122,355
    
    
    
    116,133Furniture, fixtures and office equipment
    
    
    435,372
    
    
    
    423,321Construction-in-progress
    
    
    257,017
    
    
    
    233,1046,655,276
    
    
    
    6,450,351Less: Accumulated provision for impairment losses
    
    
    (94,907
    )
    
    
    (125,028
    )6,560,369
    
    
    
    6,325,323Less: Accumulated depreciation
    
    
    (2,991,232
    )
    
    
    (2,460,113
    )Net book value
    
    
    3,569,137
    
    
    
    3,865,210
 (a)
    
    During the years ended December 31, 2007, 2006 and 2005, capitalized interest expense
amounted to approximately RMB5.5 million, RMB6.8 million and RMB23.9 million, respectively.(b)
    
    In December 2003, Shenyang Automotive disposed of certain machineries and equipment at their
net book value to the Groups jointly controlled entity, BMW Brilliance Automotive Ltd (BMW
Brilliance), at a consideration mutually agreed by both parties. The agreement of sale
includes an option for BMW Brilliance to require Shenyang Automotive to purchase back such
machineries and equipment at the purchase price less depreciation over a specified period upon
the occurrence of certain events, including the passing of a valid resolution pursuant to the
joint venture contract by the board of directors of BMW Brilliance. Up to December 31, 2007,
BMW Brilliance has not required Shenyang Automotive to purchase back such machineries and
equipments. These machineries and equipment are maintained and operated by BMW Brilliance for
the manufacturing of its products. BMW Brilliance will provide certain services to Shenyang
Automotive upon the payment of a service fee which is determined based on the number of
Zhonghua sedans produced by Shenyang Automotive using these machineries and equipment at a
predetermined formulated unit charge. The service fees of approximately RMB257,937, RMB254,479
and RMB112,160,000 were incurred for 2007, 2006 and 2005, respectively.(c)
    
    In 2003, Shenyang Automotive transferred the legal titles and ownership of certain buildings
at their net book value to BMW Brilliance and entered into an agreement with BMW Brilliance to
lease-back a substantial portion of the buildings. The agreement of sale includes an option
for BMW Brilliance to require Shenyang Automotive to purchase back such buildings at the
purchase price less depreciation upon the occurrence of certain events, including the passing
of a valid resolution pursuant to the joint venture contract by the board of directors of BMW
Brilliance. For financial reporting purposes, as of December 31, 2007 and 2006, the net book
value of the buildings, amounting to approximately RMB126,140,000 and RMB134,348,000,
respectively, were retained as assets on the balance sheet of the Group and the portion of
consideration received from BMW Brilliance up to December 31, 2007, amounting to approximately
RMB174,373,000 (2006: RMB113,343,000), was treated as financing and will be partially offset
against the lease rental payable in future years.
 F-29




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 These respective buildings have been pledged by BMW Brilliance to a bank for long-term bank
loans granted to BMW Brilliance.(d)
    
    As a result of the retirement from use and/or the change in use  from production to rental
  of certain property, plant and equipment of the Groups minibus and automotive components
segment, the Group assessed the recoverability of the carrying value of these long-lived
assets, which resulted
in impairment losses of approximately RMB0.8 million, RMB29.1 million and RMB48.3 million for
the years ended December 31, 2007, 2006 and 2005 respectively. These losses reflect the
amounts by which the carrying values of these assets exceeded their estimated fair values
determined by their estimated discounted future cash flows. The impairment loss was recorded
as a component of Selling, general and administrative expenses in the Consolidated
Statement of Income and Comprehensive Income for the years.
 F-30




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 12.
    
    INTANGIBLE ASSETS, NET
 2007
    
    
    2006RMB000
    
    
    RMB000CostBalance as of January 1
    
    
    1,539,333
    
    
    
    1,521,722Additions
    
    
    6,657
    
    
    
    17,611Balance as of December 31
    
    
    1,545,990
    
    
    
    1,539,333Accumulated amortizationBalance as of January 1
    
    
    (895,355
    )
    
    
    (713,911
    )Amortization for the year
    
    
    (161,219
    )
    
    
    (181,444
    )Balance as of December 31
    
    
    (1,056,574
    )
    
    
    (895,355
    )Accumulated impairmentBalance as of January 1 and December 31
    
    
    (223,000
    )
    
    
    (223,000
    )Net book valueBalance as of December 31
    
    
    266,416
    
    
    
    420,978Balance as of January 1
    
    
    420,978
    
    
    
    584,811
  (a)
    
    Sedan design rights, which include rights, titles and interests in certain design and
engineering agreements and a technical assistance agreement related to Zhonghua sedans; and(b)
    
    Components and parts technology rights, which include rights, titles and interests in the
design of the components and spare parts for Zhonghua sedans contributed by JinBei, a joint
venture partner, as capital into Shenyang Brilliance JinBei Automobile Co. Ltd., a subsidiary
of the Company in 2003.
   F-31




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 13.
    
    INTERESTS IN ASSOCIATED COMPANIES AND JOINTLY CONTROLLED ENTITIES
  Percentage of effectiveequity interest heldPlace of
    
    indirectly by theName of company
    
    establishment
    
    Company
    
    Principal activitiesAssociated companies:Shenyang Aerospace
Mitsubishi Motors Engine
Manufacturing Co., Ltd.
(Shenyang Aerospace)
(Note 1)
    
    Shenyang, the PRC
    
    
    12.77
    %
    
    Manufacture and
sale of automotive
enginesShenyang JinBei Vehicle
Dies Manufacturing Co.,
Ltd. (Shenyang JinBei
Vehicle)
    
    Shenyang, the PRC
    
    
    48
    %
    
    Manufacture and
sale of automotive
componentsJointly controlled entities:Mianyang Xinchen Engine
Co., Ltd. (Mianyang
Xinchen) (Note 2)
    
    Mianyang, the PRC
    
    
    50
    %
    
    Manufacture and
sale of automotive
engines for
minibuses and light
duty trucksShenyang Xinguang
Brilliance Automobile
Engine Co., Ltd. (Xinguang
Brilliance)
    
    Shenyang, the PRC
    
    
    50
    %
    
    Manufacture and
sale of automotive
engines for
minibuses and light
duty trucksBMW Brilliance Automotive
Ltd. (BMW Brilliance)
    
    Shenyang, the PRC
    
    
    49.5
    %
    
    Manufacture and
sale of BMW sedans
 
 Notse:(1)
    
    The Group has effective equity interest of 12.77% in Shenyang Aerospace through 21% equity
interest jointly held by Xin Yuan Dong and Shenyang Automotive. On 29th September, 2005, the
Group entered into an agreement with a shareholder of Shenyang Aerospace to dispose of 2% of
the Groups interest in Shenyang Aerospace for a cash consideration of RMB50 million. The
disposal is yet to be completed as at the date of these financial statements upon the approval
of respective local government.(2)
    
    On 7th August, 2006, the Group entered into an agreement with an independent third party to
dispose of 3.5% of the Groups interest in Mianyang Xinchen for a cash consideration of
approximately RMB16.4 million. The disposal is yet to be completed as at the date of these
financial statements upon the approval of the respective local government. F-32




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 13.
    
    INTERESTS IN ASSOCIATED COMPANIES AND JOINTLY CONTROLLED ENTITIES (CONTINUED)
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Interests in associated companies:Shenyang Aerospace
    
    
    374,919
    
    
    
    357,893Shenyang JinBei Vehicle
    
    
    13,840
    
    
    
    14,087388,759
    
    
    
    371,980Interests in jointly controlled entities:Mianyang Xinchen
    
    
    309,984
    
    
    
    304,462Xinguang Brilliance
    
    
    35,187
    
    
    
    28,523BMW Brilliance
    
    
    881,987
    
    
    
    708,1701,227,158
    
    
    
    1,041,1551,615,917
    
    
    
    1,413,135
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Shenyang Aerospace
    
    
    31,983
    
    
    
    31,983Mianyang Xinchen
    
    
    91,410
    
    
    
    91,410123,393
    
    
    
    123,393
  F-33




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 13.
    
    INTERESTS IN ASSOCIATED COMPANIES AND JOINTLY CONTROLLED ENTITIES (CONTINUED)
  Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Associated companies:Shenyang Aerospace
    
    
    37,863
    
    
    
    50,183
    
    
    
    28,386Shenyang JinBei Vehicle
    
    
    (246
    )
    
    
    (265
    )
    
    
    Chongqing FuHua Automotive Sales
Service Co., Ltd.
    
    
    
    
    
    
    
    
    
    
    192Chongqing Baosheng Automotive Sales
Service Co., Ltd.
    
    
    
    
    
    
    
    
    
    
    47737,617
    
    
    
    49,918
    
    
    
    29,055Jointly controlled entities:Mianyang Xinchen
    
    
    5,885
    
    
    
    (414
    )
    
    
    1,978Xinguang Brilliance
    
    
    6,532
    
    
    
    (6,876
    )
    
    
    (13,296
    )BMW Brilliance
    
    
    142,227
    
    
    
    106,692
    
    
    
    31,582Shanghai Kowin Automobile Co., Ltd
    
    
    
    
    
    
    
    
    
    
    (324
    )154,644
    
    
    
    99,402
    
    
    
    19,940192,261
    
    
    
    149,320
    
    
    
    48,995
  Year ended December 31,2007
    
    
    2006RMB000
    
    
    RMB000Revenue
    
    
    2,225,332
    
    
    
    2,113,735Profit before taxation, net
    
    
    206,390
    
    
    
    209,438Net income
    
    
    180,563
    
    
    
    187,388
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Current assets
    
    
    838,123
    
    
    
    889,889Non-current assets
    
    
    1,796,883
    
    
    
    1,906,025Total assets
    
    
    2,635,006
    
    
    
    2,795,914Current liabilities
    
    
    (433,145
    )
    
    
    (634,616
    )Long-term liabilities
    
    
    (540,000
    )
    
    
    (580,000
    )Total liabilities
    
    
    (973,145
    )
    
    
    (1,214,616
    )Total shareholders equity
    
    
    1,661,861
    
    
    
    1,581,298
 F-34




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 13.
    
    INTERESTS IN ASSOCIATED COMPANIES AND JOINTLY CONTROLLED ENTITIES (CONTINUED)
  Year ended December 31,2007
    
    
    2006RMB000
    
    
    RMB000Revenue
    
    
    13,343,555
    
    
    
    8,953,086Profit before taxation, net
    
    
    315,823
    
    
    
    159,091Net income
    
    
    296,356
    
    
    
    197,063
 As of December 31,2007
    
    
    2006RMB'000
    
    
    RMB'000Current assets
    
    
    6,366,424
    
    
    
    6,051,057Non-current assets
    
    
    2,812,837
    
    
    
    2,101,276Total assets
    
    
    9,179,261
    
    
    
    8,152,333Current liabilities
    
    
    (6,049,432
    )
    
    
    (5,530,655
    )Long-term liabilities
    
    
    (871,478
    )
    
    
    (700,979
    )Total liabilities
    
    
    (6,920,910
    )
    
    
    (6,231,634
    )Total shareholders equity
    
    
    2,258,351
    
    
    
    1,920,699
 14.
    
    INVESTMENT SECURITIES
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Available-for-sale securities at cost
    
    
    17,305
    
    
    
    17,305Gross unrealized gain
    
    
    4,686
    
    
    
    2,29321,991
    
    
    
    19,598Unlisted securities at cost
    
    
    4,138
    
    
    
    4,13826,129
    
    
    
    23,736
  F-35




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 14.
    
    INVESTMENT SECURITIES (CONTINUED)
  15.
    
    GOODWILL
   16.
    
    PREPAYMENT FOR A LONG-TERM INVESTMENT
    F-36




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 17.
    
    DEFERRED EXPENSES, NET
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Direct expenses incurred in connection with the
issuance of convertible bonds due 2011 (Note 18)
    
    
    31,414
    
    
    
    31,414Amortization
    
    
    (9,948
    )
    
    
    (3,665
    )21,466
    
    
    
    27,749Non-current portion
    
    
    15,183
    
    
    
    21,466Current portion
    
    
    6,283
    
    
    
    6,28321,466
    
    
    
    27,749
 18.
    
    CONVERTIBLE BONDS
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Convertible bonds issued at par
    
    
    1,460,779
    
    
    
    1,460,779Accreted redemption premium
    
    
    162,327
    
    
    
    59,157Exchange gain
    
    
    (133,199
    )
    
    
    (33,368
    )1,489,907
    
    
    
    1,486,568
   Conversion price reset
 (1)
    
    If the average of the closing price (the Average Market Price) of the
shares of the Company for the period of 20 consecutive trading days immediately prior
to the reset dates (being March 10, 2007 and March 10, 2008) is less than the
conversion price on the applicable reset date, the conversion price shall be adjusted
on the applicable reset date so that the Average Market Price of the shares of the
Company will become the adjusted conversion price with effect from the applicable
reset date provided that, among other things, any such adjustment to the conversion
price in no event shall be less than 68% (for the March 10, 2007 reset date) and 75%
(for the March 10, 2008 reset date) of the conversion price prevailing on the
applicable reset date and that the conversion price shall not be reduced below the
then par value of the shares unless under applicable law then in effect the
convertible bonds due 2011 could not be converted at such reduced conversion price
into legally issued, fully-paid and non-assessable shares. Since the average market
price was HK$1.53 prior to the 10th March 2008 reset date, the conversion price was
adjusted from HK$1.93 to HK$1.53.
 F-37




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 Due to the adjustment to the conversion price, the total number of conversion shares
will increase from 733,674,599 shares at a conversion price of HK$1.93 to 925,484,964
shares at conversion price of HK$1.53.An ordinary resolution was proposed in an EGM held on 21st April 2008 to grant the
directors a specific mandate to issue, allot and deal with the additional conversion
shares.
 18.
    
    CONVERTIBLE BONDS (CONTINUED)
 Redemption
  (i)
    
    on or at any time after June 7, 2008 and prior to June 7, 2009, if the closing price of the
shares of the Company on the SEHK for each of the last 30 consecutive trading days has been at
least 145% of the applicable early redemption amount divided by the conversion ratio
(principal amount of the convertible bonds divided by the conversion price);(ii)
    
    on or at any time after June 7, 2009 and prior to May 8, 2011, if the closing price of the
shares of the Company on the SEHK for each of the last 30 consecutive trading days has been at
least 130% of the applicable early redemption amount divided by the conversion ratio; or(iii)
    
    at any time, if more than 90% in principal amount of the convertible bonds has been
converted, redeemed or purchased and cancelled.
    19.
    
    NOTES PAYABLE
  F-38




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 20.
    
    TAXES PAYABLE
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Income tax payable
    
    
    9,554
    
    
    
    11,411VAT payable
    
    
    12,674
    
    
    
    10,651Consumption tax payable
    
    
    44,967
    
    
    
    54,727Others
    
    
    13,454
    
    
    
    16,463Other taxes payable
    
    
    71,095
    
    
    
    81,84180,649
    
    
    
    93,252
 21.
    
    COMMITMENTS AND CONTINGENCIES
 (a)
    
    Commitments
   OperatingleaseRMB000Within one year
    
    
    16,367One to two years
    
    
    6,201Two to three years
    
    
    4,263Three to four years
    
    
    4,263Four to five years
    
    
    4,129Over five years
    
    
    31,296Total minimum lease payments
    
    
    66,519
 F-39




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 21.
    
    COMMITMENTS AND CONTINGENCIES (CONTINUED)
 (b)
    
    Operating lease income
    As of December 31,2007RMB000Buildings
    
    
    97,358Accumulated depreciation
    
    
    (19,542
    )Net investment in operating leases
    
    
    77,816
  As of December 31,2007RMB000Within one year
    
    
    19,884One to two years
    
    
    14,174Two to three years
    
    
    14,174Three to four years
    
    
    14,174Four to five years
    
    
    14,174Over five years
    
    
    76,778Total
    
    
    153,358
  F-40




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 21.
    
    COMMITMENTS AND CONTINGENCIES (CONTINUED)
 (c)
    
    Contingent liabilities(i)
    
    As of December 31, 2007, the Group had provided the following guarantees:
 (1)
    
    Corporate guarantees of approximately RMB60 million (2006: RMB120 million) for
revolving bank loans and notes drawn by affiliated companies of Shanghai Shenhua:The guarantee arose from the mutual negotiation between Shenyang Automotive and Shanghai
Shenhua. Associated with the corporate guarantee, Shanghai Shenhua also provided a cross
guarantee for the bank facilities of Shenyang Automotive. The guarantee was for revolving
activities of Shanghai Shenhua and will be terminated upon mutual agreements between
Shenyang Automotive and Shanghai Shenhua. If Shanghai Shenhua defaults on the repayment
of its bank loans or notes when they fall due, Shenyang Automotive is required to repay
the outstanding balance. There is no recourse or collateralization provision in the
guarantee. As of December 31, 2007, the guarantee provided for the bank loans and notes
drawn by affiliated companies of Shanghai Shenhua was approximately RMB60 million (2006:
RMB120 million), which is also the maximum potential amount of future payments under the
guarantee as of December 31, 2007. However, default by Shanghai Shenhua and its
affiliated companies is considered remote by management and therefore no liability for
the guarantors obligation under the guarantee existed as of December 31, 2007.(2)
    
    Corporate guarantees of bank loans amounting to RMB200 million (2006: RMB295
million), which is also the maximum potential amount of future payments under the
guarantee as of December 31, 2007, drawn by JinBei. Bank deposits of RMB213 million
(2006: RMB312 million) were pledged as collateral for the corporate guarantees. However,
default by JinBei is considered remote by management and therefore no liability for the
guarantors obligation under the guarantee existed as of December 31, 2007.
 (ii)
    
    On or about 25th October, 2002, the Company was served with a claim lodged by Mr. Yang Rong
(Mr. Yang) in the Labour Tribunal in Hong Kong against the Company for alleged wrongful
repudiation and/or breach of his employment contract. The claim was for approximately US$4.3
million (equivalent to approximately RMB31.5 million) with respect to loss of salary. In
addition, Mr. Yang claimed unspecified damages in respect of bonuses and share options. The
claim was dismissed by the Labour Tribunal in Hong Kong on 28th January, 2003. Mr. Yang
subsequently applied for a review of this decision. At the review hearing on 4th July, 2003,
the Labour Tribunal ordered the case to be transferred to the High Court in Hong Kong. The
claim has therefore been transferred to the High Court and registered as High Court Action
No.2701 of 2003 (the Action).On 16th September, 2003, a Statements of Claim was served on the Company. On 4th November,
2003, the Company filed a Defence and Counterclaim with the High Court. Mr. Yang filed a Reply
to Defence and Defence to Counterclaim on 26th April, 2004. On 21st July, 2004. Mr. Yang
obtained leave from the Court to file an Amended Reply to Defence and Defence to Counterclaim.
The Company filed and served a Reply to defence to Counterclaim on 4th September, 2004.
Pleadings closed on 18th September, 2004. The parties filed and served Lists of Documents on
26th October, 2004 and witness statements were exchanged on 28th February, 2005.
 F-41




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 21.
    
    COMMITMENTS AND CONTINGENCIES (CONTINUED)
 (c)
    
    Contingent liabilities (Continued)The parties applied by consent to adjourn sine die a checklist hearing fixed for 20th April  ,
2005, as the respective parties anticipated that that they would be filing supplemental
evidence and amending their pleadings. The Court approved the application and made an Order on
19th April, 2005 that the checklist hearing be vacated and adjourned sine die with liberty to
restore.Pursuant to a request made by Mr. Yang on 2nd June, 2005 for further and better particulars of
the Defence and Counterclaim, the Company filed and served its Answer to Mr. Yangs request on
4th July, 2005.On August 17, 2006, in compliance with its continuing discovery obligations, the Company filed
and served a Supplemental List of Documents. Subsequently, on September 5, 2006, Mr. Yang also
filed and served a Supplemental List of Documents.There has been no material progress in the litigation.The directors of the Company do not believe the Action will have any significant impact on the
financial position of the Company and of the Group. The directors of the Company intend to
continue vigorously defending the action.
 22.
    
    CAPITAL STOCK
 As of December 31,2007
    
    
    2006
    
    
    2005Number of
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Number ofshares
    
    
    Amount
    
    
    shares
    
    
    Amount
    
    
    shares
    
    
    Amount000
    
    
    000
    
    
    000
    
    
    000
    
    
    000
    
    
    000Authorized:Common stock
of US$0.01 each
(Note1)
    
    8,000,000
    
    
    
    US$80,000
    
    
    
    5,000,000
    
    
    US$50,000
    
    
    
    5,000,000
    
    
    US$50,000Issued and fully paid:Common stock
of US$0.01 each (Note
2)
    
    
    3,669,766
    
    
    RMB303,488
    
    
    
    3,668,391
    
    
    RMB303,388
    
    
    
    3,668,391
    
    
    RMB303,388
 
 Note 1:
    
    At a special general meeting held on February 12, 2007, shareholders of the Company
approved the increase of the authorized share capital of the Company from US$50,000,000 to
US$80,000,000 by the creation of an additional 3,000,000,000 shares of par value of US$0.01 each.Note 2:
    
    1,125,000 and 250,000 ordinary shares were issued on 16th July,2007 and 24th July, 2007,
respectively, as a result of an exercise of share option on 16th July, 2007, at an
aggregate consideration of RMB1,702,000 (or HK$1,815,000) of which RMB1,602,000 was credited to the
share premium account. F-42




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 23.
    
    STOCK OPTIONS
 Original share option scheme approved in 1999
  (a)
    
    a price being not less than 80%, of the average closing price of the common stock on the
relevant stock exchange as stated in such stock exchanges quotation sheets for the five
trading days immediately preceding the relevant date in respect of such options; and(b)
    
    the nominal value of the common stock.
   New share option scheme approved in 2002
  (a)
    
    the closing price of the common stocks on the relevant stock exchange as stated in such stock
exchanges quotation sheet on the date of the offer of grant, which must be a trading date;(b)
    
    the average closing price of the common stocks on the relevant stock exchange as stated in
such stock exchanges quotation sheets for the five trading days immediately preceding the
date of the offer of grant; and(c)
    
    the nominal value of the common stock.
 F-43




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 23.
    
    STOCK OPTIONS (CONTINUED)
  Exercise prices (theweighted averageNo. of share
    
    
    exercise price in
    
    
    Aggregateoptions
    
    
    parenthesis)
    
    
    intrinsic valueOutstanding as of January 1, 2005
    
    
    14,490,000
    
    
    HK$1.896Cancelled/lapsed
    
    
    (11,690,000
    )
    
    HK$1.896Outstanding as of December 31,2005
and January 1, 2006
    
    
    2,800,000
    
    
    HK$1.896Granted
    
    
    35,750,000
    
    
    HK$1.320Outstanding
as of December 31, 2006 and January 1, 2007
    
    
    38,550,000
    
    
    HK$1.896, HK$1.320(HK$1.362
    )Granted
    
    
    59,500,000
    
    
    HK$1.746Exercised
    
    
    (1,375,000
    )
    
    HK$1.320Outstanding as of December 31, 2007
    
    
    
    
    
    HK$1.320, HK$1.746and HK$1.89696,675,000
    
    
    (HK$1.599
    )
    
    HK$14,437,000Exercisable as of December 31, 2007
    
    
    
    
    
    HK$1.320 and96,675,000
    
    
    HK$1.746 (HK$1.599
    )
    
    HK$14,437,000
  WeightedNo. of share
    
    
    average
    
    
    Weightedoptions
    
    
    remaining
    
    
    averageRange of Exercise Prices
    
    outstanding
    
    
    contractual life
    
    
    exercise priceHK$1.320-HK$1.896
    
    
    96,675,000
    
    
    9.45 years
    
    
    HK$1.599
   F-44




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
   2007
    
    
    2006Fair value at measurement date
    
    HK$0.5549
    
    
    HK$0.3139Expected volatility
    
    
    48.44
    %
    
    
    42.64
    %Option life
    
    2 - 3 years
    
    
    1 - 2 yearsExpected dividends
    
    Nil
    
    
    NilRisk-free interest rate
    
    
    2.58%-2.79
    %
    
    
    3.48%-3.509
    %
  24.
    
    DISTRIBUTION OF PROFIT
    25.
    
    RELATED PARTY TRANSACTIONS
 (a)
    
    Name and relationship
 Name
    
    RelationshipJinBei
    
    A shareholder of Shenyang AutomotiveShanghai Shenhua
    
    Common directorship of certain directors of
the CompanyBrilliance Holdings Limited (BHL)
    
    Common directorship of certain directors of
the Company
 F-45




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
   (b)
    
    Amounts due from affiliated companies arising from trading activities consisted of the
following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Due from related parties: Shanghai Shenhua and its affiliated companies
    
    
    368,499
    
    
    
    431,310 Affiliated companies of JinBei
    
    
    91,347
    
    
    
    93,446 An affiliated company of BHL
    
    
    94,095
    
    
    
    55,040 A subsidiary of the substantial shareholder of the Company
    
    
    61,455
    
    
    
     BMW Brilliance Accounts receivables
    
    
    98,224
    
    
    
    247,564 Consideration receivable arising from the disposal
of machinery and equipment (note (i))
    
    
    
    
    
    
    134,527 Other jointly controlled entities
    
    
    321
    
    
    
    21,470Less: Provision for doubtful debts
    
    
    (29,720
    )
    
    
    (29,720
    )684,221
    
    
    
    953,637
 (i)
    
    The outstanding balance is unsecured, non-interest bearing and will be settled by BMW
Brilliance when certain conditions specified in the agreement of sale are fulfilled (See also
Note 11(c)).(ii)
    
    Except for (i) above, the amounts due from affiliated companies are unsecured, non-interest
bearing and have no fixed repayment terms. F-46




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 25.
    
    RELATED PARTY TRANSACTIONS (CONTINUED)
 (c)
    
    Notes receivable from affiliated companies arising from trading activities consisted of the
following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Notes receivable from related parties: Affiliated companies of JinBei
    
    
    3,050
    
    
    
    16,620 Shanghai Shenhua
    
    
    143,276
    
    
    
    63,750 Associated companies and jointly controlled entities
    
    
    
    
    
    
    1,107 A subsidiary of the substantial shareholders of the Company
    
    
    113,829
    
    
    
    260,155
    
    
    
    81,477
  (d)
    
    Dividends receivable from affiliated companies consisted of:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Dividend receivable from a jointly controlled entity
    
    
    76,173
    
    
    
    76,173Dividend receivable from an associate
    
    
    21,000
    
    
    
    21,00097,173
    
    
    
    97,173
 (e)
    
    Amounts due to affiliated companies arising from trading activities consisted of the following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Due to related parties: Associated companies and jointly controlled entities
    
    
    584,971
    
    
    
    680,943Affiliated companies of Shanghai Shenhua
    
    
    1,870
    
    
    
    10,719Affiliated companies of JinBei
    
    
    365,275
    
    
    
    281,721 Other affiliated companies
    
    
    731
    
    
    
    9,910952,847
    
    
    
    983,293
  F-47




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 25.
    
    RELATED PARTY TRANSACTIONS (CONTINUED)
 (f)
    
    Notes payable to affiliated companies arising from trading activities consisted of the
following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Notes payable to related parties: Affiliated companies of BHL
    
    
    60,686
    
    
    
     An affiliated companies of JinBei
    
    
    51,167
    
    
    
    7,249 Associated companies and jointly controlled entities
    
    
    95,921
    
    
    
    30,039207,774
    
    
    
    37,288
 F-48




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 25.
    
    RELATED PARTY TRANSACTIONS (CONTINUED)
 (g)
    
    Save as disclosed elsewhere in the financial statements, significant transactions with
affiliated companies consisted of the following:
 Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Sales of goods: JinBei and its affiliated companies
    
    
    452,933
    
    
    
    178,414
    
    
    
    69,432 Shanghai Shenhua and its affiliated companies
    
    
    1,394,130
    
    
    
    1,052,689
    
    
    
    1,469,402 A subsidiary of the substantial shareholders of the
Company
    
    
    1,119,096
    
    
    
    
    
    
    
     Associated companies and jointly controlled entities
    
    
    188,315
    
    
    
    186,146
    
    
    
    71,0053,154,474
    
    
    
    1,417,249
    
    
    
    1,609,839Purchase of goods:Affiliated companies of JinBei
    
    
    1,477,018
    
    
    
    895,457
    
    
    
    383,808Affiliated companies of Shanghai Shenhua
    
    
    102,785
    
    
    
    16,668
    
    
    
    85,354Affiliated companies of BHL
    
    
    115,223
    
    
    
    117,336
    
    
    
    66,441 Associated companies and jointly controlled entities
    
    
    1,004,303
    
    
    
    942,878
    
    
    
    524,221 Affiliated companies of the joint venture partner of
Xinguang Brilliance
    
    
    147
    
    
    
    68
    
    
    
    761 Shareholders of Shenyang Aerospace
    
    
    63,227
    
    
    
    90,505
    
    
    
    1,987Subcontracting charges to a jointly controlled entity
    
    
    257,937
    
    
    
    254,479
    
    
    
    112,1603,020,640
    
    
    
    2,317,391
    
    
    
    1,174,732Purchase of intangible asset from an affiliated company
of the joint venture partner of Ningbo YumingFinance charge to a jointly controlled entity
    
    
    16,100
    
    
    
    16,748
    
    
    
    17,329Operating lease rental on land and buildings charged by: A jointly controlled entity
    
    
    3,430
    
    
    
    908
    
    
    
    2,206 Shanghai Shenhua and its affiliated companies
    
    
    592
    
    
    
    1,148
    
    
    
     Affiliated companies of JinBei
    
    
    
    
    
    
    60
    
    
    
    Mould testing income from a jointly controlled entity
    
    
    1,776
    
    
    
    4,320
    
    
    
    Operating lease rental from a jointly controlled entity
    
    
    14,384
    
    
    
    34,863
    
    
    
    15,078Proceeds from sale of property, plant and equipment a
jointly controlled entity
    
    
    
    
    
    
    80,332
    
    
    
    263Service income from a jointly controlled entity
    
    
    18,560
    
    
    
    35,067
    
    
    
    43,671
  F-49




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 25.
    
    RELATED PARTY TRANSACTIONS (CONTINUED)
 i.
    
    Trademark license
  ii.
    
    Guarantees provided to affiliated companies
  (g)
    
    Advances to affiliated companies consisted of the following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Advances to related parties: Associated companies and jointly controlled entities
    
    
    26,364
    
    
    
    6,553Affiliated companies of BHL
    
    
    51,134
    
    
    
    15,273 Shanghai Shenhua and its affiliated companies
    
    
    14,044
    
    
    
    14,044JinBei and its affiliated companies
    
    
    12,062
    
    
    
    23,740 Other affiliated companies
    
    
    12
    
    
    
    689103,616
    
    
    
    60,299Less: provision for doubtful debts
    
    
    (2,214
    )
    
    
    (2,214
    )101,402
    
    
    
    58,085
  (h)
    
    Advances from affiliated companies consisted of the following:
 As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Advances from related parties: Associated companies and jointly controlled entities
    
    
    1,282
    
    
    
    1,279BHL and its affiliated companies
    
    
    12,086
    
    
    
    12,728 Affiliated companies of Shanghai Shenhua
    
    
    1,430
    
    
    
    820JinBei and its affiliated companies
    
    
    735
    
    
    
    6,925 Current portion of financing received from BMW
Brilliance (Note 11(d))
    
    
    40,601
    
    
    
    33,36756,134
    
    
    
    55,389
 F-50




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 25.
    
    RELATED PARTY TRANSACTIONS (CONTINUED)
  As of December 31,2007
    
    
    2006RMB000
    
    
    RMB000Within 1 year
    
    
    40,601
    
    
    
    33,637More than 1 year but less than 2 years
    
    
    7,772
    
    
    
    13,204More than 2 years but less than 5 years
    
    
    29,154
    
    
    
    26,124More than 5 years
    
    
    96,846
    
    
    
    40,378174,373
    
    
    
    113,343Less: non-current portion
    
    
    (133,772
    )
    
    
    (79,706
    )Current portion
    
    
    40,601
    
    
    
    33,637
  26.
    
    RETIREMENT PLAN AND EMPLOYEES BENEFIT
   27.
    
    EXECUTIVE BONUS PLAN
  F-51




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 28.
    
    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Cash paid for:Interest (net of amount capitalized: 2007: RMB5,533,000; 2006: RMB6,766,000; 2005: RMB23,875,000)
    
    
    106,924
    
    
    
    92,744
    
    
    
    111,303Income taxes
    
    
    65,858
    
    
    
    39,240
    
    
    
    33,975
   29.
    
    OTHER SUPPLEMENTAL INFORMATION
  Year ended December 31,2007
    
    
    2006
    
    
    2005RMB000
    
    
    RMB000
    
    
    RMB000Import tariffs
    
    
    29,680
    
    
    
    31,616
    
    
    
    15,224Research and development costs
    
    
    402,826
    
    
    
    214,021
    
    
    
    235,177Foreign exchange gains, net
    
    
    80,040
    
    
    
    32,955
    
    
    
    21,487Provision for impairments of property, plant and
equipment
    
    
    
    
    
    
    29,160
    
    
    
    48,299Provision for doubtful debts and write off of bad debts
    
    
    5,566
    
    
    
    28,272
    
    
    
    55,703
 30.
    
    SEGMENT INFORMATION
    F-52




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
  Business segments  2007
 Manufactureand sale of
    
    
    Manufactureminibuses and
    
    
    and sale of
    
    
    Manufactureautomotive
    
    
    Zhonghua
    
    
    and sale ofcomponents
    
    
    sedans
    
    
    BMW sedans
    
    
    TotalRMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000Total revenues from reportable segments
    
    
    5,729,289
    
    
    
    8,754,847
    
    
    
    
    
    
    
    14,484,136Elimination of intersegment revenues
    
    
    (334,987
    )
    
    
    
    
    
    
    
    
    
    
    (334,987
    )Revenues from external customers
    
    
    5,394,302
    
    
    
    8,754,847
    
    
    
    
    
    
    
    14,149,149Segment (loss) income before taxation and
minority interests
    
    
    194,986
    
    
    
    (286,223
    )
    
    
    142,227
    
    
    
    50,990Unallocated amounts corporate income net of corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,405interest income less interest expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,793
    )Loss before taxation and minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,398
    )Segment assets as of December 31, 2007
    
    
    7,115,643
    
    
    
    8,038,601
    
    
    
    881,987
    
    
    
    16,036,231Unallocated amounts  corporate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,081Total assets as of December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,172,312Other disclosures:Depreciation of fixed assets
    
    
    207,216
    
    
    
    386,047
    
    
    
    
    
    
    
    593,263Amortization of long-term land lease
prepayments
    
    
    2,254
    
    
    
    1,185
    
    
    
    
    
    
    
    3,439Amortization on intangible assets
    
    
    9,548
    
    
    
    151,671
    
    
    
    
    
    
    
    161,219Impairment of equity method goodwill (Note
13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditure
    
    
    41,810
    
    
    
    278,843
    
    
    
    
    
    
    
    320,653Equity in earnings of associated companies
and jointly controlled entities
    
    
    12,171
    
    
    
    37,863
    
    
    
    142,227
    
    
    
    192,261Equity method goodwill (Note 13)
    
    
    91,410
    
    
    
    31,983
    
    
    
    
    
    
    
    123,393Goodwill (Note 15)
    
    
    339,710
    
    
    
    
    
    
    
    
    
    
    
    339,710
 F-53




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 Business segments  2006
 Manufacture andsale of
    
    
    Manufacture andminibuses and
    
    
    sale of
    
    
    Manufacture andautomotive
    
    
    Zhonghua
    
    
    sale of BMWcomponents
    
    
    sedans
    
    
    sedans
    
    
    TotalRMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000Total revenues from reportable segments
    
    
    5,533,953
    
    
    
    5,190,129
    
    
    
    
    
    
    
    10,724,082Elimination of intersegment revenues
    
    
    (239,328
    )
    
    
    
    
    
    
    
    
    
    
    (239,328
    )Revenues from external customers
    
    
    5,294,625
    
    
    
    5,190,129
    
    
    
    
    
    
    
    10,484,754Segment (loss) income before taxation and
minority interests
    
    
    145,602
    
    
    
    (830,404
    )
    
    
    106,692
    
    
    
    (578,110
    )Unallocated amounts corporate expenses net of corporate income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,138
    )interest income less interest expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86,263
    )Income before taxation and minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (714,511
    )Segment assets as of December 31, 2006
    
    
    6,237,217
    
    
    
    5,274,223
    
    
    
    708,170
    
    
    
    12,219,610Unallocated amounts  corporate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,360,754Total assets as of December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,580,364Other disclosures:Depreciation of fixed assets
    
    
    223,233
    
    
    
    377,812
    
    
    
    
    
    
    
    601,045Amortization of long-term land lease
prepayments
    
    
    2,485
    
    
    
    1,573
    
    
    
    
    
    
    
    4,058Amortization on intangible assets
    
    
    2,603
    
    
    
    178,841
    
    
    
    
    
    
    
    181,444Impairment of equity method goodwill (Note
13)
    
    
    73,343
    
    
    
    
    
    
    
    
    
    
    
    73,343Impairment of goodwill in a subsidiary (Note
15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditure
    
    
    106,130
    
    
    
    144,935
    
    
    
    
    
    
    
    251,065Equity in earnings of associated companies
and jointly controlled entities
    
    
    (7,556
    )
    
    
    50,184
    
    
    
    106,692
    
    
    
    149,320Equity method goodwill (Note 13)
    
    
    91,410
    
    
    
    31,983
    
    
    
    
    
    
    
    123,393Goodwill (Note 15)
    
    
    339,710
    
    
    
    
    
    
    
    
    
    
    
    339,710
 Business segments  2005
 Manufactureand sale ofminibuses
    
    
    Manufactureand
    
    
    and sale of
    
    
    Manufactureautomotive
    
    
    Zhonghua
    
    
    and sale ofcomponents
    
    
    sedans
    
    
    BMW sedans
    
    
    TotalRMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000(Restated)
    
    
    (Restated)
    
    
    
    
    
    (Restated)Total revenues from reportable segments
    
    
    4,837,379
    
    
    
    863,140
    
    
    
    
    
    
    
    5,700,519Elimination of intersegment revenues
    
    
    (231,529
    )
    
    
    
    
    
    
    
    
    
    
    (231,529
    )Revenues from external customers
    
    
    4,605,850
    
    
    
    863,140
    
    
    
    
    
    
    
    5,468,990Segment (loss) income before taxation
and minority interests
    
    
    (75,047
    )
    
    
    (970,603
    )
    
    
    32,250
    
    
    
    (1,013,400
    )Unallocated amounts corporate expenses
net of corporate income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,837
    ) interest income less interest expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122,165
    )Income before taxation and minority
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,195,402
    )Other disclosures:Depreciation of fixed assets
    
    
    245,598
    
    
    
    154,146
    
    
    
    
    
    
    
    399,744Amortization of long-term land lease
prepayments
    
    
    2,848
    
    
    
    1,038
    
    
    
    
    
    
    
    3,886Amortization on intangible assets
    
    
    4,746
    
    
    
    199,263
    
    
    
    
    
    
    
    204,009Impairment of equity method goodwill
(Note 13)
    
    
    179,030
    
    
    
    
    
    
    
    
    
    
    
    179,030Impairment of goodwill in a subsidiary
(Note 15)
    
    
    78,690
    
    
    
    
    
    
    
    
    
    
    
    78,690Equity in earnings of associated
companies and jointly controlled
entities
    
    
    (11,642
    )
    
    
    28,387
    
    
    
    32,250
    
    
    
    48,995
 F-54




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##### Table of Contents



Brilliance China Automotive Holdings Limited
 Notes to Consolidated Financial Statements
 31.
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME
  Share of ajointlycontrolledentitys fair
    
    
    Unrealized gainvalue
    
    
    (loss) on
    
    
    Foreign
    
    
    Accumulativeadjustment for
    
    
    marketable
    
    
    currency
    
    
    otherhedging
    
    
    available-for-
    
    
    translation
    
    
    comprehensivederivative
    
    
    sale securities
    
    
    adjustments
    
    
    incomeRMB000
    
    
    RMB000
    
    
    RMB000
    
    
    RMB000Balance as of January 1, 2006
    
    
    
    
    
    
    1,241
    
    
    
    39,179
    
    
    
    40,420Current year change
    
    
    
    
    
    
    1,052
    
    
    
    
    
    
    
    1,052Balance as of December 31,
2006
    
    
    
    
    
    
    2,293
    
    
    
    39,179
    
    
    
    41,472Current year change
    
    
    31,275
    
    
    
    2,393
    
    
    
    
    
    
    
    33,668Balance as of December 31,
2007
    
    
    31,275
    
    
    
    4,686
    
    
    
    39,179
    
    
    
    75,140
 32.
    
    COMPARATIVE FIGURES
  33.
    
    APPROVAL OF FINANCIAL STATEMENTS
  F-55




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##### Table of Contents



Balance at
    
    Charged /beginning of the
    
    (credited) to
    
    Deductions
    
    Balance at endDescription
    
    year
    
    expenses
    
    Note (a)
    
    of the yearRMB000
    
    RMB000
    
    RMB000
    
    RMB000Year ended December
31, 2007Allowance for doubtful
debt of: Accounts receivables
    
    
    62,823
    
    
    
    65
    
    
    
    
    
    
    
    62,888 Other receivables
    
    
    82,725
    
    
    
    5,204
    
    
    
    (292
    )
    
    
    87,637 Due from affiliated companies
    
    
    29,720
    
    
    
    
    
    
    
    
    
    
    
    29,720 Advances to affiliated
companies
    
    
    2,214
    
    
    
    
    
    
    
    
    
    
    
    2,214Allowance for inventories
    
    
    200,276
    
    
    
    (130,185
    )
    
    
    
    
    
    
    70,091Year ended December
31, 2006Allowance for doubtful
debt Accounts receivables
    
    
    48,367
    
    
    
    14,456
    
    
    
    
    
    
    
    62,823 Other receivables
    
    
    78,003
    
    
    
    13,740
    
    
    
    (9,018
    )
    
    
    82,725 Due from affiliated
companies
    
    
    29,720
    
    
    
    
    
    
    
    
    
    
    
    29,720 Advances to affiliated
companies
    
    
    9,250
    
    
    
    
    
    
    
    (7,036
    )
    
    
    2,214Allowance for inventories
    
    
    179,012
    
    
    
    21,264
    
    
    
    
    
    
    
    200,276Year ended December
31, 2005Allowance for doubtful
debt Accounts receivables
    
    
    47,719
    
    
    
    648
    
    
    
    
    
    
    
    48,367 Other receivables
    
    
    42,682
    
    
    
    35,321
    
    
    
    
    
    
    
    78,003 Due from affiliated
companies
    
    
    24,720
    
    
    
    5,000
    
    
    
    
    
    
    
    29,720 Advances to affiliated
companies
    
    
    1,975
    
    
    
    7,275
    
    
    
    
    
    
    
    9,250Allowance for inventories
    
    
    113,185
    
    
    
    65,827
    
    
    
    
    
    
    
    179,012
 
 Note (a) Bad debts write-offs F-56