Jiangling Motors Corporation, Ltd.
2017 Half-year Report
2017-036
1
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.
All Directors were present at the Board meeting to review this Half-year
Report.
Neither cash dividend nor stock dividend was distributed. The Board decided
not to convert capital reserve to share capital this time.
Chairman Qiu Tiangao, CFO Gong Yuanyuan and Chief of Finance
Department, Wu Jiehong, confirm that the Financial Statements in this Half-
year Report are truthful, accurate and complete.
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 Half-year Report is prepared in Chinese and English. In case of
discrepancy, the Chinese version will prevail.
2
Contents
Chapter I Important Notes, Contents and Abbreviations ................................. 2
Chapter II Brief Introduction ............................................................................. 4
Chapter III Business Profile............................................................................... 6
Chapter IV Business Operation Discussion and Analysis ................................. 7
Chapter V Major Events ................................................................................. 11
Chapter VI Share Capital Changes & Shareholders ........................................ 16
Chapter VII Preferred Shares........................................................................... 19
Chapter VIII Directors, Supervisors and Senior Management .......................... 20
Chapter IX Company Bond ............................................................................. 21
Chapter X Financial Statements ..................................................................... 22
Chapter XI Catalogue on Documents for Reference ....................................... 80
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
3
Chapter II Brief Introduction
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
Qiu Tiangao
representative
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 86-791-85266178 86-791-85266178
Fax 86-791-85232839 86-791-85232839
E-mail relations@jmc.com.cn relations@jmc.com.cn
3. Other
I. Contact methods
Changes of registered address, headquarter address, postal code, website
and e-mail
□Applicable √Not Applicable
There is no change of registered address, headquarter address, postal code,
website and e-mail. Please refer to 2016 Annual Report for details.
II. Newspapers for information disclosure, website for publication of JMC’s
half-year report and place for achieving half-year report
□Applicable √Not Applicable
There is no change of newspapers for information disclosure, website
designated by CSRC for publication of JMC’s Half-year Report and place for
achieving Half-year Report. Please refer to 2016 Annual Report for details.
4
4. Main accounting data and financial ratios
Unit: RMB ‘000
Reporting period Same period
(2017 first half) last year Change (%)
Revenue 15,666,476 10,810,736 44.92
Profit Attributable to the
Equity Holders of the 552,903 704,517 -21.52
Company
Net Cash Generated
-899,401 987,554 -191.07
From Operating Activities
Basic Earnings Per Share
0.64 0.82 -21.52
(RMB)
Diluted Earnings Per
0.64 0.82 -21.52
Share (RMB)
Weighted Average Return Down 1.35
4.36% 5.71%
on Equity Ratio percentage points
At the end of At the end of the Change (%)
reporting period previous year
Total Assets 24,199,974 24,493,789 -1.20
Shareholders’ Equity
Attributable to the Equity 12,435,579 12,409,236 0.21
Holders of the Company
5. Accounting data difference between domestic and foreign accounting
standards
I. Differences in net profit and net assets disclosed respectively per IFRS and
PRC GAAP.
□Applicable √Not Applicable
There is no difference between IFRS and PRC GAAP in net profit and net
assets.
II. Differences in net profit and net assets disclosed respectively per GAAP
and PRC GAAP.
□Applicable √Not Applicable
There is no difference between GAAP and PRC GAAP in net profit and net
assets.
5
Chapter III Business Profile
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,
heavy duty trucks, pickup, Yusheng SUV, Ford-brand SUV, Ford brand MPV
Tourneo, and Transit series commercial vehicles. 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 c0enter, high-tech enterprise
and national automobile export base which improve the company’s core
business competence.
With the support from Ford's advanced technology and management
experience, JMC's influence over auto industry is improving steadily, making
considerable progress both in new product development and technical
equipment. Series of Ford new products such as Ford brand SUV EVEREST,
Ford brand MPV Tourneo, and Ford New Transit launched further improved
JMC’s competence on R&D and manufacturing, JMC self-developed new
Yusheng SUV S330 and new generation Yusheng SUV S350 launched
further enhanced JMC’s capability of R&D, manufacturing and market
competitiveness in SUV field. JMC KaiRui N800 program won the First Prize
of China Automotive Industry Awards for Science and Technology, fully
showed JMC’s leading technology in light commercial vehicle field, High
standard Xiaolan manufacturing site continues to expand modern plants of
vehicle, engine and frame, it will further ensure JMC's products production
and quality improvement. Xiaolan national R&D Centre’s research and
development capability will also be further improved.
6
Chapter IV Business Operation Discussion and Analysis
1. Summary
In the first half of 2017, China's automotive market continues to keep growth.
Total sales volume was 13.35 million units, increased 3.81% than 2016 first
half. SUV sales volume was 4.52 million units, increased 16.83% compared
with the first half of 2016. Commercial vehicle sales volume was 2.10 million
units, increased 17.39% compared with the same period last year.
During the reporting period, to cope with more severe competition, more
stringent regulatory requirement and intensifying cost pressures, the
Company focused on quality improvement, new product development,
operating cost control and production efficiency enhancement. Simultaneously,
the Company introduced series of sales policy to respond the market risk. In
the first half of 2017, JMC achieved sales volume of 153,756 units, increased
27.06% compared with the same period last year, achieved revenue of RMB
15.67 billion, increased 44.92% compared with the same period last year,
achieved net profit of RMB 0.55 billion, decreased 21.52% compared with the
same period last year. It mainly reflected the company product structure
adjustment and the sales and R&D expenses increase.
2. Core business analysis
Year-over-Year Changes of Main Financial Data
Unit: RMB’000
YOY
2017 1H 2016 1H Reason
change(%)
Due to the sales volume
Revenue 15,666,476 10,810,736 44.92 increase and product
structure change
Due to the Sales volume
Cost of sales 12,371,957 8,356,083 48.06 increase and product
structure change
Marketing and sales
Distribution costs 1,270,477 757,567 67.70 promotion expense
increase
Administrative expenses 1,193,666 937,398 27.34
Finance Income-net 125,900 109,652 14.82
Income
62,435 66,103 -5.55
tax expense
Due to researches on
Research and
860,424 710,342 21.13 China VI Emission
Development Expenditure
Standard in 2017
Receivables and payment
Net cash generated from
-899,401 987,554 -191.07 increase due to sales
operating activities
volume increase
Net cash used in investing
-282,756 -357,893 20.99
activities
Net cash used in
-6,118 -7,783 21.39
financing activities
Net increase/(decrease) Cash generated from
in cash and cash -1,188,275 621,878 -291.08 operating activities
equivalents decrease
7
Significant change in the profit structure or profit source of the Company
during the reporting period.
□ Applicable √ Not Applicable
There is no significant change in the profit structure or profit source of the
Company during the reporting period.
Main Business Structure:
Gross Y-O-Y Y-O-Y gross
Turnover Cost Y-O-Y cost
Margin turnover margin
(RMB ‘000) (RMB ‘000) change
(RMB ‘000) change change
By Industry
Automobile Industry 15,492,267 12,206,138 21.21% 44.86% 48.01% -1.68%
By Products
Vehicle 14,194,541 11,288,484 20.47% 49.30% 52.92% -1.89%
By Region
China 15,492,267 12,206,138 21.21% 44.86% 48.01% -1.68%
3. Non-core business analysis
□ Applicable √ Not Applicable
4. Analysis of assets and liabilities
Unit: RMB’000
YOY
June 30, 2017 June 30, 2016
Major Changes
Asset item Proportion Explanation
Amount Proportion Amount Proportion change(%)
(%) (%)
Property, plant and
6,587,077 27.22 6,390,229 29.99 -2.77
equipment
Inventories 1,960,649 8.10 1,729,280 8.12 -0.02
Trade, other receivables Due to the sales
3,589,508 14.83 2,253,658 10.58 4.25
and prepayments volume increase
Cash and cash
10,477,947 43.30 9,469,918 44.44 -1.14
equivalents
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
IV. Financial assets investment
a. Stock investment
□ Applicable √ Not Applicable
b. Derivative investment
8
□ Applicable √ Not Applicable
6. Sale of major assets and equity
I. Sale of major assets
□ Applicable √ Not Applicable
II. Sale of major equity
□ Applicable √ Not Applicable
7. Operating results of main subsidiaries and joint-stock companies whose
impact on JMC’s net profit more than 10%
√Applicable □ Not Applicable
Unit: RMB
Name of Type of Registered Operating
Main Products Assets Net Assets Turnover Net Profit
Companies Companies Capital Profit
Jiangling
Motors Sales Sales vehicle,
Subsidiary 50,000,000 3,683,544,099 112,515,152 13,996,005,780 -158,145,985 -118,718,041
Corporation, service parts
Ltd
Product heavy
JMC Heavy commercial
Duty Vehicle Subsidiary vehicle , engine, 281,793,174 1,472,764,115 -176,920,868 32,387,142 -90,458,534 -69,386,498
Co., Ltd component, and
related service
8．Structured entities controlled by JMC
□ Applicable √ Not Applicable
9. Forecast of business performance in the first nine months of 2017.
□ Applicable √ Not Applicable
10. Challenges and solutions
In 2017, the Company will continue to face fiercer competition, more stringent
regulatory requirements, intensifying cost pressures and a slowdown in
China’s economic growth.
I. Macroeconomic risk, raw materials such as coal, precious metals and steel
prices increase, which have direct impact on automobile parts purchasing cost,
so as to affects the company's profitability.
II. Policies and regulations risk, under the pressure of environmental
protection, city vehicle purchase restriction / traffic control become "normal",
which have negative effect on the automobile sales and use, and
Emissions/safety regulations continuously upgrade both in domestic and
abroad at the same time, will force companies to upgrade technology quickly,
which will further intensify the company's investment and operating pressure.
III. Industry environment risk, China's auto market has entered a stage of
perfect competition, the auto market of domestic and foreign gradually
become mature, consumer tastes have improved, which put forward higher
requirements of the independent brand and quality of car companies. In
9
addition, with the growing of technical barriers in overseas markets, trade
protectionist tendencies increase, emerging economies growth slowdown,
decline of cars demand risks increase, and harder expansion for international
market.
IV. Business model risks, with the rapid development of intelligent
interconnection, big data technology, Internet companies enter the automobile
industry, which change the traditional business model.
The company will take the following measures to deal with above risks:
I. Optimizing company’s production system to improve efficiency and product
quality;
II. Optimizing dealer network and marketing spending to improve market
share ;
III. Improve suppliers’ capability and parts quality; complete the logistic
optimization plan for components and vehicle delivery; continue to reduce
parts purchasing cost;
IV. Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms;
V. Sustaining the expense management to further enhance company
competitiveness to win in the very challenging market; and
VI. Optimize and execute the company’s growth strategies, as well as
strengthen the traditional advantage, gradually increase investment in new
energy company, and new intelligent interconnection, so as to pursue
sustainable long-term growth.
10
Chapter V Major Events
1. Annual and special shareholders’ meeting
I. Shareholders’ meeting during the reporting period
Investors
Announcement
Number Name Attending Meeting Date Announcement Index
Date
Percentage (%)
Number 2017-018,
2017 First Special published on the
1 77.93 May 18, 2017 May 19, 2017
Shareholders’ Meeting website
www.cninfo.com.cn.
Number 2017-025,
2016 Annual
published on the
2 Shareholders’ Meeting 77.67 June 29, 2017 June 30, 2017
website
www.cninfo.com.cn.
II. Share holders who hold vote right restored preferred shares apply to hold a
special shareholders’ meeting
□Applicable √Not Applicable
2. Proposal on profit distribution and converting capital reserve to share
capital for the reporting period
□Applicable √Not Applicable
3. Commitments of actual controlling parties, shareholders, related parties,
acquirers and the Company finished in the reporting period or overdue
unfinished by the end of the reporting period
□Applicable √Not Applicable
There is no commitments of actual controlling parties, shareholders, related
parties, acquirers and the Company finished in the reporting period or
overdue unfinished by the end of the reporting period.
4. Appointment or dismissal of accounting firm
Whether the 2017 half-year report is audited?
□Yes √No
JMC 2017 half-year report is not audited.
5. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm for the reporting period
□Applicable √Not Applicable
6. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm in 2016
□Applicable √Not Applicable
7. Related matters regarding bankruptcy
□Applicable √Not Applicable
The Company did not go bankrupt during the reporting period.
8. Litigation or arbitration
11
Significant litigation or arbitration
□Applicable √Not Applicable
There is no significant litigation or arbitration in the reporting period.
Other litigation
□Applicable √Not Applicable
9. Punishment
□Applicable √Not Applicable
The Company have not been punished by regulatory authorities.
10. Honesty and credit of JMC and its controlling shareholder or actual
controlling party
□Applicable √Not Applicable
11. Implementation of equity incentive plan, employee stock ownership plan
and other employee incentive method
□Applicable √Not Applicable
12. Major related transactions
I. Routine operation related party transactions
√Applicable □Not Applicable
As % of
Pricing Amount Total
Transaction Parties Content Relationship Settlement Method
Principle (RMB’000) Purchases/
Revenue
Nanchang Bao-jiang
Raw materials Associate of Contracted
Steel Processing & Prepayment 457,760 4.00
purchase JMCG price
Distribution Co., Ltd.
Controlling
Parts and components Contracted
Ford shareholder D/P & T/T 452,439 3.96
purchase price
of JMC
Jiangxi Jiangling Parts and components Subsidiary of Contracted 60 days after delivery
421,636 3.69
Chassis Company purchase JMCG price and invoicing
GETRAG (Jiangxi) Parts and components Associate of Contracted 60 days after delivery
391,606 3.42
Transmission Company purchase JMCG price and invoicing
Wholly-
Jiangxi Jiangling
Parts and components owned Contracted 30 days after delivery
Special-Purpose 326,851 2.86
purchase subsidiary of price and invoicing
Vehicle Co, Ltd.
JMCG
Jiangling-Lear Interior Parts and components Joint venture Contracted 60 days after delivery
282,853 2.47
Trim Factory purchase of JMCG price and invoicing
40% of prepayment and
JMCG Import and Associate of Contracted
Sales the remains paid during 452,175 2.89
Export Co., Ltd. JMCG price
30 days after delivery
The Announcement of Related Party Transactions (No.: 2014-052) was
disclosed on Dec.16, 2014 on the website www.cninfo.com.cn.
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 during the reporting period.
12
III. Related party transaction concerning outside co-investment
□Applicable √Not Applicable
There was no outside co-investment during the reporting period.
IV. Related credit and debt
√Applicable □Not Applicable
Is there non-operating related credit and debt?
□Applicable √Not Applicable
The Company had no non-operating related credit and debt during 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 June 30, 2017 was RMB 963,588 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 which was published on August 31, 2017.
13. 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 during the reporting period.
14. Major contracts and execution
I. Entrustment, contract or lease
a. Entrustment
□Applicable √Not Applicable
There was no entrustment during the reporting period.
b. Contract
□Applicable √Not Applicable
There was no contract during the reporting period.
c. Lease
√Applicable □Not Applicable
See the note 31(b) to financial statements for lease of related parties.
Project earns more than 10% of net profit.
□Applicable √Not Applicable
II Major guarantee
□Applicable √Not Applicable
The Company had no outside guarantee during the reporting period.
III. Other important contracts
□Applicable √Not Applicable
There was no other important contract during the reporting period.
13
15. Corporation social responsibilities
I. One-to-one poverty alleviation
a. Summary of one-to-one poverty alleviation
According to arrangement of JMCG, the Company joined the one-to-one
poverty alleviation in Qianmo Village, Daijiapu Township, Suichuan County,
Jiangxi Province and XIanting Village, Songhu Town, Xinjian District,
Nanchang City.
b. Status of targeted measures in poverty alleviation for the listed company
Item Unit Amount/Progress
I. Brief Introduction —— ——
including：1. Funding RMB (‘000) 43
2. Sum converted from the materials RMB (‘000) 13.3
3. Persons get rid of poverty Persons 20
II. Investments —— ——
1. Anti-poverty depending on industry development —— ——
including：1.1 Type ——
1.2 Projects Number
1.3 Investment amount RMB (‘000)
1.4 Persons get rid of poverty Persons
2. Anti-poverty depending on employment transfer —— ——
including：2.1 Investments on vocational skills RMB (‘000)
2.2 Training persons regarding vocational skills Persons
2.3 Employment Persons Persons
3. Anti-poverty depending on relocation —— ——
including：3.1 Employment persons among relocated
Persons
persons
4. Anti-poverty depending on education —— ——
including：4.1 Grants in aid to poor students RMB (‘000)
4.2 Poor students in aid Persons
4.3 Investments on the improvement of
RMB (‘000)
educational source in poverty-stricken area
5. Health Anti-poverty —— ——
Including: 5.1 Investments on medical and health services
RMB (‘000)
in poverty-stricken area
6. Ecological protection anti-poverty —— ——
including：6.1 Project type ——
6.2 Investment amount RMB (‘000)
7. Miscellaneous provisions —— ——
including：7.1 Investments on stay-at-home children,
RMB (‘000)
women and elderly
7.2 Number of stay-at-home children, women
Persons
and elderly in aid
7.3 Investments on poor & disable people RMB (‘000)
7.4 Number of poor & disable people in aid Persons
8. Social anti-poverty —— ——
including：8.1 Investments on cooperation between West
RMB (‘000)
China and East China
8.2 Investments on one-to-one anti-poverty RMB (‘000) 56.3
8.3 Investments from anti-poverty charity fund RMB (‘000)
9. Other —— ——
including：9.1.Project Number
9.2.Investment amount RMB (‘000)
9.3. Persons getting rid of poverty Persons
III. Awards —— ——
14
II. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit
published by environmental protection administration?
√Yes □No
Emission Emission Meet
Main Emission Emission Outlet Emission Emission
Outlet Emission Standard Standard Standard
Pollutants Ways Distribution Concentration Amount
Number Amount or Not
3 in Mainsite, 1
“Wastewater
Wastewater in Xiaolan Site, COD:91.11 COD≤844.92
continuous "COD:183mg/L Discharge Meet
(COD,NH-N) 6 1 in Cast Plant t, NH- t, NH-
discharge NH-N:12mg/L" Standard”(GB 8978- Standard
and 1 in Axle N :4.897t N≤21.878t
1996)
Plant
SO2:36mg/m3,
"The Emission
Exhaust gas 53 in Mainsite, NOx :89mg/m3,
Standard of Air
(SO2,NOx,sm 34 in Xiaolan smoke:83.9mg/m3, SO2:0.23t,
continuous Pollutants”,” Emission SO2≤93.01t, Meet
oke,toluol, 125 Site, 33 in Cast toluol :0.016mg/m3, NOx :13.71
discharge Standard of Air NOx≤60.91t Standard
dimethylbenz Plant and 5 in dimethylbenzene:0.09 t
Pollutants for Boiler”
ene, NMHC） Axle Plant 0mg/m3 , NMHC:
（GB 13271-2014）
22.6mg/m3"
16. Other major events
√Applicable □Not Applicable
JMC received government incentives about RMB 200 million appropriated by
Nanchang City, Nanchang County Xiaolan Economic& Technological
Development Zone, Nanchang City Qingyunpu District and Taiyuan
Technological Development Zone during the reporting period, which is to
support JMC’s development.
17. Major event of JMC subsidiary
□Applicable √Not Applicable
15
Chapter VI Share Capital Changes & Shareholders
1. Changes of Shareholding Structure
I. 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
1,725,900 0.20% - - - - - 1,725,900 0.20%
A shares
1. State shares - - - - - - - - -
2. State-own legal
- - - - - - - - -
person share
3. Other domestic
1,725,900 0.20% - - - - - 1,725,900 0.20%
shares
Including:
Domestic legal
835,140 0.10% - - - -44,400 -44,400 790,740 0.09%
person shares
Domestic natural
890,760 0.10% - - - 44,400 44,400 935,160 0.11%
person shares
II. Unlimited
861,488,100 99.80% - - - - - 861,488,100 99.80%
tradable shares
1. A shares 517,488,100 59.95% - - - - - 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
44,400 limited tradable A shares hold by a domestic legal person shareholder
were transferred to natural person shareholders in the first half of 2017.
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 changes
□Applicable √Not Applicable
Others to be disclosed necessarily or per the requirements of securities
regulator
□Applicable √Not Applicable
II. Changes of limited tradable shares
□Applicable √Not Applicable
2. Securities issuance and listing
□Applicable √Not Applicable
16
3. Shareholders and shareholding status
Total shareholders JMC had 29,297 shareholders, including 23,921 A-share holders, and 5,376 B-share holders.
(as of June 30, 2017)
Top ten shareholders
Shares
Shares at Shares with
Shareholder Shareholding Change due to
Shareholder Name the End of Trading
Type Percentage (%) (+,-) 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 22,743,584 -2,200 0 0
Corporation Limited
Shanghai Automotive State-owned
1.51 13,019,610 0 0 0
Co., Ltd. Legal person
Central Huijin State-owned
0.83 7,186,600 0 0 0
Investment Ltd. legal person
JPMBLSA RE FTIF
Foreign legal
TEMPLETON CHINA 0.75 5,848,450 -24,000 0 0
person
FUND GTI 5497
Xingye Securities
Corporation Jinqilin
No.5 Aggregate Other 0.67 5,782,597 5,782,597 0 0
Assets Management
Plan
GAOLING Foreign legal
0.63 5,439,086 0 0 0
FUND,L.P. person
TEMPLETON
Foreign legal
DRAGON 0.57 4,916,708 0 0 0
person
FUND,INC.
INVESCO Foreign legal
0.52 4,483,356 110,726 0 0
FUNDS SICAV person
Notes on association among above-mentioned None.
shareholders
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Restriction Share Type
Jiangling Motor Holding Co., Ltd. 354,176,000 A share
Ford Motor Company 276,228,394 B share
China Securities Corporation Limited 22,743,584 A share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Central Huijin Investment Ltd. 7,186,600 A share
JPMBLSA RE FTIF TEMPLETON
5,848,450 B share
CHINA FUND GTI 5497
Xingye Securities Corporation Jinqilin
No.5 Aggregate Assets Management 5,782,597 A share
Plan
GAOLING FUND,L.P. 5,439,086 B share
TEMPLETON DRAGON FUND,INC. 4,916,708 B share
INVESCO FUNDS SICAV 4,483,356 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
□Yes √No
17
There is no stock buy-back by top ten shareholders or top ten shareholders
holding unlimited tradable shares in the reporting period.
4. Change of controlling shareholders or actual controlling parties
Change of controlling shareholders
□Applicable √Not Applicable
There was no change of controlling shareholders during the reporting period.
Change of actual controlling parties
□Applicable √Not Applicable
There was no change of actual controlling parties during the reporting period.
18
Chapter VII Preferred Shares
□Applicable √Not Applicable
JMC have no preferred shares during the reporting period.
19
Chapter VIII Directors, Supervisors and Senior Management
1. Changes of shares held by directors, supervisors and senior management
□Applicable √Not Applicable
There was no change of shares held by Directors, Supervisors and senior
management in the reporting period. Please refer to 2016 annual report for
details.
2. Changes of directors, supervisors and senior management
Name Position Status Date Reason
Peter Fleet Vice Chairman Elected June 29, 2017 Re-election of Board of Directors
David
Director Elected June 29, 2017 Re-election of Board of Directors
Johnston
Expiration of
David Schoch Vice Chairman the Term of June 29, 2017 Re-election of Board of Directors
Office
Expiration of
Mark Kosman Director the Term of June 29, 2017 Re-election of Board of Directors
Office
Expiration of
Arturo
Vice President the Term of June 29, 2017
Mendoza
Office
Mike Chang Vice President Appointed June 29, 2017
Expiration of
Liu Niansheng Supervisor the Term of June 27, 2017 Re-election of Supervisory Board
Office
Expiration of
Xu Lanfeng Supervisor the Term of June 27, 2017 Re-election of Supervisory Board
Office
Ding Zhaoyang Supervisor Elected June 27, 2017 Re-election of Supervisory Board
Chen Guang Supervisor Elected June 27, 2017 Re-election of Supervisory Board
Liao Zanping Vice President Leave Feb. 1, 2017 Work rotation
Wu Xiaojun Vice President Appointed Feb. 1, 2017
20
Chapter IX Company Bond
Whether the Company owns the corporate bond that is lists in the securities
exchange and undue or is not paid in full although it’s due.
□Yes √No
21
Chapter X Financial Statements
JIANGLING MOTORS CORPORATION, LTD.
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30
JUNE 2017
22
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June
Note 2017# 2016#
Revenue 5 15,666,476 10,810,736
Sales tax (544,622) (328,255)
Cost of sales 6 (12,371,957) (8,356,083)
Gross profit 2,749,897 2,126,398
Distribution expenses 6 (1,270,477) (757,567)
Administrative expenses 6 (1,193,666) (937,398)
Impairment charge of non-current assets (3,347) (1,347)
Other income 8 203,584 225,856
Operating profit 485,991 655,942
Finance income 9 127,903 110,419
Finance expenses 9 (2,003) (767)
Finance income-net 9 125,900 109,652
Share of profit of investments accounted for using the
equity method 15b 3,447 5,026
Profit before income tax 615,338 770,620
Income tax expense 10 (62,435) (66,103)
Profit for the period 552,903 704,517
Total comprehensive income for the period 552,903 704,517
Profit attributable to:
Shareholders of the Company 552,903 704,517
Total comprehensive income attributable to:
Shareholders of the Company 552,903 704,517
Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.64 0.82
#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
23
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
As at
31 December
Note
30 June 2017# 2016
Assets
Non-current assets
Property, plant and equipment 12 6,587,077 6,688,530
Lease prepayment 13 624,621 632,408
Intangible assets 14 148,093 158,160
Investments accounted for using the equity method 15b 43,340 39,893
Other non-current assets 99,127 97,549
Deferred income tax assets 16 576,026 554,488
8,078,284 8,171,028
Current assets
Financial assets at fair value through profit or loss 5,949 8,539
Inventories 17 1,960,649 1,934,092
Trade and other receivables and prepayments 18 3,589,508 2,625,808
Cash and cash equivalents 19 10,477,947 11,666,222
Restricted cash - 463
Assets classified as held for sale 20 87,637 87,637
16,121,690 16,322,761
Total assets 24,199,974 24,493,789
24
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
As at
Note 31 December
30 June 2017# 2016
Equity and liabilities
Equity attributable to shareholders of the
Company
Share capital 21 863,214 863,214
Share premium 816,609 816,609
Other reserves 22 452,126 452,126
Retained earnings 10,303,630 10,277,287
Total equity 12,435,579 12,409,236
Liabilities
Non-current liabilities
Borrowings 23 4,214 4,543
Deferred income tax liabilities 16 26,980 27,383
Retirement benefit obligations 24 50,913 53,627
Provisions for warranty and other liabilities 25 149,128 130,987
Other non-current liabilities 280 320
231,515 216,860
Current liabilities
Trade and other payables 26 11,329,443 11,605,178
Current income tax liabilities 31,121 98,860
Borrowings 23 444 454
Retirement benefit obligations 24 4,561 4,561
Provisions for warranty and other liabilities 25 167,311 153,640
Other current liabilities - 5,000
11,532,880 11,867,693
Total liabilities 11,764,395 12,084,553
Total equity and liabilities 24,199,974 24,493,789
#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
25
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
Attributable to shareholders of the Company
Share Share Other Retained Total
Note capital premium reserves earnings equity#
Balance at 1 January 2016 863,214 816,609 452,938 9,848,381 11,981,142
Profit for the six months 704,517 704,517
Dividends relating to 2015 (889,110) (889,110)
Balance at 30 June 2016 863,214 816,609 452,938 9,663,788 11,796,549
Balance at 1 January 2017 863,214 816,609 452,126 10,277,287 12,409,236
Profit for the six months - - - 552,903 552,903
Dividends relating to 2016 27 - - - (526,560) (526,560)
Balance at 30 June 2017 863,214 816,609 452,126 10,303,630 12,435,579
#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
26
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June
Note 2017# 2016#
Cash flows from operating activities
Cash generated from operations 28 (733,272) 1,103,907
Interest paid (158) (320)
Income tax paid (165,971) (116,033)
Net cash generated from operating activities (899,401) 987,554
Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (407,102) (512,444)
Other cash paid relating to investing activities (3,886) (101)
Proceeds from disposal of PPE 28 2,097 2,611
Interest received 120,666 145,919
Dividends received - 5,745
Other cash received from investing activities 5,469 377
Net cash used in investing activities (282,756) (357,893)
Cash flows from financing activities
Repayments of borrowings (5,226) (212)
Dividends paid to shareholders of the Company (892) (7,571)
Net cash used in financing activities (6,118) (7,783)
Net (decrease)/increase in cash and cash equivalents (1,188,275) 621,878
Cash and cash equivalents at beginning of year 11,666,222 8,848,040
Effects of exchange rate changes - -
Cash and cash equivalents at end of period 19 10,477,947 9,469,918
#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
27
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 Authorisation 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. 913600006124469438.
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 30 June 2017, 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 29 August 2017.
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, as modified by the
revaluation of financial assets and financial liabilities at fair value through profit or loss.
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.
28
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
2.1.1 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 2016 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 2016, 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.
29
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
2.1.1 Changes in accounting policy and disclosures (continued)
(b) New standards and interpretations not yet adopted (continued)
IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and
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.
IFRS 16, 'Leases' will result in almost all leases being recognised on the balance sheet,
as the distinction between operating and finance leases is removed. Under the new
standard, an asset (the right to use the leased item) and a financial liability to pay rentals
are recognised. The only exceptions are short-term and low-value leases. The
accounting for lessors will not significantly change.
The new standard is mandatory for financial years commencing on or after 1 January
2019. At this stage, the Group does not intend to adopt the standard before its effective
date.
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.
30
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
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
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.
31
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
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.
32
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment is 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 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.
33
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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.
The development cost of an internally generated intangible asset is the sum of the expenditure
incurred from the date the asset meets the recognition criteria above to the date when it is
available for use. The development costs capitalized in connection with the intangible asset
include costs of materials and services used or consumed and employee costs incurred in the
creation of the asset.
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.
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.
34
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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.
(4) Non-patent technology
Non-patent technology is capitalised from the development cost. 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 of disposal 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, 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.
35
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(1) Classification (continued)
(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.
(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 income/(expense)-
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.
36
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 liabilities 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.
37
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 reclassified 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 reclassified 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 expenses.
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. See Note
2.11(2) for further information about the Group’s accounting for trade receivables and Note
2.13 for a description of the Group’s impairment policies.
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 and other short-term highly liquid investments with original
maturities of three months or less.
38
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 removed from the balance sheet when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as
other income or finance costs.
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.
39
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Borrowing costs (continued)
Borrowing costs include interest expense, finance charges in respect of finance lease and
exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs. The exchange gains and losses that are an
adjustment to interest costs include the interest rate differential between borrowing costs that
would be incurred if the entity had borrowed funds in its functional currency, and the borrowing
costs actually incurred on foreign currency borrowings. Such amounts are estimated based on
interest rates on similar borrowings in the entity’s functional currency.
When the construction of the qualifying assets takes more than one accounting period, the
amount of foreign exchange differences eligible for capitalisation is determined for each annual
period and are limited to the difference between the hypothetical interest amount for the
functional currency borrowings and the actual interest incurred for foreign currency borrowings.
Foreign exchange differences that did not meet the criteria for capitalisation in previous years
should not be capitalised in subsequent years.
40
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 and associate 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.
41
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 profit or loss.
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.
42
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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.
(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.
43
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
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
Government grants refer to the monetary or non-monetary assets obtained by the Group from
the government, including tax return, financial subsidy and etc.
Government grants are recognised when the grants can be received and the Group can
comply with all attached conditions. If a government grant is a monetary asset, it will be
measured at the amount received or receivable. If a government grant is a non-monetary
asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be
measured at its nominal amount.
Government grants related to assets refer to government grants which are obtained by the
Group for the purposes of purchase, construction or acquisition of the long-term assets.
Government grants related to income refer to the government grants other than those related
to assets.
Government grants related to assets will be recorded as deferred income and recognised
evenly in profit or loss over the useful lives of the related assets. However, the government
grants measured at their nominal amounts will be directly recorded in profit and loss for the
current period.
Government grants related to income will be recorded as deferred income and recognised in
profit or loss in the period in which the related expenses are recognised if the grants are
intended to compensate for future expenses or losses, and otherwise recognised in profit or
loss for the current period if the grants are used to compensate for expenses or losses that
have been incurred.
44
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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”)
and Euro.
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 30 June 2017, if RMB had strengthened/weakened by 10% against USD with all other
variable held constant, the Group’s net profit for the six months ended 30 June 2017 then
ended would have been approximately RMB20,534,000 (2016: RMB35,091,000) higher/lower.
As at 30 June 2017, if RMB had strengthened/weakened by 10% against Euro with all other
variable held constant, the Group’s net profit for the six months ended 30 June 2017 then
ended would have been approximately RMB2,731,000 (2016: RMB5,269,000) 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 30 June 2017, 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 30 June 2017, 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 six months ended 30 June 2017 then ended would have been increased/decreased by
approximately RMB10,184,000.
(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 30 June 2017, the Group had cash of approximately RMB963,588,000 (2016:
RMB874,990,000) 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 mainly deposited in state-owned banks or other listed banks. Management
believes all these financial institutions have high credit quality without significant credit risk.
45
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 Over 5
year and 2 years and 5 years years
At 30 June 2017
Bank borrowings
- Principals 444 444 1,330 2,440
- Interests 68 62 145 110
Trade and other payables 10,394,267 - - -
10,394,779 506 1,475 2,550
At 31 December 2016
Bank borrowings
- Principals 454 454 1,363 2,726
- Interests 73 66 158 133
Trade and other payables 11,053,248 - - -
11,053,775 520 1,521 2,859
46
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 30 June 2017 and 31 December 2016 were as follows:
30 June 2017 31 December 2016
Total borrowings 4,658 4,997
Total equity 12,435,579 12,409,236
Total capital 12,440,237 12,414,233
Gearing ratio 0.04% 0.04%
3.3 Fair value estimation
The inputs to valuation techniques used to measure fair value are categorised into three levels
within a fair value hierarchy 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).
Financial assets 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. Since all significant inputs required to value forward
exchange contracts 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 book 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.
47
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
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) Impairment of long term assets
The Group assesses whether there are indicators that the long term assets except for financial
assets are impaired at each balance sheet date. When there are indicators that the carrying
amounts of those long term assets are unrecoverable, an impairment test will be performed.
When the carrying amount of the long term assets except for financial assets or the cash
generating unit (“CGU”) is higher than its recoverable amount, which is the higher of an
asset’s or CGU’s fair value less costs of disposal and its value in use, the impairment
occurred.
To determine the fair value less costs of disposal, the Group take reference to the prices in
sales agreements in relevant asset transactions or the observable market prices, and the
incremental cost which could directly attributable to the assets disposal.
Key judgements are made on the outputs, sales prices, relevant operation costs and discount
rates when estimate the discounted future cash flow forecasts. The Group uses relevant
accessible information, including the assets outputs, sales prices, relevant operation costs
which are based on the reasonable and supportable assumptions, to estimate the recoverable
amount of those long term assets.
(2) 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 30 June 2017, the Group recorded the deferred tax assets of approximately
RMB576,026,000. 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.
48
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements(continued)
(3) 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.
(4) Impairment of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The net
realisable value is estimated sales price less estimated cost to finish goods, estimated
distribution expenses and related taxes in the daily operation.
If management revises estimated sales price, estimated cost to finish goods, distribution
expenses and related taxes, and revised sales price is lower than current sales price, or
revised cost to finish goods, distribution expenses and related taxes are higher than those
current estimation, the Group need to consider increasing the impairment provision to the
inventories.
If the actual sales price, the cost to finish goods, distribution expenses and related taxes are
higher or lower than the estimation of management, the Group will recognise the relevant
influence in profit or loss relevant accounting period.
49
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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
Six months ended 30 June
2017 2016
Changes in inventories of finished goods and
work in progress 162,825 74,118
Raw materials and consumables used 11,127,866 7,390,290
Employee benefit expense (Note 7) 1,042,529 872,355
Depreciation of PPE (Note 12, 28) 397,762 323,276
Repairs and maintenance expenditure on PPE 43,305 37,727
Research and development expenditure 852,674 650,289
Amortisation of lease prepayment (Note 13, 28) 7,787 7,904
Amortisation of intangible assets (Note 14, 28) 5,527 4,743
Provision of warranty 150,360 108,763
Others 1,023,595 562,749
Total cost of sales, distribution expenses and
administrative expenses 14,814,230 10,032,214
For the six months ended 30 June 2017, depreciation of PPE of approximately RMB24,788,000
(the six months ended 30 June 2016: RMB 21,797,000) and amortisation of intangible assets of
approximately RMB12,642,000 (the six months ended 30 June 2016: RMB 888,000) were
included in research and development expenditure.
Impairment charge for trade and other receivables of approximately RMB2,207,000 (the six
months ended 30 June 2016:RMB8,710,000) and impairment charge for inventories of
approximately RMB19,663,000 (the six months ended 30 June 2016: RMB 10,124,000), which
were included in administrative expenses, were not included in expenses by nature.
50
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
Six months ended 30 June
2017 2016
Wages and salaries 748,104 619,534
Social security costs 98,055 84,831
Pension costs defined contribution plans 129,990 114,803
Others 66,380 53,187
1,042,529 872,355
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
Six months ended 30 June
2017 2016
Government grants (a) 205,468 227,480
Others (1,884) (1,624)
203,584 225,856
(a) For the six months ended 30 June 2017, the Group received grants of approximately
RMB205,468,000 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. These government grants were income related to support the
Group’s operation and were charged to profit or loss directly up received.
9 Finance income and expenses
Six months ended 30 June
2017 2016
(a) Finance income
Interest income on bank deposits 121,328 103,318
Interest income on credit sales 6,575 7,101
127,903 110,419
(b) Finance expenses
Interest expense on bank loans (114) (59)
Bank charges and others (1,889) (708)
(2,003) (767)
Net finance income 125,900 109,652
51
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 (2016: 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:
Six months ended 30 June
2017 2016
Current tax 84,376 96,325
Deferred tax (Note 16) (21,941) (30,222)
62,435 66,103
The tax on the Group’s profit before tax differs from the theoretical amount that would arise
using the weighted average tax rate applicable to profits of the consolidated entities as
follows:
Six months ended 30 June
2017 2016
Profit before tax 615,338 770,620
Tax calculated at tax rates applicable to profits in
the respective companies 70,822 100,020
Tax concessions (28) (105)
Expenses not deductible for tax purposes 361 283
Income not subject to tax (40,650) (36,587)
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 10,849 4,322
Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised (2,391) (11,161)
Tax losses for which no deferred income tax
asset was recognised 23,472 9,331
Tax charge 62,435 66,103
52
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(a) Value-added tax (“VAT”)
Output VAT is levied at a general rate of 17% on the selling price of goods. Pursuant to the
“Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax”
(Cai Shui [2016] 36) jointly issued by the Ministry of Finance and the State Administration of
Taxation, the rental income and interest income are subject to VAT from 1 May 2016, and the
applicable tax rates are 11% and 6% respectively.
(b) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 3%, 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.
Six months ended 30 June
2017 2016
Profit attributable to shareholders of the
Company 552,903 704,517
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 0.64 0.82
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the six months ended 30 June 2017.
53
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Vehicles Moulds other equipment constructions Total
At 1 January 2016
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
Year ended 31 December 2016
Opening net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546
Additions - - - - - 1,138,940 1,138,940
Transfers 63,567 422,097 55,408 621,285 498,413 (1,660,770) -
Disposals (100) (774) (3,182) (736) (178) - (4,970)
Other deductions - (18,969) - - (2,712) (14,784) (36,465)
Impairment charge - (1,717) (50) - (1,027) - (2,794)
Depreciation charge (45,595) (198,266) (26,648) (177,019) (282,199) - (729,727)
Closing net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
At 31 December 2016
Cost 1,865,850 3,526,187 262,667 2,206,895 2,862,436 1,100,860 11,824,895
Accumulated depreciation and impairment (373,449) (1,787,948) (123,898) (1,399,618) (1,450,760) (692) (5,136,365)
Net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
Six months ended 30 June 2017
Opening net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
Additions - - - - - 326,956 326,956
Transfers 71,525 111,568 3,067 64,038 111,288 (361,486) -
Disposals - (68) (1,817) - (276) - (2,161)
Other deductions - - - - - (351) (351)
Impairment charge (Note 28) - (615) (128) - (2,188) (416) (3,347)
Depreciation charge (Note 6, 28) (24,511) (110,408) (15,166) (114,781) (157,684) - (422,550)
Closing net book amount 1,539,415 1,738,716 124,725 756,534 1,362,816 1,064,871 6,587,077
At 30 June 2017
Cost 1,937,375 3,632,890 260,707 2,257,218 2,962,674 1,065,979 12,116,843
Accumulated depreciation and impairment (397,960) (1,894,174) (135,982) (1,500,684) (1,599,858) (1,108) (5,529,766)
Net book amount 1,539,415 1,738,716 124,725 756,534 1,362,816 1,064,871 6,587,077
54
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the six months ended 30 June 2017, depreciation expense of approximately
RMB367,960,000 (the six months ended 30 June 2016: RMB289,897,000) was charged in cost
of sales, RMB1,349,000 (the six months ended 30 June 2016: RMB1,427,000) in distribution
expenses and RMB53,241,000 (the six months ended 30 June 2016: RMB53,749,000) in
administrative expenses.
Lease rental expenses amounting to approximately RMB4,419,000 (the six months ended 30
June 2016: RMB3,087,000) 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:
30 June 2017 31 December 2016
Opening net book amount 632,408 645,608
Additions - 2,394
Amortisation charge (Note 6, 28) (7,787) (15,594)
Closing net book amount 624,621 632,408
Cost 751,626 751,626
Accumulated amortisation (127,005) (119,218)
Net book amount 624,621 632,408
Amortisation expense was charged in administrative expenses.
55
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets
Non-patent After-sale
technology Software Goodwill management model Other Total
Year ended 31 December 2016
Opening net book amount - 38,225 3,462 - 18 41,705
Addition 124,587 12,390 - - - 136,977
Amortisation charge (8,694) (11,818) - - (10) (20,522)
Closing net book amount 115,893 38,797 3,462 - 8 158,160
At 31 December 2016
Cost 124,587 98,017 89,028 36,978 1,649 350,259
Accumulated amortisation and impairment (8,694) (59,220) (85,566) (36,978) (1,641) (192,099)
Net book amount 115,893 38,797 3,462 - 8 158,160
Six months ended 30 June 2017
Opening net book amount 115,893 38,797 3,462 - 8 158,160
Addition 7,751 351 - - - 8,102
Amortisation charge (Note 6, 28) (11,745) (6,420) - - (4) (18,169)
Closing net book amount 111,899 32,728 3,462 - 4 148,093
At 30 June 2017
Cost 132,338 98,368 89,028 36,978 1,649 358,361
Accumulated amortisation and impairment (20,439) (65,640) (85,566) (36,978) (1,645) (210,268)
Net book amount 111,899 32,728 3,462 - 4 148,093
56
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(a) For six months ended 30 June 2017, amortisation expense of approximately RMB17,690,000
(the six months ended 30 June 2016: RMB5,506,000) was charged in administrative expenses,
approximately RMB309,000 (the six months ended 30 June 2016: RMB97,000) in cost of sales
and approximately RMB170,000 (the six months ended 30 June 2016: RMB28,000) in
distribution expenses.
(b) Development costs of approximately RMB7,751,000 were capitalised as non-patent technology
by the Group during the six months ended 30 June 2017 (the six months ended 30 June 2016:
RMB60,053,000).
(c) 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 CGU:
31 December 2016 Addition Impairment 30 June 2017
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 2016 were as follows:
Item JMCH
Compound annual volume growth rate 283%
Long term growth rate 3%
Discount rate 19.40%
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.
57
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
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 was as follow:
30 June 2017 31 December 2016
Associate 43,340 39,893
The amount recognised in the consolidated statement of comprehensive income was as follow:
Six months ended 30 June
2017 2016
Share of profit 3,447 5,026
The Company holds 19.15% interest of Hanon Systems (Nanchang) Co., Ltd. (Hanon
Systems) and the investment is accounted for using the equity method of accounting.
(b) Reconciliation of summarised financial information for immaterial associates
Six months ended 30 June
2017 2016
At beginning of the year 208,317 214,061
Profit for the period 18,000 26,245
Dividends distributed - (30,000)
At end of the period 226,317 210,306
Interest in associate 19.15% 19.15%
Carrying value 43,340 40,274
58
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax
30 June 2017 31 December 2016
Deferred tax assets 640,190 590,899
Deferred tax liabilities-can be offset (64,164) (36,411)
Deferred tax liabilities-cannot be offset (26,980) (27,383)
Deferred tax assets-net 576,026 554,488
Deferred tax liabilities-net (26,980) (27,383)
The gross movement on the deferred income tax account is as follows:
30 June 2017 31 December 2016
At beginning of the year 527,105 445,541
Credited to profit or loss (Note 10(a)) 21,941 81,293
Credited to other comprehensive income
(Note 10(a)) - 271
At end of the period 549,046 527,105
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:
Amortization
Provision for Retirement of
impairment of benefits Accrued nonpatented
Deferred tax assets assets obligation expenses technology Others Total
At 1 January 2016 6,207 13,339 460,044 - 519 480,109
Credited to profit or loss 1,379 484 107,442 1,087 127 110,519
Credited to other
comprehensive income - 271 - - - 271
At 31 December 2016 7,586 14,094 567,486 1,087 646 590,899
Credited /(charged) to
profit or loss 3,331 (407) 44,665 1,468 234 49,291
Credited to other
comprehensive income - - - - - -
At 30 June 2017 10,917 13,687 612,151 2,555 880 640,190
Amortisation Forward
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total
At 1 January 2016 (2,760) (3,404) (28,392) (12) (34,568)
(Charged)/credited to profit or
loss (1,936) (27,030) 1,009 (1,269) (29,226)
At 31 December 2016 (4,696) (30,434) (27,383) (1,281) (63,794)
(Charged)/credited to profit or
loss (586) (27,556) 403 389 (27,350)
At 30 June 2017 (5,282) (57,990) (26,980) (892) (91,144)
59
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax (continued)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
30 June 2017 31 December 2016
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 15,554 14,493
–Deferred tax asset to be recovered
within 12 months 624,636 576,406
640,190 590,899
30 June 2017 31 December 2016
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (86,576) (60,365)
–Deferred tax liabilities to be recovered
within 12 months (4,568) (3,429)
(91,144) (63,794)
Deductible temporary differences and tax losses which no deferred income tax assets were
recognised were as follows:
30 June 2017 31 December 2016
Deductible temporary differences 30,618 40,182
Tax losses 452,714 369,032
483,332 409,214
The expiry years of the tax losses are as follows:
30 June 2017 31 December 2016
2017 89,447 89,447
2018 44,319 44,319
2019 36,772 36,772
2020 72,470 72,470
2021 115,819 126,024
2022 93,887 -
452,714 369,032
60
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Inventories
30 June 2017 31 December 2016
Raw materials 1,489,895 1,300,443
Work in progress 202,854 193,152
Finished goods 267,900 440,497
1,960,649 1,934,092
For the six months ended 30 June 2017, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB11,290,691,000 ( the six months
ended 30 June 2016: RMB7,464,408,000).
A provision of approximately RMB39,366,000(2016: RMB26,491,000) was made as at 30
June 2017. The Group reversed approximately RMB1,062,000 of a previous inventory write-
down during the six months ended 30 June 2017. During the six months ended 30 June 2017,
the Group wrote-off inventories with provision of approximately RMB6,788,000 made in prior
years. The provision and reversal of the inventory write-down have been included in
administrative expenses in profit or loss.
As at 30 June 2017, no inventory was pledged as security for liabilities.
18 Trade and other receivables and prepayments
30 June 2017 31 December 2016
Trade receivables 1,651,383 1,188,088
Less: Provision for impairment of trade
receivables (18,056) (15,940)
Trade receivables – net 1,633,327 1,172,148
Notes receivables 651,501 498,875
Other receivables 104,667 86,581
Less: Provision for impairment of other
receivables (524) (433)
Other receivables – net 104,143 86,148
Prepayments 1,120,071 796,833
Interest receivables 80,466 71,804
3,589,508 2,625,808
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 and prepayments approximate their fair
values.
61
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2017 31 December 2016
At beginning of the year (16,373) (7,611)
Provision for receivables impairment
(Note 28) (2,207) (8,952)
Receivables written off during the year as
uncollectible - 190
At end of the period (18,580) (16,373)
The creation of provision for impaired receivables was included in ‘administrative expense’ in
profit or loss.
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.
62
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Cash and cash equivalents
30 June 2017 31 December 2016
Cash at bank and in hand 642,947 790,373
Short-term bank deposits (a) 9,835,000 10,875,849
10,477,947 11,666,222
As at 30 June 2017, the Group had cash of approximately RMB963,588,000 (2016:
RMB874,990,000) deposited in JMCF (Note 31 (j)). The interest rates range from 1.495%-
2.25% per annum (2016: 1.495% to 2.25%). 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
30 June 2017 31 December 2016
Lease prepayment and buildings of
Transit plant 87,637 87,637
As at 26 March 2015, under the authorisation from the Board of Directors, the Company signed
an agreement of “state-owned land reserves” with Nanchang 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 Land Reserve
Centre. The transaction is expected to be completed within the year of 2017.
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.
63
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Number of Tradable shares Total
shares “A” shares “B” shares
(thousands) Restricted Non-restricted
Year ended 31 December 2016
Balance at 1 January 2016 863,214 1,726 517,488 344,000 863,214
Transfer - - - - -
Balance at 31 December 2016 863,214 1,726 517,488 344,000 863,214
Six months ended 30 June
2017
Balance at 1 January 2017 863,214 1,726 517,488 344,000 863,214
Transfer - - - - -
Balance at 30 June 2017 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 30 June 2017.
64
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
At 1 January 2016 431,607 18,627 2,704 452,938
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (812) (812)
At 31 December 2016 431,607 18,627 1,892 452,126
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - - -
At 30 June 2017 431,607 18,627 1,892 452,126
(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 six
months ended 30 June 2017.
23 Borrowings
30 June 2017 31 December 2016
Current
Bank borrowings - guaranteed (a) 444 454
Non-current
Bank borrowings - guaranteed (a) 4,214 4,543
Total borrowings 4,658 4,997
(a) Bank borrowings of USD 688,000 (equivalent to approximately RMB4,658,000) (2016:
USD720,000 equivalent to approximately RMB4,997,000) were guaranteed by JMCF (Note 31
(c)).
The interest rate of bank borrowings is 1.50% per annum (2016: 1.50%).
The fair value of borrowings approximates their carrying values.
65
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
30 June 2017 31 December 2016
Between 1 and 2 years 444 454
Between 2 and 5 years 1,330 1,363
Over 5 years 2,440 2,726
4,214 4,543
The Group has the following undrawn borrowing facilities:
30 June 2017 31 December 2016
Fixed rate
- Expiring within one year 1,392,537 1,390,868
24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement
of financial position is as follows:
30 June 2017 31 December 2016
Present value of defined benefits obligations 55,474 58,188
The movement of early retirement and supplemental benefit obligations for the six months ended
30 June 2017 is as follows:
30 June 2017 31 December 2016
At beginning of the year 58,188 56,833
For the year
-Current service cost - 1,325
-Interest cost - 1,633
-Payment (2,714) (4,754)
-Past service cost from the change of plan - 1,486
-Actuarial loss - 1,665
At end of the period 55,474 58,188
Current 4,561 4,561
Non-current 50,913 53,627
55,474 58,188
The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2017 31 December 2016
Discount rate adopted —— 3.5%
The salary and supplemental benefits inflation
rate of retiree, early-retiree and employee at post —— 0% to 6%
66
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
As at 30 June 2017, the Group did not estimate the present value of defined benefit obligation.
Based on the assessment and IAS 19, the Group estimated that, at 30 June 2017, a provision of
RMB55,474,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB55,474,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,561,000 (2016:
RMB4,561,000) has been included under current liabilities.
25 Provisions for warranty and other liabilities
The movement on the warranty provisions and other liabilities is as follows:
30 June 2017 31 December 2016
At beginning of the year 284,627 214,722
Charged for the year (Note 6) 150,360 261,430
Utilised during the year (118,548) (191,525)
At end of the period 316,439 284,627
Analysis of total provisions:
30 June 2017 31 December 2016
Non-current 149,128 130,987
Current 167,311 153,640
316,439 284,627
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.
67
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
30 June 2017 31 December 2016
Trade payables 7,173,967 7,731,169
Payroll and welfare payable 237,814 289,283
Dividend payables 531,512 5,840
Other payables 3,386,150 3,578,886
11,329,443 11,605,178
For details of amount due to related parties, please refer to Note 31.
27 Dividends
A final dividend for 2016 of RMB 0.61 per share, amounting to a total dividend of
RMB526,560,000 is proposed at the Shareholders’ Meeting on 29 June 2017.
28 Cash generated from operations
Six months ended 30 June
2017 2016
Profit before tax 615,338 770,620
Depreciation of PPE (Note 6, 12) 422,550 345,073
Amortisation of lease prepayment (Note 6, 13) 7,787 7,904
Amortisation of intangible assets (Note 6, 14) 18,169 5,631
Impairment charges of PPE (Note 12) 3,347 1,347
Provision for receivables impairment (Note 18) 2,207 8,710
Provision of inventories 19,663 10,124
Loss on disposals of PPE 246 895
Finance expenses 1,646 483
Finance income (Note 9) (127,903) (110,419)
Net foreign exchange transaction loss 5,383 6,863
Share of profit from investment accounted for using
equity method (Note 15b) (3,447) (5,026)
Investment gain of forward exchange contracts (1,583) (276)
Changes on fair value of forward exchange contracts 2,590 (1,921)
Changes in working capital:
- Increase in inventories (52,548) (32,459)
- (Increase) /decrease in trade and other receivables (948,781) 460,103
- Increase in provisions for warranty 31,812 15,767
- decrease in trade and other payables (727,034) (376,818)
-decrease in pensions and other retirement benefits (2,714) (2,694)
Cash generated from operations (733,272) 1,103,907
68
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Six months ended 30 June
2017 2016
Net book amount 2,161 3,289
Loss on disposal of PPE (246) (895)
Offset with trade and other payables 182 217
Proceeds from disposal of PPE 2,097 2,611
29 Contingencies
At 30 June 2017 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:
30 June 2017 31 December 2016
Contracted but not provided for:
Purchases of buildings, plant and machinery 631,540 572,773
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 30 June 2017. The shareholders of JMH are Chongqing
Changan Automobile Corporation Ltd. and JMCG, and 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, JMH and its subsidiaries and joint venture, Ford and its
subsidiaries and joint venture in the ordinary course of business during the six months ended 30
June 2017.
69
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the six months ended 30 June 2017, 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 Otomotiv Sanayi A.S. Subsidiary of Ford
Auto Alliance (Thailand) Co.,Ltd. Subsidiary of Ford
Ford Vietnam Limited Subsidiary of Ford
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
JMCF 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. Joint venture 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
Jiangxi Sinodef International Trade Co.,Ltd. Subsidiary of JMCG
Nanchang Unistar Electric & Electronics Co.,Ltd. Subsidiary of JMCG
Nanchang Hengou Industry Co., Ltd. Associate of JMCG
Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. Subsidiary of JMCG
Jiangxi Jiangling Non-ferrous Metal Die-casting 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
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
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. Associate of JMCG
Ford Motor Company of Australia Limited Subsidiary of Ford
Changan Ford Automobile Co.,Ltd. Joint venture of Ford
70
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Six months ended 30 June
Purchase of goods 2017 2016
Nanchang Baojiang Steel Processing Distribution Co.,Ltd. 457,760 254,213
Ford 452,439 184,544
Jiangxi Jiangling Chassis Co.,Ltd. 421,636 384,153
GETRAG (Jiangxi) Transmission Company 391,606 311,994
Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 326,851 298,479
Jiangxi Jiangling Lear Interior System Co.,Ltd. 282,853 227,342
Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 278,927 135,181
Nanchang JMCG Liancheng Auto Component Co.,Ltd. 234,711 138,623
Nanchang Unistar Electric & Electronics Co.,Ltd. 122,995 100,047
Hanon Systems 120,879 103,226
Changan Ford Automobile Co.,Ltd. 115,331 10,719
Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. 99,189 28,368
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 73,564 90,130
Auto Alliance (Thailand) Co.,Ltd. 72,011 -
JMCG 50,538 53,480
Nanchang JMCG Skyman Auto Component Co.,Ltd. 31,861 32,714
Nanchang Lianda Machinery Co.,Ltd. 30,357 35,657
Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 29,077 18,710
Nanchang Yinlun Heat-exchanger Co.,Ltd. 28,259 23,343
Ford Otomotiv Sanayi A.S. 16,047 5,865
Jiangling Material Co. 14,658 11,117
Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 13,956 15,318
Nanchang Gear Co.,Ltd. 12,040 8,976
Nanchang JMCG Xinchen Auto Component Co.,Ltd. 11,909 14,164
Jiangxi Biaohong Engine Tappet Co.,Ltd. 4,042 4,814
Jiangxi JMCG Shangrao Industrial Co.,Ltd. 3,062 3,709
JMCG Hequn Costume Co.,Ltd. 2,543 1,504
Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd 1,961 -
Jiangxi JMCG Industry Co.,Ltd. 1,355 831
Jiangxi Jiangling Material Utilization Co.,Ltd. - 1,327
Others 3 4,952
3,702,420 2,503,500
The Group purchased goods from related parties classified as two types: import parts and home-
made parts.
Purchase import parts from Ford or Ford’s suppliers, based on agreed price;
Purchase home-made parts from other related parts, based on quotation, cost accounting and
negotiation.
71
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2017 2016
Ford Engineering service and design 148,586 46,590
Ford Global Technologies, LLC Royalty fee 134,653 37,885
Nanchang JMCG Shishun Logistics Co., Ltd. Transportation 128,924 85,587
Ford Otomotiv Sanayi A.S. Engineering service and design 32,749 151,648
Nanchang Hengou Industry Co., Ltd. Packing/truckage 29,705 30,836
JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 20,430 789
Ford Otomotiv Sanayi A.S. Secondments costs 16,652 15,334
Ford Secondments costs 16,631 19,584
Jiangxi JMCG Industry Co.,Ltd. Working meal 15,434 13,053
JMH Royalty fee 10,000 -
Ford Otomotiv Sanayi A.S. Royalty fee 9,582 6,736
Ford Motor (China) Co., Ltd. Software and consulting fees 3,327 -
Ford Motor (China) Co., Ltd. Regional personnel costs 2,847 2,702
Hanon Systems Experimental manufacturing costs 2,263 2,479
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business of importation 1,972 2,705
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. Experimental manufacturing costs 1,145 -
JMH Secondments costs 957 641
Ford Motor Research & Engineering (Nanjing) Co.,
Ltd. Regional personnel costs 937 1,871
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. Promotion 396 2,774
72
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2017 2016
Changan Ford Automobile Co.,Ltd. Design fee - 1,650
Others Design fee 3,750 236
580,940 423,100
The Group purchased the service from related parties based on agreement price.
73
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Sales of goods 2017 2016
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 452,175 550,617
Jiangxi Jiangling Chassis Co.,Ltd. 47,632 26,293
Nanchang Hengou Industry Co., Ltd. 44,199 -
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 42,953 84,586
JMCG Jingma Motors Co., Ltd. 39,224 38,436
Nanchang JMCG Liancheng Auto Component Co.,Ltd. 30,036 22,918
Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd 29,891 -
Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 18,326 24,979
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 14,511 11,215
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 12,823 3,145
Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 9,155 1,908
Jiangxi Jiangling Lear Interior System Co.,Ltd. 3,355 6,702
JMCG Property Management Co. 3,343 3,353
Jiangxi JMCG Industry Co.,Ltd. 3,060 5,214
JMH 2,853 1,729
Jiangxi ISUZU Co., Ltd. 1,009 440
Jiangxi Jiangling Material Utilization Co.,Ltd. - 15,849
Jiangxi Sinodef International Trade Co.,Ltd. - 4,831
Others 766 1,135
755,311 803,350
The Group sold goods to related parties, based on agreement price.
Six months ended 30 June
Provision of services 2017 2016
Ford Motor Company of Australia Limited - 6,698
The Group provided the services to related parties, based on agreement price.
74
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental
Rental cost
Lessor Category Rental cost of six Rental cost of six
months ended 30 months ended 30
June 2017 June 2016
Jiangxi Jiangling Motors Imp. &
Exp. Co., Ltd. Building 2,138 2,981
JMCG Building 2,070 -
JMCG Property Management Co. Building 211 106
4,419 3,087
Rental income
Lessee Category Rental income of six Rental income of six
months ended 30 months ended 30
June 2017 June 2016
JMH Building 4 22
GETRAG (Jiangxi) Transmission
Company Building 3 -
7 22
(c) Guarantee
As at 30 June 2017, bank loans of USD688,000 (equivalent to approximately RMB4,658,000)
(2016:USD720,000 equivalent to approximately RMB4,997,000) were guaranteed by JMCF
(Note 23).
(d) Sales of PPE
Six months ended 30 June
2017 2016
Jiangxi JMCG Industrial Co., Ltd. 2 5
(e) Purchase of PPE
Six months ended 30 June
2017 2016
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 150 -
75
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(f) 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 six
months ended 30 June 2017, the total remuneration of the key management was approximately
RMB 9,256,000 (the six months ended 30 June 2016: RMB 8,077,000).
(g) Interest received from cash deposit in related parties
Six months ended 30 June
2017 2016
JMCF 10,098 5,879
During the six months ended 30 June 2017, the interest rates range from 1.495% to 2.25% per
annum.
(h) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2017 31 December 2016
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 131,831 230,848
Nanchang Hengou Industry Co., Ltd. 40,987 1,694
JMCG Jingma Motors Co., Ltd. 19,593 10,530
Jiangxi Jiangling Chassis Co.,Ltd. 7,149 -
JMH 3,370 1,664
Jiangxi JMCG Industry Co.,Ltd. 1,633 2,036
Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. - 3,304
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. - 1,360
Ford Vietnam Limited - 1,149
Others 293 135
204,856 252,720
Other receivables from related parties 30 June 2017 31 December 2016
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 43,710 30,338
Ford Otomotiv Sanayi A.S. 1,225 1,225
Others 930 922
45,865 32,485
76
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 30 June 2017 31 December 2016
Nanchang Baojiang Steel Processing Distribution
Co.,Ltd. 586,520 410,220
Ford Otomotiv Sanayi A.S. 1,930 -
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 986 -
589,436 410,220
Notes receivables from related parties 30 June 2017 31 December 2016
JMCG Jingma Motors Co., Ltd. 36,395 44,827
Prepayments for construction in progress 30 June 2017 31 December 2016
JMCG Jiangxi Engineering Construction Co., Ltd. 13,516 8,106
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 12,245 273
Others 150 -
25,911 8,379
Prepayments for mould lease 30 June 2017 31 December 2016
Changan Ford Automobile Co., Ltd. 22,259 32,528
Cash deposit in related parties 30 June 2017 31 December 2016
JMCF (Note 19) 963,588 874,990
77
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2017 31 December 2016
Jiangxi Jiangling Chassis Co.,Ltd. 301,854 267,405
Jiangxi Jiangling Lear Interior System Co.,Ltd. 270,491 381,357
Jiangxi JMCG Specialty Vehicles Corporation,
Ltd. 258,189 286,710
Nanchang Jiangling Hua Xiang Auto
Components Co.,Ltd. 194,953 210,407
GETRAG (Jiangxi) Transmission Company 185,437 180,956
Jiangxi Jiangling Special Purpose Vehicle
Co.,Ltd. 167,843 255,916
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 116,678 144,608
Hanon Systems 83,797 87,404
Ford 81,868 117,540
Nanchang Unistar Electric & Electronics Co.,Ltd. 68,648 50,575
Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. 54,110 43,618
JMCG 51,201 73,518
Nanchang JMCG Skyman Auto Component
Co.,Ltd. 34,032 23,538
Jiangxi Lingge Non-ferrous Metal Die-casting
Co.,Ltd. 18,622 17,778
Nanchang Yinlun Heat-exchanger Co.,Ltd. 18,311 20,612
Nanchang Lianda Machinery Co.,Ltd. 17,716 23,570
Nanchang JMCG Xinchen Auto Component
Co.,Ltd. 9,691 10,194
Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 8,983 13,475
Auto Alliance (Thailand) Co.,Ltd. 6,888 12,004
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 6,454 3,654
Nanchang Gear Co.,Ltd. 5,836 5,777
Jiangxi JMCG Shangrao Industrial Co.,Ltd. 2,521 2,137
Jiangxi Biaohong Engine Tappet Co.,Ltd. 2,133 2,362
Changan Ford Automobile Co.,Ltd. 2,036 113,485
Ford Otomotiv Sanayi A.S. 2,015 2,687
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co.,Ltd 1,492 612
Jiangxi JMCG Industry Co.,Ltd. 1,481 188
Others 1,190 3,790
1,974,470 2,355,877
78
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2017 31 December 2016
Ford 109,828 176,871
Ford Otomotiv Sanayi A.S. 95,045 232,672
Ford Global Technologies, LLC 59,147 58,517
JMCG Jiangxi Engineering Construction Co., Ltd. 18,145 12,511
JMH 10,696 1,303
Jiangxi Jiangling Lear Interior System Co.,Ltd. 10,556 16,154
Nanchang Hengou Industry Co., Ltd. 9,423 11,378
Nanchang JMCG Shishun Logistics Co., Ltd. 6,580 3,944
Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. 5,979 6,157
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 3,879 3,751
Ford Motor (China) Co., Ltd. 3,689 1,199
Hanon Systems 2,520 257
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 1,090 951
GETRAG (Jiangxi) Transmission Company 665 1,550
JMCG Hequn Costume Co.,Ltd. 861 1,410
JMCG 53 1,041
Others 2,864 5,383
341,020 535,049
Advance from related parties 30 June 2017 31 December 2016
Jiangxi JMCG Specialty Vehicles Corporation,
Ltd. 176 4,294
Others 774 342
950 4,636
(i) I Related parties commitments
Capital commitments 30 June 2017 31 December 2016
JMCG Jiangxi Engineering Construction Co.,
Ltd. 49,019 40,334
79
Chapter XI Catalogue on Documents for Reference
1. Originals of 2017 Half-year financial statements signed by legal representative
and Chief Financial Officer.
2. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in the first half of 2017.
4. The Half-year Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 30, 2017
80
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