Jiangling Motors Corporation, Ltd.
2015 Annual Report
2016-006
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its members,
and the senior executives are jointly and severally liable for the truthfulness,
accuracy and completeness of the information disclosed in the report and confirm
that the information disclosed herein does not contain false statements,
misrepresentations or major omissions.
Chairman Wang Xigao, President Yuan-Ching Chen, CFO Dennis Leu and Chief of
Finance Department, Ding Ni, confirm that the Financial Statements in this Annual
Report are truthful and complete.
All Directors were present at the Board meeting to review this Annual Report.
The prospective description regarding future business plan and development
strategy in this report does not constitute virtual commitment. The investors shall
pay attention to the risk.
All financial data in this report are prepared under International Financial Reporting
Standards (‘IFRS’) unless otherwise specified.
The Annual Report is prepared in Chinese and English. In case of discrepancy, the
Chinese version will prevail.
The year 2015 profit distribution proposal approved by the Board of Directors is as
follows:
A cash dividend of RMB 10.3 (including tax) will be distributed for every 10 shares
held, and there is no stock dividend. The Board decided not to convert capital
reserve to share capital this time.
1
Contents
Chapter I Important Notes, Contents and Abbreviations ............................... 1
Chapter II Brief Introduction and Operating Highlight .................................... 3
Chapter III Overview ....................................................................................... 5
Chapter IV Management Discussion and Analysis .......................................... 6
Chapter V Major Events ............................................................................... 14
Chapter VI Share Capital Changes & Shareholders ...................................... 21
Chapter VII Preferred Shares.......................................................................... 25
Chapter VIII Directors, Supervisors, Senior Management and Employees ...... 26
Chapter IX Corporate Governance Structure ................................................ 36
Chapter X Financial Statements ................................................................... 43
Chapter XI Catalog on Documents for Reference ........................................ 100
Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
Jiangling-Isuzu Jiangling-Isuzu Motors Company, Ltd.
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
2
Chapter II Brief Introduction and Operating Highlight
1. Company’s Information
Share’s name Jiangling Motors, Jiangling B Share’s Code 000550, 200550
Place of listing Shenzhen Stock Exchange
Company’s Chinese
江铃汽车股份有限公司
name
English name Jiangling Motors Corporation, Ltd.
Abbreviation JMC
Company legal
Wang Xigao
representative
No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Registered Address
Province, P.R.C
Postal Code of
330001
Registered Address
Headquarters No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Address Province, P.R.C
Postal Code of
Headquarters 330001
Address
Website http://www.jmc.com.cn
E-mail relations@jmc.com.cn
2. Contact Person and Method
Securities Affairs
Board Secretary
Representative
Name Wan Hong Quan Shi
No. 509, Northern Yingbin No. 509, Northern Yingbin
Address Avenue, Nanchang City, Avenue, Nanchang City,
Jiangxi Province, P.R.C Jiangxi Province, P.R.C
Tel 86-791-85235675 86-791-85266178
Fax 86-791-85232839 86-791-85232839
E-mail relations@jmc.com.cn relations@jmc.com.cn
3. Information Disclosure and Place for Achieving Annual Report
Newspapers for information China Securities, Securities Times, Hong Kong
disclosure Commercial Daily
Website designated by CSRC for
http://www.cninfo.com.cn
publication of JMC’s Annual Report
Securities Department, Jiangling Motors
Place for Achieving Annual Report
Corporation, Ltd.
4. Changes of Registration
Organization Code 61244694-3
Changes of Controlling On December 1, 1993, JMC A shares were listed on
Shareholders Shenzhen Stock Exchange, while JMCG, the founder-
3
member, was the controlling shareholder of the Company.
On September 29, 1995 and November 12, 1998, JMC
issued additional 344 million B shares totally, while, after
the additional B share issuance, JMCG and Ford were the
controlling shareholders of the Company. On December 8,
2005, the 354.176 million JMC shares held by JMCG, the
former controlling shareholder, were transferred to JMH.
Presently, JMH and Ford are the controlling shareholders
of the Company.
5. Other Information
Accounting Firm Appointed by JMC for Audit
PricewaterhouseCoopers Zhong Tian CPAs LLP
Name
(‘PwC Zhong Tian’)
11th Floor, PricewaterhouseCoopers Center, 202 Hu Bin Road,
Headquarters address
Shanghai City, P.R.C.
Names of Signed
Ye Jun, Xiong Huanwei
Accountants
6. Main accounting data and financial ratios
Unit: RMB ‘000
2015 2014 Change (%) 2013
Revenue 24,527,893 25,537,290 -3.95 20,889,706
Profit Attributable to the
Equity Holders of the 2,222,061 2,107,852 5.42 1,694,848
Company
Net Cash Generated
1,925,023 4,189,649 -54.05 3,141,249
From Operating Activities
Basic Earnings Per Share
2.57 2.44 5.42 1.96
(RMB)
Diluted Earnings Per
2.57 2.44 5.42 1.96
Share (RMB)
Weighted Average Return Down 1.64
19.56% 21.20% 19.54%
on Equity Ratio percentage point
End of Year End of Year End of Year
Change (%)
2015 2014 2013
Total Assets 21,050,726 19,496,528 7.97 16,484,699
Shareholders’ Equity
Attributable to the Equity 11,981,142 10,598,429 13.05 9,173,999
Holders of the Company
7. Accounting data difference between China GAAP and IFRS
Impact of IFRS adjustments on the net profit and shareholders’ equity
□Applicable □√Not Applicable
4
8. Main accounting data quarterly
Unit: RMB’000
Q1 Q2 Q3 Q4
Revenue 6,350,234 5,639,094 4,976,888 7,561,677
Profit Attributable to the
Equity Holders of the 574,050 507,482 458,866 681,663
Company
Net Cash Generated
From Operating -84,445 314,767 -462,488 2,157,189
Activities
Chapter III Operating Overview
1. Company’s Core Business during the Reporting Period
JMC’s core business is production and sales of commercial vehicles, SUV and
related components. JMC’s major products include JMC series light truck, pickup,
Yusheng SUV, Ford-brand SUV, Transit series commercial vehicles, and heavy
duty trucks. The Company also produces and sells engines, castings and other
components for sales to domestic and overseas markets.
2. Major Change of Main Assets
I. Major Change of Main Assets
There’s no major change of main assets during the reporting period.
II. Main Overseas Assets
□Applicable □√Not Applicable
3. Core Competitiveness Analysis
JMC is a sino-foreign joint venture auto company with R&D, manufacturing and
sales operations. As a mainstream of domestic light commercial vehicle industry,
JMC had been ranked among the top hundred Chinese listed corporations with
comprehensive strength for consecutive years; and certificated as a national
enterprise technology center, high-tech enterprise and national automobile export
base which improve the company’s core business competence.
JMC's influence over auto industry is improving steadily, making considerable
progress both in technical equipment and new product development. JMC
successfully launched Xiaolan new plant and R&D Center, which greatly
strengthened the company’s product development capability and manufacturing
efficiency. Ford-brand SUV EVEREST launched in 2015 further improved the
Company’s competence on production, R&D and manufacturing in SUV field.
5
Meanwhile, JMC has always been strictly implementing national emission
regulation, and has accumulated a steady technical force and made full
preparation for the emission standard upgrade. With the government’s emphasis
on environment protection and the accelerated progress of emission policies, the
Company’s competitive advantage will be increasingly recognized.
Chapter IV Management Discussion and Analysis
1. Summary
In 2015, China automobile market has been transferred from rapid growth to slight
growth. Total sales volume was 24.60 million units, increased 4.7% compared with
last year. Commercial vehicle sales volume was 3.45 million units, decreased 9.0%
compared with 2014.
During the reporting period, to cope with more severe competition, more stringent
regulatory requirement, intensifying cost pressures and commercial vehicle
industry slowdown pressure, the Company focused on quality improvement, new
product development, operating cost control and production efficiency
enhancement. Simultaneously, the Company introduced a series of sales policy to
respond the segment markets slowdown pressure. In 2015, JMC achieved sales
volume of 257,016 units, decreased 6.8% compared with last year, achieved
revenue of RMB 24.53 billion, decreased 4.0% compared with last year, and
achieved net profit of RMB 2.22 billion, increased 5.4% compared with last year.
2. Core Business Analysis
I. Summary
In 2015, JMC sales volume achieved 257,016 units, decreased 6.8% compared
with last year, including 108,689 units truck, 56,856 units pickup, SUV of 24,656
units and Transit CV of 66,815 units. Sales volume decrease is mainly caused by
the commercial vehicle industry slowdown. Total production volume was 254,397
units, including 109,234 units truck, 55,469 units pickup, SUV of 25,054 units and
Transit CV of 64,640 units.
Since the sales volume decreased 6.8%, JMC total sales revenue in 2015 was
RMB 24.53 billion, decreased 4.0% compared with last year.
II. Revenue and Cost
(a) Composition of Sales Revenue
Unit: RMB
2015 FY 2014 FY
YOY
Product Proportion Proportion change
Amount Amount (%)
(%) (%)
6
By Industry
Automobile 24,527,892,839 100% 25,537,289,610 100% -3.95%
Industry
By Products
Vehicle 22,115,996,697 90.17% 23,334,320,533 91.37% -5.22%
Components 2,176,421,920 8.87% 1,974,502,351 7.73% 10.23%
Material 235,474,222 0.96% 228,466,726 0.90% 3.07%
& Others
By region
China 24,527,892,839 100% 25,537,289,610 100% -3.95%
(b) Reach to 10% of Revenue or Profit by Industry, Product or Region
Unit: RMB
Y-O-Y
Y-O-Y
Y-O-Y Cost gross
Gross turnover
Turnover Cost Change margin
Margin change
(%) change
(%)
(points)
By Industry
Automobile 0.87
24,527,892,839 18,131,134,952 26.08% -3.95% -5.07%
Industry
By Products
Vehicle 22,115,996,697 16,316,619,585 26.22% -5.22% -6.34% 0.88
By Region
China 24,527,892,839 18,131,134,952 26.08% -3.95% -5.07% 0.87
If the company’s core business scope is adjusted during the reporting period, the
company’s core business data of last year need to be adjusted per the scope in
this year
□Applicable □√Not Applicable
(c) Whether Company’s Goods Revenue Higher Than Service Revenue
□√Yes □No
Industry Item Unit 2015 2014 Change (%)
Automobile Sales volume unit 257,016 275,858 -6.83
(d) Execution of Company’s Signed Significant Sales Contract
□Applicable □√Not Applicable
(e) Composition of Operating Cost
Unit: RMB
Product 2015 FY 2014 FY YOY
7
change
Proportion Proportion （%）
Cost Cost
(%) (%)
Vehicle 16,316,619,585 90.0% 17,420,269,306 91.2% -6.3%
Components 1,587,708,668 8.8% 1,454,104,801 7.6% 9.2%
Material 226,806,699 1.2% 224,341,187 1.2% 1.1%
& Others
(f) Whether Consolidated Scope Change During the Reporting Period
□Yes □√No
(g) Major Change or Adjustment of Company Business, Product or Service
□Applicable □√Not Applicable
Main Customers and Suppliers
In 2015, JMC total sales value to the top 5 customers was RMB 3,594 million,
accounting for about 14.6% of JMC’s total turnover.
Top 5 Customers:
Percentage of
Sales Value
No. Name of the Customer JMC’s Total
(RMB)
Turnover (%)
Zhejiang Jiangling Motors Sales
1 1,214,534,304 5.0%
Company
JMCG Import & Export Co., Ltd.
2 1,066,145,770 4.3%
(“JMIE”)
Shanghai Keda Auto Sales
3 450,759,577 1.8%
Company
Shanghai Keda Zhoupu Auto
4 436,873,542 1.8%
Sales Company
Henan Jiangling Motors Sales
5 425,420,312 1.7%
Company
Total 3,593,733,505 14.6%
Other introduction to main customers
□√Applicable □Not Applicable
JMIE is a related party of the Company.
The total value of purchases from the top 5 suppliers was RMB 3,579 million,
accounting for about 21.7% of JMC’s total annual purchase amount.
Top 5 Suppliers:
Percentage of
Purchase Value JMC’s Total
No. Name of the Supplier
(RMB) Annual Purchase
Amount (%)
8
Bosch Auto Diesel System
1 852,074,349 5.2%
Company
Jiangxi Jiangling Chassis
2 753,417,883 4.6%
Company
3 Ford Motor Company 728,225,388 4.4%
GETRAG (Jiangxi) Transmission
4 643,243,581 3.9%
Company
Nanchang Bao-jiang Steel
5 601,710,557 3.6%
Processing & Distribution Co., Ltd.
Total 3,578,671,758 21.7%
Other introduction to main suppliers
□√Applicable □Not Applicable
Except Bosch Auto Diesel System Company, the other four companies are related
parties of the Company.
III. Expense Analysis
There’s no major change of expense during the reporting period.
IV. Research & Development
In 2015, JMC continued to focus on development of new product programs.
Product related spending centered at future product development and compliance
with regulatory requirements. The N352, N330, J08, J09, J10, J18 programs will
incorporate market-driven improvements including new model, increased payloads,
new styling, and improved power, etc.. The JX493, E802, J15 and self-developed
gas engine projects will further expand the Company's engine development &
manufacturing capacity and ensure the Company is compliant with stringent
emission regulations. The competitive R&D will ensure the company’s volume and
profit growth. Development expenditure in 2015 was 1,831 million, representing 15%
of net assets, or 7% of revenue.
R&D
2015 2014 Change (%)
R&D Staff (person) 2,110 1,645 28.27%
Up 1.72 percentage
R&D Staff as % of total employees 13.44% 11.72%
point
R&D Investment (RMB) 1,830,992,839 1,554,018,365 17.82%
Up 1.37 percentage
R&D Investment as % of revenue 7.46% 6.09%
point
Capitalization of R&D investment 0 0 -
Capitalization of R&D investment as %
0 0 -
of R&D Investment
Patents in the past two years
□√Applicable □Not Applicable
Achieved totally as of
Applied Achieved
Dec 31, 2015
Invention Patent 32 6 22
Utility Patent 137 139 478
9
Design Patent 51 44 114
Key Technical Team or Personnel No major change
High-tech Enterprise certified by
Yes
MOST
V. Cash Flow Analysis
RMB’000
Item 2015 2014 Y-O-Y Change
Net cash generated from
1,925,023 4,189,649 -54.05%
operating activities
Net cash used in
-1,197,152 -1,021,435 -17.20%
investing activities
Net cash used in
-843,299 -684,718 -23.16%
financing activities
Net (decrease)/increase
cash and cash -115,428 2,483,496 -104.65%
equivalents
Net cash generated from operating activities decreased by RMB 2,265 million,
down 54.05% vs. 2014, mainly reflecting the decrease of revenue, the increase
input on R&D and the increase of accounts receivable.
3. Non- core business analysis
□Applicable □√Not Applicable
4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB’000
YOY Major Changes
Explanation
December 31, 2015 December 31, 2014
Asset item Proportion
change
Amount Proportion Amount Proportion (Points)
Property, plant and
6,323,546 30.0% 5,736,408 29.4% 0.6
equipment
Inventories 1,730,930 8.2% 1,658,707 8.5% -0.3
Trade, other receivables
2,793,770 13.3% 2,006,162 10.3% 3.0
and prepayments
Cash and cash equivalents 8,848,040 42.0% 8,963,468 46.0% -4.0
II. The fair value of the assets and liabilities (not applicable).
5. Investment
I. Summary
□Applicable □√Not Applicable
II. Obtained Major Equity Investment during the Reporting Period
□Applicable □√Not Applicable
III. Ongoing Major Non-Equity Investment during the Reporting Period
□√Applicable □Not Applicable
10
Investment Fixed Total
Spending Investment
Method/ Assets Investment
in 2015 Committed Planned
Project Name source (Y/N) Approved
Job#1 Time
(RMB
(RMB Mils) (RMB Mils)
Mils)
Self- Y First Half,
J08 Program 1,233 211 807
funded 2015
Self- Y Second Half,
J09 Program 2,414 599 1,605
funded 2016
Capacity Self- Y
Second Half,
Investment in funded 2,133 62 1,866
2017
Xiaolan Site
Self- Y First Half,
N330 Program 1,212 284 659
funded 2017
J20 Heavy Self- Y
Duty Truck funded First Half,
1,173 179 183
Long Lead 2019
Funding
IV. Financial Assets Investment
(a) Stock Investment
□Applicable □√Not Applicable
(b) Derivative Investment
□Applicable □√Not Applicable
V. Usage of Raised Fund
□Applicable □√Not Applicable
6. Sales of Major Assets and Equity
I. Sale of Major Assets
□Applicable □√Not Applicable
II. Sales of Major Equity
□Applicable □√Not Applicable
7. Operating Results of Main Subsidiaries and Joint-Stock Companies
Unit: RMB
Name of Type of Registered Operating
Main Business Assets Net Assets Turnover Net Profit
Companies Companies Capital Profit
Jiangling
Motors Sales Sales vehicle,
Subsidiary 50,000,000 2,935,698,307 220,731,488 21,436,631,609 66,095,548 49,157,632
Corporation, service parts
Ltd
Product heavy
JMC Heavy commercial
Duty Vehicle Subsidiary vehicle , engine, 281,793,174 1,106,052,443 -52,871,195 98,055,695 -202,802,209 -81,507,258
Co., Ltd component, and
related service
Hannon Automotive air
Joint -Stock
Systems conditioning and 46,627,171 330,291,715 214,062,594 528,073,486 93,531,644 73,343,839
Company
(Nanchang) Parts
11
Co.,Ltd.
8. Structured Entities Controlled by JMC
□Applicable □√Not Applicable
9. Outlook
I. Industry Competition and Development Trend
At present China is still in the stage of accelerated industrial and urbanization
development. With the One Belt One Road strategy and urbanization progress,
there will be boost of domestic infrastructure construction and vigorous
development of logistics industry as well as great opportunity for the development
of China’s commercial vehicle market. Meanwhile, China's Car Parc per capita is
still lower than world’s average level indicating a strong auto market potential in the
future. Currently, urban traffic congestion and environment pollution affect
automobile industry development. However, as the economic progressing steadily,
the consumption level and purchasing power improved, domestic automobile sales
volume is expected to achieve higher level.
In 2016, under the industry incentive policy, China’s automobile industry will still
maintain slight growth, 2016 sales is projected to be 26 million units, up 6% over
2015.
II. Corporation Strategy
Company’s mission is to produce and sell world class products with the best
customer satisfaction in auto industry. JMC will continue to introduce new light
truck, pickup, light bus and SUV programs in the future to further strengthen the
market share performance. At the same time, JMC will further improve SUV sales
performance and penetrate into heavy truck segment.
III. 2016 Business Plan
The Company is targeting 2016 revenue level at RMB 26.0 billion, an increase of 6%
vs. 2015. To enhance profitability, the company is committed to the following plans
in 2016:
(1) Achieve volume and market share targets by enhancing the sales network and
sales/marketing activities, especially pushing the third – fifth class city dealer
network construction
(2) Well prepared the new products launch plan to ensure the successful sales
(3) Continue to improve product quality, pursue cost reduction opportunities,
improve manufacturing and operating efficiency to achieve profit and cost
targets.
(4) Continue to promote the new fuel economy and emission compliance program
to satisfy regulatory requirements.
(5) Work with technical partners to execute the N352, N330, J08, J09, J10, J15,
J18, J20, J21 programs.
(6) Expand finished vehicle exports and OEM components sales business.
12
IV. Potential Challenges and Solutions
In 2016, the company will continue to face fiercer competition, more stringent
regulatory requirements, intensifying cost pressures and a slowdown in China’s
economic growth. To achieve steady growth, the company will continue to focus on
the following aspects in 2016.
(1) Optimizing company’s production system to improve efficiency and product
quality.
(2) Optimizing dealer network and marketing spending to improve market share.
(3) Improve suppliers’ capability and parts quality; continue to reduce parts
purchasing cost.
(4) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
(5) Sustaining the expense management and control to optimize the business
structure.
(6) Optimize and execute company’s growth strategies to pursue sustainable long-
term growth.
The Company will continue to optimize cost structure, improve production
efficiency, mitigate management cost as well as focus on new product
development to deliver the launch quality and cost target. With the support from
technical partner, the Company has been working on major programs approved by
the Board, including N352, N330, J08, J09, J10, J15, J18, J20, J21, etc. to
accelerate the progress of launching new competitive and profitable products to
the market. Meanwhile, the Company will strive to ensure the timely delivery of
high quality heavy trucks, and devote to strengthening dealer network, expanding
overseas market and parts business.
10. External research and media interview to the Company
I. Table of external research, communication and media interviews with the
Company in the reporting period
Date Communication Type of Information Discussed
Method Object and Materials offered
January 28, On-the-spot Institution JMC Operating highlights
2015 research
February 6, On-the-spot Institution JMC Operating highlights
2015 research
February On-the-spot Institution JMC Operating highlights
13, 2015 research
March 20, On-the-spot Institution JMC Operating highlights
2015 research
Times 4
Institutions 29
Persons 0
Other objects 0
Whether to disclose, reveal or divulge the No
undisclosed material information
II. Table of external research, communication and media interviews with the
Company in the period from December 31, 2015 to March 19, 2016
Date Communication Type of Information Discussed
13
Method Object and Materials offered
January 14, On-the-spot Institution JMC Operating highlights
2016 research
January 26, On-the-spot Institution JMC Operating highlights
2016 research
March 3, On-the-spot Institution JMC Operating highlights
2016 research
Times 3
Institutions 17
Persons 0
Other objects 0
Whether to disclose, reveal or divulge the No
undisclosed material information
Chapter V Major Events
1. Profit distribution and capital reserve conversion regarding common stock
Establishment, implementation or adjustment of profit distribution policy, esp. cash
dividend distribution policy, regarding common stock during the reporting period
□√Applicable □Not Applicable
According to the requirements of Notice on Further Implementing Cash Dividend
Distribution Policy Among Listed Companies and Supplementary Notice on Further
Implementing Cash Dividend Distribution Policy Among Listed Companies
promulgated respectively by CSRC and Jiangxi Branch, CSRC, the Company
amended the related articles regarding profit distribution stipulated in the Articles of
Association of JMC in 2014. The standards and proportion on profit distribution is
clear and on the process, Independent Directors fulfilled their duties, the
reasonable appeals from the middle and small shareholders were thought over and
their legal rights and interests were protected when the plan was drafted and
executed.
JMC had distributed cash dividends to all the shareholders in the consecutive
twelve years since 2003. Accumulated cash dividends for the twelve years totalled
RMB 5,532 million. During the reporting period, the Proposal on Profit Distribution
for Year 2014 was reviewed and approved by the Board of Directors, and was
approved by 2014 Annual Shareholders’ Meeting. On July 2015, the Company
completed the profit distribution for Year 2014. Both the formulation of JMC Profit
Distribution Plan and implementation complies with the relevant requirements of
the Articles of Association and other profit distribution policy, and the procedures
are valid and legal, which protect the interests of all shareholders.
Special Explanation on Cash Dividend Policy
Whether to comply with the requirements of the
Articles of Association of JMC or resolution of the Y
Shareholders’ Meeting (Y/N)
Whether the standards and proportion of dividends
Y
on profit distribution are clear (Y/N)
Whether the procedures are valid and legal (Y/N) Y
Whether the Independent Director fulfil their duties Y
14
(Y/N)
Whether middle and small shareholders have
opportunities to claim their appeals and their legal Y
rights and interests are completely protected (Y/N)
Whether the condition and procedure are
reasonable and transparent when the cash Y
dividend policy is being changed (Y/N)
Profit Distribution Plans or Proposal from 2013 to 2015
(1) Proposal on 2015 Year Profit Distribution Plan
Details on the profit available for appropriation of the Company in 2015 prepared in
accordance with the China GAAP and International Financial Reporting Standard
(‘IFRS’) are as follows:
Unit: RMB’000
China GAAP IFRS
Retained earnings at Dec. 31, 2014 8,466,847 8,463,638
2015 net profit 2,222,061 2,222,061
Allocation of dividend for 2014 -837,318 -837,318
Retained earnings at Dec. 31, 2015 9,851,590 9,848,381
The upper limit of profit available for distribution was based on the lower of the un-
appropriated profit calculated in accordance with the China GAAP and that
calculated in accordance with IFRS. Therefore, the Company’s retained earnings
available for distribution as of December 31, 2015 were RMB 9,848,381 thousand.
The Board approved to submit to the 2015 Annual Shareholders’ Meeting the
following proposal on year 2015 profit distribution:
(1). to appropriate for the dividend distribution from the profit available for
distribution, which shall be equal to RMB 1.03 per share and shall apply to the
Company’s total share capital; and
(2). to carry forward the un-appropriated portion to the following fiscal year.
Profit distribution proposal: a cash dividend of RMB 10.3 (including tax) will be
distributed for every 10 shares held. Based on the total share capital of
863,214,000 shares as of December 31, 2015, the total cash dividend distribution
amounts shall be RMB 889,110,420.
B share dividend shall be paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by the
Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(2) 2014 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 9.7 (including tax) was
distributed for every 10 shares held. Based on the total share capital of
15
863,214,000 shares as of December 31, 2013, the total cash dividend distribution
amounts were RMB 837,317,580.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by the
Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(3) 2013 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 7.9 (including tax) was
distributed for every 10 shares held. Based on the total share capital of
863,214,000 shares as of December 31, 2013, the total cash dividend distribution
amounts were RMB 681,939,060.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by the
Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
Table of cash dividend in the recent three years
Unit: RMB’000
Profit attributable to Cash dividend as % of
Cash dividend the equity holders of profit attributable to the
(Including tax) the Company in that equity holders of the
year Company
2015* 889,110 2,222,061 40.01%
2014 837,318 2,107,852 39.72%
2013 681,939 1,694,848 40.24%
*The proposal on 2015 year profit distribution is subject to approval of the
Shareholders’ Meeting of the Company.
2. Proposal on 2015 Year Profit Distribution Plan or Capital Reserve Conversion
□√Applicable □Not Applicable
Please refer to Article 1, Chapter V of this Report.
3. Commitments
3.1 Commitments of the Company, the shareholder, the actual controlling party,
the acquirer, the Director, the Supervisor, the senior executive or other related
party of the Company
□√Applicable □Not Applicable
Promisor Content of Time Term of Implementation of
Item
Commitments Commitments commitments
Share reform None None None N/A
16
Acquisition report or
Statement of changes in None None None N/A
equity
Asset restructuring None None None N/A
Initial Public Offering or
None None None N/A
re-funding
JMH July 11, within 6 months JMH exercised its
2015 since July 9, commitments sincerely and
Other commitments *
2015 did not breach the promise as
of January 9, 2016.
Implementation in time Yes
or not
* i. JMH will not reduce JMC shares by secondary market within six months since
July 9, 2015; ii. JMH will exercise its duties as a major shareholder, concentrate on
the quality of the listed company, push to establish a sound invest-return long-term
mechanism and continue to improve the return level.
3.2 Earnings forecast of the assets or project and the explanations
□Applicable □√Not Applicable
4. Non-operating funding in the Company occupied by controlling shareholder and
its affiliates
□Applicable □√Not Applicable
There was no non-operating funding in the Company occupied by controlling
shareholder and its affiliates.
5. Explanation of the Board of Directors, Supervisory Committee and Independent
Directors to abnormal opinions from accounting firm
□Applicable □√Not Applicable
6. Explanation on the changes of accounting policy, accounting estimates,
estimation method compared with that of last year
□Applicable □√Not Applicable
There was no change of accounting policy, accounting estimates, estimation
method during the reporting period.
7. Explanation on major accounting errors that shall be restated during the
reporting period
□Applicable □√Not Applicable
There was no major accounting error that shall be restated during the reporting
period.
8. Explanation on consolidated scope change compared with that of last year
□Applicable □√Not Applicable
There was no change on consolidated scope in the reporting period.
9. Appointment or Dismissal of Accounting Firm
17
Current accounting firm
Name PricewaterhouseCoopers Zhong Tian CPAs LLP
Compensation (RMB’000) 1,800
Consecutive years offering audit
14
services
Names of signed accountants Ye Jun, Xiong Huanwei
Dismissal of accounting firm
□Applicable □√Not Applicable
Appointment of C-SOX auditor, financial consultant or sponsor
Upon the approval of 2013 Annual Shareholders’ Meeting, JMC agrees to appoint
PwC Zhong Tian as JMC’s 2014 and 2015 C-SOX auditor. In 2015, JMC paid RMB
640 thousand to PwC Zhong Tian for the C-SOX audit.
10. Suspension and Termination of Listing after Annual Report Disclosed
□Applicable □√Not Applicable
11. Related Matters regarding Bankruptcy
□Applicable □√Not Applicable
There was no matter involving bankruptcy during the reporting period.
12. Major Litigation or Arbitration
□Applicable □√Not Applicable
There was no major litigation or arbitration during the reporting period.
13. Punishment
□Applicable □√Not Applicable
Neither JMC nor its Directors or senior management were punished by regulatory
authorities in 2015.
14. Good Faith of JMC and its controlling shareholder or actual controlling party
□Applicable □√Not Applicable
15. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan and
Other Employee Incentive Method
□Applicable □√Not Applicable
There was neither equity incentive plan or ESOP, nor other employee incentive
method in 2015.
16. Major Related Transactions
i. Routine related party transactions
□√Applicable □Not Applicable
As % of
Pricing Settlement Amount Total
Transaction Parties Content Relationship
Principle Method (RMB’0000) Purchases/
Revenue
Jiangxi Jiangling Parts and Subsidiary of Contracted 60 days after 75,342 4.56%
18
Chassis Company components JMCG price delivery and
purchase invoicing
Parts and Controlling
Contracted
Ford components shareholder of D/P 72,823 4.41%
price
purchase JMC
GETRAG (Jiangxi) Parts and Associate of 60 days after
Contracted
Transmission components JMCG delivery and 64,324 3.90%
price
Company purchase invoicing
Nanchang Bao-jiang Parts and Associate of
Contracted
Steel Processing & components JMCG Prepayment 60,171 3.64%
price
Distribution Co., Ltd. purchase
Jiangxi Jiangling Parts and Wholly-owned 30 days after
Contracted
Special-Purpose components subsidiary of delivery and 47,882 2.90%
price
Vehicle Co, Ltd. purchase JMCG invoicing
Parts and Subsidiary of 60 days after
Jiangling-Lear Contracted
components JMCG delivery and 47,085 2.85%
Interior Trim Factory price
purchase invoicing
Sales 40% of
prepayment
JMCG Import and Associate of Contracted and the
106,615 4.35%
Export Co., Ltd. JMCG price remains paid
during 30 days
after delivery
ii. Major related party transaction concerning transfer of assets or equity
□Applicable □√Not Applicable
There was no major related party transaction concerning transfer of assets or
equity in 2015.
iii. Related party transaction concerning outside co-investment
□Applicable □√Not Applicable
There was no outside co-investment in 2015.
iv. Related credit and debt
□√Applicable □Not Applicable
Is there non-operating related credit and debt?
□Yes □√No
The Company had no non-operating related credit and debt in the reporting period.
v. Other major related party transactions
□√Applicable □Not Applicable
The balance amount of bank deposit of the Company in JMCG Finance Company
as of the end of the year 2015 was RMB 372,320 thousand. The Board of Directors
reviewed and approved JMCG Finance Company Continious Risk Assessment
Report. Please refer to the website www.cninfo.com.cn for the original of the report.
17. Major Contracts and Execution
i. Entrustment, contract or lease
a. Entrustment
□Applicable □√Not Applicable
There was no entrustment in 2015.
19
b. Contract
□Applicable □√Not Applicable
There was no contract in 2015.
c. Lease
□√Applicable □Not Applicable
See the note 31 (b) to financial statements for lease of related parties.
Project with more than 10% of net profit
□Applicable □√Not Applicable
There was no lease project with more than 10% of net profit in the reporting period.
ii Major guarantee
□Applicable □√Not Applicable
The Company had no outside guarantee in 2015.
iii. Entrustment on cash asset management
a. Trust investment
□Applicable □√Not Applicable
There was no trust investment in 2015.
b. Entrusted loan
□Applicable □√Not Applicable
There was no entrusted loan in 2015.
iv. Other major contract
□Applicable □√Not Applicable
There was no major contract in 2015.
18. Other Major Events
JMC received government incentives of approximate RMB 690 million appropriated
by Nanchang City, Xiaolan Economy Development Zone, Nanchang County,
Nanchang City Qingyupu District, and Taiyuan Economic & Technological
Development Zone in 2015, which is to support JMC’s development.
19. Major event of JMC subsidiary
□Applicable □√Not Applicable
20. Corporation Social Responsibilities
□√Applicable □Not Applicable
JMC 2015 Corporation Social Responsibilities Report can be downloaded from
JMC official website: www.jmc.com.cn or the website: www.cninfo.com.cn.
21. Company Bond
□Applicable □√Not Applicable
20
Chapter VI Share Capital Changes & Shareholders
1. Changes of shareholding structure
I. Table of the changes of shareholding structure
Before the change Change (+, -) After the change
Proportion New Reserve- Proportion
Bonus
Shares of total share converte Others Subtotal Shares of total
Shares
shares (%) s d shares shares (%)
I. Limited tradable
1,821,900 0.21% - - - -96,000 -96,000 1,725,900 0.20%
A shares
3. Other domestic
1,821,900 0.21% - - - -96,000 -96,000 1,725,900 0.20%
shares
Including:
Domestic legal
1,785,000 0.21% - - - -72,000 -72,000 1,713,000 0.20%
person shares
Domestic natural
36,900 - - - - -24,000 -24,000 12,900 -
person shares
II. Unlimited
861,392,100 99.79% - - - 96,000 96,000 861,488,100 99.80%
tradable shares
1. A shares 517,392,100 59.94% - - - 96,000 96,000 517,488,100 59.95%
2. B shares 344,000,000 39.85% - - - - - 344,000,000 39.85%
III. Total 863,214,000 100.00% - - - - - 863,214,000 100.00%
Causes of shareholding changes
□√Applicable □Not Applicable
JMC did not issue shares or derivative securities during the past three years as of
December 31, 2015. JMC’s total shares remained the same in 2015, and the
change in shareholding structure was caused by
a. the trading restriction on the limited A shares of 36,000 shares held by Mr. Chu
Kun were relieved on January 22, 2015;
b. the trading restriction on the limited A shares of 60,000 shares held by Fujian
Province Fuqi Huatai Services Company were relieved on December 17, 2015;
c. limited A shares of 12,000 shares, formerly held by Shenzhen Airport Terminal
Building Co., Ltd., were transferred to Mr. Li Yuanqin by the way of judicial
deduct.
Approval of changes of shareholding structure
□Applicable □√Not Applicable
Shares Transfer
□Applicable □√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS, shareholders’
equity attributable to the equity holders of the Company, generated from shares
transfer
□Applicable □√Not Applicable
Others to be disclosed necessarily or per the requirements of securities regulator
□Applicable □√Not Applicable
II. Changes of limited A shares
21
□√Applicable □Not Applicable
2. Securities Issuance and Listing
I. Securities issuance (not including preferred shares) in 2015
□Applicable □√Not Applicable
II. Explanation on changes of shares, shareholding structure, assets and liabilities
structure
□Applicable □√Not Applicable
III. Current staff shares
□Applicable □√Not Applicable
3. Shareholders and actual controlling parties
I. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total shareholders 19,437
(as of December 31,
2015)
Total shareholders 19,626
(as of Feb 29, 2016)
Top ten shareholders
Shares due
Shareholding Shares at Shares with
Shareholder Change to
Shareholder Name Percentage the End of Trading
Type (+,-) mortgage
(%) Year Restriction
or frozen
Jiangling Motor State-owned
41.03 354,176,000 0 0 0
Holding Co., Ltd. legal person
Ford Motor Company Foreign legal
32 276,228,394 0 0 0
person
China Securities
Other 2.64 22,745,784 22,745,784 0 0
Corporation Limited
Shanghai Automotive State-owned
1.51 13,019,610 0 0 0
Co., Ltd. Legal person
Pingan Life
Insurance Specific Domestic non-
Client Asset state-owned 1.04 9,012,285 9,012,285 0 0
Management Project- legal person
No.1
E-fund New Silk-road Domestic non-
Securities Investment state-owned 0.96 8,262,087 8,262,087 0 0
Fund legal person
Central Huijin
Other 0.83 7,186,600 7,186,600 0 0
Investment Ltd.
JPMBLSA RE FTIF
Foreign legal
TEMPLETON CHINA 0.70 6,026,850 0 0 0
person
FUND GTI 5497
GAOLING Foreign legal
0.66 5,670,745 -982,267 0 0
FUND,L.P. person
TEMPLETON
Foreign legal
DRAGON 0.57 4,937,808 379,967 0 0
person
FUND,INC.
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Restriction Share Type
22
Jiangling Motor Holding Co., Ltd. 354,176,000 A share
Ford Motor Company 276,228,394 B share
China Securities Corporation Limited 22,745,784 A share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Pingan Life Insurance Specific Client
9,012,285 A share
Asset Management Project-No.1
E-fund New Silk-road Securities
8,262,087 A share
Investment Fund
Central Huijin Investment Ltd. 7,186,600 A share
JPMBLSA RE FTIF TEMPLETON
6,026,850 B share
CHINA FUND GTI 5497
GAOLING FUND,L.P. 5,670,745 B share
TEMPLETON DRAGON FUND,INC. 4,937,808 B share
Notes on association among above- None.
mentioned shareholders
Stock buy-back by top ten shareholders or top ten shareholders holding unlimited
tradable shares in the reporting period
□Applicable □√Not Applicable
II. Controlling Shareholders
Nature of controlling shareholders: Central/Local government holdings, foreign
holdings
Type: Legal person
Legal Main scope of
Name Established Date Organization code
representative business
manufacturing of
automobiles, engines,
chassis, and
automotive
components and
parts, sales of self-
produced products, as
well as related after-
sales services;
industrial investment;
management & agent
Jiangling Motor Holding for merchandise and
Mr. Zhang Baolin November 1. 2004 76703230-7
Co., Ltd. technology export &
import; property
management; sales of
household articles,
mechanical &
electronic equipment,
artistic handicrafts,
agricultural by-
products and steel;
consulting business in
enterprise
management.
Design,
manufacturing,
assembly and sales of
William Clay
Ford Motor Company 1993 cars, trucks, parts and
Ford
components,
financing, leasing of
vehicles and
23
equipment, and
insurance business.
Change of controlling shareholders
□Applicable □√Not Applicable
There was no change of controlling shareholders in the reporting period.
III. Actual Controlling Parties
Nature of controlling shareholders: Central/Local State-owned Assets Supervision
and Administration
Type: Legal person
Legal
Name Established Date Organization code Main scope of business
representative
manufacturing of
automobiles, engines,
chassis, specialty vehicle,
transmission, other products,
automotive quality testing,
sales of self-produced
products and raw materials,
equipment, electronic
JMCG Qiu Tiangao July 27, 1991 15826375-9 products, parts and others,
as well as related after-sales
services and maintenance
services; development of
products derived from JMC
brand light vehicle; oversea
auto project-contracting,
export equipment, material
and related labor services.
development, manufacturing,
sales, import & export
Chongqing business of auto (including
Changan December 31, sedan), engine, automotive
Xu Liuping 20286320-X
Automobile 1996 components, die, tools,
Co., Ltd. installation of machinery,
technological consultant
services.
Change of actual controlling parties
□Applicable □√Not Applicable
There was no change of actual controlling parties in the reporting period.
Ownership and control relations between the Company and the actual controlling
parties are shown as follows:
24
SASAC
Nanchang State-owned Assets
Supervision and Administration
Committee
45.55% 100%
Chongqing Changan Automobile Co., JMCG
Ltd. 50% 50%
JMH Ford
41.03% 32%
JMC
Actual controlling parties control the Company by the way of trust or other assets
management
□Applicable □√Not Applicable
IV. Other legal person shareholder holding more than 10% of total equity of the
Company
□Applicable □√Not Applicable
V. Shareholding reducing restriction to controlling shareholders, actual controlling
parties, restructuring parties and other commitment-making entities
□√Applicable □Not Applicable
JMH commits not to reduce JMC shares by secondary market within six months
since July 9, 2015.
Chapter VII Preferred Shares
□Applicable □√Not Applicable
JMC had no preferred shares in the reporting period.
25
Chapter VIII Directors, Supervisors, Senior Management and Employees
1. Changes of Shares held by Directors, Supervisors and Senior Management
Position Name Gender Age Term of Office Shares Shares Share Cause
as of as of Change in of
Dec. 31, Dec. 31, Year 2015 Share
2014 2015 Change
Directors：
2014.6.27-
Chairman Wang Xigao Male 66 0 0 0
2017.6.27
2014.6.27-
Vice Chairman John Lawler Male 50 0 0 0
2017.6.27
2014.6.27-
Director Qiu Tiangao Male 50 0 0 0
2017.6.27
2014.6.27-
Director Manto Wong Male 54 0 0 0
2017.6.27
2014.6.27-
Director & President Yuan-Ching Chen Male 64 0 0 0
2017.6.27
2015.12.9-
Director Yuan Mingxue Male 49 0 0 0
2017.6.27
2014.6.27-
Independent Director Lu Song Male 59 0 0 0
2017.6.27
2014.6.27-
Independent Director Wang Kun Female 40 0 0 0
2017.6.27
2015.12.9-
Independent Director Li Xianjun Male 48 0 0 0
2017.6.27
2014.6.27-
Ex-Director Wang Kun Male 40 0 0 0
2015.11.11
Ex-Independent 2014.6.27-
Wang Xu Female 52 0 0 0
Director 2015.9.17
Supervisors：
2014.6.27-
Chief supervisor Zhu Yi Male 46 0 0 0
2017.6.27
2014.6.27-
Supervisor Alvin Qing Liu Male 59 0 0 0
2017.6.27
2014.6.27-
Supervisor Zhang Jian Male 47 40 40 0
2017.6.27
2014.6.27-
Supervisor Liu Niansheng Male 49 0 0 0
2017.6.27
2014.6.27-
Supervisor Xu Lanfeng Female 47 0 0 0
2017.6.27
Senior
Management:
2014.6.27-
EVP Xiong Chunying Female 52 1,200 1,200 0
2017.6.27
2015.1.1-
EVP Jin Wenhui Male 49 0 0 0
2017.6.27
2014.6.27-
CFO Dennis Leu Male 52 0 0 0
2017.6.27
2014.6.27-
VP & Board Secretary Wan Hong Male 55 0 0 0
2017.6.27
2014.6.27-
VP Li Qing Male 51 0 0 0
2017.6.27
2015.4.1-
VP Tim Slatter Male 51 0 0 0
2017.6.27
VP Zhu Shuixing Male 42 2014.6.27- 100 100 0
26
2017.6.27
2014.6.27-
VP Liu Shuying Female 53 0 0 0
2017.6.27
2014.6.27-
VP Liao Zanping Male 53 0 0 0
2017.6.27
2015.7.1-
VP Arturo Mendoza Male 61 0 0 0
2017.6.27
2015.7.1-
VP Li Xiaojun Male 41 0 0 0
2017.6.27
2015.9.1-
VP Christian Chen Male 44 0 0 0
2017.6.27
2014.6.27-
Ex-VP John Scholtes Male 57 0 0 0
2015.3.31
2014.6.27-
Ex-VP Zhong Wanl Male 53 0 0 0
2015.8.30
2. Changes of Directors, Supervisors and Senior Management
Name Position Status Date Reason
Wang Kun Director Leave Nov 11, 2015 Work rotation
Independent
Wang Xu Leave Sep 17, 2015 Personal working reason
Director
Mach 31,
John Scholtes VP Leave Work rotation
2015
August 30,
Zhong Wanli VP Leave Personal reason
2015
3. Particulars about working experience of directors, supervisors and senior
management in the past five years
Directors:
Mr. Wang Xigao, born in 1950, is a senior engineer equivalent to professor, and
holds a Bachelor’s Degree in Thermodynamics from Tsinghua University and a
Bachelor’s Degree in Economic Management from Fudan University. In the past
five years, Mr. Wang Xigao held various positions including Chairman of JMCG,
Chairman of Jiangling-Isuzu Motors Company Limited, and Vice-Chairman of JMH.
Since March 2004, Mr. Wang Xigao assumed the post of the Chairman of JMC.
Mr. John Lawler, born in 1966, holds a Bachelor’s Degree in Business-Economics
from Knox College, U.S.A. and a Master’s Degree in Business-Finance from
University of Iowa, U.S.A. In the past five years, Mr. John Lawler held various
positions including Controller of North America Product Programs, Controller of US
Marketing & Sales of Ford Motor Company, CFO of Ford Asia Pacific and Africa,
Vice Chairman of JMC, Vice President of Ford and Chairman & CEO of Ford Motor
(China) Ltd. Mr. John Lawler was appointed as Vice Chairman of JMC in
December 2013.
Mr. Qiu Tiangao, born in 1966, holds a Bachelor’s Degree in Mechanical
Manufacturing and a Master’s Degree in Industrial Engineering from Huazhong
University of Science and Technology. In the past five years, Mr. Qiu Tiangao held
various positions including Vice President of JMH., Director, General Manager,
27
Chairman of JMCG, Director of Jiangling Motor Holding Co., Ltd., Chairman of
JMCG Jingma Motors Co., Ltd., Chairman of Jiangxi Isuzu Motors Co., Ltd. Mr. Qiu
Tiangao was appointed as Director of JMC in June 2014.
Mr. Manto Wong, born in 1962, holds a Bachelor’s Degree in Computer
Engineering and a Master’s Degree in Business Administration from the University
of Michigan, U.S.A. In the past five years, Mr. Manto Wong held various positions
including Director of Business Strategy for Asia Pacific of Ford, Vice President and
CFO of Ford Motor (China) Ltd., and Vice President of Finance & Director of
Changan Ford Automobile Co., Ltd. Mr. Manto Wong was appointed as Director of
JMC in October 2013.
Mr. Yuan-Ching Chen, born in 1952, holds mechanical engineering Degree from
National Cheng Kung University of China Taiwan. In the past five years, Mr. Yuan-
Ching Chen has held the positions of the President and Director of JMC. Mr. Yuan-
Ching Chen was appointed as Director of JMC in June 2009.
Mr. Yuan Mingxue, born in 1968, senior engineer, holds a Bachelor’s Degree in
Auto Engineering from Beijing Institute of Technology and an EMBA from China
Europe International Business School. In the past five years, Mr. Yuan Mingxue
held various positions including Assistant to the President of Changan Automobile
and Executive Vice President of Jiangling Motor Holdings Co., Ltd., Assistant to
the President, Chief of Strategy Planning Department and Director of Capital
Management Division of Chongqing Changan Automobile Company Limited
(“Changan Automobile”), Assistant to the President and General Manager of
Overseas Business Development Department of Changan Automobile, Vice
President of Changan Automobile. Mr. Yuan Mingxue was appointed as Director of
JMC in October 2015.
Mr. Lu Song, born in 1957, associate professor and lawyer, holds a Bachelor’s
Degree in Law from Peking University and a Master’s Degree in Law from China
Foreign Affairs University (“CFAU”) and Free University of Brussels respectively. In
the past five years, Mr. Lu Song held various positions including associate
professor of CFAU and the arbitrator of international arbitral institutions, Vice
President of the Chinese Society of Private International Law, Executive Council of
the Chinese Society of International Law. Mr. Lu Song was appointed as
Independent Director of JMC in June 2014.
Ms. Wang Kun, born in 1976, associate professor, holds a Bachelor’s Degree in
Administration from Nankai University and a Doctor’s Degree in Accounting from
Hong Kong University of Science and Technology. In the past five years, Ms.
Wang Kun held various positions including lecturer in Tsinghua University School
of Economics and Management, Assistant to Dean of Tsinghua University School
of Economics and Management and Deputy Director of Tsinghua University
28
Corporate Governance Center. Ms. Wang Kun was appointed as Independent
Director of JMC in June 2014.
Mr. Li Xianjun, born in 1967, holds a Bachelor’s Degree in Industrial Management
from Jilin University of Technology and an MBA, a Doctor’s Degree in Political
Economy from Jilin University. In the past five years, Mr. Li Xianjun held various
positions including Head and Academic Director of School of Automotive
Engineering of Tsinghua University, Independent Director of Tianjin FAW Xiali
Automobile Co., Ltd. Ms. Li Xianjun was appointed as Independent Director of JMC
in December 2015.
Supervisors:
Mr. Zhu Yi, born in 1970, is a senior accountant, and holds a Bachelor’s Degree in
Business Management and a MBA from Jiangxi University of Finance &
Economics. In the past five years, Mr. Zhu Yi used to be the Chief of JMCG Asset
& Finance Department, Assistant to General Manager, Vice General Manager of
JMCG, and Director of JMH. Mr. Zhu Yi has been a Supervisor of JMC since June
2002.
Mr. Alvin Qing Liu, born in 1957, has a Jurisprudence Doctor Degree and a Master
Degree in International Economics from Marquette University, U.S.A. and is a
member of American Bar Association and was admitted to practice in the U.S.
Federal Court for the Eastern District of Wisconsin. In the past five years, Mr. Alvin
Qing Liu has held the positions including Vice President and General Counsel of
Ford Motor (China) Ltd, Vice President and General Counsel of Ford Asia Pacific.
Mr. Alvin Qing Liu has been a Supervisor of JMC since June 2002.
Mr. Zhang Jian, born in 1969, holds a College Degree in Secretarial Professional
from North China University of Technology. In the past five years, Mr. Zhang Jian
held various positions including Chairman Secretary & Office Deputy Director of
JMC, JMCG Office Director, Director of JMCG Communist Party Office, Chief of
Publicity Department and Assistant to General Manger of JMCG., Senior Vice
Chairman, Chairman of JMCG Labor Union and Chief of JMCG Publicity
Department. Mr. Zhang Jian held the post of Supervisor of JMC in June 2011.
Mr. Liu Niansheng, born in 1967, is a senior engineer, and holds a Bachelor’s
Degree in Forging Technology and Equipment from Jiangxi University of
Technology and a Master’s Degree in National Economic Management from
Renmin University of China. In the past five years, Mr. Liu Niansheng held various
positions including Plant Manager of JMC Framing Plant, Plant Manager of JMC
Transit Plant and Assistant to the President of JMC. Mr. Liu Niansheng held the
post of Supervisor of JMC in December 2011.
Ms. Xu Lanfeng, born in 1969, senior engineer, holds a Bachelor’s Degree in
Forging Technology and Equipment from Nanchang University and a MBA from
29
University of International Business and Economics. In the past five years, Ms. Xu
Lanfeng held various positions including Deputy Plant Manager of JMC Framing
Plant, Deputy Chief, Chief of Manufacturing Department. Ms. Xu Lanfeng has been
a Supervisor of JMC in June 2008.
Senior management:
Ms. Xiong Chunying, born in 1964, senior engineer, holds a Bachelor’s Degree in
Automobile Engineering from Jiangsu Engineering College, a Master’s Degree in
Industrial Economics from Jiangxi University of Finance and Economics and an
EMBA Degree in China Europe International Business School. In the past five
years, Ms. Xiong Chunying has held the positions of Executive Vice President of
JMC and Director of JMCG.
Mr. Jin Wenhui, born in 1967, is a senior engineer and holds a Bachelor’s Degree
in Mechanical Manufacturing and a Master’s Degree in Mechanical Engineering
from Huazhong University of Science and Technology. In the past five years, Mr.
Jin Wenhui held various positions including Assistant to the President for JMC and
Vice General Manager of Jianging-Isuzu Motors Company Limited, Director,
General Manager of JMCG Jingma Motors Co., Ltd., Executive Vice General
Manager of Jiangxi-Isuzu Motors Co., Ltd., Executive Vice President of JMC.
Mr. Dennis Leu, born in 1964, holds a Bachelor’s Degree in Business from Chung
Yuan Christian University of China Taiwan and a Master’s Degree in Business
Administration from National Central University of China Taiwan. In the past five
years, Mr. Dennis Leu held various positions including Chief of Planning and
Management Department, Controller, CFO of the Company.
Mr. Wan Hong, born in 1961, is an engineer, and holds a Master of Business
Administration Degree from Jiangxi University of Finance & Economics. In the past
five years, Mr. Wan Hong has held the positions of Vice President and Board
Secretary of JMC.
Mr. Li Qing, born in 1965, holds a Bachelor’s Degree in Marketing from Wuhan
University of Technology and a MBA from University of South Australia and Jiangxi
University of Finance & Economics. In the past five years, Mr. Li Qing has held the
positions of Vice General Manager and General Manager of the former Jiangling
Motors Sales General Company, General Manager of JMC Sales & Services
Branch, Vice President of JMC and Director of JMCG.
Mr. Tim Slatter, born in 1974, holds a Bachelor’s Degree in Automotive
Engineering and Design from Coventry University, U.K. In the past five years, Mr.
Tim Slatter held various positions including Global Exhaust Engineering Manager
of Ford Europe, Powertrain Programs and Integration Chief Engineer of Ford AP.
30
Mr. Zhu Shuixing, born in 1965, is a senior engineer and holds a Master’s Degree
in Pressure Processing from Northwestern Polytechnical University and a MBA
from Jinan University. In the past five years, Mr. Zhu Shuixing has held the
positions of Operation Officer of Amphenol East Asia Electronic Technology
(Shenzhen) Limited, Assistant to the President and Vice President of JMC.
Ms. Liu Shuying, born in 1962, is a senior engineer and holds a Bachelor’s Degree
in Mechanical Manufacturing from Jiangxi University of Technology. In the past five
years, Ms. Liu Shuying has held various positions including Director of Product
Development Center, Assistant to the President of JMC and Vice General Manager
of Jiangling-Isuzu Motors Company Limited, and Vice President of JMC.
Mr. Liao Zanping, born in 1963, is a senior engineer and holds a Bachelor’s
Degree in Internal-combustion Engine from Tianjing University and a MBA from
Peking University. In the past five years, Mr. Liao Zanping has held various
positions including General Manager of Beijing Automobile Works Co., Ltd.,
General Manager, Chairman of Wolff Engine (Jiangxi) Co., Ltd., General Manager
of JMCG Jingma Motors Co., Ltd., Vice President of JMC and General Manger of
JMC Heavy Duty Vehicle Co., Ltd.
Mr. Arturo Mendoza, born in 1955, holds an Engineering Bachelor’s Degree in
Mechanical Engineering from Instituto Tecnologico de Chihuahua, Mexico. In the
past five years, Mr. Arturo Mendoza held various positions including LMEA
Manager of Changan Ford Mazda Engine Corporation and Vice President of JMC.
Mr. Li Xiaojun, born in 1975, is a senior engineer and holds a Bachelor’s Degree in
Mechanical Design & Manufacturing from Jiangxi University of Science and
Technology and a Master’s Degree in Industrial Engineering from Huazhong
University of Science and Technology. In the past five years, Mr. Li Xiaojun held
various positions including Plant Manager of Assembly Plant, Assistant to the
President for JMC and Vice President of JMC.
Mr. Christian Chen, born in 1972, is a semi-senior engineer and holds a Bachelor’s
Degree in Automotive Engineering from Wuhan University of Technology and a
MBA from Wuhan University. In the past five years, Mr. Christian Chen held
various positions including Purchasing Manager and Senior Purchasing Manager
of Ford Motor Company, and Vice President of JMC.
Positions at the shareholder entities
□√Applicable □Not Applicable
Name Shareholder Title Term of Compensation
Entity Office Paid by
Shareholder
Entity (Y/N)
Wang Xigao JMH Vice Chairman 2004.11— N
31
Qiu Tiangao JMH Director 2012.4— N
John Lawler Ford Vice President 2012.12— Y
Zhu Yi JMH Board member 2004.11— N
Alvin Qing Liu Ford Asia Pacific Vice 2009.1— Y
President and
General Counsel
Particulars about positions and concurrent positions in other entities other than
shareholder entities
□√Applicable □Not Applicable
Name Entity Title
JMC Heavy Duty
Wang Xigao Executive Director
Vehicle Co., Ltd.
Ford Motor (China)
Chairman and CEO
Ltd.
Ford Motor Research
& Engineering Chairman and CEO
John Lawler (Nanjing) Co., Ltd.
Changan Ford
Vice Chairman
Automobile Co., Ltd.
Changan Ford Mazda
Vice Chairman
Engine Co., Ltd.
Chairman & General
JMCG
Manager
JMCG Jingma Motors
Qiu Tiangao Chairman
Co., Ltd.
Jiangxi-Isuzu Motors
Chairman
Co., Ltd.
Ford Motor Research
& Engineering Director
Manto Wong (Nanjing) Co., Ltd.
Changan Ford VP of Finance &
Automobile Co., Ltd. Director
Chongqing Changan
Yuan Mingxue Vice President
Automobile Co., Ltd.
Associated
Lu Song CAFU
Professor
Assistant to Dean of
Tsinghua University
School of Economics
and Management
Wang Kun Tsinghua University
and Deputy Director
of Tsinghua
University Corporate
Governance Center
Head and Academic
Director of School of
Li Xianjun Tsinghua University
Automotive
Engineering
32
Vice General
Zhu Yi JMCG
Manager
Changan Ford
Alvin Qing Liu Director
Automobile Co., Ltd.
Xiong Chunying JMCG Director
Jin Wenhui JMCG Director
JMC Heavy Duty
Supervisor
Vehicle Co., Ltd.
Dennis Leu
Jiangling Motors
Supervisor
Sales Co., Ltd.
JMCG Director
Li Qing Jiangling Motors
Executive Director
Sales Co., Ltd.
Liao Zanping/ Vice JMC Heavy Duty
General Manager
President Vehicle Co., Ltd.
Penalties from securities regulator to the present and resigned Directors,
Supervisors and senior executives in the recently three years
□Applicable □√Not Applicable
4. Annual Compensation
Decision-making procedure, basis, and payment regarding the annual
compensation of the Directors, the Supervisors and senior executives
Directors and Supervisors who did not concurrently hold other management
positions in JMC were not paid by JMC. Director Wang Xigao, Director Qiu
Tiangao, Supervisors Zhu Yi and Zhang Jian were paid by JMCG. Directors John
Lawler, Manto Wong and Supervisor Alvin Qing Liu were paid by Ford. Director
Yuan Mingxue was paid by Chongqing Changan Automobile Co., Ltd.
(1) In accordance with the Senior Executive Compensation & Incentive Plan of
JMC approved by the Board of Directors and the Senior Executive Base Salary
Plan of JMC agreed by the Compensation Committee, the compensation for the
Chinese-side senior management consists of base salary, short-term incentive and
long-term incentive, and the long-term incentive would be paid equally in a
deferred period of three years. In 2015, the Company paid annual compensation
before tax of approximately RMB 1,610 thousand to EVP Xiong Chunying, paid
approximately RMB 640 thousand EVP Jin Wenhui, paid approximately RMB
1,160 thousand to VP & Board Secretary Wan Hong, paid VP Li Qing
approximately RMB 1,170 thousand, paid VP Zhu Shuixing approximately RMB
1,160 thousand, paid VP Liu Shuying approximately RMB 1,150 thousand, VP Liao
Zanping approximately RMB 1,240 thousand, and paid VP Li Xiaojun
approximately RMB 860 thousand. Two employee-representative supervisors, Mr.
Liu Niansheng and Ms Xu Lanfeng, were paid annual compensation before tax of
about RMB 780 thousand and RMB 450 thousand respectively. The total
compensation before tax paid by JMC for the aforesaid persons was about RMB
10.23 million in the reporting period, including the long-term incentive of RMB 0.97
million deferred from the previous years.
33
(2) JMC pays annual compensation for Ford-seconded senior management
personnel to Ford in accordance with the revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. In 2015, JMC
should pay US$ 375 thousand per person to Ford for Director tor & President
Yuan-Ching Chen, CFO Dennie Leu, VP Arturo Mendoza, US$ 250 thousand to
VP Tim Slatter, RMB 187.5 thousand to VP Christian Chen, pay US$ 125 thousand
to former VP John Scholtes, RMB 562.5 thousand for former VP Zhong Wanli.
These payments made by JMC to Ford do not reflect the actual salaries earned by
Ford-seconded senior management.
(3) Pursuant to the resolutions of JMC 2011 Annual Shareholder’s Meeting, the
annual compensation for the JMC Independent Directors is adjusted as RMB 100
thousand per person, and JMC bears their travel-related expenses associated with
JMC’s business.
Table on Annual Compensation
Unit: RMB’0000
Compensation
Compensation
Paid by
Name Position Gender Age Present (Y/N) Before Tax
Related Party
Paid by JMC
(Y/N)
Wang Xigao Chairman Male 66 Y 0 Y
John Lawler Vice Chairman Male 50 Y 0 Y
Qiu Tiangao Director Male 50 Y 0 Y
Manto Wong Director Male 54 Y 0 Y
Yuan-Ching Director & Y N
Male 64 *
Chen President
Yuan Mingxue Director Male 49 Y 0 Y
Independent Y
Lu Song Male 59 10 N
Director
Independent Y
Wang Kun Female 40 10 N
Director
Independent Y
Li Xianjun Male 48 2.9 N
Director
Wang Kun Director Male 40 N 0 Y
Independent N
Wang Xu Female 52 7.1 N
Director
Zhu Yi Chief supervisor Male 46 Y 0 Y
Alvin Qing Liu Supervisor Male 59 Y 0 Y
Zhang Jian Supervisor Male 47 Y 0 Y
Liu Niansheng Supervisor Male 49 Y 78 N
Xu Lanfeng Supervisor Female 47 Y 45 N
Xiong Chunying EVP Female 52 Y 161 N
Jin Wenhui EVP Male 49 Y 64 N
Dennis Leu CFO Male 52 Y * N
VP & Board
Wan Hong Male 55 Y 116 N
Secretary
Li Qing VP Male 51 Y 117 N
Tim Slatter VP Male 51 Y * N
Zhu Shuixing VP Male 42 Y 116 N
Liu Shuying VP Female 53 Y 115 N
34
Liao Zanping VP Male 53 Y 124 N
Arturo Mendoza VP Male 61 Y * N
Li Xiaojun VP Male 41 Y 86 N
Christian Chen VP Male 44 Y * N
John Scholtes VP Male 57 N * N
Zhong Wanli VP Male 53 N * N
合计 -- -- -- -- 1,053** --
* JMC pays annual compensation for Ford-seconded senior management
personnel to Ford in accordance with the revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. In 2015, JMC
should pay US$ 375 thousand per person to Ford for Director tor & President
Yuan-Ching Chen, CFO Dennie Leu, VP Arturo Mendoza, US$ 250 thousand to
VP Tim Slatter, RMB 187.5 thousand to VP Christian Chen, pay US$ 125 thousand
to former VP John Scholtes, RMB 562.5 thousand for former VP Zhong Wanli.
These payments made by JMC to Ford do not reflect the actual salaries earned by
Ford-seconded senior management.
** Including the long-term incentive of RMB 0.97 million deferred from the previous
years.
Granted equity incentive to the Directors, Supervisors and senior executives in
2015
□Applicable □√Not Applicable
5. Employees
At the end of 2015, JMC had a total of 15,698 employees, of which 10,296 were
production workers, 659 sales personnel, 3,591 technical personnel, 175 finance
personnel, 977 administrative staff. There were 1,496 persons with junior technical
titles, 772 with intermediate technical titles and 167 with senior technical titles,
altogether accounting for 16% of the total employees. There were 76 early-retired
employees. JMC bore retirement benefits of 875 retired employees.
Comparing with market compensation system and income level and considering the
Company’s actual situation, JMC regarded Position, Person, Performance
Compensation Concept as guideline and offered competitive compensation, which
could ensure the inner fairness and competitive ability against the outside, to attract,
reserve and give incentive to the excellent talents,.
In 2015, JMC’s training expense was RMB 24,764 thousand, and training person-
time were 96,426 with training stratification of 95.13%. Please refer to the Chapter IV
of 2015 JMC Corporation Social Responsibility Report for more details on 2015
training plan implementation.
35
About Labor Cost
2015
Employees paid 15,698
Amount incurred (RMB’000) 1,678,080
Total compensation % as of revenue 6.84%
Averaged compensation of senior
1,020
executives (RMB’000 per person)
Averaged compensation of all employees
107
(RMB’000 per person)
Chapter IX Corporate Governance Structure
1. Status of the Corporate Governance in JMC
Difference between actual situation of corporate governance in JMC and that of
requirements of listed company corporate governance promulgated by CSRC
□Applicable □√Not Applicable
There was no major difference between actual situation of corporate governance in
JMC and that of requirements of listed company corporate governance promulgated
by CSRC. During the reporting period, the Company continued to improve its
corporate governance in compliance with the Company law, the Code of Corporate
Governance for Listed Companies in China, the Rules Governing Listing of Stock on
Shenzhen Stock Exchange, as well as relevant laws and regulations. JMC fulfilled
its social responsibilities positively and made a report on 2014 Corporate Social
Responsibilities.
2. Separation between JMC and the Controlling Shareholders in respect of
Personnel, Assets and Finance, and Independence concerning Organization and
Business:
(1) With respect to personnel matters, the positions of chairman and president are
held by different individuals; JMC’s senior management do not hold positions other
than director positions with its controlling shareholders; JMC senior management
personnel are paid by JMC; labor, personnel matters and compensation
management of JMC are completely independent.
(2) With respect to assets, JMC assets are complete. The assets utilized by JMC,
including production system, supporting production system and peripheral facilities,
and non-patent technology, are owned and/or controlled by JMC.
(3) With respect to finance, JMC has an independent finance department and
independent accounting system, and has a uniform and independent accounting
system and financial control system for its branches and subsidiaries. JMC has its
own bank accounts, and there are no bank accounts jointly owned by JMC and its
controlling shareholders. JMC pays taxes independently in accordance with
relevant laws.
(4) With respect to organization, JMC’s organization is independent, complete and
scientifically established with a sound and efficient operating mechanism. The
establishment and the operation of JMC’s corporate governance are strictly carried
out per the Articles of Association of JMC. Production and administrative
management are independent from the controlling shareholders. JMC has
established an organization structure that meets the need for ongoing development.
36
(5) With respect to business, JMC has independent purchasing, production and
sales systems. The purchasing, production and sales of main materials and
products are carried out through its own purchasing, production & sales functions.
JMC is independent from the controlling shareholders in respect to its business,
and has independent and complete business and self-sufficient operating
capability.
3. Horizontal Competition
□Applicable □√Not Applicable
4. Introduction to the Shareholders’ Meeting
I. Index to the Shareholders’ Meeting in 2015
Meeting Meeting Type Convening Date Disclosure Date Index
Announcement of this
2015 First Special Special Special Shareholders’
Shareholders’ Shareholders’ March 3, 2015 March 4, 2015 Meeting (No: 2015-012) was
Meeting Meeting published in the website
Http://www.cninfo.com.cn.
Announcement of this Annual
2014 Annual Annual Shareholders’ Meeting (No:
Shareholders’ Shareholders’ June 25, 2015 June 26, 2015 2015-028) was published in
Meeting Meeting the website
Http://www.cninfo.com.cn.
Announcement of this
2015 Second Special Special Special Shareholders’
October 16, October 17,
Shareholders’ Shareholders’ Meeting (No: 2015-048) was
2015 2015
Meeting Meeting published in the website
Http://www.cninfo.com.cn.
Announcement of this
2015 Third Special Special Special Shareholders’
December 9, December 10,
Shareholders’ Shareholders’ Meeting (No: 2015-055) was
2015 2015
Meeting Meeting published in the website
Http://www.cninfo.com.cn.
II. Special Shareholders’ Meeting convened by preferred shareholders whose
voting rights were restored
□Applicable □√Not Applicable
5. Independent Directors’ Performance of Duty
I. Particulars about the directors’ attendance to the Board meeting and the
Shareholders’ Meeting
Not to present Presence at
Presence
Required in person in the
Presence in Form of Presence
Name Board Absence two Shareholders’
in Person Paper by Proxy
Attendance consecutive Meeting
Meeting
meetings (Y/N)
Lu Song 14 3 10 1 0 N 2
Wang Kun 14 3 10 1 0 N 2
Li Xianjun 3 1 2 0 0 N 0
II. Dissent from Independent Directors
□Yes □√No
37
The Independent Directors of the Company had no dissent to the relevant proposal
of the Company in the reporting period.
III. Other introduction to Independent Directors’ Performance of Duty
□√Yes □No
JMC has appointed three Independent Directors so far. The Independent Directors
exercised their fiduciary duties regarding routine work and major decision-making of
the Board of Directors. They studied every proposal reviewed by the Board of
Directors thoroughly and raised their opinions, inquired about major events which
required opinions from the Independent Directors and issued their written opinions,
and actively engaged in the affairs of the Compensation Committee and the Audit
Committee in the reporting period, to protect the interests of the Company and all
the shareholders.
6. 2015 Diligence Report of the Committees under the Board of Directors
I. Audit Committee’s Works
A. Work Summary Report of the Audit Committee
According to Audit Committee Working Rules, the Audit Committee diligently
executed its duties and delivered guiding opinions. The primary tasks during the
reporting period were as follows:
i. The Audit Committee reviewed the Company’s internal control work plan and
internal control implementation results regularly.
ii. The Audit Committee reviewed the Eight Accounting Provisions and Write-off
proposal and submitted it to the Board for approval.
iii. The Audit Committee reviewed and agreed to retain PwC as the statutory
auditor for 2016 to 2018, with an annual audit fee of RMB 1,900,000. and
submitted it for Shareholders’ meeting approval.
iv. The Audit Committee reviewed and agreed to retain PwC as the C-Sox auditor
for 2016 to 2018, with an annual audit fee of RMB 550,000. and submitted it for
Shareholders’ meeting approval.
v. The Audit Committee reviewed the independent auditor’s audit plan, letter of
engagement and risks and controls.
vi. The Audit Committee has coordinated with the independent auditor to allow the
audit and associated financial report can be submitted within the appointed
period.
vii. The Audit Committee reviewed the financial statements before the certified
auditor’s on-site audit, after receiving the certified auditor’s initial and final audit
opinions. The Committee communicated with auditors face to face over
important events and major accounting estimations, audit adjustment items and
important accounting policies which potentially affect the financial statements,
and believes that the financial statements are truthful, accurate and fully
reflect the Company’s actual status.
viii. The Audit Committee has submitted the 2015 Independent Auditor Summary
Report to Board for review.
ix. The Audit Committee reviewed the Internal Control Self-assessment Report
and agreed to submit this to the Board for approval.
B. Written opinions on JMC financial statements
The Audit Committee reviewed the unaudited financial statements prepared by the
Company and issued its written opinions on January 12, 2016 as follows:
38
The Audit Committee reviewed the Financial Statements compiled by JMC and
believes that the Financial Statements have in all material respects reflected the
actual company status. The Audit Committee will continue to keep in close contact
with auditor. After receiving the auditor’s initial audit comments, Audit Committee
will review Company Financial Statements a second time.
The Audit Committee reviewed the financial statements prepared by JMC after the
external auditor issued its initial audit opinions, and issued its written opinions on
February 16, 2016 as follows:
i. Financial statements have been prepared according to China New GAAP and
the company’s financial policies.
ii. The financial status reported for December 31, 2015 including Balance Sheet,
Income Statement and Cash Flow is accurate and truthful.
The Audit Committee made resolutions on the audited 2015 financial statements
on March 2, 2016 as follows:
The Audit Committee has reviewed the financial statements after the certified
auditor issued its final audit opinions. The Audit Committee believes that the
financial status reported for December 31, 2015 including Balance Sheet, Income
Statement and Cash Flow is accurate and truthful. The Audit Committee supports
submitting to the Board approval.
C. 2015 External Auditor Work Summary Report
The Audit Committee has reviewed the 2015 Audit Work Plan submitted by PwC
via a communication with the PwC leading auditor. Agreement was achieved
regarding timing and content and both parties believe that the plan ensures a
comprehensive completion of the 2015 audit.
The independent auditor thoroughly communicated with the management and the
Audit Committee Members regarding: accounting policies implementation, revenue
recognition, significant accounting estimates related to accrued expenses,
accounting treatment for 8 Provisions, and R & D expenses, related party
transaction recognition and fairness and information disclosure. They have also
discussed about issues identified and the corrective actions. As a result, all parties
have a more in-depth understanding of the business status, financial status and
internal control. Therefore, a solid foundation was laid for a fair audit conclusion
issued by the independent auditor.
The Audit Committee believes that the external certified auditor has executed the
audit work consistently with the requirements of China Certified Auditor
Independent Audit Principles. The audit period is adequate and the allocation of
personnel resources is sufficient to deliver an audit report which accurately reflects
the Company’s financial position as at December 31, 2015, and the financial
performance and cash flows for the year then ended. The audit conclusion reflects
the Company’s actual status.
II. 2015 Diligence Report of the Compensation Committee
In the reporting period, the Compensation Committee exercised its duties as
follows:
39
i. reviewed and approved the Proposal on 2014 Year-end Bonus for Senior
Executives;
ii. reviewed and approved the KPIs of JMC Senior Executives in 2015;
iii. reviewed and approved 2014 Diligence Report of the Compensation Committee,
and
iv. approved to amend JMC Senior Executive Compensation & Incentive Plan,
adjusting the fixed pay of senior executives;
The Compensation Committee’s opinions on the annual compensation of the
directors, supervisors and senior management disclosed in this Report are as
follows:
The 2015 annual compensation for the Chinese-side senior management was paid
upon the principles promulgated in the Senior Executive Compensation & Incentive
Plan of JMC and the Senior Executive Base Salary Plan of JMC. The 2015 annual
compensation for Ford-seconded senior management personnel was paid in
accordance with revised Personnel Secondment Agreement signed between JMC
and Ford and Ford Affiliates. The annual compensation for the director and
supervisor that the Company paid abided by JMC salary management system.
In the reporting period, the annual compensation of the directors, supervisors and
senior executives disclosed in this Report was complied with JMC salary
management system, and there was neither breach nor inconsistency of this system.
7. Works of Supervisory Board
Risks found by the Supervisory Board in 2015
□Yes □√No
The Supervisory Board had no dissent on inspection items in the reporting period.
8. Compensation & Incentive Mechanism for Senior Management in the Reporting
Period
In accordance with the Senior Executive Compensation & Incentive Plan of JMC
approved by the Board of Directors on December 18, 2006 and the Senior Executive
Base Salary Plan of JMC agreed by the Compensation Committee on March 2007,
the compensation for senior management consists of base salary, short-term
incentive and long-term incentive. The base salary grade of senior management is in
line with his/her position, and the funding of the short-term incentives and long-term
incentives are all derived from an incentive fund based on the pre-tax profit. The
short-term incentives will be paid in that year, and the long-term incentives will be
paid equally in a deferred period of three years.
The Compensation Committee approved to amend the Senior Executive
Compensation & Incentive Plan of JMC on March 3, 2015, upon which the fixed pay
of senior executives was adjusted. The Compensation Committee approved the
2015 year-end bonus of senior executives on March 3, 2016. These plans are
applicable only to the Chinese-side senior management.
9. Internal Control
I. Major defect of internal control in the reporting period
□Yes □√No
II. Internal Control Self-assessment Report
Issuance date March 19, 2016
Index www.cninfo.com.cn
Total value of assets of the entities 100.00%
40
in scope counts as % of that
disclosed in the consolidated
financial statements
Total value of operating revenue of
the entities in scope counts as % of
100.00%
that disclosed in the consolidated
financial statements
Deficiency Determination Criteria
Type Financial Report Non-financial Report
Material Weakness: An error that
changes the trend of results,
Material Weakness: Unscientific
changes profit to loss or loss to
decision making process such
profit Ineffective anti-fraud
as incorrect decisions that
process or any fraud involving
result in unsuccessful mergers
senior management Ineffective
and acquisitions; Major
control over accounting policies
regulatory compliance issues;
Ineffective oversight by the Audit
Frequent media reports harmful
Committee Significant Deficiency;
to the Company’s reputation; A
Errors in management reporting
lack of control within key
systems or Corporate accounting
business processes or
records that could lead to
systematic breakdown of
incorrect management decisions;
control policies
Actions inconsistent with
Material weakness identified in
Qualitative Criteria Company values, policies and
the self-assessment without any
other Corporate guidelines that
action plan implemented
are likely to significantly impact
Significant Deficiency; control
cost, quality, customer
deficiency, or combination of
satisfaction, reputation, or
control deficiencies, that does
competitive advantage; Control
not meet the criteria for material
issues in IT infrastructure or
weakness but deserves the
applications that may lead to
concerns of the Audit
impairment of Company
Committee and the Board of
operations. Any actions indicating
Directors. Minor Deficiency Any
fraud or theft that is significant in
control deficiencies that do not
value Minor Deficiency; Any
meet the criteria for material or
control deficiencies that do not
significant.
meet the criteria for material or
significant.
Material Weakness Misstatement in
the Income Statement is more than
5% of the annual profit before
taxation; Misclassification in the Please refer to internal control
Income Statement is more than deficiency over financial reporting
Quantitative Criteria
0.4% of the annual sales revenue for the criteria for non-financial
reporting internal control.
Adjustment of net assets in the
Balance Sheet is more than 1% of
the shareholders' equity Adjustment
of asset or liability in the Balance
41
Sheet is more than 0.6% of the total
assets; Adjustment in the Cash Flow
Statement is more than 3% of the
total net cash flow in the operating
activities. Significant Deficiency
Misstatement in the Income
Statement is more than 2.5% of the
annual profit before taxation;
Misclassification in the Income
Statement is more than 0.2% of the
annual sales revenue; Adjustment of
net assets in the Balance Sheet is
more than 0.5% of the
Shareholders’equity; Adjustment of
asset or liability in the Balance
Sheet is more than 0.3% of the Total
assets; Adjustment in the Cash Flow
Statement is more than 1.5% of the
total net cash flow from the
operating activities. Minor Deficiency
All the deficiencies that don’t meet
the quantitative criteria for
significant.
Number of Material Weakness in
0
financial report
Number of Material Weakness in
0
non-financial report
Number of Significant Deficiency in
0
financial report
Number of Significant Deficiency in
0
non-financial report
10. Internal Control Audit Report
□√Applicable □Not Applicable
Opinions in the Internal Control Audit Report
The opinions in the Internal Control Audit Report issued by Pwc Zhong Tian are as follows:
As of December 31, 2015, JMC maintained adequate control over financial statements in all the material
aspects according to the Basic Standard for Enterprise Internal Control and other relevant rules.
Internal Control Audit Report
Disclosed
Disclosed or not
Issuance date March 19, 2016
Index Http://www.cninfo.com.cn
Type of Opinion Standard and unqualified opinions
Major Defect regarding non-
No
financial report or no
Abnormal opinion issued by the accounting firm
□Yes □√No
Opinion issued by the accounting firm keeps the same with that of self-assessment
report made by the Board
□√Yes □No
42
Chapter X Financial Statements
Type of Audit Report Standard and Unqualified Opinion
Signature date March 17, 2016
Name of Auditor PricewaterhouseCoopers Zhong Tian
CPAs LLP
Document No. of Audit Report 2016/SH-065
43
Independent Auditor's Report
2016/SH-065
(Page1 of 2)
To the shareholders of Jiangling Motors Corporation, Ltd.
We have audited the consolidated financial statements of Jiangling Motors Corporation, Ltd. (“the
Company”) and its subsidiaries (together, the “Group”) set out on pages 3 to 56, which comprise
the consolidated statement of financial position as at 31 December 2015, and the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
The management of the Company is responsible for the preparation and fair presentation of
consolidated financial statements in accordance with International Financial Reporting Standards,
and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
44
2016/SH-065
(Page 2 of 2)
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Group as at 31 December 2015, and of the Group’s financial performance
and cash flows for the year then ended in accordance with International Financial Reporting
Standards.
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
17 March 2016
45
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in RMB unless otherwise stated)
Year ended 31 December
Note 2015 2014
RMB’000 RMB’000
Revenue 5 24,527,893 25,537,290
Sales tax (788,236) (852,416)
Cost of sales 6 (18,131,135) (19,098,715)
Gross profit 5,608,522 5,586,159
Distribution costs 6 (1,591,235) (1,738,087)
Administrative expenses 6 (2,470,489) (2,166,903)
Impairment charge of non-current assets (3,016) (89,073)
Other income 8 683,136 568,227
Operating profit 2,226,918 2,160,323
Finance income 9 270,985 251,736
Finance costs 9 (2,344) (2,111)
Finance income-net 9 268,641 249,625
Share of profit of investments accounted for using the
equity method 15b 14,045 19,347
Profit before income tax 2,509,604 2,429,295
Income tax expense 10 (287,543) (321,443)
Profit for the year 2,222,061 2,107,852
Other comprehensive income:
Item that will not be reclassified subsequently to profit or
loss
- Remeasurements of retirement benefits obligations (2,707) (1,978)
- Income tax relating to remeasurements of retirement
benefit obligations 677 495
Other comprehensive income for the year, net of tax (2,030) (1,483)
Total comprehensive income for the year 2,220,031 2,106,369
Profit attributable to:
Shareholders of the Company 2,222,061 2,107,852
Total comprehensive income attributable to:
Shareholders of the Company 2,220,031 2,106,369
Earnings per share for profit attributable to the
shareholders of the Company
(expressed in RMB per share)
- Basic and diluted 11 2.57 2.44
The notes on pages 52 to 100 are an integral part of these consolidated financial statements.
46
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
(All amounts in RMB unless otherwise stated)
As at 31 December
Note 2015 2014
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment (“PPE”) 12 6,323,546 5,736,408
Lease prepayment 13 645,608 590,629
Intangible assets 14 41,705 32,173
Investments accounted for using the equity method 15b 40,993 26,948
Other non-current assets 64,487 34,493
Deferred income tax assets 16 473,933 440,730
7,590,272 6,861,381
Current assets
Financial assets at fair value through profit or loss 77 -
Inventories 17 1,730,930 1,658,707
Trade, other receivables and prepayments 18 2,793,770 2,006,162
Cash and cash equivalents 19 8,848,040 8,963,468
Restricted cash - 6,810
Assets classified as held for sale 20 87,637 -
13,460,454 12,635,147
Total assets 21,050,726 19,496,528
47
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 DECEMBER 2015
(All amounts in RMB unless otherwise stated)
As at 31 December
Note 2015 2014
RMB’000 RMB’000
EQUITY
Capital and reserves attributable to the
Company’s shareholders
Share capital 21 863,214 863,214
Share premium 816,609 816,609
Other reserves 22 452,938 454,968
Retained earnings 9,848,381 8,463,638
Total equity 11,981,142 10,598,429
LIABILITIES
Non-current liabilities
Borrowings 23 4,678 4,808
Deferred income tax liabilities 16 28,392 29,458
Retirement benefit obligations 24 52,273 50,146
Provisions for warranty and other liabilities 25 214,722 226,503
Other non-current liabilities 400 480
300,465 311,395
Current liabilities
Financial liabilities at fair value through profit or loss - 2,011
Trade and other payables 26 8,708,829 8,420,273
Current income tax liabilities 50,305 153,439
Borrowings 23 425 401
Retirement benefit obligations 24 4,560 5,580
Other current liabilities 5,000 5,000
8,769,119 8,586,704
Total liabilities 9,069,584 8,898,099
Total equity and liabilities 21,050,726 19,496,528
The notes on pages 52 to 100 are an integral part of these consolidated financial statements.
48
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in RMB unless otherwise stated)
Attributable to shareholders of the Company
Share Share Other Retained Total
Note capital premium reserves earnings equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2014 863,214 816,609 456,451 7,037,725 9,173,999
Profit for the year - - - 2,107,852 2,107,852
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of tax - - (1,483) - (1,483)
Dividend relating to 2013 - - - (681,939) (681,939)
Balance at 31 December 2014 863,214 816,609 454,968 8,463,638 10,598,429
Balance at 1 January 2015 863,214 816,609 454,968 8,463,638 10,598,429
Profit for the year - - - 2,222,061 2,222,061
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of tax - - (2,030) - (2,030)
Dividend relating to 2014 27 - - - (837,318) (837,318)
Balance at 31 December 2015 863,214 816,609 452,938 9,848,381 11,981,142
The notes on pages 52 to 100 are an integral part of these consolidated financial statements.
49
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in RMB unless otherwise stated)
Year ended 31 December
Note 2015 2014
RMB’000 RMB’000
Cash flows from operating activities
Cash generated from operations 28 2,349,632 4,583,032
Interest paid (340) (417)
Income tax paid (424,269) (392,966)
Net cash generated from operating activities 1,925,023 4,189,649
Cash flows from investing activities
Purchase of PPE and Lease prepayment (1,542,900) (1,287,649)
Other cash paid relating to investing activities (6,561) (2,546)
Proceeds from disposal of PPE and Lease prepayment 28 43,669 11,124
Interest received 291,744 246,153
Dividends received 15,657 11,424
Other cash received from investing activities 1,239 59
Net cash used in investing activities (1,197,152) (1,021,435)
Cash flows from financing activities
Repayments of borrowings (411) (404)
Dividends paid to the Company’s shareholders (840,961) (682,620)
Other cash paid relating to financing activities (1,927) (1,694)
Net cash used in financing activities (843,299) (684,718)
Net (decrease)/increase in cash and cash equivalents (115,428) 2,483,496
Cash and cash equivalents at beginning of year 8,963,468 6,479,972
Effects of exchange rate changes - -
Cash and cash equivalents at end of year 19 8,848,040 8,963,468
The notes on pages 52 to 100 are an integral part of these consolidated financial statements.
50
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in the People’s Republic
of China (the “PRC”) under the Company Law of the PRC and according to the approval of
Hongban (1992) No. 005 of Nangchang Revolution and Authorization Group of Company’s
Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of
the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was
owned by Jiangling Motors Corporation Group (“JMCG”). The legal representative’s operating
license of the Company is No. 360000511000021.
The address of the Company’s registered office is No.509, Northern Yingbin Avenue,
Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”).
In addition, the Company issued 25,214,000 A shares as bonus shares to the existing
shareholders in 1994. The bonus shares were issued by utilisation of the Company’s retained
earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and
the Company issued 170,000,000 additional B shares in 1998.
As at 31 December 2015, the total number of issued shares of the Company is 863,214,000
shares, which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These consolidated financial statements were authorised for issue by the Board of Directors
on 17 March 2016.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all
applicable International Financial Reporting Standards (“IFRS”). The consolidated financial
statements have been prepared under the historical cost convention except as disclosed in
the accounting policies below.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimations are significant to the
consolidated financial statements are disclosed in Note 4.
51
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
2.1.1 Going concern
The group meets its day-to-day working capital requirements through its bank facilities. The
current economic conditions continue to create uncertainty particularly over (a) the level of
demand for the group’s products; and (b) the availability of bank finance for the foreseeable
future. The group’s forecasts and projections, taking account of reasonably possible changes
in trading performance, show that the group should be able to operate within the level of its
current facilities. After making enquiries, the directors have a reasonable expectation that the
group has adequate resources to continue in operational existence for the foreseeable future.
The group therefore continues to adopt the going concern basis in preparing its consolidated
financial statements. Further information on the group’s borrowings is given in Note 23.
2.1.2 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the group
Standards, amendments and interpretations which are effective for the financial year beginning
on 1 January 2015 are not material to the Group.
(b) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective
for annual periods beginning after 1 January 2015, and have not been applied in preparing
these consolidated financial statements. None of these is expected to have a significant effect
on the consolidated financial statements of the Group, except the following set out below:
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and
recognition of financial assets and financial liabilities. The complete version of IFRS 9
was issued in July 2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9 retains but simplifies the
mixed measurement model and establishes three primary measurement categories for
financial assets: amortised cost, fair value through OCI and fair value through P&L. The
basis of classification depends on the entity's business model and the contractual cash
flow characteristics of the financial asset. Investments in equity instruments are required
to be measured at fair value through profit or loss with the irrevocable option at inception
to present changes in fair value in OCI not recycling. There is now a new expected credit
losses model that replaces the incurred loss impairment model used in IAS 39. For
financial liabilities there were no changes to classification and measurement except for
the recognition of changes in own credit risk in other comprehensive income, for liabilities
designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge
effectiveness by replacing the bright line hedge effectiveness tests. It requires an
economic relationship between the hedged item and hedging instrument and for the
‘hedged ratio’ to be the same as the one management actually use for risk management
purposes.
Contemporaneous documentation is still required but is different to that currently
prepared under IAS 39. The standard is effective for accounting periods beginning on or
after 1 January 2018. Early adoption is permitted. The Group is yet to assess IFRS 9’s
full impact.
IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and
52
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
2.1.2 Changes in accounting policy and disclosures (continued)
(b) New standards and interpretations not yet adopted (continued)
establishes principles for reporting useful information to users of financial statements
about the nature, amount, timing and uncertainty of revenue and cash flows arising from
an entity’s contracts with customers. Revenue is recognised when a customer obtains
control of a good or service and thus has the ability to direct the use and obtain the
benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations. The standard is effective for annual
periods beginning on or after 1 January 2018 and earlier application is permitted. The
Group is assessing the impact of IFRS 15.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be
expected to have a material impact on the Group.
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct
attributable costs of investment. The results of subsidiaries are accounted for by the company
on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend
from these investments if the dividend exceeds the total comprehensive income of the
subsidiary in the period the dividend is declared or if the carrying amount of the investment in
the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.
2.3 Associates
An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the profit or loss of the investee
after the date of acquisition.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share
of post-acquisition movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred legal or constructive obligations or made payments on
behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
53
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.3 Associates (continued)
Impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to ‘share of profit of investments
accounted for using equity method’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is
the Company’s functional and the Group’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within ‘other
income/(expense)-net’.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in amortised cost are recognised in profit or loss,
and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held
at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss. Translation differences on non-monetary financial assets, such as equities classified
as available-for-sale, are included in other comprehensive income.
54
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and
any impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition or construction of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Buildings 35-40 years
Plant and machinery 10-15 years
Motor vehicles 6-10 years
Moulds 5 years
Electronic and other equipment’s 5-7 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognised within ‘other income/(expense) – net’ in profit or loss’.
Assets under construction represent buildings under construction and plant and equipment
pending installation, and are stated at cost. Costs include construction and acquisition costs. No
provision for depreciation is made on assets under construction until such time as the relevant
assets are completed and ready for intended use. When the assets concerned are brought into
use, the costs are transferred to property, plant and equipment and depreciated in accordance
with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is
expensed in profit or loss on a straight line basis over the period of the lease or when there is
impairment, the impairment is expensed in profit or loss.
55
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the fair value of the identified net
assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit
from the synergies of the combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in
circumstances indicate a potential impairment. The carrying value of the CGU containing the
goodwill is compared to the recoverable amount, which is the higher of value in use and the fair
value less costs of disposal. Any impairment is recognised immediately as an expense and is
not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development
projects (relating to the design and testing of new or improved products) are recognised as
intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic
benefits;
(e) adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably
measured.
Other development expenditures that do not meet these criteria are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use on a straight-line basis over its
useful life.
No development costs were capitalised by the Group during the year ended 31 December
2015.
56
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful
lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not
subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at each reporting
date.
2.10 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered highly probable. The non-current
assets (except for certain assets as explained below), are stated at the lower of carrying amount
and fair value less costs to sell. Deferred tax assets and financial assets (other than investments
in subsidiaries and associates), which are classified as held for sale, would continue to be
measured in accordance with the policies set out elsewhere in Note 2.
2.11 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit
or loss, loans and receivables,, held-to-maturity financial assets and available-for-sale. The
classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A
financial asset is classified in this category if acquired principally for the purpose of selling in
the short term. Derivatives are also categorised as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets if expected to be settled
within 12 months; otherwise, they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for the
amounts that are settled or expected to be settled more than 12 months after the end of the
reporting period. These are classified as non-current assets.
57
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(1) Classification(continued)
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. They are included in non-current
assets unless the investment matures or management intends to dispose of it within 12
months of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date – the
date on which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets
are derecognised when the rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and receivables are subsequently carried
at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value
through profit or loss’ category are presented in profit or loss within ‘other (losses)/gains – net’
in the period in which they arise. Dividend income from financial assets at fair value through
profit or loss is recognised in profit or loss as part of other income when the Group’s right to
receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for-
sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments recognised in equity are included in profit or loss as ‘gains and losses from
investment securities’.
Interest on available-for-sale securities calculated using the effective interest method is
recognised in profit or loss as part of other income. Dividends on available-for-sale equity
instruments are recognised in profit or loss as part of other income when the Group’s right to
receive payments is established.
58
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Financial liabilities at fair value through profit or loss and offsetting financial
instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A
financial liability is classified in this category if incurred principally for the purpose of selling in the
short term. A financial liability initially recognised at fair value, and transaction costs are
expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in
this category are classified as current liability if expected to be settled within 12 months;
otherwise, they are classified as non-current. A financial liability is derecognised when it is
extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and
must be enforceable in the normal course of business and in the event of default, insolvency
or bankruptcy of the company or the counterparty.
2.13 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or group of financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganisation, and
where observable data indicate that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of
the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s fair value using an observable market
price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised (such as
an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
59
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or a group of financial assets is impaired.
For debt securities, if any such evidence exists the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment loss
on that financial asset previously recognised in profit or loss – is removed from equity and
recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument
classified as available for sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed through profit or loss.
For equity investments, a significant or prolonged decline in the fair value of the security
below its cost is also evidence that the assets are impaired. If any such evidence exists the
cumulative loss – measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in profit or
loss – is removed from equity and recognised in profit or loss. Impairment losses recognised
in profit or loss on equity instruments are not reversed through profit or loss.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
weighted average cost method. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal
operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
prices in the ordinary course of business, less applicable variable distribution costs.
2.15 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of business. If collection of trade and other receivables is expected in one
year or less (or in the normal operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less allowance for impairment.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts.
60
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Where any group company purchases the Company’s equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to owners of the Company until the shares are cancelled or
reissued. Where such shares are subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included
in equity attributable to the Company’s shareholders.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in profit or loss over the period of the borrowings
using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the end of the reporting period.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
61
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the PRC. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
(2) Deferred income tax
Inside basis differences
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Outside basis differences
Deferred income tax liabilities are provided on taxable temporary differences arising from
investments in subsidiaries, associates and joint arrangements, except for deferred income tax
liability where the timing of the reversal of the temporary difference is controlled by the Group
and it is probable that the temporary difference will not reverse in the foreseeable future.
Generally the Group is unable to control the reversal of the temporary difference for associates.
Only when there is an agreement in place that gives the group the ability to control the reversal
of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable
temporary differences arising from the associate’s undistributed profits is not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from
investments in subsidiaries only to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit available against which the temporary
difference can be utilised.
62
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax (continued)
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes
assets and liabilities relate to income taxes levied by the same taxation authority on either the
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
2.22 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed
by the PRC government. The contribution to the scheme is charged to profit or loss as and
when incurred. The Group’s obligations are determined at a certain percentage of the salaries of
the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees.
Such supplementary pension subsidies are considered as under defined benefit plans. The
liability recognised in the statement of financial position in respect of these defined benefit plans
is the present value of the defined benefit obligation at the balance sheet date less the fair value
of plan assets, together with adjustments for recognised actuarial gains or losses and past
service cost. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows according to the terms of the
related pension liability.
The current service cost of the defined benefit plan, recognised in profit or loss in employee
benefit expense, except where included in the cost of an asset, reflects the increase in the
defined benefit obligation results from employee service in the current year, benefit changes,
curtailments and settlements.
Past-service costs are recognised immediately in income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in profit or loss.
Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period in
which they arise.
(2) Housing fund and other benefits
The Group’s full-time employees are entitled to participate in a state-sponsored housing fund.
The fund can be used by the employees for the purchase of apartment accommodation, or
may be withdrawn upon their retirement. The Group is required to make annual contributions
to the state-sponsored housing fund equivalent to a certain percentage of the employees’
salaries.
63
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Employee benefits (continued)
(3) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a
present legal or constructive obligation as a result of services rendered by employees and a
reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled
within twelve months and are measured at the amounts expected to be paid when they are
settled.
2.23 Provisions
Provisions, mainly warranty costs, are recognised when: the Group has a present legal or
constructive obligation as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount has been reliably estimated. Provisions are
not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in the provision due to
passage of time is recognised as interest expense.
2.24 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and
represents amounts receivable for goods supplied, stated net of discounts returns and value
added taxes. The Group recognises revenue when the amount of revenue can be reliably
measured; when it is probable that future economic benefits will flow to the entity; and when
specific criteria have been met for each of the Group’s activities, as described below. The Group
bases its estimates of return on historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
64
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Revenue recognition (continued)
(1) Sales of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership
of the goods are transferred to the customer, the customer has accepted the products and
collectability of the related receivables is reasonably assured.
(2) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
2.25 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is
impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loan and receivables
are recognised using the original effective interest rate.
2.26 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit or loss on a straight-line basis over the
period of the lease.
2.27 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
financial statements in the period in which the dividends are approved by the Company’s
shareholders, where appropriate.
2.28 Government grants
Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and the Group will comply with all attached
conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the
period necessary to match them with the costs they are intended to compensate. Government
grants not relating to future costs are recognised on receipt basis.
Government grants relating to the purchase of property, plant and equipment are included in
non-current liabilities as deferred income and are credited to profit or loss on a straight line
basis over the expected lives of the related assets.
65
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board
of Directors.
(1) Market risk
(a) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to other payables dominated in US dollar (“USD”).
Management has set up a policy to require the Group to manage their foreign exchange risk
against their functional currency. Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated in a currency that is not the
Company’s functional currency.
As at 31 December 2015, if RMB had strengthened/weakened by 10% against USD with all
other variable held constant, the Group’s net profit for the year then ended would have been
approximately RMB23,276,000 (2014:RMB12,614,000) higher/lower.
(b) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 31 December 2015, a large portion of its bank deposits and all of
its borrowings were at fixed rate. The Group has not used any interest rate swaps to hedge its
exposure to interest rate risk.
As at 31 December 2015, if the interest rate of the Group’s bank deposits had been
increased/decreased by 10% and all other variables were held constant, the Group’s net profit
for the year then ended would have been increased/decreased by approximately
RMB20,259,000 (2014:RMB17,192,000).
(2) Credit risk
The Group’s maximum exposure to credit risk in relation to financial assets is the carrying
amounts of cash and cash equivalents and trade and other receivables.
As at 31 December 2015, the Group had cash of approximately RMB372,320,000 (2014:
RMB181,674,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a
non-bank financial institution and a subsidiary of JMCG (Note 19). The Group’s other bank
deposits are deposited in state-owned banks or other listed banks. Management believes all
these financial institutions have high credit quality without significant credit risk.
66
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
All the Group’s trade and other receivables have no collateral. However, the Group has
policies in place to ensure that sales are made to customers with appropriate credit history
and the Group performs periodic credit evaluations of its customers. The Group assesses the
credit quality of each customer by taking into account its financial position, past experience
and other factors. Credit limit and terms are reviewed on periodic basis, and the financial
department is responsible for such monitoring procedures. In determining whether provision
for impairment is required, the Group takes into consideration the aging status and the
likelihood of collection. In this regards, the directors of the Company are satisfied that the risks
is minimal as all customers are existing ones or related parties and have no default in the past
and adequate provision for impairment, if any, has been made in the financial statements after
assessing the collectability of individual debts. Further quantitative disclosures in respect of
the impairment of trade and other receivables are set out in Note 18.
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group in and aggregated by
Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities (Note 23) at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities.
The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 Between 2 and
year and 2 years 5 years Over 5 years
RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000
At 31 December 2015
Bank borrowings
- Principals 425 425 1,276 2,977
- Interests 75 69 167 167
Trade and other payables 8,206,159 - - -
8,206,659 494 1,443 3,144
At 31 December 2014
Bank borrowings
- Principals 401 401 1,202 3,205
- Interests 77 71 176 204
Trade and other payables 7,828,285 - - -
Financial liabilities at fair value
through profit or loss 2,011 - - -
7,830,774 472 1,378 3,409
67
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as borrowings divided by total capital. Total capital is calculated
as equity, as shown in the consolidated statement of financial position, plus borrowings. The
Group aims to maintain the gearing ratio at a reasonable level.
The gearing ratios at 31 December 2015 and 2014 were as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Total borrowings 5,103 5,209
Total equity 11,981,142 10,598,429
Total capital 11,986,245 10,603,638
Gearing ratio 0.04% 0.05%
3.3 Fair value estimation
Financial liabilities at fair value through profit or loss are forward exchange contracts which are
not traded in an active market. The fair value is determined by using valuation techniques
which maximised the use of observable market data where it is available and rely as little as
possible on entity specific estimates. The different levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)
(level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (level 3).
Since all significant inputs required to value the instrument are observable, the forward
exchange contracts are classified as level 2.
The carrying amounts of the Group’s financial assets including cash and cash equivalents,
trade and other receivables and financial liabilities including trade and other payables,
borrowing, approximate their fair values due to their short maturities. The face values less any
estimated credit adjustments for financial assets and liabilities with a maturity of less than one
year are assumed to approximate their fair values.
68
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
The fair value of financial liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate available to the Group for
similar financial instruments.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
(1) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that
fail to perform satisfactorily based on certain pre-determined conditions. Management
estimates the related warranty claims based on historical warranty claim information including
level of repairs and returns as well as recent trends that might suggest that past cost
information may differ from future claims.
Factors that could impact the estimated claim information include the success of the Group’s
productivity and quality controls, as well as parts and labour costs. Any increase or decrease
in the provision would affect profit or loss in future years.
(2) Pension benefits
The present value of the pension obligations depend on a number of factors that are
determined on an actuarial basis using a number of assumptions. Any changes in these
assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the
interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations. In determining the
appropriate discount rate, the Group considers the interest rates of government bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating the terms of the related pension liability.
Other key assumptions for pension obligations are based on current market conditions.
Additional information is disclosed in Note 24.
69
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
(3) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added
tax and consumption tax. Significant judgment is required in determining the provision for
these taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from amounts that were initial
recorded, such differences will impact the tax provisions in the period such determination is
made.
Deferred income tax assets relating to certain temporary differences are recognised as
management considers it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Where the expectation is different from the original
estimate, such differences will impact the recognition of deferred tax assets and tax in the
periods in which such estimate is changed.
As at 31 December 2015, the Group recorded the deferred tax assets of approximately
RMB473,933,000. To the extent that it is probable that taxable profit will be available against
which the deductible temporary differences will be utilised, deferred tax assets are recognised
mainly for temporary differences arising from accrued expenses and retirement benefit
obligations.
(4) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with
the accounting policy stated in Note 2.8. The recoverable amounts of cash-generating units
have been determined based on value in use calculations. These calculations require the use
of estimates (Note 14).
If budgeted gross margin rates used in CGU or groups of CGU’s extrapolate cash flow
projections are adjusted to be lower than current gross margin rates, a further impairment of
goodwill is required to be recognised.
If after-tax discount rate applied to the cash flow projections is adjusted to be higher than
current after-tax discount rate, a further impairment of goodwill is required to be recognised.
If actual gross margin rates or after-tax discount rate is higher or lower than management’s
estimation, the recognised impairment of goodwill cannot be reversed.
(5) Impairment of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The Group will
reassess whether the inventories’ net realisable value is lower than the inventories’ cost at
end of each year. Impairment provision for inventories is recognised in profit or loss when the
cost is higher than the net realisable value.
70
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
5 Revenue and segment information
The Group principally derives its turnover from the manufacture, assembly and sale of
automobiles, related spare parts and components, and sales are made principally in the PRC.
Revenue represents the total invoiced value of goods supplied to customers, net of value-added
tax, returns and allowances.
Management has determined the operating segment based on the reports reviewed by the
strategic executive committee that are used to make strategic decisions. The committee
considers the business from the product perspective as all the Group’s sales are made in the
PRC. Since the Group principally derives its turnover from the sale of automobiles, the
committee considers the automobile business as a whole in allocating resources and assessing
performance. Accordingly, no segment information is presented.
6 Expenses by nature
2015 2014
RMB’000 RMB’000
Changes in inventories of finished goods and
work in progress 169,844 161,290
Raw materials and consumables used 16,116,227 17,123,578
Employee benefit expenses (Note 7) 1,678,080 1,572,313
Depreciation of PPE (Note 12, 28) 554,197 516,247
Repairs and maintenance expenditure on PPE 147,528 157,175
Research and development expenditure 1,830,993 1,554,018
Amortisation of lease prepayment (Note 13, 28) 15,733 14,202
Amortisation of intangible assets (Note 14, 28) 7,301 4,313
Provision of warranty (Note 25) 168,141 204,768
Others 1,478,741 1,665,884
Total cost of sales, distribution costs and
administrative expenses 22,166,785 22,973,788
In 2015, depreciation of PPE of RMB36,374,000 (2014: RMB30,394,000) and amortisation of
intangible assets of RMB2,586,000 (2014: RMB3,200,000) were included in research and
development expenditure.
Impairment charge for trade and other receivables of RMB3,882,000 (2014: RMB1,623,000) and
impairment charge for inventories of RMB22,192,000 (2014: RMB28,294,000), which were
included in administrative expenses, were not included in expenses by nature.
71
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
7 Employee benefit expenses
2015 2014
RMB’000 RMB’000
Wages and salaries 1,182,279 1,142,623
Social security costs 167,711 137,825
Pension costs defined contribution plans 209,339 176,564
Pension costs defined benefit plans (Note 24) 3,616 4,125
Others 115,135 111,176
1,678,080 1,572,313
The employees of the Group participated in a retirement benefit plan organised by the
municipal and provincial governments under which the Group was required to make defined
contributions monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In
accordance with the Group’s early retirement programs, the Group was also committed to
making periodic benefit payments to certain early-retired employees until they reach their
legal retirement ages.
8 Other income
2015 2014
RMB’000 RMB’000
Government grants (a) 709,071 579,765
Others (25,935) (11,538)
683,136 568,227
(a) In 2015, the Group received grants of approximately RMB709,071,000, mainly from Finance
Bureau of Nanchang, Finance Bureau of Nanchang Qingyunpu District, Economic
Development District Administrative Commission of Xiaolan and the Finance Bureau of
Economic and Technological Development District Administrative Commission of Taiyuan.
Those grants were income related government grants to support the Group’s operation.
9 Finance income and cost
2015 2014
RMB’000 RMB’000
(a) Finance income
Interest income on bank deposits 239,965 203,159
Interest income on credit sales 31,020 48,577
270,985 251,736
(b) Finance cost
Interest expense on bank loans (417) (416)
Bank charges (1,927) (1,695)
(2,344) (2,111)
Net finance income 268,641 249,625
72
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation
(a) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2015, the Company is entitled to a preferential CIT rate of 15% from 2015 to
2017 (2014: 15%). The CIT rates of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) and Jiangling
Motor Sales Co, Ltd. (“JMCS”), the subsidiaries of the Company, are 25%.
The amounts of income tax expense charged to profit or loss represented:
2015 2014
RMB’000 RMB’000
Current tax (321,135) (460,404)
Deferred tax (Note 16) 33,592 138,961
(287,543) (321,443)
The difference between the actual income tax charge in profit or loss and the amounts which
result from applying the enacted tax rate to profit before income tax can be reconciled as
follows:
2015 2014
RMB’000 RMB’000
Profit before tax 2,509,604 2,429,295
Tax calculated at tax rates applicable to profits in
the respective companies (376,423) (387,392)
Tax concessions 159 469
Expenses not deductible for tax purposes (5,638) (5,466)
Income not subject to tax 113,717 97,638
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse (999) (1,107)
Tax losses for which no deferred income tax
asset was recognised (18,359) (25,585)
Tax charge (287,543) (321,443)
The weighted average applicable tax rate was 15% (2014: 16%).
73
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation (continued)
(a) Corporate income tax (continued)
The tax (charge)/credit relating to other comprehensive income is as follows:
2015 2014
Before Tax After Before Tax After
tax credit tax tax charge tax
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Actuarial (loss)/gain on
retirement benefit obligations (2,707) 677 (2,030) (1,978) 495 (1,483)
Other comprehensive income (2,707) 677 (2,030) (1,978) 495 (1,483)
Current tax - -
Deferred tax (Note 16) 677 495
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of 17% on the selling price of goods. Input VAT paid on
purchase of goods and equipment can be used to offset the output VAT to determine the net
VAT payable.
(c) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 5% or 9% on the selling price of goods.
11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the
Company by the weighted average number of ordinary shares in issue during the year.
2015 2014
Profit attributable to shareholders of the
Company (‘000) 2,222,061 2,107,852
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 2.57 2.44
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the year ended 31 December 2015.
74
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Vehicles Moulds other equipment’s constructions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014
Cost 1,721,207 3,369,228 156,912 1,333,643 1,982,205 861,701 9,424,896
Accumulated depreciation and impairment (287,680) (1,756,039) (70,814) (1,057,826) (1,102,708) (692) (4,275,759)
Net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
Year ended 31 December 2014
Opening net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
Additions - - - - - 1,250,711 1,250,711
Transfers 98,938 193,735 46,055 89,145 384,468 (812,341) -
Disposals (89) (10,203) (1,643) (581) (6,139) - (18,655)
Other deductions - (73,794) - - (3,627) (17,217) (94,638)
Impairment charge (Note 28) - (1,229) - - (2,277) - (3,506)
Depreciation charge (Note 6, 28) (42,870) (178,027) (25,350) (87,230) (213,164) - (546,641)
Closing net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
At 31 December 2014
Cost 1,819,897 3,138,887 190,888 1,421,197 2,030,067 1,282,854 9,883,790
Accumulated depreciation and impairment (330,391) (1,595,216) (85,728) (1,144,046) (991,309) (692) (4,147,382)
Net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
Year ended 31 December 2015
Opening net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
Additions - - - - - 1,457,199 1,457,199
Transfers 114,352 261,449 34,729 193,583 399,568 (1,003,681) -
Disposals (4,255) (1612) (1,216) - (2,150) - (9,233)
Classified as held for sale (78,870) - - - - - (78,870)
Other deductions - (86,845) - - (2,628) （98,898） (188,371)
Impairment charge (Note 28) - (1,719) (316) - (981) - (3,016)
Depreciation charge (Note 6, 28) (46,204) (179,076) (25,116) (106,987) (233,188) - (590,571)
Closing net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546
At 31 December 2015
Cost 1,802,523 3,193,284 219,587 1,591,116 2,384,260 1,637,474 10,828,244
Accumulated depreciation and impairment (327,994) (1,657,416) (106,346) (1,227,369) (1,184,881) (692) (4,504,698)
Net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546
75
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the year ended 31 December 2015, depreciation expense of approximately
RMB506,108,000 (2014: RMB473,020,000) has been charged in cost of sales, RMB2,284,000
(2014: RMB2,080,000) in distribution costs and RMB82,179,000 (2014: RMB71,541,000) in
administrative expenses.
Lease rental expenses amounting to RMB8,809,000 (2014: RMB6,159,000) relating to the lease
of property are included in profit or loss.
13 Lease prepayment
Lease prepayment represents the Group’s interests in land which are held on leases of 50
years. The movement is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Opening net book amount 590,629 604,831
Additions 79,479 -
Classified as held for sale (8,767) -
Amortisation charge (Note 6, 28) (15,733) (14,202)
Closing net book amount 645,608 590,629
Cost 749,232 683,036
Accumulated amortisation (103,624) (92,407)
Net book amount 645,608 590,629
Amortisation expense was charged in administrative expenses.
76
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets
After-sale
management
model Software Goodwill Other Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2014
Opening net book amount - 18,968 89,028 39 108,035
Addition - 17,217 - - 17,217
Impairment charge - - (85,566) - (85,566)
Amortisation charge (Note 6, 28) - (7,503) - (10) (7,513)
Closing net book amount - 28,682 3,462 29 32,173
At 31 December 2014
Cost 36,978 68,040 89,028 1,649 195,695
Accumulated amortisation and
impairment (36,978) (39,358) (85,566) (1,620) (163,522)
Net book amount - 28,682 3,462 29 32,173
Year ended 31 December 2015
Opening net book amount - 28,682 3,462 29 32,173
Addition - 19,419 - - 19,419
Impairment charge - - - - -
Amortisation charge (Note 6, 28) - (9,876) - (11) (9,887)
Closing net book amount - 38,225 3,462 18 41,705
At 31 December 2015
Cost 36,978 85,627 89,028 1,649 213,282
Accumulated amortisation and
impairment (36,978) (47,402) (85,566) (1,631) (171,577)
Net book amount - 38,225 3,462 18 41,705
For the year ended 31 December 2015, amortisation expense of approximately RMB9,685,000 (2014:
RMB7,288,000) was charged in administrative expenses, RMB194,000 (2014:RMB194,000) in cost of
sales and RMB8,000 (2014: RMB31,000) in distribution costs.
77
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets (continued)
Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the
cash generating unit level. The goodwill is allocated to the following cash generating unit
(“CGU”):
31 December 2014 Addition Impairment 31 December 2015
RMB’000 RMB’000 RMB’000 RMB’000
JMCH 3,462 - - 3,462
The recoverable amount of the CGU is determined based on value in use calculations. These
calculations use after-tax cash flow projections based on financial budgets approved by
management covering a nine-year period. Cash flows beyond the five-year period are
extrapolated using the estimated growth rates stated below. The growth rate does not exceed
the long-term average growth rate for the heavy duty vehicle business in which the CGU
operates.
The key assumptions used for value in use calculations in 2015 are as follows:
Item JMCH
Compound annual volume growth rate 404%
Long term growth rate 3%
Discount rate 19.4%
The key assumptions used for value in use calculations in 2014 are as follows:
Item JMCH
Compound annual volume growth rate 257%
Long term growth rate 3%
Discount rate 19.4%
The long term growth rates used are consistent with the forecasts included in industry reports.
The discount rates used are after-tax and reflect specific risks relating to the relevant operating
subsidiary.
78
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15a Subsidiaries
As at the date of this report, the Group has the following subsidiary:
Place and date Percentage of
Entity of incorporation equity interest held Principal activities
JMCH Taiyuan, PRC / 100% Manufacture and sale of
8 January 2013 automobiles and spare parts
JMCS Nanchang, PRC / 100% Sale of automobiles and
11 October 2013 spare parts
15b Investments accounted for using the equity method
(a) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position is as follow:
31 December 2015 31 December 2014
RMB’000 RMB’000
Associate 40,993 26,948
The amount recognised in the consolidated statement of comprehensive income is as follow:
2015 2014
RMB’000 RMB’000
Share of profit 14,045 19,347
As at 17 December 2015 Halla Visteon Climate Control (Nanchang) Co., Ltd., was renamed as
Hannon Systems (Nanchang) Co., Ltd. (“Hannon Systems”). The Company holds 19.15%
interest of Hannon Systems and the investment is accounted for using the equity method of
accounting.
(b) Reconciliation of summarised financial information
2015 2014
RMB’000 RMB’000
Opening net assets 1 January 140,719 181,105
Profit for the year 73,342 101,031
Dividends distributed - (141,417)
Closing net assets 214,061 140,719
Interest in associate 19.15% 19.15%
Carrying value 40,993 26,948
79
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax
31 December 2015 31 December 2014
RMB’000 RMB’000
Deferred tax assets 480,109 442,408
Deferred tax liabilities-can be offset (6,176) (1,678)
Deferred tax liabilities-cannot be offset (28,392) (29,458)
Deferred tax assets-net 473,933 440,730
Deferred tax liabilities-net (28,392) (29,458)
The gross movement on the deferred income tax account is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 411,272 271,816
Credited to profit or loss (Note 10) 33,592 138,961
Credited to other comprehensive income 677 495
At end of the year 445,541 411,272
The movement in deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax assets Provision for Retirement
impairment of benefits Accrued
assets obligation expenses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 7,201 13,430 250,344 33,517 304,492
(Charged)/credited to profit or
loss (1,872) (1,483) 131,093 9,683 137,421
Credited to other
comprehensive income - 495 - - 495
At 31 December 2014 5,329 12,442 381,437 43,200 442,408
Credited/(charged) to profit or
loss 878 220 78,607 (42,681) 37,024
Credited to other
comprehensive income - 677 - - 677
At 31 December 2015 6,207 13,339 460,044 519 480,109
Deferred tax liabilities Amortization Fair Forward
of Intangible PPE value exchange
Assets depreciation gains contracts Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 (2,071) - (30,535) (70) (32,676)
Credited to profit or loss 393 - 1,077 70 1,540
At 31 December 2014 (1,678) - (29,458) - (31,136)
(Charged)/credited to profit or
loss (1,082) (3,404) 1,066 (12) (3,432)
At 31 December 2015 (2,760) (3,404) (28,392) (12) (34,568)
80
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
.
The analysis of deferred tax assets and deferred tax liabilities is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 12,653 12,036
–Deferred tax asset to be recovered
within 12 months 467,456 430,372
480,109 442,408
31 December 2015 31 December 2014
RMB’000 RMB’000
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (32,787) (29,458)
–Deferred tax liabilities to be recovered
within 12 months (1,781) (1,678)
(34,568) (31,136)
Tax losses which no deferred income tax assets were recognised were as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Tax losses 250,697 275,289
The expiry years of the tax losses are as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
2016 6,721 6,721
2017 89,447 89,447
2018 44,319 44,319
2019 36,773 102,343
2020 73,437 -
250,697 242,830
81
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
17 Inventories
31 December 2015 31 December 2014
RMB’000 RMB’000
Raw materials 1,170,043 927,110
Work in progress 144,654 159,502
Finished goods 416,233 572,095
1,730,930 1,658,707
For the year ended 31 December 2015, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB16,286,071,000 (2014:
RMB17,284,868,000), which included inventory provision of RMB24,878,000
(2014:RMB29,175,000).
A provision of RMB47,637,000 (2014: RMB33,216,000) was made as at 31 December 2015.
The Group reversed RMB2,686,000 of a previous inventory write-down in 2015. In 2015, the
Group wrote-off inventories with provision of RMB7,772,000 made in prior years. The
provision and reversal of the inventory write-down have been included in cost of sales in profit
or loss.
As at 31 December 2015, no inventory was pledged as security for liabilities.
18 Trade, other receivables and prepayments
31 December 2015 31 December 2014
RMB’000 RMB’000
Trade receivables 1,463,736 696,258
Less: Provision for impairment of trade
receivables (7,319) (6,919)
Trade receivables – net 1,456,417 689,339
Notes receivables 709,630 799,782
Other receivables 58,427 53,387
Less: Provision for impairment of other
receivables (292) (719)
Other receivables – net 58,135 52,668
Prepayments 476,952 340,880
Dividends receivables - 15,657
Interest receivables 92,636 107,836
2,793,770 2,006,162
Refer to Note 31 for details of receivables from related parties. The carrying amounts of the
Group’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables approximate their fair values.
82
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
18 Trade, other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year (7,638) (6,841)
Provision for receivables impairment
(Note 28) (3,882) (1,623)
Receivables written off during the year as
uncollectible 3,909 826
At end of the year (7,611) (7,638)
The creation of provision for impaired receivables have been included in ‘administrative
expense’ in profit or loss.
As at 31 December 2015, trade receivables of approximately RMB59,095,000 (2014:
RMB42,191,000) were past due but not impaired. These balances related to a number of
independent customers for whom there was no recent history of default. The ageing analysis of
these trade receivables based on past due date is as below:
31 December 2015 31 December 2014
RMB’000 RMB’000
Up to 3 months 34,327 8,167
3 months to 6 months 7,404 23,858
Over 6 months 17,364 10,166
59,095 42,191
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of
receivable mentioned above. The Group does not hold any collateral as security.
83
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Cash and bank balances
Cash and cash equivalents
31 December 2015 31 December 2014
RMB’000 RMB’000
Cash at bank and in hand 606,040 982,460
Short-term bank deposits (a) 8,242,000 7,981,008
8,848,040 8,963,468
As at 31 December 2015, the Group had cash of approximately RMB372,320,000 (2014:
RMB181,674,000) deposited in JMCF (Note 31 (g)). The interest rates range from 0.455% to
3% per annum (2014: 0.42% to 1.38%). JMCF, a non-bank financial institution, is a subsidiary
of JMCG.
(a) Short-term bank deposits can be withdrawn at the discretion of the Group without any
restriction.
20 Assets classified as held for sale
31 December 2015 31 December 2014
RMB’000 RMB’000
Lease prepayment and buildings of
Transit plant 87,637 -
As at 26 March 2015, under the authorization from the board of directors, the Company signed
an agreement of “state-owned land reserves” with Nanchang City Land Reserve Centre (the
“agreement”). According to the agreement, the Company will sell its land use right and
buildings of Transit plant, with a consideration of RMB135,000,000 to Nanchang City Land
Reserve Centre. The transaction is expected to be completed within the year of 2016.
As those aforementioned assets met the criteria of assets classified as held for sale, they were
reclassified as current assets and presented separately in the consolidated statement of
financial position.
84
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
21 Share capital
Number of Tradable shares Total
shares “A” shares “B” shares
(thousands) Restricted Non-restricted
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2014
Balance at 1 January 2014 863,214 2,542 516,672 344,000 863,214
Transfer - (720) 720 - -
Balance at 31 December 2014 863,214 1,822 517,392 344,000 863,214
Year ended 31 December 2015
Balance at 1 January 2015 863,214 1,822 517,392 344,000 863,214
Transfer - (96) 96 - -
Balance at 31 December 2015 863,214 1,726 517,488 344,000 863,214
All the “A” and “B” shares are registered, issued and fully paid shares of RMB1 each.
All the “A” and “B” shares rank pari passu in all respects.
After the implementation of the share reform scheme on 13 February 2006, 1,726,000 shares
were still restricted as at 31 December 2015.
85
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 431,607 18,627 6,217 456,451
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,483) (1,483)
At 31 December 2014 431,607 18,627 4,734 454,968
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (2,030) (2,030)
At 31 December 2015 431,607 18,627 2,704 452,938
(a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of
the Company, it is required to appropriate 10% of its annual net profit, after offsetting any prior
years’ losses as determined under the Accounting Standards for Business Enterprises in the
PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance
of the statutory surplus reserve fund reaches 50% of the Company’s share capital, any further
appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be
used to offset prior years’ losses, if any, and may be converted into share capital by issuing
new shares to shareholders in proportion to their existing shareholding or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation.
As the balance of the statutory surplus reserve fund has reached 50% of the Company’s share
capital, no further appropriations to the statutory surplus reserve fund were provided for the
years ended 31 December 2014 and 2015.
23 Borrowings
31 December 2015 31 December 2014
RMB’000 RMB’000
Current
Bank borrowings - guaranteed (a) 425 401
Non-current
Bank borrowings - guaranteed (a) 4,678 4,808
Total borrowings 5,103 5,209
(a) Bank borrowings of USD786,000 (equivalent to approximately RMB5,103,000) (2014:
USD851,000 equivalent to approximately RMB5,209,000) were guaranteed by JMCF (Note 31
(c)).
The interest rate of bank borrowings is 1.50% per annum (2014: 1.50%).
The fair value of borrowings approximates their carrying values.
86
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Between 1 and 2 years 425 401
Between 2 and 5 years 1,276 1,202
Over 5 years 2,977 3,205
4,678 4,808
The Group has the following undrawn borrowing facilities:
31 December 2015 31 December 2014
RMB’000 RMB’000
Fixed rate
- Expiring within one year 2,214,032 1,174,626
24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement
of financial position is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Present value of defined benefits obligations 56,833 55,726
The movement of early retirement and supplemental benefit obligations for the year ended 31
December 2015 is as follows:
31 December2015 31 December2014
RMB’000 RMB’000
At beginning of the year 55,726 57,001
For the year
-Current service cost 1,625 1,292
-Interest cost 1,991 2,399
-Payment (5,216) (7,378)
-Actuarial loss 2,707 2,412
At end of the year 56,833 55,726
Current 4,560 5,580
Non-current 52,273 50,146
56,833 55,726
The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted: 3.00% (2014: 3.75%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 5% (2014: 0% to 6%)
(3) Mortality: average life expectancy of residents in the PRC
87
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2015, a
provision of RMB56,833,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB56,833,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,560,000 (2014:
RMB5,580,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Change in assumption Impact on overall liability
Discount rate Increase/decrease by 0.5% Decrease/increase by 5.3%/6.0%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 2.3%/2.0%
Rate of mortality Increase/decrease by 1 year Decrease/increase by 0.6%/0.8%
In 2015, RMB3,616,000 were charged in ‘administrative expenses’ (2014:RMB4,125,000) and
RMB2,707,000 were charged in other comprehensive income (2014: RMB1,978,000 were
charged in other comprehensive income).
25 Provisions for warranty and other liabilities
The movement on the warranty provisions is as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 226,503 191,095
Charged for the year (Note 6) 168,141 204,768
Utilised during the year (179,922) (169,360)
At end of the year 214,722 226,503
The above represents the warranty costs for repairs and maintenance, which are estimated
based on present after-sale service policies and prior years’ experience on the occurrence of
such cost. For the business motor vehicles the warranty period is the sooner of 24 months
duration and 50,000 kilometres mileage since the motor vehicles are sold to consumer, while for
the SUV the warranty period is the sooner of 36 months duration and 100,000 kilometres
mileage since the motor vehicles are sold to consumer.
26 Trade and other payables
31 December 2015 31 December 2014
RMB’000 RMB’000
Trade payables 5,600,317 5,626,580
Payroll and welfare payable 278,396 280,620
Dividend payables 11,646 10,001
Other payables 2,818,470 2,503,072
8,708,829 8,420,273
Refer to Note 31 for details of amount due to related parties.
88
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
27 Dividends
A final dividend for 2014 of RMB837,318,000 (RMB0.97per share) was paid in 2015.
A final dividend for 2015 of RMB1.03 per share, amounting to a total dividend of
RMB889,110,000 is proposed at the Directors’ Meeting on 17 March 2016, and such dividend is
to be approved by the shareholders at the Annual General Meeting. These financial statements
do not reflect this dividend payable.
28 Cash generated from operations
2015 2014
RMB’000 RMB’000
Profit before tax 2,509,604 2,429,295
Depreciation of PPE (Note 6, 12) 590,571 546,641
Amortisation of lease prepayment (Note 6, 13) 15,733 14,202
Amortisation of intangible assets (Note 6, 14) 9,887 7,513
Impairment charges of PPE (Note 12) 3,016 3,506
Impairment charges of goodwill (Note 14) - 85,566
Provision for receivables impairment (Note 18) 3,882 1,623
Write-down of inventories (Note 17) 22,192 28,296
Loss on disposals of PPE 6,268 7,297
Finance cost (Note 9) 2,344 2,111
Finance income (Note 9) (270,985) (251,736)
Net foreign exchange transaction loss 21,326 4,121
Share of profit from investment accounted for using
equity method (Note 15b) (14,045) (19,347)
Investment loss of forward exchange contracts 5,322 2,488
Changes on fair value of forward exchange contracts (2,088) 2,481
Changes in working capital:
- Decrease/(increase) in restricted cash 6,810 (6,810)
- (Increase)/decrease in inventories (133,843) 34,549
- (Increase)/decrease in trade and other receivables (855,314) 35,787
- (Decrease)/increase in provisions for warranty (11,781) 35,408
- Increase in trade and other payables 442,333 1,623,293
- Decrease in pensions and other retirement benefits (1,600) (3,252)
Cash generated from operations 2,349,632 4,583,032
89
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Year ended 31 December
2015 2014
RMB’000 RMB’000
Net book amount 9,233 18,655
Loss on disposal of PPE (6,268) (7,297)
Offset with trade and other payables (a) 40,704 (234)
Proceeds from disposal of PPE 43,669 11,124
(a) As at 31 December 2015, The company received the first phase disposal payment,
RMB40,500,000 of lease prepayment and buildings on the ground of Transit plant (Note 20).
29 Contingencies
At 31 December 2015, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the
financial statements are as follows:
31 December 2015 31 December 2014
RMB’000 RMB’000
Contracted but not provided for:
Purchases of buildings, plant and machinery 1,033,458 1,218,684
31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 31 December 2015. For JMH, the shareholders are
Chongqing Changan Automobile Corporation Ltd. (“Changan Auto”) and JMCG, both of them
hold 50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, JMCG and its subsidiaries, Ford and its subsidiaries in the ordinary course of
business during the year ended 31 December 2015.
90
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
For the year ended 31 December 2015, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JMH
Nanchang JMCG Skyman Auto Component Co., Ltd. Subsidiary of JMH
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford Otosan Company Subsidiary of Ford
JMCG Interior Trim Factory Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG
JMCG Property Management Co. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Material Utilization Co., Ltd. Subsidiary of JMCG
Jiangling Material Co. Subsidiary of JMCG
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. Subsidiary of JMCG
Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. Subsidiary of JMCG
JMCF Subsidiary of JMCG
Jiangxi ISUZU Engine Co., Ltd. Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Nanchang Jiangling Huasheng Cleaner Co., Ltd. Subsidiary of JMCG
Jiangxi Sinodef International Trade Co.,Ltd. Subsidiary of JMCG
Nanchang Unistar Electric & Electronics Co.,Ltd. Subsidiary of JMCG
Nanchang Hengou Industry Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Car Frame Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Real Estate Co., Ltd. Subsidiary of JMCG
Jiangxi ISUZU Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Associate of JMCG
Nanchang Yinlun Heat-exchanger Co.,Ltd. Associate of JMCG
JMCG Hequn Costume Co., Ltd. Associate of JMCG
Jiangling Aowei Aotomobile Spare Part Co., Ltd. Associate of JMCG
Nanchang JMCG Printing Plant Co., Ltd. Associate of JMCG
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG
Changan Ford Automobile Co., Ltd. Joint venture of Ford
91
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Purchase of goods Price policy 2015 2014
RMB’000 RMB’000
Jiangxi Jiangling Chassis Co., Ltd. (B) 753,418 832,971
Ford (A) 728,225 406,427
GETRAG (Jiangxi) Transmission Company (B) 643,244 692,007
Nanchang Baojiang Steel Processing Distribution Co., Ltd. (B) 601,711 667,940
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. (i) (B) 478,819 278
Jiangxi Jiangling Lear Interior System Co., Ltd. (B) 470,855 543,648
Nanchang JMCG Liancheng Auto Component Co., Ltd. (B) 298,493 323,374
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. (B) 282,451 299,685
Hannon Systems (B) 248,735 266,215
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. (B) 232,562 252,342
Nanchang Unistar Electric & Electronics Co.,Ltd. (B) 213,572 261,195
JMCG Interior Trim Factory(i) (B) 190,609 726,806
JMCG (B) 127,389 144,222
Nanchang Lianda Machinery Co., Ltd. (B) 76,417 74,365
Nanchang JMCG Skyman Auto Component Co., Ltd. (B) 71,495 83,072
Nanchang Yinlun Heat-exchanger Co.,Ltd. (B) 50,170 56,171
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. (B) 37,086 35,641
Jiangling Aowei Aotomobile Spare Part Co., Ltd. (B) 34,912 41,173
Nanchang JMCG Xinchen Auto Component Co., Ltd. (B) 26,273 26,527
Jiangling Material Co. (B) 25,493 34,318
Faurecia Emissions Control Technologies (Nanchang)
Co., Ltd. (B) 19,060 1,422
Nanchang Gear Co., Ltd. (B) 19,024 10,085
Jiangxi ISUZU Engine Co., Ltd. (B) 11,347 13,653
Jiangxi Biaohong Engine Tappet Co., Ltd. (B) 10,989 10,208
Changan Ford Automobile Co., Ltd. (B) 9,795 485
Nanchang Jiangling Huasheng Cleaner Co., Ltd. (B) 9,220 9,827
Jiangxi JMCG Shangrao Industrial Co., Ltd. (B) 8,532 22,055
Jiangxi JMCG Industry Co., Ltd. (B) 7,610 353
Nanchang JMCG Printing Plant Co., Ltd. (B) 6,879 6,784
Ford Otosan Company (A) 5,047 3,557
JMCG Hequn Costume Co., Ltd. (B) 4,894 4,539
Jiangxi Jiangling Material Utilization Co., Ltd. (B) 4,142 9,487
Ford Motor (China) Co., Ltd. (A) - 18,906
5,708,468 5,879,738
The Company purchased goods from related parties classified as two types: import parts and home-
made parts.
(A) Purchase import parts from Ford or Ford’s suppliers, based on agreed price;
(B) Purchase home-made parts from other related parts, based on quotation, cost accounting and
negotiation.
(i) As at September 2015, Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. absorbed JMCG Interior
Trim Factory.
92
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction Price policy 2015 2014
RMB’000 RMB’000
Ford Engineering service and design (C) 318,484 390,726
Ford Otosan Company Engineering service and design (C) 231,703 -
Nanchang JMCG Shishun Logistics Co., Ltd. Transportation (C) 166,329 184,034
Ford Global Technologies, LLC Royalty fee (C) 87,387 62,040
Ford Secondments costs (C) 56,339 53,400
Ford Otosan Company Royalty fee (C) 49,818 76,368
Nanchang Hengou Industry Co., Ltd. Packing/truckage (C) 43,433 34,367
Jiangxi JMCG Industry Co.,Ltd. Working meal (C) 31,826 31,857
JMCG Jiangxi Engineering Construction Co., Engineering construction and
Ltd. maintenance (C) 27,476 16,749
Ford Otosan Company Secondments costs (C) 22,261 -
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. Promotion (C) 7,882 519
Jiangxi Jiangling Lear Interior System Co., Ltd. Evaluation and design (C) 6,332 1,646
Ford Motor (China) Co., Ltd. Regional personnel costs (C) 6,087 4,893
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business of importation (C) 5,323 5,116
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. Software fee (C) 2,953 699
GETRAG (Jiangxi) Transmission Company Design fee (C) 2,831 11,999
JMCG Public relations costs (C) 1,134 1,080
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. Regional personnel costs (C) 2,461 1,922
Ford Motor (China) Co., Ltd. Software fee (C) 1,229 560
Ford Royalty fee (C) 2,416 -
JMCG Property Management Co. Property management (C) 2,302 2,134
JMH Secondments costs (C) 1,465 1,292
93
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction Price policy 2015 2014
RMB’000 RMB’000
Nanchang JMCG Liancheng Auto Component
Co., Ltd. Experimental manufacturing cost (C) 729 1,702
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. Experimental expenses (C) 597 2,679
Changan Ford Automobile Co., Ltd. Design fee (C) - 19,389
Others (C) - 1,228
1,078,797 906,399
(C) The Company purchased the service price from related parties based on agreement, of which engineering service and design fee mainly
including the fee to Ford.
94
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Sales of goods Price policy 2015 2014
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. (D) 1,066,146 1,312,708
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. (D) 189,793 194,263
JMCG Jingma Motors Co., Ltd. (D) 60,741 50,659
Jiangxi Jiangling Chassis Co., Ltd. (D) 55,627 67,998
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. (D) 48,032 52,658
Jiangxi Jiangling Material Utilization Co., Ltd. (D) 47,818 82,020
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. (D) 36,271 -
JMCG Interior Trim Factory (D) 16,989 77,186
Jiangxi Sinodef International Trade Co.,Ltd. (D) 16,949 19,488
Jiangxi Jiangling Lear Interior System Co., Ltd. (D) 16,526 17,977
Jiangxi JMCG Industry Co., Ltd. (D) 9,606 7,937
JMCG Property Management Co. (D) 7,043 7,691
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. (D) 6,939 4
Jiangxi ISUZU Engine Co., Ltd. (D) 3,928 6,031
Nanchang JMCG Car Frame Co., Ltd. (D) 3,669 1,573
Jiangxi ISUZU Co., Ltd. (D) 1,952 -
Nanchang Lianda Machinery Co., Ltd. (D) 565 1,173
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. (D) 529 3,500
Jiangling Aowei Aotomobile Spare Part Co., Ltd. (D) 196 1,770
Others (D) 2,081 2,556
1,591,400 1,907,192
(D) The Company sold goods to related parties, based on agreement price.
(b) Rental
Rental cost
Lessor Category Rental cost of 2015 Rental cost of 2014
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp.
Co., Ltd. Building 4,471 1,118
JMCG Building 4,074 5,041
JMCG Property Management Co. Building 259 -
Jiangxi Jiangling Real Estate Co., Ltd. Building 5 -
8,809 6,159
95
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental (continued)
Rental income
Lessee Category Rental income of 2015 Rental income of 2014
RMB’000 RMB’000
Jiangling Material Co., Ltd. Building 132 132
JMH Building 35 -
Jiangxi ISUZU Co., Ltd. Building 21 -
188 132
(c) Guarantee
As at 31 December 2015, bank loans of USD786,000 (equivalent to approximately
RMB5,103,000) (2014:USD851,000 equivalent to approximately RMB5,209,000) were
guaranteed by JMCF (Note 23).
(d) Sales of PPE
2015 2014
RMB’000 RMB’000
Nanchang JMCG Liancheng Auto Component Co., Ltd. - 622
Jiangxi JMCG Industrial Co., Ltd. 10 5
10 627
(e) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive
Committee, the Company Secretary and members of the Supervisory Board. During the year
ended 31 December 2015, the total remuneration of the key management was approximately
RMB11,262,000 (2014: RMB9,430,000).
(f) Interest received from cash deposit in related parties
31 December 2015 31 December 2014
RMB’000 RMB’000
JMCF 7,828 4,342
In 2015, the interest rates range from 0.455% to 3% per annum (2014: 0.42% to 1.38%).
96
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(g) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 230,762 203,352
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. 24,097 3,287
JMCG Jingma Motors Co., Ltd. 8,337 2,308
Jiangxi JMCG Industry Co., Ltd. 3,384 13
Nanchang JMCG Car Frame Co., Ltd. 2,453 -
JMH - 12
Others 238 -
269,271 208,972
Other receivables from related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 6,941 5,411
Ford Otosan Company 1,225 3,757
JMCG Jiangxi Engineering Construction Co., Ltd. - 211
8,166 9,379
Prepayments for purchasing of goods 31 December 2015 31 December 2014
RMB’000 RMB’000
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 211,530 240,046
Changan Ford Automobile Co., Ltd. - 17,109
211,530 257,155
Notes receivables from related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
JMCG Jingma Motors Co., Ltd. 27,080 34,378
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. - 15,044
Jiangxi Jiangling Chassis Co., Ltd. 4,217 -
31,297 49,422
Prepayments for construction in progress 31 December 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 20,166 8,063
JMCG Jiangxi Engineering Construction Co., Ltd. 1,755 1,697
21,921 9,760
Prepayments for mould lease 31 December 2015 31 December 2014
RMB’000 RMB’000
Changan Ford Automobile Co., Ltd. 18,517 -
97
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(g) Balances arising from sales/purchases of goods/services (continued)
Cash deposit in related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
JMCF (Note 19) 372,320 181,674
Trade payables to related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. 330,939 317,797
Jiangxi Jiangling Chassis Co., Ltd. 210,110 326,231
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 199,259 -
Jiangxi Jiangling Lear Interior System Co., Ltd. 195,310 188,264
GETRAG (Jiangxi) Transmission Company 181,415 228,766
JMCG 136,953 85,250
FORD 127,701 53,668
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 112,597 102,423
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 105,596 116,829
Hannon Systems 96,058 83,065
Nanchang Unistar Electric & Electronics Co.,Ltd. 71,433 76,056
Nanchang Lianda Machinery Co., Ltd. 22,373 26,881
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 22,024 25,826
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 17,574 271
Nanchang Yinlun Heat-exchanger Co.,Ltd. 15,247 18,577
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 13,860 16,110
Jiangxi Lingge Non-ferrous Metal Die-casting
Co., Ltd. 10,737 12,612
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 7,049 8,699
Nanchang Gear Co., Ltd. 6,680 4,052
Changan Ford Automobile Co., Ltd. 5,829 -
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 5,274 4,927
Jiangxi JMCG Shangrao Industrial Co., Ltd. 3,872 14,153
Jiangxi Biaohong Engine Tappet Co., Ltd. 3,156 3,359
Jiangling Material Co. 1,501 1,647
Nanchang JMCG Printing Plant Co., Ltd. 1,474 1,208
Jiangxi Jiangling Material Utilization Co., Ltd. 1,192 2,060
Jiangxi ISUZU Engine Co., Ltd. 727 4,697
JMCG Interior Trim Factory - 191,894
Others 475 383
1,906,415 1,915,705
98
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
(g) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
Ford Otosan Company 122,899 6,309
FORD 110,278 118,926
Ford Global Technologies, LLC 48,500 17,574
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. 13,554 3,386
Nanchang Hengou Industry Co., Ltd. 11,815 10,785
JMCG Jiangxi Engineering Construction Co., Ltd. 8,333 3,648
GETRAG (Jiangxi) Transmission Company 6,650 8,090
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 5,590 8,687
Jiangxi Jiangling Lear Interior System Co., Ltd. 5,178 1,832
Ford Motor (China) Co., Ltd. 4,340 11,582
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 3,668 2,401
Nanchang JMCG Shishun Logistics Co., Ltd. 2,773 2,803
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 1,745 1,764
JMCG Hequn Costume Co., Ltd. 1,189 1,025
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 1,126 1,943
JMCG Property Management Co. 141 1,077
Others 3,781 4,409
351,560 206,241
Advance from related parties 31 December 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Sinodef International Trade Co.,Ltd. 737 833
Others 476 99
1,213 932
(h) I Related parties commitments
Capital commitments 31 December 2015 31 December 2014
RMB’000 RMB’000
JMCG Jiangxi Engineering Construction Co.,
Ltd. 29,304 20,397
99
Chapter XI Catalog on Documents for Reference
1. Originals of 2015 financial statements signed by legal representative and Chief
Financial Officer.
2. Originals of the Independent Auditor’s Reports signed by Independent
accountants and stamped by the accounting firm.
3. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in 2015.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 17, 2015
100
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