REGISTERED NUMBER: |
Strategic Report, Report of the Director and |
Financial Statements for the Year Ended 31 December 2024 |
for |
Changan UK R & D Centre Limited |
REGISTERED NUMBER: |
Strategic Report, Report of the Director and |
Financial Statements for the Year Ended 31 December 2024 |
for |
Changan UK R & D Centre Limited |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Contents of the Financial Statements |
for the Year Ended 31 December 2024 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Director | 4 |
Statement of Director's Responsibilities | 5 |
Report of the Independent Auditors | 6 |
Statement of Comprehensive Income | 10 |
Statement of Financial Position | 11 |
Statement of Changes in Equity | 12 |
Notes to the Financial Statements | 13 |
Changan UK R & D Centre Limited |
Company Information |
for the Year Ended 31 December 2024 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Certified Accountants |
and Statutory Auditors |
9 St Clare Street |
London |
EC3N 1LQ |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Strategic Report |
for the Year Ended 31 December 2024 |
The director presents his strategic report for the year ended 31 December 2024. |
FAIR REVIEW OF THE BUSINESS |
During the financial year under review, CAUK (the company) continued to be a trusted supplier of R&D powertrain services to its parent company. The development cycle has continued, with programmes carried over from previous years having successfully gone into further stages of development, moving along the development cycle and becoming part of new production vehicles which are on the market and proving to be good sellers for HQ. |
CAUK continue to deliver the next generation of powertrain products including high efficiency engine platforms and E-drive systems, with several variations. Performance tests have shown that the engine family will be very competitive when launched. Work on the HE engine platforms will continue in order to prepare the technologies of the future engines and, support any difficulties that might occur when they go into production. CAUK continues to provide troubleshooting support to HQ lead projects and, strategic consultancy to power system related subjects or matters at its parent company. |
During 2024 CAUK started a few new programmes including new 2.0L engine, ultra-high speed e-machine, and platform software for e-drive system. The planned outcome from those new projects, when they complete in a few years time, will enable Changan to be competitive for its powertrain offerings to the global markets. In addition to powertrain projects, CAUK started to provide support for vehicle engineering for the products that are planned for the EU/UK markets. CAUK's primary role in those projects is to support localised validation and provide improvement suggestions from the European perspective. The directors hope this is the area that CAUK can expand its business into and grow in the future. |
During 2024 CAUK continued to meet its performance task set by its HQ by providing engineering outputs on time and on quality. By having own test facilities, we are able to conduct tests with high operation efficiency , which may have proven to be an issue if these had to be done externally. |
The company continues to hold a small property portfolio, which provides a small but useful revenue stream and will continue to do so going forward. This business is efficiently managed in-house with the help of third parties where needed. During the year, three tenancy contracts ended, and three new tenancy agreements were signed. |
The director believes that the company's strong engineering and support service enables the company's continued growth and enables it to continue to focus on developing high-quality powertrain products and technologies to meet the needs of the parent company in the short, medium and long term. |
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES |
CAUK's activities expose it primarily to the financial risks of continuation of work contracts, and the associated funding, from the parent company. CAUK is not structured in a manner which would allow it to automatically sustain itself through third party business in the absence of the parent company's contracts. |
Short-term liquidity risk is managed by close liaison with the parent company to ensure that cash settlement is carried out in a timely matter. CAUK's policy is to always run in credit and have no UK bank loans. Core business debtor management is limited by the fact that the only customer is our parent company. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Strategic Report |
for the Year Ended 31 December 2024 |
GLOBAL INVESTMENTS |
In order to support our HQ's global sales strategy, CAUK completed several key overseas investments: |
In March 2024, CAUK, in partnership with United Prosperity Investment Co., Ltd, completed a RMB 22.5 million investment to establish a joint venture - Changan Automobile Mexico Sales Company; |
In July 2024, the board approved the investment of RMB 18 million to establish a wholly owned subsidiary, Changan Automobile Deutschland GmbH, which was also finalised within 2024; |
Additionally, in July 2024, CAUK and United Prosperity Investment Co., Ltd agreed to establish a joint venture named Changan Netherlands Holding B.V., in which CAUK holds a 15% share equivalent to RMB 11 million. This investment has been finalised in March 2025. |
KEY FINANCIAL PERFORMANCE INDICATORS |
The company has several key financial indicators used internally to monitor and challenge performance, The company performance in 2024 and comparative information for previous year is summarised below. |
2024 | 2023 | Movement |
£ | £ |
Gross assets | 30,847,259 | 29,183,688 | 6% |
Total equity | 27,942,190 | 27,005,900 | 3% |
Debt to equity ratio | 10.40% | 8.10% | 29% |
Total revenue | 10,196,653 | 8,279,513 | 23% |
Profit/(loss) before tax | 1,691,844 | (815,931) | 307% |
The increase in gross assets is primarily attributable to the rise in turnover, which is recharge to HQ. The growth in turnover reflects the higher level of activity on HQ-related projects during the year. |
The improvement in profit is largely due to no fair value movement on investment property in year 2024, as the current year valuation reflects prevailing market conditions which compares to a £1.36 million fair value loss recognised in 2023. |
ON BEHALF OF THE BOARD: |
27 March 2025 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Report of the Director |
for the Year Ended 31 December 2024 |
The director presents his report with the financial statements of the company for the year ended 31 December 2024. |
PRINCIPAL ACTIVITY |
The principal activity of the company continued to be that of the design and development of automotive powertrain products for the parent company in China. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 December 2024 (2023: Nil). |
RESEARCH AND DEVELOPMENT |
The company undertakes a continual programme of research and development in the area of automotive design. |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTOR |
DISCLOSURE IN THE STRATEGIC REPORT |
The Company has chosen to disclose information regarding future development opportunities for the Company and financial instrument risk management policies in the strategic report rather than the director's report. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditor, Shinewing Wilson Accountancy Limited will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Statement of Director's Responsibilities |
for the Year Ended 31 December 2024 |
The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations. |
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
Report of the Independent Auditors to the Members of |
Changan UK R & D Centre Limited |
Opinion |
We have audited the financial statements of Changan UK R & D Centre Limited (the 'company') for the year ended 31 December 2024 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report. |
Other information |
The director is responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Director and the Statement of Director's Responsibilities, but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Changan UK R & D Centre Limited |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Director. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of director's remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on page five, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. |
Report of the Independent Auditors to the Members of |
Changan UK R & D Centre Limited |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity. |
The following laws and regulations were identified as being of significance to the entity: |
- Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company law, Tax legislation, Employment law and Distributable profits legislation. |
- Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include Landlord and Tenant Act 1954, Health and Safety legislation, off-payroll working rules (IR35) and General Data Protection Regulation (GDPR). |
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud. |
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK). |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Report of the Independent Auditors to the Members of |
Changan UK R & D Centre Limited |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Chartered Certified Accountants |
and Statutory Auditors |
9 St Clare Street |
London |
EC3N 1LQ |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Statement of Comprehensive Income |
for the Year Ended 31 December 2024 |
31.12.24 | 31.12.23 |
Notes | £ | £ |
TURNOVER | 4 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
(378,861 | ) | (1,413,388 | ) |
Other operating income | 5 |
Gain/loss on revaluation of investments | - | (1,366,299 | ) |
OPERATING PROFIT/(LOSS) | 7 | ( |
) |
Interest receivable and similar income |
PROFIT/(LOSS) BEFORE TAXATION | ( |
) |
Tax on profit/(loss) | 8 |
PROFIT/(LOSS) FOR THE FINANCIAL YEAR |
( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Statement of Financial Position |
31 December 2024 |
31.12.24 | 31.12.23 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 9 |
Tangible assets | 10 |
Investments | 11 |
Investment property | 12 |
CURRENT ASSETS |
Debtors | 13 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 14 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 17 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Retained earnings |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the director and authorised for issue on |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Statement of Changes in Equity |
for the Year Ended 31 December 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 January 2023 |
Changes in equity |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 31 December 2023 |
Changes in equity |
Total comprehensive income | - |
Balance at 31 December 2024 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements |
for the Year Ended 31 December 2024 |
1. | STATUTORY INFORMATION |
Changan UK R & D Centre Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Going concern |
At the time of approving the financial statements, the dìrector has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the dírector continues to adopt the going concern basis of accounting in preparing the financial statements. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows; |
• | the requirement of paragraph 33.7. |
The financial statements of the company are consolidated in the financial statements of Chongqing Changan Automobile Company Limited, https://www.changan.com.cn/cca/basicinfo?index=1 |
Preparation of consolidated financial statements as an individual company |
The Company is a part of a larger group and included in the consolidated financial statements of a parent. The ultimate parent undertaking Chongqing Changan Automobile Co., Ltd., holds 100% of the share capital of the Company, is the smallest and largest group to consolidate these financial statements. The Company continues under section 401 of the Companies Act to take exemption in preparing consolidated accounts for the UK sub-group. These financial statements present information about the Company as an individual undertaking and not about its group. Ultimate parent company's accounts continue to be prepared under Chinese GAAP, and have been filed along with the Company's accounts at the Companies House in accordance with the Companies Act 2006. The consolidated financial statements are available at the ultimate parent's registered office, Building T2, No. 2, Financial City, No. 61 Dongshengmen Road, Jiangbei District, Chongqing. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for work provided in the normal course of business, net of discounts, VAT and other sales related taxes. |
The company provides research and development services on a continuous basis to, and under the general direction of, its parent company, in accordance with the terms of a single agreement/contract. Accordingly, revenue receivable from the parent company is recognised on a straight-line basis over the specified period. |
Other income |
Other income is recognised when it is probable that the economic benefit will flow to the company, and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Tangible fixed assets |
Tangible fixed assets are measured at cost, net of depreciation and any impairment losses. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. |
Freehold buildings: 35 and 20 years straight line |
Equipment: 5-12 years straight line |
Fixture & fittings: 12 years straight line |
Freehold land: not provided |
Asset under construction: not provided |
Impairment of fixed assets |
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. |
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. |
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. |
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the assets (or cash-generating unit) prior years. A reversal of impairment loss is recognised immediately in profit or loss. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Investment property |
Investment property is carried at fair value and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary, for any difference in the nature, location or condition of the specific asset. No depreciation is provided. |
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Income Statement in the year in which they arise. |
Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses are recognised in the Income Statement. |
Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds and the carrying value of the asset at the date of disposal. |
Leasing arrangements |
The investment properties are leased to tenants under operating leases with rentals payable monthly. Rental income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' of FRS 102 to all of its financial instruments. |
Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument. |
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. |
Basic financial assets |
Basic financial assets, which include trade and other debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the financial asset is measured at the present value of the future receipts discounted at a market rate of interest. |
Impairment of financial assets |
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date. |
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original elective interest rate. The impairment loss is recognised in profit or loss. |
If there is a decrease in the impairment loss arising from an event occuring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss. |
Derecognition of financial assets |
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party. |
Classification of financial liabilities |
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. |
Basic financial liabilities |
Basic financial liabilities, including trade and other creditors and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. |
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. |
Derecognition of financial liabilities |
Financial liabilities are derecognised when, and only when, the company's contractual obligations are discharged, cancelled, or they expire. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Share capital |
Financial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. |
The company's ordinary shares are classified as equity instruments. |
Taxation |
Taxation for the year comprises current, over/under provision from previous period and deferred tax. Tax liability is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. R&D tax credit is recognised each year and included in the other operating income. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Research and development |
Research expenditure is written off against profits in the year in which it is incurred. |
The Company undertakes research and development activities as a supplier rather than for its own benefits, therefore, no development costs are capitalised. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result. |
Retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
The assets of the scheme are held separately from those of the company in an independently administered fund. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
2. | ACCOUNTING POLICIES - continued |
Employee benefits |
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets. |
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received. |
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. |
Investment in joint venture and subsidiary |
Investments in joint ventures and subsidiaries are initially recognised at cost in the financial statements, representing the actual funds invested by the company, subsequently investments are carried at cost, less any accumulated impairment losses. Impairment is assessed at each reporting date, and any loss is recognised in profit or loss if the recoverable amount falls below the carrying value. |
Government grants |
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. |
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. |
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. |
Critical judgements |
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. |
Leases |
In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the Company as lessee, or transferred from the Company as lessor. |
Key sources of estimation uncertainty |
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows: |
Valuation of investment property |
The valuation is based on the fair value of the freehold interests of the individual properties subject to the various tenancies prevailing and subject to the assumptions that the property will meet the minimum requirements laid down by the legislation and that there will be no adverse impact on value and marketability. |
Valuation of investment in JV and subsidiary |
Investments in joint ventures and subsidiaries are initially recognised at cost, which complies with FRS 102. The company reviews the carrying amount of investments annually for any indications of impairment. Where an impairment is identified, the recoverable amount is reassessed, and any shortfall in carrying value is recognized immediately in profit or loss. |
4. | TURNOVER |
The turnover and profit (2023 - loss) before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
31.12.24 | 31.12.23 |
£ | £ |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
4. | TURNOVER - continued |
An analysis of turnover by geographical market is given below: |
31.12.24 | 31.12.23 |
£ | £ |
P.R. China | 10,196,653 | 8,279,513 |
5. | OTHER OPERATING INCOME |
31.12.24 | 31.12.23 |
£ | £ |
Rents received |
Sundry receipts | 17,012 | 10,896 |
R&D tax reliefs |
Government grants and enhanced |
credit scheme |
2,070,705 | 1,963,756 |
6. | EMPLOYEES AND DIRECTORS |
31.12.24 | 31.12.23 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
31.12.24 | 31.12.23 |
Development staff | 56 | 53 |
Administrative staff | 5 | 8 |
31.12.24 | 31.12.23 |
£ | £ |
Directors' remuneration |
During the year, the director was not remunerated for services provided to the company as these costs were borne by other companies in the group. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
7. | OPERATING PROFIT/(LOSS) |
The operating profit (2023 - operating loss) is stated after charging: |
31.12.24 | 31.12.23 |
£ | £ |
Depreciation - owned assets |
Loss on disposal of fixed assets |
Computer software amortisation |
Auditors' remuneration |
Other non- audit services |
Foreign exchange differences |
8. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
31.12.24 | 31.12.23 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax | ( |
) |
Tax on profit/(loss) |
UK corporation tax has been charged at 25% . |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
31.12.24 | 31.12.23 |
£ | £ |
Profit/(loss) before tax | ( |
) |
Profit/(loss) multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Depreciation in excess of capital allowances |
Adjustments to tax charge in respect of previous periods |
to tax rate change |
Deferred tax not recognised | - | 10,395 |
Total tax charge | 755,554 | 67,961 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
8. | TAXATION - continued |
For the financial year ended 31 December 2024, the current weighted averaged tax rate was 25%. |
OECD Pillar Two model rules |
Changan UK (CAUK) is within the scope of the OECD Pillar Two model rules, which establish a global minimum tax rate of 15%. Pillar Two legislation has been enacted in the UK and is effective from 2024. Under this legislation, CAUK may be liable for a top-up tax based on the difference between the GloBE effective tax rate in each jurisdiction and the 15% minimum rate, including any applicable domestic top-up taxes. |
As CAUK's parent company is based in China, where Pillar Two has not been implemented, the company is assessing its exposure to the legislation and the potential impact on its financial position. Liabilities will be recognized when they become probable and measurable, in accordance with applicable accounting standards. |
9. | INTANGIBLE FIXED ASSETS |
Computer |
software |
£ |
COST |
At 1 January 2024 |
Additions |
Disposals | ( |
) |
Reclassification/transfer |
At 31 December 2024 |
AMORTISATION |
At 1 January 2024 |
Amortisation for year |
Eliminated on disposal | ( |
) |
Reclassification/transfer |
At 31 December 2024 |
NET BOOK VALUE |
At 31 December 2024 |
At 31 December 2023 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
10. | TANGIBLE FIXED ASSETS |
Fixtures |
Freehold | Long | Plant and | and |
property | leasehold | machinery | fittings | Totals |
£ | £ | £ | £ | £ |
COST |
At 1 January 2024 |
Additions |
Disposals | ( |
) | ( |
) |
Reclassification/transfer | ( |
) | ( |
) |
At 31 December 2024 |
DEPRECIATION |
At 1 January 2024 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
Reclassification/transfer | ( |
) | ( |
) |
At 31 December 2024 |
NET BOOK VALUE |
At 31 December 2024 |
At 31 December 2023 |
11. | FIXED ASSET INVESTMENTS |
Unlisted |
investments |
£ |
COST |
Additions |
At 31 December 2024 |
NET BOOK VALUE |
At 31 December 2024 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
11. | FIXED ASSET INVESTMENTS - continued |
The company's investments at the Statement of Financial Position date in the share capital of companies include the following: |
Subsidiary |
Registered office: Georg-Brauchle-Ring 56-58 80992 Muenchen |
Nature of business: |
% |
Class of shares: | holding |
31.12.24 |
£ |
Aggregate capital and reserves |
Profit for the year |
Joint venture |
Registered office: Periférico Blvrd. Manuel Ávila Camacho No. 138 Lomas de Chapultepec I Sección, Miguel Hidalgo México, CIUDAD DE MEXICO, 11000 Mexico |
Nature of business: |
% |
Class of shares: | holding |
31.12.24 |
£ |
Aggregate capital and reserves |
Profit for the year |
The carrying value of the company's investment in the JV was as follows: |
2024 |
£ |
At 1 January | - |
Investment during the year | 2,466,376 |
Share of profit | 2,332,189 |
AT 31 December | 4,798,565 |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
12. | INVESTMENT PROPERTY |
Total |
£ |
FAIR VALUE |
At 1 January 2024 |
and 31 December 2024 |
NET BOOK VALUE |
At 31 December 2024 |
At 31 December 2023 |
Fair value at 31 December 2024 is represented by: |
£ |
Valuation in 2015 | 378,888 |
Valuation in 2017 | 727,968 |
Valuation in 2020 | 735,239 |
Valuation in 2023 | (1,366,299 | ) |
Cost | 4,500,484 |
4,976,280 |
The Company values investment properties every three years using RICS registered valuers. Last valuation was carried out and reported on 30 October 2023 by ME Cook Bsc (Hons) MRICS, a RICS registered valuer, of KWB Office Agency Ltd, who is not connected with the Company. |
For year ended 31 December 2024, the fair value of investment property is based on the mangement's consideration, the management inputs include sales price per square metre for similar properties in a similar location in an active market, or property yields derived from the latest transactions in active markets for similar properties. |
13. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.24 | 31.12.23 |
£ | £ |
Amounts owed by group undertakings |
Other debtors |
Other debtor-rent receivable | 399,184 | 223,702 |
KWB Service charge account | 616,288 | 167,211 |
VAT |
Prepayments |
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
14. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.24 | 31.12.23 |
£ | £ |
Trade creditors |
Social security and other taxes |
Pension | 77,455 | 58,755 |
Other creditors |
Deferred income |
Accrued expenses |
Included in deferred income is grant received to date from government towards the construction of CAUK test centre, £129,664 (2023: £129,664) has been recognised as income during the year. |
15. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31.12.24 | 31.12.23 |
£ | £ |
Within one year |
Between one and five years |
The company owns several investment properties for rental purposes, which were acquired in 2015. Rental income earned during the year was £471,421 (2023: £450,856). All of the properties have committed tenants for between 1-10 years with 1-3 years break clauses. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expire of the lease period. |
At the reporting end date, the company has contracted with tenants for the following minimum lease payments: |
Within one year: £379,492 (2023: £327,321) |
Between one and five years: £946,351 (2023: £1,218,953) |
16. | FINANCIAL INSTRUMENTS |
Carrying amount of financial assets |
Debt instruments measured at amortised cost: £5,015,363 (2023: £7,665,246). |
Carrying amount of financial liabilities |
Liabilities measured at amortised cost: £1,808,593 (2023: £1,363,294). |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
17. | PROVISIONS FOR LIABILITIES |
31.12.24 | 31.12.23 |
£ | £ |
Deferred tax |
Accelerated capital allowances |
Investment property |
Other provisions | 28,018 | 100,000 |
Deferred |
tax |
£ |
Balance at 1 January 2024 |
Provided during year |
Balance at 31 December 2024 |
Included in other provision, £28K (2023: £100K) was PAYE liability provided in relation to ongoing PAYE investigation. |
The deferred tax liability set out above relates to accelerated capital allowances and the fair value adjustment in respect of investment properties, and is expected to reverse over the life of the assets to which they relate or on the sale of the investment properties. In past years, the UK Government has steadily reduced the rate of UK corporation tax, the latest rates set at 25% with effect from 1 April 2023. |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.24 | 31.12.23 |
value: | £ | £ |
Ordinary | £1 | 26,393,935 | 26,393,935 |
19. | PENSION COMMITMENTS |
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. Amounts charged to profit and loss in respect of the scheme were £817,065 (2023: £619,022). |
20. | RELATED PARTY DISCLOSURES |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
21. | POST BALANCE SHEET EVENTS |
The company entered into an agreement with United Prosperity Investment Co Limited, a related party in the Group, to establish a joint venture of Changan Netherlands Holding B.V.. Upon completion of the investment on 4 March 2025, Changan UK owns 15% shareholding of the JV. |
Changan UK R & D Centre Limited (Registered number: 07295448) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2024 |
22. | CONTROLLING PARTY |
The immediate and ultimate holding company is Chongqing Changan Automobile Company Limited, a company registered in China. The registered address of the holding company is No. 260, East Jianxin Road Jiangbei District, Chongqing, 400023. Chongqing Changan Automobile Company Limited is the parent company of the largest and smallest group in which the results of the company are consolidated. |
The sole director does not consider there to be an individual ultimate controlling party. |