Jiangling Motors Corporation, Ltd.
2018 Annual Report
2019-03
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 any false statement,
misrepresentation or major omission.
Chairman Qiu Tiangao, CFO Li Weihua and Chief of Finance Department, Xie
Wanzhao, confirm that the Financial Statements in this Annual Report are truthful
and complete.
All Directors were present at the Board meeting to review this Annual Report.
The prospective description regarding future business plan and development
strategy in this report does not constitute virtual commitment. The investors shall
pay attention to the risk.
All financial data in this report are prepared under International Financial
Reporting Standards (‘IFRS’) unless otherwise specified.
The Annual Report is prepared in Chinese and English. In case of discrepancy,
the Chinese version will prevail.
The year 2018 profit distribution proposal approved by the Board of Directors is as
follows:
A cash dividend of RMB 0.40 (including tax) will be distributed for every 10 shares
held based on the total share capital of 863,214,000 shares, and there is no stock
dividend. The Board decided not to convert capital reserve to share capital this
time.
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Contents
Chapter I Important Notes, Contents and Abbreviations ............................... 1
Chapter II Brief Introduction and Operating Highlight ..................................... 3
Chapter III Operating Overview ....................................................................... 5
Chapter IV Management Discussion and Analysis .......................................... 6
Chapter V Major Events................................................................................ 16
Chapter VI Share Capital Changes & Shareholders ....................................... 26
Chapter VII Preferred Shares .......................................................................... 30
Chapter VIII Directors, Supervisors, Senior Management and Employees....... 31
Chapter IX Corporate Governance Structure.................................................. 41
Chapter X Corporate Bond ............................................................................ 48
Chapter XI Financial Statements .................................................................... 48
Chapter XII Catalog on Documents for Reference ........................................ 128
Abbreviations:
JMC or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holdings Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Group Co., Ltd.
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
2
Chapter II Brief Introduction and Operating Highlight
1. Company’s Information
Share’s name Jiangling Motors, Jiangling B Share’s Code 000550, 200550
Place of listing Shenzhen Stock Exchange
Company’s Chinese
江铃汽车股份有限公司
name
English name Jiangling Motors Corporation, Ltd.
Abbreviation JMC
Company legal
Qiu Tiangao
representative
No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Registered Address
Province, P.R.C
Postal Code of
330001
Registered Address
Headquarters No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Address Province, P.R.C
Postal Code of
Headquarters 330001
Address
Website http://www.jmc.com.cn
E-mail relations@jmc.com.cn
2. Contact Person and Method
Board Secretary Securities Affairs Representative
Name Wan Hong Quan Shi
No. 509, Northern Yingbin Avenue, No. 509, Northern Yingbin Avenue,
Address Nanchang City, Jiangxi Province, Nanchang City, Jiangxi Province,
P.R.C 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. Information Disclosure and Place for Achieving Annual Report
Newspapers for information China Securities, Securities Times, Hong Kong
disclosure Commercial Daily
Website designated by CSRC for
http://www.cninfo.com.cn
publication of JMC’s Annual Report
Securities Department, Jiangling Motors
Place for Achieving Annual Report
Corporation, Ltd.
4. Changes of Registration
Organization Code 913600006124469438
On December 1, 1993, JMC A shares were listed on
Shenzhen Stock Exchange, while JMCG, the founder-
Changes of Controlling member, was the controlling shareholder of the Company.
Shareholders On September 29, 1995 and November 12, 1998, JMC
issued additional 344 million B shares totally, while, after
the additional B share issuance, JMCG and Ford were the
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controlling shareholders of the Company. On December 8,
2005, the 354.176 million JMC shares held by JMCG, the
former controlling shareholder, were transferred to JMH.
Presently, JMH and Ford are the controlling shareholders
of the Company.
5. Other Information
Accounting Firm Appointed by JMC for Audit
PricewaterhouseCoopers Zhong Tian LLP
Name
(‘PwC Zhong Tian’)
11/F, PricewaterhouseCoopers Center Link Square 2,202 Hu
Headquarters address
Bin Road, Huangpu District Shanghai 200021, PRC
Names of Signed
Lei Fang, Ye Dan
Accountants
6. Main accounting data and financial ratios
Unit: RMB’ 000
2018 2017 Change (%) 2016
Revenue 28,249,340 31,345,747 -9.88% 26,633,949
Profit Attributable to the
Equity Holders of the 91,833 690,938 -86.71% 1,318,016
Company
Net Cash Generated
-101,808 674,588 -115.09% 4,593,000
From Operating Activities
Basic Earnings Per Share
0.11 0.8 -86.71% 1.53
(RMB)
Diluted Earnings Per
0.11 0.8 -86.71% 1.53
Share (RMB)
Weighted Average Return
0.83% 5.51% -4.68% 10.74%
on Equity Ratio
End of Year End of Year End of Year
Change (%)
2018 2017 2016
Total Assets 23,396,529 26,383,761 -11.32% 24,493,789
Shareholders’ Equity
Attributable to the Equity 10,384,498 12,572,402 -17.40% 12,409,236
Holders of the Company
7. Accounting data difference between China GAAP and IFRS
I. Differences in net profit and net assets in financial statements between in
accordance with international accounting standards and Chinese accounting
standards
□Applicable □√Not Applicable
II. Differences in net profit and net assets in financial statements between in
accordance with overseas accounting standards and Chinese accounting
standards
4
□Applicable □√Not Applicable
8. Main accounting data quarterly
Unit: RMB’ 000
Q1 Q2 Q3 Q4
Revenue 6,481,073 7,806,424 5,902,627 8,059,216
Profit Attributable to the
Equity Holders of the 153,606 165,345 -100,164 -126,954
Company
Net Cash Generated
From Operating -1,397,337 490,519 -1,382,054 2,187,064
Activities
Chapter III Operating Overview
1. Company’s Core Business during the Reporting Period
JMC’s core business is production and sales of commercial vehicles, SUV and
related components. JMC’s major products include JMC series light truck, heavy
truck, pickup and light bus; Yusheng SUV; Ford-brand light bus, MPV and SUV.
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. With leading position and advanced technology of commercial
vehicles, JMC is China auto industry pioneer providing excellent products and
solutions to smart logistics, which is certificated as a national high-tech enterprise,
national innovative pilot enterprise, national enterprise technology centre, national
industrial design centre, national intellectual property demonstration enterprises
and national automobile export base; and had been ranked among the top 100
most valuable global brands for consecutive years.
On traditional business, 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 Territory, high-end
Yuhu MCA，N800 HP, Kaiyun 4D30/Stg. V, classic Yuhu, Kairui EV and heavy
truck Weilong HV5 launched further improved JMC’s competence on R&D and
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manufacturing. JMC became one of the first vehicle connectivity demonstration
enterprises equipped with Bei Dou Navigation Satellite System (BDS) developed
by China. The design paten of tractor JH476 won the China Paten Award of
Excellence; Kairui 800 won the Tiangong Cup Jiangxi Industrial Design Gold
Award; the first JMC heavy truck Jiangling Weilong is awarded 2018 China Truck
of the Year and The Most Potential Heavy Truck; which fully showed JMC’s
leading technology in light commercial vehicle field and self innovation capability.
High standard Xiaolan manufacturing site continues to expand modern plants of
vehicle, engine and frame, which will further ensure JMC's product production and
quality improvement. With the construction of Fushan new energy base, JMC will
deliver more new energy vehicles in the future which will lay a solid foundation for
JMC’s sustainable and healthy growth.
While continuous consolidating the traditional advantages, JMC has been
developing new business areas and innovative business models in response to
the new trend of overseas and domestic industries. In terms of new technology
exploration, JMC has been developing hydrogen fuel new energy vehicle
technology based on commercial freight situation; cooperated with the top
domestic autonomous driving company in R&D to carry out innovation under
specific situation with the realization of autonomous driving on mass production
CV for the program target, participated global smart driving competition and
explored ADAS mass production plan and autonomous driving Demo scheme. In
terms of new business model, combined with accumulation of new technology,
JMC reached strategic partnership with internet city-wide freight platform,
domestic new energy transportation service platform and top logistics companies.
Comprehensive joint development with mobile communication, freight logistics,
CV manufacturing and smart driving to create a new ecological environment with
coordination of vehicle and road. These explorations will lay the foundation for
JMC’s transformation into the strategic vision of to be the best partner for smart
mobility and logistics solutions.
Chapter IV Management Discussion and Analysis
1. Summary
In 2018, China’s economic growth is slowing, so as its auto market. Total sales
volume was 28.08 million units, decreased 2.76% compared with 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 2018, JMC achieved sales
volume of 285,066 units, decreased 8.05% compared with last year, achieved
revenue of RMB 28.25 billion, decreased 9.88% compared with last year,
achieved net profit of RMB 92 million, decreased 86.71% compared with last year.
It mainly reflects: I. Maintain intensive R&D and exploration expense on new
product, technology and business to improve product core competitiveness in
order to conform the auto trend of intelligence, netlink, electrification and sharing;
II. Marketing expense increased and sales structure changed to compete in the
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very challenging market brought by the new entrants of auto industry and price
strategy of traditional competitors.
2. Core Business Analysis
I. Summary
In 2018, JMC sales volume achieved 285,066 units, decreased 8.05% compared
with last year, including 107,202 units truck, 72,775 units pickup, 12,591 units
SUV, 43,516 units Transit CV, 39,796 units light bus and 9,186 units CKD export.
2018 total production volume was 286,808 units, decreased 7.83% compared with
last year, including 108,594 units truck, 72,696 units pickup, 13,859 units SUV,
43,768 units Transit CV, 38,705 units light bus and 9,186 units CKD export.
JMC total sales revenue in 2018 was RMB 28.25 billion, decreased 9.88%
compared with last year.
II. Revenue and Cost
(a) Composition of Sales Revenue
Unit: RMB
2018 FY 2017 FY
YOY change
Proportion Proportion
Amount Amount (%)
(%) (%)
Revenue 28,249,339,672 100.00% 31,345,746,762 100.00% -9.88%
By Industry
Automobile Industry 28,249,339,672 100.00% 31,345,746,762 100.00% -9.88%
By Products
Vehicle 25,178,859,631 89.13% 28,390,845,975 90.58% -11.31%
Components 2,696,240,006 9.55% 2,605,496,777 8.31% 3.48%
Automobile
71,798,771 0.25% 18,720,025 0.06% 283.54%
Maintenance services
Material
302,441,264 1.07% 330,683,985 1.05% -8.54%
& Others
By region
China 28,249,339,672 100.00% 31,345,746,762 100.00% -9.88%
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(b) Reach to 10% of Revenue or Profit by Industry, Product or Region
□√Applicable □Not Applicable
Unit: RMB
Y-O-Y
Y-O-Y
Y-O-Y Cost gross
Gross turnover
Turnover Cost Change margin
Margin change
(%) change
(%)
(points)
By Industry
Automobile
28,249,339,672 24,409,546,754 13.59% -9.88% -2.54% -6.51%
Industry
By Products
Vehicle 25,178,859,631 22,143,813,493 12.05% -11.31 % -3.08% -7.47%
By Region
China 28,249,339,672 24,409,546,754 13.59% -9.88% -2.54% -6.51%
If the Company’s core business scope is adjusted during the reporting period, the
Company’s core business data of last year need to be adjusted per the scope in
this year
□Applicable □√Not Applicable
(c) Whether Company’s Goods Revenue Higher Than Service Revenue
□√Yes □No
Industry Item Unit 2018 2017 Change (%)
Automobile Sales volume unit 285,066 310,028 -8.05%
Automobile Production volume unit 286,808 311,180 -7.83%
Explanation on YOY change of over 30%
□Applicable □√Not Applicable
(d) Execution of Company’s Signed Major Sales Contract
□Applicable □√Not Applicable
(e) Composition of Operating Cost
Unit: RMB
2018 FY 2017 FY
YOY
Product Proportion Proportion change
Cost Cost （%）
(%) (%)
Vehicle 22,143,813,493 90.72% 22,847,921,018 91.23% -3.08%
Components 1,921,477,490 7.87% 1,874,840,311 7.49% 2.49%
Automobile
69,559,583 0.29% 18,039,452 0.07% 285.60%
Maintenance services
Material & Others 274,696,188 1.12% 304,289,181 1.21% -9.73%
(f) Whether Consolidated Scope was Changed During the Reporting Period
□√Yes □No
During the reporting period, the new consolidated subsidies included Shenzhen
Fujiang New Energy Automobile Sales Co., Ltd., Guangzhou Fujiang New Energy
Automobile Sales Co., Ltd., and Xiamen Fujiang New Energy Automobile Sales
8
Co., Ltd. All the three companies are wholly-owned subsidiaries of the Company
established in 2018 with a cash investment of RMB 10 million.
Please refer to the Note 16a Subsidiaries of the notes to the consolidated financial
statements in the Chapter XI Financial Statements for details.
(g) Major Change or Adjustment on Business, Products or Services During the
Reporting Period
□Applicable □√Not Applicable
(h) Main Customers and Suppliers
Top 5 Customers:
Total sales value to top 5 customers（RMB） 3,656,375,426
Accounted for the proportion of JMC’s total annual turnover 12.95%
Included related party transaction accounted for the
4.35%
proportion of JMC’s total annual turnover
Percentage
of JMC’s
Sales Value
No. Name of the Customer Total
(RMB)
Turnover
(%)
1 Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,228,470,623 4.35%
2 Zhejiang Jiangling Motors Sales Company 1,138,232,870 4.03%
Hunan Transit Jiangling Motors Sales
3 478,831,969 1.70%
Company
4 Shanghai Keda Zhoupu Auto Sales Company 439,610,214 1.56%
5 Beijing Jinglingshun Auto Sales Company 371,229,750 1.31%
Total 3,656,375,426 12.95%
Other introduction to main customers
□√Applicable □Not Applicable
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. is a related party of the Company.
EVP Xiong Chunying holds the position of Director of Jiangxi Jiangling Motors Imp.
& Exp. Co., Ltd.
Top 5 Suppliers:
Total purchase value from top 5 suppliers（RMB） 4,170,908,479
Accounted for the proportion of JMC’s total annual purchase
19.20%
amount
Included related party transaction accounted for the proportion
15.47%
of JMC’s total annual purchase amount
9
Percentage of
Purchase Value JMC’s Total
No. Name of the Supplier
(RMB) Annual Purchase
Amount (%)
Nanchang Baojiang Steel Processing
1 922,453,891 4.25%
Distribution Co., Ltd.
2 Jiangxi Jiangling Chassis Co., Ltd. 864,932,239 3.98%
3 Bosch Auto Diesel System Company 809,754,457 3.73%
GETRAG (Jiangxi) Transmission
4 791,364,536 3.64%
Company
Jiangxi Jiangling Special Purpose
5 782,403,356 3.60%
Vehicle Co., Ltd.
Total 4,170,908,479 19.20%
Other introduction to main suppliers
□√Applicable □Not Applicable
Except Bosch Auto Diesel System Company, the other four suppliers are related
parties of the Company.
III. Expense Analysis
Unit: RMB’ 000
YOY Major Changes
2018 2017
Change Explanation
Due to the effect of
implementing IFRS 15 -
Revenue from Contracts
with Customers since
January 1, 2018, and this
Distribution Expenses 1,202,382 2,694,779 -55.38%
affects the presentation
between income
statement accounts and
does not actually affect
the net profit.
Administrative Expenses 2,460,259 2,744,600 -10.36%
Finance Income-net -182,587 -239,221 -23.67% Cash balance decreased.
IV. Research & Development
In 2018, JMC continued to focus on development of new product programs.
Product related spending centred at future product development and compliance
with regulatory requirements, including new model, increased payloads, new
styling, and improved power, etc., ensuring the Company is compliant with
stringent environmental and safety regulations. The competitive R&D will ensure
the company’s volume and profit growth in the future. Development expenditure in
2018 was 1,735 million, representing 16.71% of net assets, or 6.14% of revenue.
10
R&D
2018 2017 Change (%)
R&D Staff (person) 2,692 2,417 11.38%
R&D Staff as % of total employees 16.28% 13.94% 2.34%
R&D Investment (RMB) 1,735,368,721 2,054,740,061 -15.54%
R&D Investment as % of revenue 6.14% 6.56% -0.42%
Capitalization of R&D investment 71,814,337 58,010,234 23.80%
Capitalization of R&D investment
4.14% 2.82% 1.32%
as % of R&D Investment
Major change of R&D Investment as % of revenue
□Applicable □√Not Applicable
Major change of capitalization of R&D investment
□√Applicable □Not Applicable
Please refer to the Note 14 Intangible Assets of the notes to the consolidated
financial statements in the Chapter XI Financial Statements for details.
V. Cash Flow Analysis
RMB’ 000
Y-O-Y
Item 2018 2017
Change
Net cash generated from operating activities -101,808 674,588 -115.09%
Net cash used in investing activities -1,138,924 -669,656 -70.08%
Net cash used in financing activities -2,280,111 -533,431 -327.44%
Net (decrease)/increase cash and cash
-3,520,843 -528,499 -566.20%
equivalents
Explanation on the major factors regarding major change of related data
□√Applicable □Not Applicable
Net cash generated from operating activities decreased by RMB 776 million, down
115.09% vs. 2017, mainly reflecting the volume decrease and increase of
government subsidy receivable generated from higher sales volume of new
energy vehicle.
Net cash used in investing activities increased up 70.08% vs. 2017, mainly
reflecting the increase in the amount of cash paid for fixed assets purchased and
built.
Net cash used in financing activities increased by RMB 1,747 million, up 327.44%
vs. 2017, mainly reflecting the payment of 2017 interim special dividend
distribution.
Explanation on significant difference between net cash generated from operating
activities and net profit during the reporting period
□Applicable □√Not Applicable
3. Non- core business analysis
□√Applicable □Not Applicable
11
Unit: RMB
Proportion Sustainability
Item Amount Explanation
of PBT （Y/N）
Government subsidies to
Non-operating
248,127,231 625.96% support the Company’s Y
Revenue
development
4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB’ 000
YOY
December 31, 2018 December 31, 2017 Major Changes
Asset item Proportion
Change Explanation
Amount Proportion Amount Proportion (Points)
New Fushan
Property, plant and equipment 6,941,292 29.67% 6,714,088 25.45% 4.22%
plant.
Inventories 2,522,354 10.78% 2,339,304 8.87% 1.91%
Trade and other receivables and
4,678,284 20.00% 4,555,934 17.27% 2.73%
prepayments
Due to payment
of 2017 interim
special dividend
Cash and cash equivalents 7,616,880 32.56% 11,137,723 42.21% -9.65% distribution and
payment increase
for fixed assets
purchasing
Trade and other payables 12,195,966 52.13% 13,222,540 50.12% 2.01%
II. The fair value of the assets and liabilities (not applicable).
III. Restriction on Assets Rights as of the End of the Reporting Period
There was no major restriction on assets rights as of the end of the reporting period.
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
Investment Fixed Spending in Investment
Project
Method/ Assets 2018 Committed Progress Index
Name
source (Y/N) (RMB mils) (RMB mils)
Fushan
Self-funded Y 372 372 11% *
Plant
Total 372 372 -- --
12
*The announcement (No. 2017-044) was published on the website
www.cninfo.com.cn.
IV. Financial Assets Investment
(a) Stock Investment
□Applicable □√Not Applicable
(b) Derivative Investment
□Applicable □√Not Applicable
V. Usage of Raised Fund
□Applicable □√Not Applicable
6. Sales of Major Assets and Equity
I. Sale of Major Assets
□Applicable □√Not Applicable
II. Sales of Major Equity
□Applicable □√Not Applicable
7. Operating Results of Main Subsidiaries and Joint-Stock Companies whose
impact on JMC’s net profit more than 10%
Unit: RMB’000
Name of Type of Registered Operating
Main Business Assets Net Assets Turnover Net Profit
Companies Companies Capital Profit
Jiangling
Sales vehicle,
Motors Sales Subsidiary 50,000 3,638,713 249,594 23,592,089 -2,569 -2,158
service parts
Corporation, Ltd
Product heavy
commercial
JMC Heavy vehicle ,
Duty Vehicle Subsidiary engine, 281,793 2,610,390 -675,856 507,555 -349,354 -348,490
Co., Ltd. component,
and related
service
Acquisition and disposal of the subsidiaries
□Applicable □√Not Applicable
8. Structured Entities Controlled by JMC
□Applicable □√Not Applicable
9. Outlook
I. Industry Competition and Development Trend
At present China is still in the stage of industrial and urbanization development,
China's economic operation is remaining at a reasonable level, the macro-control
targets have been well achieved, the economy has maintained growth in
medium/high speed, imports and exports is stable, and the balance of payments
has been basically balanced. Steady domestic demand, encouraged innovation
and further deepening of the combination of internet and industrial will continue to
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benefit China’s economy toward steady and improvement with the GDP growth is
predicted around 6.3%. The infrastructure construction and logistic industry in
China will also continue to develop combined with consumption incentive of Guard
Blue Sky Plan and rural subsidy scheme of home appliances/cars which will be
good to the stability and development of commercial vehicle segment. Meanwhile,
China's Car Parc per capita is still lower than world’s average level indicating a
strong auto market potential in the future. Currently, automobile industry
development is affected by the urban traffic congestion, environment pollution,
purchase tax incentive cancellation and new energy vehicle incentive cancellation
gradually. However, as the economic progressing steadily, the consumption level
and purchasing power improved, domestic automobile sales volume is expected
to achieve higher level. In 2019, sales volume is still expected to continue to grow
slightly. The production, sales and use of automobile is significantly changed by
the combination of technology revolution characterized by electrification, digital,
network and smart and innovative business model featured by platform and
sharing. The pattern has continued for several hundred years of auto industry is
facing great changes, new energy vehicles and smart internet is becoming a clear
direction of auto industry to lead its upgrade, transformation and structure
adjustment.
II. Corporation Strategy
Company takes to become the best partner for smart mobility and logistics
solutions as vision and integrity, innovation and win-win as core value, adopts
aggressive strategic actions in smart logistics of commercial vehicles to
strengthen its leading position; proactively participates in mobility of passenger
vehicle and tries different business model to build new core competitiveness
through new technology application and new business model. JMC will continue
to deliver SUV and crossover vehicles with high cost performance and high quality
new energy vehicles with smart, environmental, safe and economic; participate in
smart mobility and logistics service by cutting-edge technology and innovative
business model, and actively expand the company’s friend circle to continuously
develop new core competitiveness in auto ecosystem.
III. 2018 Business Plan
The Company is targeting 2019 sales volume level at 383 thousand units and
revenue level at RMB 37 billion, increases of 34% and 31% vs. 2018 respectively.
To enhance profitability, the company is committed to the following plans in 2019:
(1) Achieve volume and market share targets by enhancing the sales network and
sales/marketing activities, especially pushing the third – fifth class city dealer
network construction.
(2) Continue to strengthen sales network and channel, actively develop network in
low-tier cities, establish flexible marketing scheme to deliver the target of sales
volume and share.
(3) Well prepared the new products launch plan for Ford Territory, Everest MCA
and PK/LT upgrade to Stage VI.
14
(4) Continue to improve product quality, pursue cost reduction opportunities,
improve manufacturing and operating efficiency to achieve profit and cost
targets.
(5) Continue to research, develop and apply new energy, autonomous driving and
smart connectivity.
(6) Continue to promote the new fuel economy and emission compliance program
to satisfy regulatory requirements.
(7) Work with technical partners to execute future product development and R&D
ability improvement.
(8) Expand finished vehicle exports and OEM components sales business.
(9) Actively explore and try innovative business.
IV. Potential Challenges and Solutions
In 2019, the Company will continue to face fiercer competition, more stringent
regulatory requirements, intensifying cost pressures and a slowdown in China’s
economic growth. To achieve steady growth, the Company will continue to focus
on the following aspects in 2019:
(1) Optimizing company’s production system to improve efficiency and product
quality.
(2) Optimizing dealer network and marketing spending to improve market share;
(3) Improve suppliers’ capability and parts quality; continue to reduce parts
purchasing cost.
(4) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
(5) Sustaining the expense management and control to optimize the business
structure.
(6) Execute company’s growth strategies to pursue sustainable and healthy
growth.
The Company will continue to optimize cost structure, improve production
efficiency, achieve competitive manufacturing output, optimize efficiency of
R&D/program and mitigate management cost to realize profitable growth.
Meanwhile, focus on new product development to deliver the launch quality and
cost target. With the support from technical partner, the Company continues to
promote new products development and R&D ability improvement, to accelerate
the progress of launching new competitive and profitable products to the market
and the exploration and development of heavy truck to enhance the company’s
influence on commercial vehicles. Meanwhile, the Company will strive to ensure
the timely delivery of high quality heavy truck, and devote to strengthening dealer
network, expanding overseas market and parts business.
10. External research and media interview to the Company
I. Table of external research, communication and media interviews with the
Company in the reporting period
Date Communication Type of Information Discussed
Method Object and Materials offered
May 17, On-the-spot Institution JMC Operating highlights
2018 research
15
November On-the-spot Institution JMC Operating highlights
30, 2018 research
Reception times 2
Visiting institution number 26
Visiting person number 0
Other objects 0
Whether to disclose, reveal or divulge the None
undisclosed material information
Chapter V Major Events
1. Profit distribution and capital reserve conversion regarding common stock
Establishment, implementation or adjustment of profit distribution policy, esp. cash
dividend distribution policy, regarding common stock during the reporting period
□√Applicable □Not Applicable
In accordance with the requirements of laws, regulations and the Articles of
Association of the Company, the Company's profit distribution policy maintains
continuity and stability, and the Company pays attention to the reasonable return to
investors. The Company gives priority to cash dividend, and subject to the
provisions of laws, regulations and the Articles of Association of the Company, the
Board of Directors can put forward a mid-term or special profit distribution proposal.
The Company's profit distribution policy is in line with the CSRC's guidance on
encouraging cash dividends for listed companies.
Special Explanation on Cash Dividend Policy
Whether to comply with the requirements of the Articles of Association of
Y
JMC or resolution of the Shareholders’ Meeting (Y/N)
Whether the standards and proportion of dividends on profit distribution are
Y
clear (Y/N)
Whether the procedures are valid and legal (Y/N) Y
Whether the Independent Director fulfil their duties (Y/N) Y
Whether middle and small shareholders have opportunities to claim their
Y
appeals and their legal rights and interests are completely protected (Y/N)
Whether the condition and procedure are reasonable and transparent when
Y
the cash dividend policy is being changed (Y/N)
Profit distribution plan or proposal in the recent three years
(1) Proposal on 2018 Year Profit Distribution
Details on the profit available for appropriation of the Company in 2018 prepared
in accordance with the China GAAP and International Financial Reporting
Standard (‘IFRS’) are as follows:
Unit: RMB’ 000
China GAAP IFRS
Retained earnings at Dec. 31, 2017 10,444,874 10,441,665
2018 net profit 91,833 91,833
Allocation of interim special dividend for 2017 2,000,067 2,000,067
Allocation of dividend for 2017 276,228 276,228
Retained earnings at Dec. 31, 2018 8,260,412 8,257,203
The upper limit of profit available for distribution was based on the lower of the un-
appropriated profit calculated in accordance with the China GAAP and that
calculated in accordance with IFRS. Therefore, the Company’s retained earnings
available for distribution as of December 31, 2018 were RMB 8,257,203 thousand.
16
The Board approved to submit to the 2018 Annual Shareholders’ Meeting the
following proposal on year 2018 profit distribution:
(i). to appropriate for the dividend distribution from the profit available for
distribution, which shall be equal to RMB 0.04 per share and shall apply to the
Company’s total share capital; and
(ii). to carry forward the un-appropriated portion to the following fiscal year.
Profit distribution proposal: a cash dividend of RMB 0.4 (including tax) per 10
shares will be distributed to shareholders. Based on the total share capital of
863,214,000 shares as of December 31, 2018, total cash dividend distribution
amounts shall be RMB 34,528,560.
The cash dividend on B share shall be paid in Hong Kong Dollars and converted
at the middle rate of the HK dollar’s exchange rate against RMB quoted by the
People’s Bank of China on the first working day following the relevant resolution
adopted by the Company’s Annual Shareholders’ Meeting.
The Board decided not to convert the capital reserve to the share capital this time.
(2) 2017 Year Profit Distribution Plan
A cash dividend of RMB 3.2 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of December 31,
2017, the total cash dividend distribution amounts were RMB 276,228,480.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by
the Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(3) 2017 Interim Special Dividend Distribution Plan
A cash dividend of RMB 23.17 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of September 30,
2017, the total cash dividend distribution amounts were RMB 2,000,066,838.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by
the Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(4) 2016 Year Profit Distribution Plan
A cash dividend of RMB 6.1 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of December 31,
2016, the total cash dividend distribution amounts were RMB 526,560,540.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
17
the first working day following the approval on the profit distribution proposal by
the Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
Table of cash dividend in the recent three years
Unit: RMB’000
Profit attributable to the Cash dividend as % of profit
Cash dividend
equity holders of the attributable to the equity holders
(Including tax)
Company in that year of the Company
2018
34,529 91,833 37.60%
(Proposed)
2017 2,276,295 690,938 329.45%
2016 526,561 1,318,016 39.95%
The Company made a profit during the reporting period and the profit of the
parent company distributable to the common share holders is positive, but a
distribution plan of cash dividends for the common shares is not put forward
□Applicable □√Not Applicable
2. Proposal on 2018 Year Profit Distribution Plan or Capital Reserve Conversion
□√Applicable □Not Applicable
Please refer to Article 1, Chapter V of this Report.
3. Commitments
3.1 Commitments of the Company, the shareholder, the actual controlling party,
the acquirer, the Director, the Supervisor, the senior executive or other related
party of the Company
□Applicable □√Not Applicable
3.2 Earnings forecast of the assets or project and the explanations
□Applicable □√Not Applicable
4. Non-operating funding in the Company occupied by controlling shareholder and
its affiliates
□Applicable □√Not Applicable
There was no non-operating funding in the Company occupied by controlling
shareholder and its affiliates.
5. Explanation of the Board of Directors, Supervisory Committee and Independent
Directors to abnormal opinions from accounting firm
□Applicable □√Not Applicable
6. Explanation on the changes of accounting policy, accounting estimates,
estimation method compared with that of last year
□√Applicable □Not Applicable
Please refer to the Note 2 Summary of Significant Accounting Policies of the
notes to the consolidated financial statements in the Chapter XI Financial
Statements for details.
18
7. Explanation on major accounting errors that shall be restated during the
reporting period
□Applicable □√Not Applicable
There was no major accounting error that shall be restated during the reporting
period.
8. Explanation on consolidated scope change compared with that of last year
□√Applicable □Not Applicable
During the reporting period, the new consolidated subsidies included Shenzhen
Fujiang New Energy Automobile Sales Co., Ltd., Guangzhou Fujiang New Energy
Automobile Sales Co., Ltd. and Xiamen Fujiang New Energy Automobile Sales
Co., Ltd. All the three companies are wholly-owned subsidiaries of the Company
established in 2018 with a cash investment of RMB 10 million.
Please refer to the Note 16a Subsidiaries of the notes to the consolidated financial
statements in the Chapter XI Financial Statements for details.
9. Appointment or Dismissal of Accounting Firm
Current accounting firm
PricewaterhouseCoopers Zhong Tian
Name
LLP
Compensation (RMB’000) 1,900
Consecutive years offering audit services 17
Names of signed accountants Lei Fang, Ye Dan
Consecutive years offering audit services
Lei Fang 2 year, Ye Dan 1 year
of signed accountants
Dismissal of accounting firm
□Applicable □√Not Applicable
Appointment of C-SOX auditor, financial consultant or sponsor
□√Applicable □Not Applicable
Upon the approval of 2014 Annual Shareholders’ Meeting, JMC agreed to appoint
PricewaterhouseCoopers Zhong Tian LLP as JMC’s 2016 to 2018 C-SOX auditor.
In 2018, JMC paid RMB 550 thousand to PricewaterhouseCoopers Zhong Tian
LLP for the C-SOX audit.
10. Suspension and Termination of Listing after Annual Report Disclosed
□Applicable □√Not Applicable
11. Related Matters regarding Bankruptcy
□Applicable □√Not Applicable
There was no matter involving bankruptcy during the reporting period.
12. Major Litigation or Arbitration
□Applicable □√Not Applicable
There was no major litigation or arbitration during the reporting period.
In 2018, there was no major litigation and arbitration that had significant impacts
on the Company’s operation. As of the end of 2018, there was a total of 3 pending
litigation in which the Company is as the defendant, involving an amount of RMB
1.84 million.
19
13. Punishment
□Applicable □√Not Applicable
Neither JMC nor its Directors or senior management were punished by regulatory
authorities during the reporting period.
14. Honesty and credit of JMC and its controlling shareholder or actual controlling
party
□Applicable □√Not Applicable
15. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan and
Other Employee Incentive Method
□Applicable □√Not Applicable
There was neither equity incentive plan or ESOP, nor other employee incentive
method during the reporting period.
16. Major Related Transactions
i. Routine related party transactions
□√Applicable □Not Applicable
As % of
Pricing Settlement Amount Total
Transaction Parties Content Relationship
Principle Method (RMB’000) Purchases/
Revenue
Controlling
shareholder of
Ford and goods Contracted
JMC and D/P & T/T 869,000 4.00%
subsidiaries of Ford purchase price
subsidiaries of
Ford
Nanchang Bao-jiang Associate of
goods Contracted
Steel Processing JMCG Prepayment 922,453 4.25%
purchase price
Distribution Co., Ltd.
Subsidiary of 60 days after
Jiangxi Jiangling goods Contracted
JMCG delivery and 864,932 3.98%
Chassis Co., Ltd. purchase price
invoicing
GETRAG (Jiangxi) Associate of 60 days after
goods Contracted
Transmission JMCG delivery and 791,365 3.64%
purchase price
Company invoicing
Jiangxi Jiangling Wholly-owned 30 days after
goods Contracted 782,403
Special Purpose subsidiary of delivery and 3.60%
purchase price
Vehicle Co., Ltd. JMCG invoicing
40% of
prepayment
Jiangxi Jiangling
Associate of Contracted and the
Motors Imp. & Exp. Sales 1,228,471 4.35%
JMCG price remains paid
Co., Ltd.
during 30 days
after delivery
The Announcement (No.:2017-049) on Related Party Transactions of the
Company was published 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 in the reporting period.
20
iii. Related party transaction concerning outside co-investment
□Applicable □√Not Applicable
There was no outside co-investment in the reporting period.
iv. Related credit and debt
□√Applicable □Not Applicable
Is there non-operating related credit and debt?
□Yes □√No
The Company had no non-operating related credit and debt in the reporting period.
v. Other major related party transactions
□√Applicable □Not Applicable
The balance amount of bank deposit of the Company in JMCG Finance Company
as of the end of 2018 was RMB 833,617 thousand. The Board of Directors
reviewed and approved JMCG Finance Company Continuous Risk Assessment
Report. Please refer to the website www.cninfo.com.cn for the original of the
report which was published on March 28, 2019.
17. Major Contracts and Execution
i. Entrustment, contract or lease
a. Entrustment
□Applicable □√Not Applicable
There was no entrustment in the reporting period.
b. Contract
□Applicable □√Not Applicable
There was no contract in the reporting period.
c. Lease
□√Applicable □Not Applicable
Please refer to the note 13 Lease Prepayment of the notes to the consolidated
statements in the Chapter XI Financial Statements for detail.
Project with more than 10% of net profit
□Applicable □√Not Applicable
There was no lease project with more than 10% of net profit in the reporting
period.
ii. Major guarantee
□Applicable □√Not Applicable
The Company had no outside guarantee in the reporting period.
iii. Entrustment on cash asset management
a. Trust investment
□Applicable □√Not Applicable
There was no trust investment in the reporting period.
b. Entrusted loan
□Applicable □√Not Applicable
There was no entrusted loan in the reporting period.
21
iv. Other major contract
□Applicable □√Not Applicable
18. Corporation Social Responsibilities
I. Corporation Social Responsibilities
JMC always consciously undertake social responsibility and create brand public-
benefit “Jiangling Xiqiao Project” with the aim of “green, love, and safe”. By 2018,
365 bridges have been donated in 106 counties and cities in 24 provinces,
benefiting nearly 600,000 people. JMC was awarded China Poverty Alleviation
Ambassador Prize, China Responsible Public Partners Prize and China Social
Responsibility Excellent Brand Prize.
During the reporting period, the Company operated according to law and
regulations, upheld the interest of the shareholders, especially small & medium-
sized shareholders, protected the legitimate rights and interests of employees,
and treated suppliers, customers and consumers sincerely. Simultaneously, JMC
paid attention to environmental protection, energy saving and consumption
reduction, fully reduced energy consumption and pollutant discharge, and actively
fulfilled corporate social responsibility.
JMC 2018 Corporation Social Responsibilities Report can be downloaded from
JMC official website: www.jmc.com.cn or the website: www.cninfo.com.cn.
II. Targeted measures in poverty alleviation
a. Plan on poverty alleviation
The Company joined the one-to-one poverty alleviation, depending on JMCG, in
Qianmo Village, Dai Jiapu Township, Suichuang County, Jiangxi Province and
Xianting Village, Songhu Town, Xinjian District, Nanchang City in accordance with
the working arrangement of Jiangxi Provincial Party Committee and Provincial
Government. The overall goal is: to help the poor village to achieve a well-off
standard of living before 2020 by cooperating with the local government.
b. Summary of poverty alleviation in 2018
The Company regards the realization of precision poverty relief as the basic
strategy of precision poverty alleviation. In 2017, Xianting Village get rid of poverty.
The Company continued to consolidate efforts of one-to-one poverty alleviation in
2018.
c. Status of targeted measures in poverty alleviation
Item Unit Amount/Progress
I. Brief Introduction —— ——
including：1. Funding RMB (’000) 4,200
2. Sum converted from the materials RMB (’000) 132.4
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 —— ——
22
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) 25.4
4.2 Poor students in aid Persons 1,400
4.3 Investments on the improvement of
RMB (’000) 4,200
educational source in poverty-stricken are
5. Health Anti-poverty —— ——
Including: 5.1 Investments on medical and health
RMB (’000)
services 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) 107
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
RMB (’000)
West China and East China
8.2 Investments on one-to-one anti-poverty RMB (’000)
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 —— ——
d. On-going plan regarding targeted measures in poverty alleviation
Education is the fundamental way to get rid of poverty and become rich. In terms
of education to poverty alleviation, the Company will rely on JMCG in 2019 to
upgrade the existing Xianting Primary School into a standardized, modern and
exemplary rural complete primary school to provide a sound learning environment
for students studying in Xianting Primary School, in accordance with the
government overall planning arrangements and local conditions
III. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit published
by environmental protection administration?
√Yes □No
23
Name of
Applicable Total
principal Number of
Mode of Distribution of Discharge standard for Total amount amount of Excessive
pollutant and discharge
discharge discharge outlet concentration pollutant of discharge discharge discharge
specific outlet
discharge audited
pollutant
3 in Mainsite, 1
“Wastewater
Wastewater continuous in Xiaolan Site, COD: COD≤843.
"COD:155.7mg/L Discharge Meet
(COD, NH-N) discharge 6 1 in Cast Plant
NH-N:26.1mg/L" Standard”(GB
178.51t; NH- 34t; NH-
Standard
and 1 in Axle N: 9.515t N≤21.72t
8978-1996)
Plant
SO2: 172mg/m3; "The Emission
Exhaust gas NOx :240mg/m3; Standard of Air
51 in Mainsite,
(SO2,NOx,sm smoke: Pollutants”, SO2≤93.01
35 in Xiaolan
oke,toluol, continuous 72.4mg/m3; "Emission SO2: 86.15t; t; Meet
125 Site, 33 in Cast
dimethylbenz discharge toluol :0.174mg/ Standard of Air NOx : 15.77t NOx≤60.91 Standard
Plant and 6 in
ene, m3; Pollutants for t
Axle Plant
NMHC） dimethylbenzene Boiler”（GB
:0.542mg/m3; 13271-2014）
The construction and operation of pollutant preventive and control facilities
Since 2006, JMC has invested more than RMB 30 million to construct seven
wastewater treatment stations (including the wastewater treatment station in the
east plant area and Xiaolan wastewater treatment station), with the treatment
capacity as high as 9,000t/d. The treated wastewater reached the national
discharge standard. In 2018, JMC invested RMB 500 thousand to renovate
Xiaolan Wastewater Treatment Station, and invested RMB 870 thousand to
upgrade the wastewater treatment process of the wastewater treatment station in
Axle Plant. The sewage station has equipped with MBR integrated equipment,
which increases the anti-shock load capacity of the sewage treatment system,
and the effluent water quality is stable to meet the discharge standard.
For up-to-standard emission of waste gases, JMC has taken new control
measures over the years. JMC invested RMB 3.6 million in 2018 to upgrade the
dust collector of the Casting Plant and added an electric furnace dust removal
equipment. The existing matching dust collectors were dismantled and two sets of
“downstream” back flush flat bag filter system were installed to effectively reduce
environmental pollution .
For noise reduction, JMC took different measures to reduce the environmental
impact, such as increase of protective sound-proof doors & windows,
establishment of noise enclosure for air blower, installation of muffler and
transformation of sound-proof doors & windows. All these measures can make
sure up-to-standard discharge of noise at the plant boundary.
In the process of waste management, JMC managed from the source, and divided
the generation of wastes. JMC established a temporary storage yard for solid
wastes. Warning graphic symbols have been posted at the temporary storage site
of hazardous wastes. Besides, signboards have been provided as well, so as to
remind the passer-by of probable hazards in the storage process of hazardous
wastes. In 2017, JMC invested RMB500 thousand to extend Xiaolan storage yard
for solid wastes. In 2018, JMC invested RMB 550 thousand to renovate the
engine plant garbage station. According to the requirements of the Solid Waste
Control Law, solid wastes must be protected against leakage, anti-diffusion, and
24
loss prevention, and should not be stored in the open air. After the anti-pollution,
anti-seepage and classification treatment of the garbage station, leakage and
pollution can be avoided and the requirements of the regulations are met.
EIA on construction project and other administrative permits for
environmental protection
The Company strictly implements the construction project environmental impact
assessment system. With respect to new construction, expansion and
reconstruction, JMC comprehensively planned environmental protection and
evaluated the “Three Simultaneities”. From the source of design, JMC carried out
the philosophy of energy saving and low carbon all the time. The Company carries
on the environmental monitoring every year according to the requirements,
ensures the pollutant discharge meeting the requirements of discharge permit,
formulates the stricter internal control target, and strives to reduce the impact of
environmental pollution to the minimum. In 2018, the Company completed the
environmental inspection and acceptance of the new energy vehicle
transformation project of Qingyunpu Plant, and obtained the environmental
assessment approval of the new energy laboratory project and the project of
expanding the capacity of 300 thousand vehicle parts and components per year
(Phase II).
Emergency plan on emergency environmental incidents
In order to dilute or prevent environmental risks, JMC established an emergency
preparation and response procedure and specific environmental emergency plans,
so as to formulate corresponding control methods for potential accidents and
emergences occurred or that may probably occur, and has been filed with the
environmental protection bureau.JMC organize various emergency drills to the
effectiveness of the plan.
Environmental self-monitoring scheme
In 2018, JMC’s Qingyunpu Main Plant Area (the “Plant Area”) was listed as a key
pollutant discharging organization of wastewater/hazardous wastes. The Plant
Area monitored by itself in strict accordance with the Method for Self-monitoring
and Information Disclosure of State Key Monitoring Enterprises (Trial). Its self-
monitoring schemes, monitoring results and annual monitoring reports on pollution
sources were disclosed on the “pollution source self-monitoring reporting platform
of Jiangxi Province”. Xiaolan plant area and other plant areas finished self-
monitoring according to the EIA requirements.
Other information related to environmental protection
JMC paid high attention to environmental protection and pollution source control,
taking resource saving and cost reduction as the primary task. Moreover, the
Company also took full advantage of 6sigma, and controlled from the source, so
as to achieve the effect of environmental improvement. In the new expansion and
reconstruction projects, JMC laid emphasis on improving the environmental
performance, strictly implemented the system of “Three Simultaneities”,
transacted the EIA procedure according to national standards, stipulated the
preventive and control measures for environmental pollution, and reported to
competent administrative departments on environmental protection for approval.
19. Other Major Events
JMC received government incentives of approximate RMB 458 million
appropriated by Nanchang City, Nanchang County Xiaolan Economy
Development Zone, Nanchang City Qingyupu District, and Shanxi
25
Transformation and Comprehensive Reform Demonstration Zone in 2018, which
is to support JMC’s development.
20. Major event of JMC subsidiary
□Applicable □√Not Applicable
26
Chapter VI Share Capital Changes & Shareholders
1. Changes of shareholding structure
I. Table of the changes of shareholding structure
Before the change Change (+, -) After the change
Proportion New Reserve- Proportion
Bonus
Shares of total share converted Others Subtotal Shares of total
Shares
shares (%) s shares shares (%)
I. Limited tradable
906,855 0.10% - - - -120,015 -120,015 786,840 0.09%
A shares
1. Other domestic
906,855 0.10% - - - -120,015 -120,015 786,840 0.09%
shares
Including:
Domestic legal
785,940 0.09% - - - - - 785,940 0.09%
person shares
Domestic natural
120,915 0.01% - - - -120,015 -120,015 900 0.00%
person shares
II. Unlimited
862,307,145 99.90% - - - 120,015 120,015 862,427,160 99.91%
tradable shares
1. A shares 518,307,145 60.05% - - - 120,015 120,015 518,427,160 60.06%
2. B shares 344,000,000 39.85% - - - - - 344,000,000 39.85%
III. Total 863,214,000 100.00% - - - - - 863,214,000 100.00%
Causes of shareholding changes
□√Applicable □Not Applicable
JMC did not issue shares or derivative securities during the past three years as of
December 31, 2018. JMC’s total shares remained unchanged in 2018, and the
change in shareholding structure was caused by the trading restriction on limited
A shares of 120,000 shares held by a natural person shareholder, Jiang Xiangwei,
was relived on May 23, 2018.
Approval of changes of shareholding structure
□Applicable □√Not Applicable
Shares Transfer
□Applicable □√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS, shareholders’
equity attributable to the equity holders of the Company, generated from shares
transfer
□Applicable □√Not Applicable
Others to be disclosed necessarily or per the requirements of securities regulator
□Applicable □√Not Applicable
II. Changes of limited A shares
□√Applicable □Not Applicable
2. Securities Issuance and Listing
I. Securities issuance (not including preferred shares) in the reporting period
□Applicable □√Not Applicable
27
II. Explanation on changes of shares, shareholding structure, assets and liabilities
structure
□Applicable □√Not Applicable
III. Current staff shares
□Applicable □√Not Applicable
3. Shareholders and actual controlling parties
I. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total shareholders JMC had 30,076 shareholders, including 24,702 A-share holders, and 5,374 B-share holders,
as of the end of the as of December 31, 2018.
reporting period
Total shareholders JMC had 24,189 shareholders, including 18,732 A-share holders, and 5,457 B-share holders,
as of the last month- as of February 28, 2018.
end prior to the
disclosure date of the
Report
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
Holdings Co., Ltd. legal person
Ford Motor Company Foreign legal
32 276,228,394 0 0 0
person
China Securities
Other 2.72 23,458,066 714,482 0 0
Corporation Limited
Shanghai Gao Yi
Asset Management Other 1.74 15,000,000 15,000,000 0 0
Partnership (L.P.)
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 0.68 5,848,450 0 0 0
person
FUND GTI 5497
GAOLING Foreign legal
0.63 5,453,086 14,000 0 0
FUND,L.P. person
INVESCO Foreign legal
0.58 5,035,746 0 0 0
FUNDS SICAV person
TEMPLETON
Foreign legal
DRAGON 0.56 4,836,708 0 0 0
person
FUND,INC.
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 Holdings 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 Gao Yi Asset Management
15,000,000 A share
Partnership (L.P.)
28
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
GAOLING FUND,L.P. 5,453,086 B share
INVESCO FUNDS SICAV 5,035,746 B share
TEMPLETON DRAGON FUND,INC. 4,836,708 B share
Notes on association among above- None.
mentioned shareholders
Stock buy-back by top ten shareholders or top ten shareholders holding unlimited
tradable shares in the reporting period
□Applicable □√Not Applicable
II. Controlling Shareholders
Nature of controlling shareholders: Central/Local government holdings, foreign
holdings
Type: Legal person
Legal Established Organization
Name Main scope of business
representative Date code
manufacturing of automobiles,
engines, chassis, and automotive
components and parts, sales of self-
produced products, as well as
related after-sales services;
industrial investment; management
Jiangling Motor November 913601007670 & agent for merchandise and
Mr. Zhang Baolin
Holdings Co., Ltd. 1, 2004 323079 technology export & import; property
management; sales of household
articles, mechanical & electronic
equipment, artistic handicrafts,
agricultural by-products and steel;
consulting business in enterprise
management.
to design, manufacture, market, and
service a full line of Ford cars,
trucks, sport utility vehicles (“SUVs”),
electrified vehicles, and Lincoln
January 1, luxury vehicles, provide financial
Ford Motor Company William Clay Ford
1903 services through Ford Motor Credit
Company LLC, and be pursuing
leadership positions in electrification,
autonomous vehicles, and mobility
solutions.
Change of controlling shareholders
□Applicable □√Not Applicable
There was no change of controlling shareholders in the reporting period.
29
III. Actual Controlling Parties
Nature of controlling shareholders: Central/Local State-owned Assets Supervision
and Administration
Type: Legal person
Legal Established Organization
Name Main scope of business
representative Date code
manufacturing of automobiles, engines, chassis,
specialty vehicle, transmission, other products,
automotive quality testing, sales of self-produced
products and raw materials, equipment,
July 27, 913600001582 electronic products, parts and others, as well as
JMCG Qiu Tiangao 63759R
1991 related after-sales services and maintenance
services; development of products derived from
JMC brand light vehicle; overseas auto project-
contracting, export equipment, material and
related labour services.
development, manufacturing, sales, import &
Chongqing
export business of auto (including sedan),
Changan December 915000002028
Zhang Baolin 6320X6
engine, automotive components, die, tools,
Automobile 31, 1996
installation of machinery, technological
Co., Ltd.
consultant services.
Equity of listed company in domestic and aboard
market held by the entity controlled by the actual None
controlling party during the reporting period
Change of actual controlling parties
□Applicable □√Not Applicable
There was no change of actual controlling parties in the reporting period.
Ownership and control relations between the Company and the actual controlling
parties are shown as follows:
SASAC
Nanchang State-owned Assets
Supervision and Administration
Committee
43.11% 100%
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
JMH Ford
41.03% 32%
JMC
Actual controlling parties control the Company by the way of trust or other assets
management
□Applicable □√Not Applicable
30
IV. Other legal person shareholder holding more than 10% of total equity of the
Company
□Applicable □√Not Applicable
V. Shareholding reducing restriction to controlling shareholders, actual controlling
parties, restructuring parties and other commitment-making entities
□Applicable □√Not Applicable
Chapter VII Preferred Shares
□Applicable □√Not Applicable
JMC had no preferred shares in the reporting period.
31
Chapter VIII Directors, Supervisors, Senior Management and
Employees
1. Changes of Shares held by Directors, Supervisors and Senior Management
Name Position Gender Age Term of Shares at Share Shares at
Office the period- Change in the period-
beginning the reporting end
period
2017.06.29-
Qiu Tiangao Chairman Male 52 0 0 0
2020.06.28
2018.12.05-
Anning Chen Vice Chairman Male 58 0 0 0
2020.06.28
2017.06.29-
David Johnston Director Male 48 0 0 0
2020.06.28
Candidate Director 2019.03.01-
Manto Wong Male 56 0 0 0
& President 2020.06.28
2017.06.29-
Xiong Chunying Director & EVP Female 54 1,200 0 1,200
2020.06.28
2017.06.29-
Yuan Mingxue Director Male 50 0 0 0
2020.06.28
Independent 2017.06.29-
Lu Song Male 61 0 0 0
Director 2020.06.28
Independent 2017.06.29-
Wang Kun Female 42 0 0 0
Director 2020.06.28
Independent 2017.06.29-
Li Xianjun Male 51 0 0 0
Director 2020.06.28
2018.12.05-
Xiao Hu Chief supervisor Male 50 0 0 0
2020.06.28
2017.06.29-
Alvin Qing Liu Supervisor Male 61 0 0 0
2020.06.28
2017.06.29-
Zhang Jian Supervisor Male 49 40 0 40
2020.06.28
2017.06.28-
Ding Zhaoyang Supervisor Male 49 20 0 20
2020.06.28
2017.06.28-
Chen Guang Supervisor Male 45 0 0 0
2020.06.28
2017.06.29-
Jin Wenhui EVP Male 51 0 0 0
2020.06.28
2018.06.29-
Li Weihua CFO Female 41 0 0 0
2020.06.28
VP & Board 2017.06.29-
Wan Hong Male 57 0 0 0
Secretary 2020.06.28
2017.06.29-
Li Xiaojun VP Male 43 0 0 0
2020.06.28
2017.06.29-
Liu Shuying VP Female 56 0 0 0
2020.06.28
2017.06.29-
Mike Chang VP Male 52 0 0 0
2020.06.28
2017.06.29-
Christian Chen VP Male 46 0 0 0
2020.06.28
2017.06.29-
Wu Xiaojun VP Male 44 0 0 0
2020.06.28
2018.01.01-
Ding Wenmin VP Male 47 0 0 0
2020.06.28
2017.06.29-
Peter Fleet Ex Vice Chairman Male 51 0 0 0
2018.12.04
Thomas Fann Ex Director & Male 56 2017.06.29- 0 0 0
32
President 2019.02.28
2017.06.29-
Zhu Yi Ex Chief Supervisor Male 51 0 0 0
2018.12.04
Gong 2014.06.27-
Ex-CFO Female 45 0 0 0
Yuanyuan 2018.07.31
2015.07.01-
Zhu Shuixing Ex-VP Male 53 0 0 0
2018.08.15
2017.06.29-
Tim Slatter Ex-VP Male 44 0 0 0
2019.02.28
Total 1,260 0 1,260
2. Changes of Directors, Supervisors and Senior Management
Name Position Status Date Reason
Peter Fleet Vice Chairman Leave 2018.12.05 Work rotation
Zhu Yi Chief Supervisor Leave 2018.12.05 Work rotation
Gong Yuanyuan CFO Leave 2018.08.01 Work rotation
Resign from the vice president
Zhu Shuixing VP Leave 2018.08.16
position for the personal reasons
Thomas Fann Director & President Leave 2019.03.01 Work rotation
Tim Slatter VP Leave 2019.03.01 Work rotation
3. Particulars about working experience of Directors, Supervisors and senior
management
Directors and Candidate Director:
Mr. Qiu Tiangao, born in 1966, holds a Bachelor Degree in Mechanical
Manufacturing and a Master Degree in Industrial Engineering from Huazhong
University of Science and Technology, and is the Chairman of JMCG, Vice
Chairman of Jiangling Motor Holdings Co., Ltd., and Chairman of JMC. Mr. Qiu
Tiangao held various positions including General Manager, Chairman of
Nanchang Gear Co., Ltd., Chairman of Jiangxi JMCG Gear Co., Ltd., Vice
President of Jiangling Motor Holding Co., Ltd., and Director & General Manager of
JMCG.
Mr. Anning Chen, born in 1961, holds a Ph.D. in Engineering from the University
of Cincinnati, Ohio, U.S. and MBA from the University of Michigan Ross Business
School, Ann Arbor, Michigan, U.S., and is a Group Vice President of Ford Motor
Company, President and CEO of Ford Motor (China) Ltd., and Vice Chairman of
JMC. Mr. Anning Chen first began his distinguished career at Ford Motor
Company in 1992, and during his seventeen years at Ford, he held various
executive management roles. Most recently, Mr. Anning Chen was CEO of Chery
Automobile LTD, China as well as Chairman of the Board of Directors for Chery
Jaguar Land Rover Automotive, China.
Mr. David Johnston, born in 1970, holds a Bachelor Degree in Economics, Master
Degree in Economics and Manufacturing Leadership from Cambridge University,
United Kingdom, and is CFO of Ford Asia Pacific and a Director of JMC. Mr.
David Johnston held various positions including Controller and Finance Manager
of PAG, Volvo China CFO, Ford ASEAN CFO, Manufacturing Controller of Ford
Europe, PD Controller of Ford Europe, PD Vehicle Controller of Ford Global
Finance.
33
Mr. Manto Wong, born in 1962, holds a Bachelor’s Degree in Computer
Engineering and a Master’s Degree in Business Administration from the University
of Michigan, U.S.A., and is a Candidate Director and President of JMC. Mr. Manto
Wong held various positions including Manger of U.S. Market Analysis
Department of Ford, Chief Financial Officer of JMC, Chief Financial Officer of Ford
Japan operations, Director of Business Strategy for Asia Pacific of Ford, Vice
President and Chief Financial Officer for Ford Motor (China) Ltd., and Vice
President of Finance for Changan Ford.
Ms. Xiong Chunying, born in 1964, senior engineer, holds a Bachelor Degree in
Automobile Engineering from Jiangsu Engineering College, a Master Degree in
Industrial Economics from Jiangxi University of Finance and Economics and an
EMBA Degree from China Europe International Business School, and is a Director
of JMCG and a Director & First Executive Vice President of JMC, in charge of the
Company's product development and assists the President to support the overall
operation of the Company. Ms. Xiong Chunying held various positions including
Chief of Quality Management Department, Assistant to the President, Vice
President of JMC.
Mr. Yuan Mingxue, born in 1968, senior engineer, holds a Bachelor’s Degree in
Auto Engineering from Beijing Institute of Technology and an EMBA from China
Europe International Business School, and is a Standing Vice President of
Chongqing Changan Automobile Company Limited (“Changan Automobile”) and a
Director of JMC. Mr. Yuan Mingxue has held various positions including Chief of
Quality Department, Manager of Engine Plant for Changan Company, General
Manager of Nanjing Changan Auto Co., Ltd., Assistant to the President of
Changan Automobile and Executive Vice President of Jiangling Motor Holdings
Co., Ltd., Assistant to the President, Chief of Strategy Planning Department for
Changan Automobile, Assistant to the President and General Manager of
Overseas Business Development Department for Changan Automobile, and Vice
President of Changan Automobile.
Mr. Lu Song, born in 1957, professor and arbitrator, holds a Bachelor’s Degree in
Law from Peking University and a Master’s Degree in Law from China Foreign
Affairs University (“CFAU”) and Free University of Brussels respectively, and is a
professor of CFAU and the arbitrator of international arbitral institutions, Vice
President of the Chinese Society of Private International Law, Executive Council
of the Chinese Society of International Law, and an Independent Director of JMC.
Mr. Lu Song held various positions including Director of International Law Institute
of CFAU and Secretary General of the Chinese Society of International Law.
Ms. Wang Kun, born in 1976, associate professor, holds a Bachelor’s Degree in
Administration from Nankai University and a Doctor’s Degree in Accounting from
Hong Kong University of Science and Technology, and is the Assistant to Dean of
School of Economics and Management of Tsinghua University, Deputy Director of
Corporate Governance Center of Tsinghua University, and an Independent
Director of JMC. Ms. Wang Kun held position of lecturer in School of Economics
and Management of Tsinghua University.
Mr. Li Xianjun, born in 1967, holds a Bachelor’s Degree in Industrial Management
from Jilin University of Technology and a MBA, a Doctor’s Degree in Political
34
Economy from Jilin University, and is Head and Academic Director of School of
Automotive Engineering of Tsinghua University, and an Independent Director of
JMC. Mr. Li Xianjun has held various positions including Planner of Engine Plant
of FAW, Secretary of General Manager of Jilin Province Agricultural Machine
Corporation, General Manager of Planning Department of Jilin Province Feed
Company, and Lecturer of School of Business of Jilin University.
Supervisors:
Mr. Xiao Hu, born in 1968, holds a Bachelor’s Degree in Radio from Information
Science & Electronic Engineering Department of Zhejiang University, and is a
member of the Standing Committee of the CPC, the secretary of Discipline
Inspection Commission and Chairman of Supervisory Board for JMCG, and Chief
Supervisor of JMC. Mr. Xiao Hu has served as a cadre in the General Office of
the Nanchang Municipal People's Government, deputy director of the Office of the
Working Committee of the Nanchang Hi-tech Industrial Development Zone,
deputy director of the Software Industry Office of the Nanchang Hi-tech Industry
Development Zone Administrative Committee, deputy head of the Organization
Department of the Working Committee of Nanchang Hi-tech Industry
Development Zone, deputy director of the Personnel and Labor Bureau of the
Nanchang Hi-tech Industry Development Zone Administrative Committee, Head of
the Organization Department of the Working Committee of Nanchang Hi-tech
Industry Development Zone, and the Director of the Personnel Bureau of the
Nanchang Hi-tech Industry Development Zone Administrative Committee.
Mr. Alvin Qing Liu, born in 1957, holds a Master’s Degree in International
Economics and a Jurisprudence Doctor’s Degree from Marquette University,
U.S.A, and is a Vice President and General Counsel of Ford Asia Pacific, Director
& Vice Chairman of Ford Motor (China) Ltd, and a Supervisor of JMC. Mr. Liu was
a practicing attorney at Ruder, Ware and Michler Law Firm, U.S.A., counsel of
Asia Pacific Region, Chrysler Corporation, U.S.A., counsel of Mergers and
Acquisitions Group and Northeast Asia Operations, Daimler-Chrysler A.G.,
Germany, an International Counsel in the Office of General Counsel, Ford Motor
Company, and Vice President & General Counsel of Ford Motor (China), Ltd.
Mr. Zhang Jian, born in 1969, holds a College Degree in Secretarial Professional
from North China University of Technology, and is Chairman of JMCG Labor
Union, Chief Supervisor of Jiangling Motor Holdings Co., Ltd, and a Supervisor of
JMC. Mr. Zhang Jian held various positions including Secretary of Chairman and
Deputy Director of Office for JMC, Director of Office, Director of Communist Party
Office, Chief of Publicity Department for JMCG, Assistant to General Manger of
JMCG, and Senior Vice Chairman of JMCG Labor Union.
Mr. Ding Zhaoyang, born in 1969, holds a MBA Degree from Université de
Poitiers, France, and is a Supervisor of JMC and Chief of Public & legal Affair
Department for JMC. Mr. Ding Zhaoyang held various positions including Deputy
Chief, Chief of Public Relationship Department of JMC.
Mr. Chen Guang, born in 1973, holds a Bachelor’s Degree in Automobile
Engineering from Hunan University, and is a Supervisor of JMC and a Vice
General Manager of JMC Heavy Duty Vehicle Co., Ltd. Mr. Chen Guang held
various positions including Deputy Chief of Quality Management Department,
35
Deputy Plant Manager of Assembly Plant for Jiangling-Isuzu Motors Company
Limited, and Plant Manager of Assembly Plant for JMC.
Senior management:
Mr. Manto Wong, please refer to the part of Directors and Candidate Director.
Ms. Xiong Chunying, please refer to the part of Directors and Candidate Director.
Mr. Jin Wenhui, born in 1967, senior engineer, holds a Bachelor’s Degree in
Mechanical Manufacturing, a Master’s Degree in Mechanical Engineering from
Huazhong University of Science and Technology and an EMBA Degree in China
Europe International Business School, and is an Executive Vice President of JMC,
in charge of sales and manufacturing management. Mr. Jin Wenhui held various
positions including Chief of Manufacturing Department, Assistant to the President,
Vice President of JMC, Director, General Manager of JMCG Jingma Motors Co.,
Ltd., and Executive Vice General Manager of Jiangxi-Isuzu Motors Co., Ltd.
Ms. Li Weihua, born in 1977, holds a Bachelor’s Degree in International Economic
Law from Shanghai University of Finance and Economics and a MBA from
Canada York University Schulich School of Business, and is the CFO of JMC, in
charge of financial management. Ms. Li Weihua has held various positions
including Finance Analyst of Ford China, Finance Analyst, and Finance Manager
of Ford Motor Research & Engineering (Nanjing) Co., Ltd., MFG Finance Manager,
PD Finance Manager, MFG Finance Controller, and PD Finance Controller for C
and C SUV of Ford AP, and CFO of Ford Lioho.
Mr. Wan Hong, born in 1961, holds a Master of Business Administration Degree
from Jiangxi University of Finance & Economics, and is the Vice President &
Board Secretary of JMC, in charge of the Company human resources and
relevant duties of Board Secretary. Mr. Wan Hong held various positions including
Chief of Labour and Personnel Department, Assistant to the President, and Vice
President for JMC.
Mr. Li Xiaojun, born in 1975, senior engineer, holds a Bachelor’s Degree in
Mechanical Design & Manufacturing from Jiangxi University of Science and
Technology and a Master’s Degree in Industrial Engineering from Huazhong
University of Science and Technology, and is a Vice President of JMC, in charge
of quality, manufacturing management and parts business. Mr. Li Xiaojun held
various positions including Chief of JMC Quality Management Department, Plant
Manager of Assembly Plant and Assistant to the President for JMC.
Ms. Liu Shuying, born in 1962, senior engineer, holds a Bachelor’s Degree in
Mechanical Manufacturing from Jiangxi University of Technology, and is a Vice
President of JMC, in charge of product development. Ms. Liu Shuying held
various positions including Chief of Quality & Supervision Department of
Jiangling-Isuzu Motors Company Limited, Director of Product Development
Center and Assistant to the President of JMC.
Mr. Mike Chang, born in 1966, holds a Bachelor Degree in Naval Architecture
Engineering from National Taiwan University, China Taiwan and a Master Degree
in Manufacturing Engineering from University of California, Los Angeles, U.S.A.,
36
and is a Vice President of JMC, in charge of Xiaolan Branch and Engine Plant. Mr.
Mike Chang held various positions including Paint Area Manger, Final Assembly
Plant Area Manager, Manufacturing Director, Board member of Ford Lio Ho, Vice
General Manager of BinXin Paper Company for Ting Hsin International Group,
Manufacturing Director of Nam Chow Foods Co., China, General Manager of
Tianjin Chuan Shun Foods Co., LTD, Tianjin Ting Fung Starch Development Co.,
LTD, and Hangzhou StarPro Starch Co., LTD for Ting Hsin International Group,
and General Manager of Changan Ford Automobile Co., Ltd. Harbin Branch.
Mr. Christian Chen, born in 1972, semi-senior engineer, holds a Bachelor’s
Degree in Automotive Engineering from Wuhan University of Technology and a
MBA from Wuhan University, and is a Vice President of JMC, in charge of
purchasing business. Mr. Christian Chen held various positions including Product
Development Manager of Dongfeng-Citroen, Quality Project Engineer of TUV,
STA, Buyer, Purchasing Manager and Senior Purchasing Manager of Ford Motor
Company.
Mr. Wu Xiaojun, born in 1974, holds a Bachelor’s Degree from Wuhan University
of Technology and a MBA from Jiangxi University of Finance and Economics, and
is a Vice President of JMC and General Manager of JMC Heavy Duty Vehicle Co.,
Ltd., in charge of heavy duty truck business. Mr. Wu Xiaojun held various
positions including Chief of Quality Department, Assistant to the President for
JMC, and Executive Deputy General Manager of JMC Heavy Duty Vehicle Co.,
Ltd.
Mr. Ding Wenming, born in 1972, holds a Bachelor’s Degree in Automobile
Exertion from Wuhan University of Technology, and is a Vice President of JMC, in
charge of Company level strategic planning, product planning and project
management. Mr. Ding Wenming held various positions including Deputy Chief of
Product Development Center, Chief of Product Planning & Program Management
Department, and Assistant to the President for JMC.
Positions at the shareholder entities
□√Applicable □Not Applicable
Name Shareholder Title Term of Compensation
Entity Office Paid by
Shareholder
Entity (Y/N)
Qiu Tiangao JMH Vice Chairman 2016.3— N
Group Vice President 2018.10— Y
Anning Chen Ford and President, Ford
China
CFO, Ford Asia 2017.7— Y
David Johnston Ford
Pacific
Yuan Mingxue JMH Director 2015.7— N
Vice President and 2009.1— Y
Alvin Qing Liu Ford General Counsel,
Ford Asia Pacific
37
Particulars about positions and concurrent positions in other entities other than
shareholder entities
□√Applicable □Not Applicable
Name Entity Title
JMCG Chairman
JMCG Jingma Motors Co., Ltd. Chairman
Jiangling Dingsheng Investment Co.,
Chairman
Ltd.
Qiu Tiangao JMCG New Energy Vehicle Co., Ltd. Chairman
Jiangxi ISUZU Co., Ltd. Chairman
GETRAG (Jiangxi) Transmission
Chairman
Company
JMC Heavy Duty Vehicle Co., Ltd. Chairman
Ford Motor (China) Ltd. President & CEO
Anning Chen Changan Ford Automobile Co., Ltd. Vice Chairman
Fordshuttle Trading (Shanghai) Co.,
Chairman
Ltd.
David Ford Motor (China) Ltd. Director
Johnston Changan Ford Automobile Co., Ltd. Director
Chongqing Changan Automobile Co., Standing Vice
Yuan Mingxue
Ltd. President
Lu Song China Foreign Affairs University Professor
Assistant to Dean of
School of Economics
and Management &
Wang Kun Tsinghua University
Deputy Director of
Corporate Governance
Center
Head and Academic
Director of School of
Li Xianjun Tsinghua University
Automotive
Engineering
JMCG Chief supervisor
JMCG Jingma Motors Co., Ltd. Supervisor
Jiangling Dingsheng Investment Co.,
Supervisor
Ltd.
Xiao Hu
Jiangxi Jiangling Real Estate Co., Ltd. Chief supervisor
Jiangxi Jiangling Chassis Co., Ltd. Supervisor
Jiangxi Jiangling Group Special Vehicle
Supervisor
Co., Ltd.
Changan Ford Mazda Engine Co., Ltd. Director
Ford Motor (China) Ltd. Director
Changan Ford Automobile Co., Ltd. Director
Ford Motor Research (Nanjing) Co.,
Alvin Qing Liu Supervisor
Ltd.
Ford Motor Research Test(Nanjing)
Supervisor
Co., Ltd.
Fordshuttle Trading (Shanghai) Co., Supervisor
38
Ltd.
JMCG Director
Xiong Jiangxi Jiangling Motors Imp. & Exp.
Director
Chunying Co., Ltd.
JMC Heavy Duty Vehicle Co., Ltd. Director
Jiangxi Jiangling Group Special Vehicle
Chairman
Co., Ltd.
Jiangxi Jiangling Special Purpose
Director
Vehicle Co., Ltd.
Legal Representative
Jiangling Motor Sales Co., Ltd.
& Executive Director
JMC Heavy Duty Vehicle Co., Ltd. Director
Jin Wenhui
Hanon Systems (Nanchang) Co., Ltd. Director
Shenzhen Fujiang New Energy
Legal Representative
Automobile Sales Co., Ltd.
Guangzhou Fujiang New Energy Legal Representative
Automobile Sales Co., Ltd. & Executive Director
Xiamen Fujiang New Energy Legal Representative
Automobile Sales Co., Ltd. & Executive Director
Jiangling Motors Sales Co., Ltd. Supervisor
JMC Heavy Duty Vehicle Co., Ltd. Director
Hanon Systems (Nanchang) Co., Ltd. Director
Shenzhen Fujiang New Energy
Supervisor
Li Weihua Automobile Sales Co., Ltd.
Guangzhou Fujiang New Energy
Supervisor
Automobile Sales Co., Ltd.
Xiamen Fujiang New Energy
Supervisor
Automobile Sales Co., Ltd.
Jiangxi Hongdu Aviation Industry Co.,
Independent Director
Wan Hong Ltd.
JMC Heavy Duty Vehicle Co., Ltd. Director
Director & General
Wu Xiaojun JMC Heavy Duty Vehicle Co., Ltd.
Manager,
Chen Guang JMC Heavy Duty Vehicle Co., Ltd. Vice General Manager
Penalties from securities regulator to the present and resigned Directors,
Supervisors and senior executives in the recently three years
□Applicable □√Not Applicable
4. Compensation of Directors, Supervisors and Senior Executives
Decision-making procedure, determination of basis, and actual payment regarding
the compensation of the Directors, Supervisors and senior executives
Directors and Supervisors who did not concurrently hold other management
positions in JMC were not paid by JMC. Director Qiu Tiangao, Supervisors Xiao
Hu and Zhang Jian were paid by JMCG. Directors Anning Chen, David Johnston
and Supervisor Alvin Qing Liu were paid by Ford. Director Yuan Mingxue was
paid by Chongqing Changan Automobile Co., Ltd.
39
(1) In accordance with JMC Executive Compensation Scheme approved by the
Board of Directors, the compensation for the Chinese-side senior management
consists of base salary and floating bonus. The base salary level is determined
according the grade of the senior executives, and the floating bones shall be paid
according to the operating performance. 70% of the bonus will be distributed in
this year, and the rest 30% will be distributed in the next three years. In 2018, the
Company paid annual compensation before tax of approximately RMB 1,650
thousand to EVP Xiong Chunying, paid approximately RMB 1,440 thousand to
EVP Jin Wenhui, paid approximately RMB 1,180 thousand per person to VP &
Board Secretary Wan Hong, VP Liu Shuying, VP Li Xiaojun and VP Liu Shuying,
paid VP Wu Xiaojun approximately RMB 1,310 thousand, paid VP Ding Wenming
approximately RMB 1,390 thousand, paid Ex-VP Zhu Shuixing approximately
RMB 920 thousand,. Two employee-representative supervisors, Mr. Ding
Zhaoyang and Mr. Chen Guang, were paid annual compensation before tax of
about RMB 440 thousand and RMB 580 thousand respectively. The total
compensation before tax paid by JMC for the aforesaid persons was about RMB
11.27 million in the reporting period, including the long-term incentive of RMB 1.18
million deferred from the previous years.
(2) JMC pays annual compensation for Ford-seconded senior management
personnel to Ford in accordance with the revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. In 2018, JMC
should pay US$ 375 thousand per person to Ford for Ex Director & President
Thomas Fann, Ex VP Tim Slatter and VP Mike Chang, pay RMB 750 thousand for
VP Christian Chen, pay RMB 312.5 thousand for CFO Li Weihua, and pay RMB
437.5 thousand for Ex CFO Gong Yuanyuan. These payments made by JMC to
Ford do not reflect the actual salaries earned by Ford-seconded senior
management.
(3) Pursuant to the resolutions of JMC 2011 Annual Shareholder’s Meeting, the
annual compensation for the JMC Independent Directors is RMB 100 thousand
per person, and JMC bears their travel-related expenses associated with JMC’s
business.
Table on compensation of the Directors, Supervisors and senior executives in the
reporting period
Unit: RMB’ 000
Compensation Compensation
Present
Name Position Gender Age Before Tax Paid Paid by Related
(Y/N)
by JMC Party (Y/N)
Qiu Tiangao Chairman Male 52 Y 0 Y
Anning Chen Vice Chairman Male 58 Y 0 Y
David Johnston Director Male 48 Y 0 Y
Candidate
Manto Wong Director & Male 56 Y 0 Y
President
Xiong Chunying Director & EVP Female 54 Y 1,650 N
Yuan Mingxue Director Male 50 Y 0 Y
Independent
Lu Song Male 61 Y 100 N
Director
Independent
Wang Kun Female 42 Y 100 N
Director
Li Xianjun Independent Male 51 Y 100 N
40
Director
Xiao Hu Chief supervisor Male 51 Y 0 Y
Alvin Qing Liu Supervisor Male 61 Y 0 Y
Zhang Jian Supervisor Male 49 Y 0 Y
Ding Zhaoyang Supervisor Male 49 Y 440 N
Chen Guang Supervisor Male 45 Y 580 N
Jin Wenhui EVP Male 51 Y 1,440 N
Li Weihua CFO Female 41 Y * N
VP & Board
Wan Hong Male 57 Y 1,180 N
Secretary
Li Xiaojun VP Male 42 Y 1,180 N
Liu Shuying VP Female 56 Y 1,180 N
Mike Chang VP Male 52 Y * N
Christian Chen VP Male 46 Y * N
Wu Xiaojun VP Male 44 Y 1,310 N
Ding Wenming VP Male 47 Y 1,390 N
Peter Fleet Vice Chairman Male 51 N 0 Y
Director &
Thomas Fann Male 56 N * N
President
Chief
Zhu Yi Male 48 N 0 Y
Supervisor
Gong Yuanyuan CFO Female 45 N * N
Zhu Shuixing VP Male 53 N 920 N
Tim Slatter VP Male 44 N * N
* Please refer to the relevant statement in the Article 4 Compensation of Directors,
Supervisors and Senior Executives of this Chapter.
Granted equity incentive to the Directors, Supervisors and senior executives in the
reporting period
□Applicable □√Not Applicable
5. Employees
i. Employees, Professional Structure and Educational Level
Employees in parent company (persons) 14,449
Employees in subsidiaries (persons) 2,091
Total employees (persons) 16,540
Total employees paid compensation (persons) 17,395
Retired employees bore retirement benefits in parent company and its subsidiaries 806
Professional Structure
Type Employees (Persons)
Production Worker 11,058
Sales Personnel 692
Technical Personnel 3,589
Finance Personnel 245
Administrative Staff 956
Total 16,540
Educational Level
Type Employees (Persons)
Master degree and higher 1,012
Bachelor degree 3,802
Polytechnic school degree 2,010
Below polytechnic school degree 9,716
Total 16,540
41
ii. Compensation Policy
The Company strictly complies with the relevant requirements of national labor
laws and regulations, provides a safe and comfortable workplace, and
continuously establishes and improves the salary management mechanism that
matches the employee’s income with the company’s performance, employee’s
individual performance and ability. By implementing policies such as the
employee’s annual salary adjustment, annual performance rewards, etc. that
allow employees to share company development achievements. At the same time,
we constantly improve the employee welfare policy to meet the diverse individual
needs of employees and enhance employee experience and satisfaction.
iii. Training
In 2018, JMC’s training expense was RMB 13,960 thousand, and training person-
time were 93,000 with training stratification of 97%. Please refer to 2018 JMC
Corporation Social Responsibility Report for more details on 2018 training plan
implementation.
iv. Labour outsourcing
□Applicable □√Not Applicable
Chapter IX Corporate Governance Structure
1. Status of the Corporate Governance in JMC
Difference between actual situation of corporate governance in JMC and that of
requirements of listed company corporate governance promulgated by CSRC
□Applicable □√Not Applicable
During the reporting period, the Company strictly abided by the Company Law,
the Securities Law, the Code of Corporate Governance for Listed Companies in
China, the Rules Governing Listing of Stock on Shenzhen Stock Exchange, as
well as relevant laws and regulations, to carry out corporate governance activities
and continued to improve its corporate governance.
2. Separation between JMC and the Controlling Shareholders in respect of
Personnel, Assets and Finance, and Independence concerning Organization and
Business:
(1) With respect to personnel matters, the positions of chairman and president are
held by different individuals; JMC’s senior management do not hold positions
other than director positions with its controlling shareholders; JMC senior
management personnel are paid by JMC; labor, personnel matters and
compensation management of JMC are completely independent.
(2) With respect to assets, JMC assets are complete. The assets utilized by JMC,
including production system, supporting production system and peripheral
facilities, and non-patent technology, are owned and/or controlled by JMC.
(3) With respect to finance, JMC has an independent finance department and
independent accounting system, and has a uniform and independent accounting
system and financial control system for its branches and subsidiaries. JMC has its
own bank accounts, and there are no bank accounts jointly owned by JMC and its
42
controlling shareholders. JMC pays taxes independently in accordance with
relevant laws.
(4) With respect to organization, JMC’s organization is independent, complete and
scientifically established with a sound and efficient operating mechanism. The
establishment and the operation of JMC’s corporate governance are strictly
carried out per the Articles of Association of JMC. Production and administrative
management are independent from the controlling shareholders. JMC has
established an organization structure that meets the need for ongoing
development.
(5) With respect to business, JMC has independent purchasing, production and
sales systems. The purchasing, production and sales of main materials and
products are carried out through its own purchasing, production & sales functions.
JMC is independent from the controlling shareholders in respect to its business,
and has independent and complete business and self-sufficient operating
capability.
3. Horizontal Competition
□Applicable □√Not Applicable
4. Introduction to the Shareholders’ Meeting
I. Index to the Shareholders’ Meeting in the reporting period
Investor
Convening Disclosure
Meeting Meeting Type Participation Index
Date Date
Ratio
Announcement of this
Special Shareholders’
2018 First Special Special
Meeting (No: 2018-
Shareholders’ Shareholders’ 77.59% 2018.02.06 2018.02.07
008) was published in
Meeting Meeting
the website
www.cninfo.com.cn.
Announcement of this
Annual Shareholders’
2018Annual Annual
Meeting (No: 2018-
Shareholders’ Shareholders’ 76.91% 2018.06.26 2018.06.27
028) was published in
Meeting Meeting
the website
www.cninfo.com.cn.
Announcement of this
2018 Second Special Shareholders’
Special
Special Meeting (No: 2018-
Shareholders’ 77.70% 2018.12.05 2018.12.06
Shareholders’ 051) was published in
Meeting
Meeting the website
www.cninfo.com.cn.
II. Special Shareholders’ Meeting convened by preferred shareholders whose
voting rights were restored
□Applicable □√Not Applicable
43
5. Independent Directors’ Performance of Duty
I. Particulars about the directors’ attendance to the Board meeting and the
Shareholders’ Meeting
Not to Presence at
present in the
Presence
Required person in Shareholders’
Presence in Form Presence
Name Board Absence two Meeting
in Person of Paper by Proxy
Attendance consecutive
Meeting
meetings
(Y/N)
Lu Song 19 3 15 1 0 N 1
Wang Kun 19 3 15 1 0 N 1
Li Xianjun 19 1 15 3 0 N 1
II. Dissent from Independent Directors
□Yes □√No
The Independent Directors of the Company had no dissent to the relevant
proposal of the Company in the reporting period.
III. Other introduction to Independent Directors’ Performance of Duty
□√Yes □No
JMC has appointed three Independent Directors so far. The Independent
Directors exercised their fiduciary duties on routine work and major decision-
making of the Board of Directors. They studied every proposal reviewed by the
Board of Directors thoroughly and raised their opinions, inquired about major
events which required opinions from the Independent Directors and issued their
written opinions, and actively engaged in the affairs of the Compensation
Committee and the Audit Committee in the reporting period, to protect the
interests of the Company and all the shareholders.
6. 2018 Diligence Report of the Committees under the Board of Directors
I. Work of the Audit Committee
A. Work Summary Report of the Audit Committee
According to its Working Rules, the Audit Committee diligently executed its duties
and delivered guiding opinions. The primary tasks completed during the reporting
period were as follows.
i. The Audit Committee reviewed the Company’s internal control work plan and
internal control implementation results regularly.
ii. The Audit Committee reviewed the Eight Accounting Provisions and Write-off
proposal and submitted it to the Board for approval.
iii. The Audit Committee reviewed the proposal on Implementing New Revenue
Recognition Standard and submitted it to the Board for approval.
iv. The Audit Committee reviewed the independent auditor’s audit plan, letter of
engagement and risks and controls.
v. The Audit Committee has coordinated with the independent auditor to allow the
audit and associated financial report can be submitted within the appointed
period.
vi. The Audit Committee reviewed the financial statements before the certified
auditor’s on-site audit, after receiving the certified auditor’s initial and final audit
opinions. The Committee communicated with auditors face to face over
important events and major accounting estimations, audit adjustment items and
important accounting policies which potentially affect the financial statements,
44
and believes that the financial statements are truthful, accurate and fully
reflect the Company’s actual status.
vii. The Audit Committee submitted the Summary Work Report of the Independent
Auditor for 2018 to Board for review.
viii. The Audit Committee reviewed the Internal Control Self-assessment Report
and agreed to submit this to the Board for approval.
B. Written Opinions on JMC Financial Statements
The Audit Committee reviewed the unaudited financial statements prepared by
the Company and issued its written opinions as follows on January 16, 2019: the
Audit Committee reviewed the financial statements compiled by JMC and believes
that the financial statements have in all material aspects reflected the actual
status of the Company. The Audit Committee would continue to keep in close
contact with the external auditor. After receiving the auditor’s initial audit
comments, the committee would review the financial statements once again.
The Audit Committee reviewed the financial statements prepared by JMC after the
external auditor issued its initial audit opinions and issued written opinions as
follows on February 26, 2019: the financial statements have been prepared
according to China GAAP and the Company’s financial policies; and, the financial
statements reported gives a true, accurate and fair view of the financial position of
the Company as at December 31, 2018, and of its financial performance and its
cash flows for the year then ended, in all material respects.
The Audit Committee made resolutions on the audited 2018 financial statements
as follows on March 7, 2019: the Audit Committee reviewed the financial
statements after the certified public auditor issued its final audit opinion, and the
Audit Committee believed that the financial statements reported, including the
Balance Sheet, Income Statement and Cash Flow, give a true, accurate and fair
view of the financial position of the Company as at December 31, 2018, and of its
financial performance and its cash flows for the year then ended, in all material
respects. The Audit Committee concurred to submit for Board approval.
C. 2018 Independent Audit Work Summary Report
The Audit Committee reviewed the 2018 Audit Work Plan submitted by the
independent auditing firm PwC Zhong Tian via communications with the PwC
Zhong Tian leading auditor. Agreement was achieved regarding timing and
content and both parties believe that the plan ensures a comprehensive
completion of the 2018 audit tasks.
The independent auditor thoroughly communicated with the management and the
Audit Committee Members regarding: accounting policies implementation,
revenue recognition, significant accounting estimates related to accrued expenses,
accounting treatment for eight Provisions, Impairment of long term assets, and
research and development expenses, related party transaction recognition and
fairness and information disclosure. They have also discussed about issues
identified and the corrective actions. As a result, all parties have a more in-depth
understanding of the business status, financial status and internal control.
Therefore, a solid foundation was laid for a fair audit conclusion issued by the
independent auditor.
45
The Audit Committee believed that the external certified auditor had executed the
audit work consistently with the requirements of China Certified Auditor
Independent Audit Principles. The audit period was adequate and the allocation of
personnel resources was sufficient to deliver an audit report which accurately
reflects the Company’s financial position as at December 31, 2018, and the
financial performance and cash flows for the year then ended. The audit
conclusion fairly reflects the Company’s actual status.
II. 2018 Diligence Report of the Compensation Committee
In the reporting period, the Compensation Committee exercised its duties as
follows:
i. reviewed and approved the Proposal on 2017 Year-end Bonus for the
Company’s senior executives;
ii. Reviewed and approved the adjustment of the annual total cash income target
of the Company’s senior executives in 2018;
iii. Reviewed and approved the KPIs for the Company’s senior executives in 2018,
and;
iv. Reviewed and approved the 2017 Due Diligence Report of the Compensation
Committee.
The Compensation Committee’s opinions on the annual compensation of the
Directors, Supervisors and senior management disclosed in this Report are as
follows:
The 2018 annual compensation for the Chinese-side senior management was
paid upon the principles promulgated in the JMC Executive Compensation
Scheme. The 2018 annual compensation for Ford-seconded senior management
personnel was paid in accordance with revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. The annual
compensation for the Director and Supervisor that the Company paid abided by
JMC salary management system.
In the reporting period, the annual compensation of the Directors, Supervisors and
senior executives disclosed in this Report was complied with JMC salary
management system, and there was neither breach nor inconsistency of this
system.
7. Works of Supervisory Board
Risks found by the Supervisory Board in the reporting period
□Yes □√No
The Supervisory Board had no dissent on inspection items in the reporting period.
8. Compensation & Incentive Mechanism for Senior Management in the Reporting
Period
The Compensation Committee of the Company approved the 2018 year-end
bonus plan for the senior executive based on the actual performance of the key
performance indicators for the senior executives, which is set out in JMC
Executive Compensation Scheme approved by the Board of Directors of the
Company, and approved to adjust the Year 2019 total income target of the senior
executives based on market conditions. These plans are applicable only to the
Chinese-side senior management.
46
9. Internal Control
I. Major defect of internal control in the reporting period
□Yes □√No
II. Internal Control Self-assessment Report
Issuance date March 28, 2019
Index www.cninfo.com.cn
Total value of assets of the entities in scope counts as % of that disclosed in the
100.00%
consolidated financial statements
Total value of operating revenue of the entities in scope counts as % of that
100.00%
disclosed in the consolidated financial statements
Deficiency Determination Criteria
Type Financial Report Non-financial Report
Material Weakness: An error that
changes the trend of results, changes
Material Weakness: Unscientific
profit to loss or loss to profit
decision making process such as
Ineffective anti-fraud process or any
incorrect decisions that result in
fraud involving senior management
unsuccessful mergers and
Ineffective control over accounting
acquisitions; Major regulatory
policies Ineffective oversight by the
compliance issues; Frequent media
Audit Committee Significant
reports harmful to the Company’s
Deficiency; Errors in management
reputation; A lack of control within
reporting systems or Corporate
key business processes or
accounting records that could lead to
systematic breakdown of control
incorrect management decisions;
policies
Actions inconsistent with Company
Qualitative Criteria Material weakness identified in the
values, policies and other Corporate
self-assessment without any action
guidelines that are likely to
plan implemented Significant
significantly impact cost, quality,
Deficiency; control deficiency, or
customer satisfaction, reputation, or
combination of control deficiencies,
competitive advantage; Control
that does not meet the criteria for
issues in IT infrastructure or
material weakness but deserves the
applications that may lead to
concerns of the Audit Committee and
impairment of Company operations.
the Board of Directors. Minor
Any actions indicating fraud or theft
Deficiency Any control deficiencies
that is significant in value Minor
that do not meet the criteria for
Deficiency; Any control deficiencies
material or significant.
that do not meet the criteria for
material or significant.
Material Weakness Misstatement in the
Income Statement is more than 5% of
the annual profit before taxation;
Misclassification in the Income Please refer to internal control
deficiency over financial reporting for
Quantitative Criteria Statement is more than 0.4% of the
the criteria for non-financial reporting
annual sales revenue internal control.
Adjustment of net assets in the Balance
Sheet is more than 1% of the
shareholders' equity Adjustment of asset
47
or liability in the Balance Sheet is more
than 0.6% of the total assets;
Adjustment in the Cash Flow Statement
is more than 3% of the total net cash
flow in the operating activities.
Significant Deficiency
Misstatement in the Income Statement is
more than 2.5% of the annual profit
before taxation; Misclassification in the
Income Statement is more than 0.2% of
the annual sales revenue; Adjustment of
net assets in the Balance Sheet is more
than 0.5% of the Shareholders’ equity;
Adjustment of asset or liability in the
Balance Sheet is more than 0.3% of the
Total assets; Adjustment in the Cash
Flow Statement is more than 1.5% of the
total net cash flow from the operating
activities. Minor Deficiency All the
deficiencies that do not meet the
quantitative criteria for significant.
Number of Material
Weakness in 0
financial report
Number of Material
Weakness in non- 0
financial report
Number of Significant
Deficiency in financial 0
report
Number of Significant
Deficiency in non- 0
financial report
10. Internal Control Audit Report
□√Applicable □Not Applicable
Opinions in the Internal Control Audit Report
Internal Control Audit Report
Disclosed
Disclosed or not
Issuance date March 28, 2019
Index www.cninfo.com.cn
Type of Opinion Standard and unqualified opinions
Major Defect regarding non-
No
financial report or no
Abnormal opinion issued by the accounting firm
□Yes □√No
Opinion issued by the accounting firm keeps the same with that of self-assessment
report made by the Board
□√Yes □No
48
Chapter X Corporate Bond
Whether the Company owns the corporate bond that it lists in the securities
exchange and is undue or is not paid in full although it’s due
No.
Chapter XI Financial Statements
Type of Audit Report Standard and Unqualified Opinion
Signature date March 26, 2019
Name of Auditor PricewaterhouseCoopers Zhong Tian LLP
Document No. of Audit Report 2019/SH-0175
49
Independent Auditor’s Report
2019/SH-0175
(Page 1 of 5)
To the Shareholders of Jiangling Motors Corporation, Ltd.
Opinion
What we have audited
The consolidated financial statements of Jiangling Motors Corporation, Ltd. (the “Company”) and
its subsidiaries (the “Group”) set out on pages 55 to 127, which comprise:
the consolidated statement of financial position as at 31 December 2018;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant
accounting policies.
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 December 2018, and its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion .
Independence
We are independent of the Group in accordance with the Code of Ethics for Professional
Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have
fulfilled our other ethical responsibilities in accordance with the CICPA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
Research and development expenditures
Impairment of long term assets
50
2019/SH-0175
(Page 2 of 5)
Key Audit Matter How our audit addressed the Key Audit Matter
Research and development We obtained a breakdown, by value, of all individual
expenditures research and development projects and reconciled this to
the amounts of research and development expenses and
Refer to note 14 to the capitalised research and development projects, which were
consolidated financial recorded in the general ledger, identifying no reconciling
statements. differences.
We focussed on this area due to We tested the projects where research and development
the incurred amount of research expenses were in excess of RMB31,000,000, together with a
and development expenditures sample of randomly selected immaterial projects from the
(RMB1,735,369,000 in 2018), the remaining population, as follows:
amount of the development costs We obtained the lists of expenses by nature on selected
capitalised (RMB71,814,000 in projects and inspected contracts and underlying invoices
2018), and the fact that there is which were directly related to those projects. We also
management’s judgement checked the reasonableness of the indirect expenses
involved in assessing whether the attributable to relevant projects, including employment
criteria set out in the accounting costs and depreciation expenses, by understanding the
policies (note 2.10(2)) required allocating method and inspecting the supporting for the
assembling and allocating process of those indirect
for capitalisation of such
expenses.
development costs had been met,
We also checked the recorded research and development
particularly: costs of those projects with budgeted amounts and
The technical feasibility of the discuss with project manager regarding to the status of
project. selected projects.
The likelihood of the project
generating sufficient future We found no material issues arising from the above
economic benefits.
procedures.
The timing to start
capitalisation.
We obtained the lists of capitalised projects and tested those
projects with the capitalised amounts over
We had particular regard to the
RMB16,000,000. We obtained explanations from
fact that the Group has continued
management of why those projects were considered to be
to invest in the technical
capital in nature, in terms of how the specific requirements
improvements for its automobile
of the relevant accounting standards, most notably of IAS
products, and therefore we
38 were met. We also conducted interviews with individual
focussed on the accuracy and
project managers responsible for those projects selected to
completeness of recorded
corroborate these explanations, which enabled us to
research and development
independently assess whether the projects met all the
expenditures and whether the
criteria for capitalisation set out in accounting standards. In
economic benefits of the projects
addition, we reviewed the selected projects’ inspection
under development supported
reports at different phases including the reports which
the amounts capitalised.
indicated that the subject projects entered into
developmental stage and related management and board
As part of our work we also
meeting minutes. We found the information we gathered
focused on management’s
from those documents to be consistent with explanations
judgements regarding whether
obtained from individual project managers and to be in line
capitalised costs were of a
with management’s assessment that the costs met the
development stage rather than
relevant capitalisation criteria. We considered
research stage (which would result
management’s judgements on whether those selected
in the costs being expensed rather
projects should be capitalised were appropriate.
than capitalised), and whether
costs, including employment
(payroll) costs, were directly
attributable to relevant projects.
51
2019/SH-0175
(Page 3 of 5)
Key Audit Matter How our audit addressed the Key Audit Matter
Impairment of long term We evaluated management’s impairment calculations
assets assessing the future cash flow forecasts used in the models,
and the process by which they were drawn up, including
Refer to note 2.11, note 4.1(2) comparing them to the latest Board approved budgets, and
and note 12 to the consolidated testing the underlying calculations. We found that
financial statements. management had followed their clearly documented process
for drawing up future cash flow forecasts, which was subject
We focused on this area because to timely oversight and challenge by the directors and which
JMC Heavy Duty Vehicle Co., was consistent with the Board’s approved budgets.
Ltd. (“JMCH”), the subsidiary
of the Group has incurred We challenged:
accumulated losses of the key assumptions for revenue growth rate, sales growth
RMB1,190,746,000 as at 31 rate, discount rate and long-term growth rate in the
December 2018, which forecasts by comparing them to historical results, and
indicates there may be economic and industry forecasts;
impairment on its long term the discount rate by assessing the cost of capital for the
assets, mainly including CGU and comparable organisations.
property, plant and equipment We considered the key assumptions used were reasonably
with the amount of set in place.
RMB1,354,783,000. The
determination of whether or not We discussed the action plans in place and evaluated the
an impairment charge for long reasonableness of those plans, by comparing those action
term assets for JMCH is plans with the performance in prior years, automobile
necessary to involve significant industry developing trends and existing market player’s
judgements of management performance. We considered those action plans were
about the future results of the reasonably set in place.
business and assessment of
future plans of the JMCH’s We also tested whether the required CGU performance
operations. improvement had ever been attained by the relevant CGU
historically. We compared the current year actual results
Management considers JMCH with the prior year forecast to evaluate whether the
to be a cash generating unit assumptions used in the prior year forecast were over
(“CGU”) and has calculated the optimistic. We found that the comparison analysis made by
fair value less costs of disposal management between the actual results and forecasted
as the recoverable amount of figures were reasonable.
this CGU. The fair value less
costs of disposal is based on We challenged management on the adequacy of their
discounted future cash flow sensitivity calculations over the recoverable amount of the
forecasts over which the CGU. We determined that the calculations were most
management make judgements sensitive to assumptions for revenue growth rate, sales price
on certain key inputs including growth rate, discount rate and long term growth rate. We
revenue growth rate, sales price calculated the degree to which these assumptions would
growth rate, discount rate and need to move before an impairment conclusion was
long term growth rate. triggered. We discussed the likelihood of such a movement
with management and agreed with their conclusion that it
was unlikely.
Based on the procedures we performed, management’s
judgements and assessments relating to the impairment of
long term assets are supported by the evidence we gathered.
52
2019/SH-0175
(Page 4 of 5)
Other Information
Management of the Company is responsible for the other information. The other information
comprises all of the information included in the annual report other than the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit Committee for the
Consolidated Financial Statements
Management of the Company is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRSs, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
53
2019/SH-0175
(Page 5 of 5)
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit Committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with Audit Committee, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Lei Fang.
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
26 March 2019
54
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF THE AUDITORS
31 DECEMBER 2018
55
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in thousands of RMB unless otherwise stated)
Notes 2018 2017
Revenue from contracts with customers 5 28,249,340 31,345,747
Taxes and surcharges (687,133) (967,011)
Cost of sales 6 (24,463,198) (25,045,090)
Gross profit 3,099,009 5,333,646
Distribution costs 6 (1,202,382) (2,694,779)
Administrative expenses 6 (2,460,259) (2,744,600)
Net expected credit losses on financial assets 3.1(2) (1,089) —
Net impairment losses on property, plant and equipment (7,143) (11,850)
Other income 8 426,678 632,036
Operating (loss)/profit (145,186) 514,453
Finance income 9 188,436 244,300
Finance costs 9 (5,849) (5,079)
Finance income-net 9 182,587 239,221
Share of profit of investments accounted for using the
equity method 16b 2,238 8,149
Profit before income tax 39,639 761,823
Income tax credit/(expense) 10 52,194 (70,885)
Profit for the period 91,833 690,938
Profit attributable to:
Shareholders of the Company 91,833 690,938
Other comprehensive income/(loss)
Item that will not be reclassified to profit or loss
- Remeasurements of retirement benefits obligations (4,590) (1,616)
- Income tax relating to remeasurements of retirement
benefit obligations 1,148 404
Other comprehensive loss for the period, net of tax (3,442) (1,212)
Total comprehensive income for the period 88,391 689,726
Total comprehensive income attributable to:
Shareholders of the Company 88,391 689,726
Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.11 0.80
The notes on pages 60 to 127 are an integral part of these consolidated financial statements.
55
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
(All amounts in thousands of RMB unless otherwise stated)
Notes 2018 2017
ASSETS
Non-current assets
Property, plant and equipment 12 6,941,292 6,714,088
Lease prepayment 13 601,260 616,834
Intangible assets 14 246,026 197,860
Deferred income tax assets 17 743,096 690,253
Investments accounted for using the equity method 16b 40,112 37,874
Other non-current assets - 478
Total non-current assets 8,571,786 8,257,387
Current assets
Inventories 18 2,522,354 2,339,304
Trade and other receivables and prepayments 19 4,678,284 4,555,934
Derivative financial instruments 3.3 979 -
Financial assets at fair value through other
comprehensive income 3.3 6,246 -
Cash and cash equivalents 20 7,616,880 11,137,723
14,824,743 18,032,961
Assets classified as held for sale 21 - 93,413
Total current assets 14,824,743 18,126,374
Total assets 23,396,529 26,383,761
56
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 DECEMBER 2018
(All amounts in thousands of RMB unless otherwise stated)
Notes 2018 2017
EQUITY
Share capital 22 863,214 863,214
Share premium 816,609 816,609
Other reserves 23 447,472 450,914
Retained earnings 8,257,203 10,441,665
Total equity 10,384,498 12,572,402
LIABILITIES
Non-current liabilities
Contract liabilities 5 38,382 —
Borrowings 24 3,595 3,851
Deferred income tax liabilities 17 26,024 26,736
Retirement benefit obligations 25 63,425 54,764
Provisions for statutory warranty 26 151,492 184,688
Other non-current liabilities 60,160 240
Total non-current liabilities 343,078 270,279
Current liabilities
Trade and other payables 27 12,195,966 13,222,540
Contract liabilities 5 266,702 —
Current income tax liabilities 179 114,906
Borrowings 24 449 428
Financial liabilities at fair value through profit or loss - 8,493
Retirement benefit obligations 25 4,595 4,420
Provisions for statutory warranty 26 201,062 190,293
Total current liabilities 12,668,953 13,541,080
Total liabilities 13,012,031 13,811,359
Total equity and liabilities 23,396,529 26,383,761
The notes on pages 60 to 127 are an integral part of these consolidated financial statements.
57
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in thousands of RMB unless otherwise stated)
Share Share Other Retained
Notes capital premium reserves earnings Total
Balance at 1 January 2017 863,214 816,609 452,126 10,277,287 12,409,236
Profit for the period - - - 690,938 690,938
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of
tax - - (1,212) - (1,212)
Dividends relating to 2016 - - - (526,560) (526,560)
Balance at 31 December 2017 863,214 816,609 450,914 10,441,665 12,572,402
Balance at 1 January 2018 863,214 816,609 450,914 10,441,665 12,572,402
Profit for the period - - - 91,833 91,833
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of
tax - - (3,442) - (3,442)
Dividends relating to 2017 28 - - - (2,276,295) (2,276,295)
Balance at 31 December 2018 863,214 816,609 447,472 8,257,203 10,384,498
The notes on pages 60 to 127 are an integral part of these consolidated financial statements.
58
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in thousands of RMB unless otherwise stated)
Notes 2018 2017
Cash flows from operating activities
Cash generated from operations 29 (4,180) 896,721
Interest paid (218) (226)
Income tax paid (97,410) (221,907)
Net cash (outflow)/inflow from operating activities (101,808) 674,588
Cash flows from investing activities
Payment for property, plant and equipment (“PPE”) (1,385,315) (1,019,830)
Purchase of financial assets at fair value through profit
or loss (10,353,000) -
Other cash paid relating to investing activities (16,321) (11,080)
Proceeds from disposal of PPE, lease prepayment and 29
intangible assets 2,773 99,726
Proceeds from disposal of financial assets at fair value
through profit or loss 10,353,000 -
Investment income from financial assets at fair value
through profit or loss 18,191 -
Dividends received - 10,168
Interest received 232,627 240,338
Other cash received from investing activities 9,121 11,022
Net cash outflow from investing activities (1,138,924) (669,656)
Cash flows from financing activities
Repayments of borrowings (434) (5,443)
Dividends paid to shareholders of the Company (2,278,417) (527,117)
Other cash paid relating to financing activities (1,260) (871)
Net cash outflow from financing activities (2,280,111) (533,431)
Net decrease in cash and cash equivalents (3,520,843) (528,499)
Cash and cash equivalents at beginning of year 11,137,723 11,666,222
Effects of exchange rate changes - -
Cash and cash equivalents at end of year 20 7,616,880 11,137,723
The notes on pages 60 to 127 are an integral part of these consolidated financial statements.
59
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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 Group Co.,Ltd (“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 31 December 2018, 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 26 March 2019.
2 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of
these consolidated financial statements. These policies have been consistently applied to all
the years presented, unless otherwise stated. The financial statements are for the Group
consisting the Company and its subsidiaries.
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 on a historical cost basis, except for certain financial assets
and liabilities (including derivative instruments, financial assets at FVOCI and financial
liabilities at FVPL) are measured at fair value.
60
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(1) New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their
annual reporting period commencing 1 January 2018. The Group had to change its accounting
policies following the adoption of these standards. There is no retrospective adjustment
recoginsed in prior periods. The impact of adopting the following standards are disclosed in
Note 2.2.
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
(2) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not
mandatory for reporting period ended 31 December 2018 and have not been early adopted by
the Group. The Group’s assessment of the impact of these new standards and interpretations
is set out below.
IFRS 16 Leases
Nature of change
IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the
statement of financial position by lessees, 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.
Impact
The Group has set up a project team which has reviewed all of the Group’s leasing
arrangements over the last year in light of the new lease accounting rules in IFRS 16. The
Group only have leasing arrangements with short-term and low-value leases, no significant
impact on the financial statement.
Date of adoption by the Group
The Group will apply the standard from its mandatory adoption date of 1 January 2019. No
comparative amounts are need to be restated because all the leases are related to short-term
and low-value leases.
There are no other standards that are not yet effective that would be expected to have a
material impact on the Group in the current or future reporting periods and on foreseeable
future transactions.
61
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Changes in accounting policies
This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15
Revenue from Contracts with Customers on the Group’s financial statements.
(1) Impact on the financial statements
IFRS 9 was generally adopted without restating comparative information; IFRS 15 was
adopted using the modified retrospective transition method. As a result, the reclassifications
and adjustments arising from the adoption of new standards are therefore not reflected in the
statement of financial position as at 31 December 2017. The following tables show the
adjustments recognised for each individual line item at the date of initial application, 1 January
2018. Line items that were not affected by the changes have not been included. As a result,
the sub-totals and totals disclosed cannot be recalculated from the numbers provided. There
was no significant impact on retained earnings at 1 January 2018. The adjustments are
explained in more detail by standard below.
Statement of
Financial Position Closing balance Opening balance
(extract) 31 December 2017 IFRS 9 IFRS 15 1 January 2018
Total assets 26,383,761 - - 26,383,761
Non-current liabilities -
Contract liabilities 240 - 32,134 32,374
Current liabilities
Trade and other
payables 13,222,540 - (168,062) 13,054,478
Contract liabilities - - 135,928 135,928
Financial liabilities at
fair value through
profit or loss (“FVPL”) 8,493 (8,493) - -
Derivative financial
instruments - 8,493 - 8,493
Total liabilities 13,811,359 - - 13,811,359
Net assets 12,572,402 - - 12,572,402
Total equity 12,572,402 - - 12,572,402
62
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Changes in accounting policies (continued)
(2) IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments,
impairment of financial assets and hedge accounting.
The adoption of IFRS 9 Financial Instruments from 1 January 2018 resulted in changes in
accounting policies and adjustments to the amounts recognised in the financial statements.
The new accounting policies are set out in Notes 2.13 and 2.15 below. In accordance with the
transitional provisions in IFRS 9(7.2.15) and (7.2.26), comparative figures have not been
restated.
There was no significant impact on the Group’s retained earnings as at 1 January 2018. The
main effects resulting from reclassification are as follows:
(i) Reclassification of financial instruments on adoption of IFRS 9
Derivative financial
Financial assets – 1 January 2018 Notes FVPL instruments
Closing balance 31 December 2017 – IAS 39 8,493 -
Reclassify foreign exchange forwards from
(a)
FVPL to derivative financial instruments (8,493) 8,493
Opening balance 1 January 2018 - IFRS 9 - 8,493
(a) Reclassify foreign exchange forwards from FVPL to derivative financial instruments
Foreign exchange forwards is a derivative financial instruments, the cash flow of the contract
is modified according to the foreign exchange rate. As a result, forwards foreign exchange
was reclassified from FVPL to derivative financial instruments.
On the date of initial application, 1 January 2018, the financial instruments of the Group
impacted by the adoption of IFRS 9 were as follows:
Measurement category Carrying amount
Original (IAS 39) New (IFRS 9) Original New Difference
Current financial liabilities
FVPL - foreign exchange
FVPL FVPL 8,493 - (8,493)
forwards
Derivatives - foreign
FVPL FVPL - 8,493 8,493
exchange forwards
63
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Changes in accounting policies (continued)
(2) IFRS 9 Financial Instruments (continued)
(ii) Impairment of financial assets
Trade receivables for sales of inventory and from the provisions of services are the main
financial assets of the Group that are subject to IFRS 9’s new expected credit loss model.
The Group was required to revise its impairment methodology under IFRS 9 for the financial
assets. The Group applies the IFRS 9 simplified approach to measure expected credit losses
which uses a lifetime expected loss allowance for all trade receivables. The Group applies
either 12-month expected credit losses or lifetime expected credit losses for other financial
assets at amortised cost and financial assets at fair value through other comprehensive
income, depending on whether there has been a significant increase in credit risk since initial
recognition. The change in impairment methodology is disclosed in Note 2.13. There is no
significant impact on the Group’s retained earnings and equity at 1 January 2018.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9,
the identified impairment loss was immaterial.
(3) IFRS 15 Revenue from Contracts with Customers
The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January
2018 which resulted in changes in accounting policies and adjustments to the amounts
recognised in the financial statements. In accordance with the transition provisions in IFRS 15,
the Group elected to use the modified retrospective approach for transition to the revenue
standard and the cumulative effect of initially applying the revenue standard recognised as an
adjustment to the opening balance of retained earnings at the date of initial application.
Comparative figures have not been restated.
The Group evaluated the impact of the adoption of IFRS 15 to the retained earnings of 1
January 2018, there is no significant impact on the retained earnings. In summary, the
following adjustments were made to the amounts recognised in statement of financial position
at the date of initial application (1 January 2018) and the end of current period presented (31
December 2018):
Closing balance Opening balance
31 December 2017 Reclassification 1 January 2018
(ISA 18) (IFRS 15)
Trade and other payables (a) 13,222,540 (168,062) 13,054,478
Contract liabilities (a) - 168,062 168,062
64
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Changes in accounting policies (continued)
(3) IFRS 15 Revenue from Contracts with Customers (continued)
31 December 2018
Original (IAS 18) Reclassification New (IFRS 15)
Trade and other payables (a) 12,501,050 (305,084) 12,195,966
Contract liabilities (a) - 305,084 305,084
The impact on the statement of profit and loss in the current period summarised as below:
2018
Original (IAS 18) Reclassification New (IFRS 15)
Distribution costs (b),(c) 2,730,955 (1,528,573) 1,202,382
Revenue from contracts
with customers (b) 29,121,617 (872,277) 28,249,340
Cost of sales (c) 23,753,250 656,297 24,409,547
(a) Contract liabilities
Advance from customers have been presented as trade and other payables originally are now
presented as contract liabilities. With the adoption of IFRS 15, a contract liability is recognised
if the entity receives consideration (or if it has the unconditional right to receive consideration)
in advance of performance. Contract liabilities are expected to be settled within 12 months after
the end of the period are presented as current liabilities in the statement of financial position,
otherwise are presented as other non-current liabilities.
(b) Sales rebates
With the adoption of IFRS 15, sales rebates are recoginsed as reduction of revenue unless the
payment to the customer is in exchange for a distinct good or service under IFRS 15.
(c) Shipping fees
Shipping fees have previously been recognised in distribution costs are now recognised in cost
of sales. Shipping service of automobiles is considered as a separate performance obligation
because the control of goods transfers to the customer before shipment, but the Group has
promised to arrange for the goods to be shipped. As a result, shipping fees are reclassified
from distribution costs to cost of sales accordingly. Shipping fees incurred as fulfilment cost for
the contract with a customer are also reclassified to cost of sales.
65
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.3 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 fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the
Group.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
2.4 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, after
initially being recognised at cost.
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. Dividends received or receivable from associates and joint ventures are
recognised as a reduction in 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.
66
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.5 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct
attributable costs of investment. The results of subsidiaries are accounted for by the Company
on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend
from these investments if the dividend exceeds the total comprehensive income of the
subsidiary in the period the dividend is declared or if the carrying amount of the investment in
the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.
2.6 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.7 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.
Non-monetary items that are measured at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For
example, translation differences on non-monetary 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 and translation differences on non-monetary assets such as equities classified as fair
value through other comprehensive income are recognised in other comprehensive income.
67
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 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 automobiles 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 2.11).
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.
2.9 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.
68
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 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 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 capitalised 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.
69
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 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.
2.11 Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation
and are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they might be impaired. Other assets are tested 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 inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash-generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
2.12 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. They are
measured at the lower of their carrying amount and fair value less costs to sell, except for
assets such as deferred tax assets, assets arising from employee benefits, financial assets
and investment property that are carried at fair value and contractual rights under insurance
contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair
value less costs to sell. A gain is recognised for any subsequent increases in fair value less
costs to sell of an asset, but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held
for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as
held for sale are presented separately from the other assets in the statement of financial
position.
70
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2.13 Investments and other financial assets
(1) Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement
categories:
those to be measured subsequently at fair value (either through OCI or through profit or
loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets
and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or
OCI. For investments in equity instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through other comprehensive income
(“FVOCI”).
The Group reclassifies debt investments when and only when its business model for
managing those assets changes.
(2) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date
on which the Group commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
(3) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortised
cost. Interest income from these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on derecognition is recognised
directly in profit or loss and presented in other income/(expense)-net together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the
statement of profit or loss.
71
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Investments and other financial assets (continued)
(3) Measurement (continued)
FVOCI: Assets that are held for collection of contractual cash flows and for selling the
financial assets, where the assets’ cash flows represent solely payments of principal and
interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest income and foreign
exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other income/(expense)-net. Interest income from
these financial assets is included in finance income using the effective interest rate method.
Foreign exchange gains and losses are presented in other income/(expense)-net and
impairment expenses are presented as separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at
FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is
recognised in profit or loss and presented net within other income/(expense)-net in the
period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s
management has elected to present fair value gains and losses on equity investments in OCI,
there is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other income/(expense)-
net in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other
changes in fair value.
(4) Impairment
From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses
associated with its debt instruments carried at amortised cost and FVOCI. The impairment
methodology applied depends on whether there has been a significant increase in credit risk. For
trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables, see Note 3.1
for further details.
(5) Accounting policies applied until 31 December 2017
The Group has applied IFRS 9 retrospectively, but has elected not to restate comparative
information. As a result, the comparative information provided continues to be accounted for in
accordance with the Group’s previous accounting policy.
(i) Classification
Until 31 December 2017 the Group classifies its financial assets in the following categories:
financial assets at fair value through profit or loss,
loans and receivables,
available-for-sale financial assets.
The classification determined on the purpose for which the investments were acquired.
Management determined the classification of its investments at initial recognition and, in the case
of assets classified as held-to-maturity, re-evaluated this designation at the end of each reporting
72
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
period. See Note 15 for details about each type of financial asset.
2 Summary of significant accounting policies (continued)
2.13 Investments and other financial assets (continued)
(5) Accounting policies applied until 31 December 2017 (continued)
(ii) Subsequent measurement
Subsequent to the initial, recognition loans and receivables were subsequently carried at
amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at FVPL were subsequently carried at fair
value. Gains or losses arising from changes in the fair value are recognised as follows:
for ‘financial assets at FVPL’ – in profit or loss within other income/(expense)-net
for available-for-sale financial assets that are monetary securities denominated in a foreign
currency – translation differences related to changes in the amortised cost of the security
were recognised in profit or loss and other changes in the carrying amount were recognised
in other comprehensive income
for other monetary and non-monetary securities classified as available-for-sale – in other
comprehensive income.
Details on how the fair value of financial instruments is determined are disclosed in Note 3.3.
When securities classified as available-for-sale were sold, the accumulated fair value
adjustments recognised in other comprehensive income were reclassified to profit or loss as
gains and other losses from investment securities.
(iii) Impairment
The Group assessed at the end of each reporting period whether there was objective evidence
that a financial asset or Group of financial assets was impaired. A financial asset or a Group of
financial assets was impaired and impairment losses were incurred only if there was 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) had an impact on the
estimated future cash flows of the financial asset or Group of financial assets that could be
reliably estimated. In the case of equity investments classified as available-for-sale, a significant
or prolonged decline in the fair value of the security below its cost was considered an indicator
that the assets are impaired.
Assets carried at amortised cost
For loans and receivables, the amount of the loss was measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows (excluding future
credit losses that had not been incurred) discounted at the financial asset’s original effective
interest rate. The carrying amount of the asset was reduced and the amount of the loss was
recognised in profit or loss. If a loan or held-to-maturity investment had a variable interest rate,
the discount rate for measuring any impairment loss was the current effective interest rate
determined under the contract. As a practical expedient, the Group could 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 decreased and the decrease could
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 was recognised in profit or loss.
73
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Investments and other financial assets (continued)
(5) Accounting policies applied until 31 December 2017 (continued)
(iii) Impairment (continued)
Assets carried at amortised cost (continued)
Impairment testing of trade receivables is described in Note 3.1(2).
Assets classified as available-for-sale
If there was objective evidence of impairment for available-for-sale financial assets, 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 –
was removed from equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss were not
reversed through profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increased in a subsequent
period and the increase could be objectively related to an event occurring after the impairment
loss was recognised in profit or loss, the impairment loss was reversed through profit or loss.
2.14 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position where the Group currently has 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 Group has also entered into arrangements that do not
meet the criteria for offsetting but still allow for the related amounts to be set off in certain
circumstances, such as bankruptcy or the termination of a contract.
2.15 Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The
accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. No
derivative is designated as a hedging instrument by the Group, changes in the fair value of
derivatives are recognised immediately in profit or loss and included in other
income/(expense)-net.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value. The cost of finished goods
and work in progress comprises raw materials, direct labour, other direct costs and related
production overheads, the latter being allocated on the basis of normal operating capacity.
Cost excludes borrowing costs. Costs are assigned to individual items of inventory on the
basis of weighted average costs. Costs of purchased inventory are determined after deducting
rebates and discounts. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary
to make the sale.
74
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 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 3.1
for further information about the Group’s accounting for trade receivables and a description of
the Group’s impairment policies.
2.18 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 that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the statement of financial position.
2.19 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.
2.20 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of financial year which are unpaid. The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as current liabilities unless payment
is not due within 12 months after the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
2.21 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. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
75
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Borrowings (continued)
Borrowings are removed from the statement of financial position 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/(expense)-net 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.
2.22 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.
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.
2.23 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the countries where the company and its
subsidiaries and associates operate and generate taxable income. 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.
76
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 Current and deferred income tax (continued)
(2) Deferred income tax
Deferred income tax is provided in full, 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. Deferred income tax is also 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 nor
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred 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.
2.24 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in
exchange for service rendered by employees or for termination of employment relationship,
which include short-term employee benefits, post-employment benefits, termination benefits and
other long-term employee benefits.
(1) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff
welfare, premiums or contributions on medical insurance, work injury insurance and maternity
insurance, housing funds, union running costs and employee education costs, short-term paid
absences and etc. The short-term employee benefits actually occurred are recognised as a
liability in the accounting period in which the service is rendered by the employees, with a
corresponding charge to the profit or loss for the current period or the cost of relevant assets.
Non-monetary benefits are measured at fair value.
77
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Employee benefits (continued)
(2) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under
which the Group pays fixed contributions into a separate fund and will have no obligation to
pay further contributions; and defined benefit plans are post-employment benefit plans other
than defined contribution plans. During the reporting period, the premiums or contributions on
basic pensions and unemployment insurance belong to defined contribution plans; the
premiums or contributions on supplementary retirement benefits belong to defined benefit
plans.
(i) Defined contribution plans
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local
authorities of Ministry of Human Resource and Social Security. Monthly payments of
premiums on the basic pensions are calculated according to the bases and percentage
prescribed by the relevant local authorities. When employees retire, the relevant local
authorities are obliged to pay the basic pensions to them. The amounts based on the above
calculations are recognised as liabilities in the accounting period in which the service has been
rendered by the employees, with a corresponding charge to the profit or loss for the current
period or the cost of relevant assets.
(ii) Defined benefit plans
The Group provides employees with some supplementary retirement benefits belong to
defined benefit plans in addition to the social security policy prescribed by the State. The
liability recognised in the statement of financial position in respect of defined benefit pension
plans is the present value of the defined benefit obligation at the end of the reporting period
less the fair value of plan assets. 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 using
interest rates of national debt that are denominated in the currency in which the benefits will
be paid, and that have terms approximating to the terms of the related obligation.
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 the statement of profit or loss.
Remeasurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they occur, directly in other
comprehensive income. They are included in retained earnings in the statement of changes in
equity and in the statement of financial position.
Changes in the present value of the defined benefit obligation resulting from plan amendments
or curtailments are recognised immediately in profit or loss as past service costs.
78
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Employee benefits (continued)
(3) Termination benefits
The Group provides compensation for terminating the employment relationship with
employees before the end of the employment contracts or as an offer to encourage employees
to accept voluntary redundancy before the end of the employment contracts. The Group
recognises a liability arising from compensation for termination of the employment relationship
with employees, with a corresponding charge to profit or loss for the current period at the
earlier of the following dates: 1) when the Group cannot unilaterally withdraw an employment
termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses
for a restructuring that involves the payment of termination benefits.
(4) Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security
contributions to be paid to and for the employees who accept voluntary retirement before the
normal retirement date prescribed by the State, as approved by the management. The Group
pays early retirement benefits to those early retired employees from the early retirement date
until the normal retirement date. The Group accounts for the early retirement benefits in
accordance with the treatment for termination benefits, in which the salaries and social
security contributions to be paid to and for the early retired employees from the off-duty date to
the normal retirement date are recognised as liabilities with a corresponding charge to the
profit or loss for the current period. The differences arising from the changes in the respective
actuarial assumptions of the early retirement benefits and the adjustments of benefit standards
are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date
are classified as current liabilities.
2.25 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.
79
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.26 Revenue recognition
The Group manufactures and sells a range of automobiles and automobile parts to dealers and
ending customers. Besides, the Group also provides automobile maintenance and additional
warranty services. The Group recognises revenue when the customer obtains control of the
goods and services. The revenue is recognised based on the consideration to which the Group
expects to be entitled in exchange for transferring promised goods or services to customers.
(1) Sales of goods – Automobile and automobile parts
The Group manufactures and sells a range of automobiles and automobile parts to dealers and
ending customers. Sales are recognised when control of the products has transferred, being
when the customer has the ability to direct the use of and obtain substantially all of the
remaining benefits from the products. Control of automobiles is transferred when automobiles
are delivered out of warehouse, being when customer has accepted the products. Control of
automobile parts is transferred when the products out of warehouse or shipped to designated
destination, being when customer has accepted the products.
When the contracts include two performance obligations, selling automobiles and providing
shipping services, the transaction price will be allocated to each performance obligation based
on the stand-alone selling prices. Where these are not directly observable, they are estimated
considering market information, expected cost plus margin.
No element of financing is deemed present as the sales are made with a credit term within one
year, which is consistent with market practice. The Group’s obligation to repair or replace faulty
products under the statutory warranty terms prescribed by the industry law and regulations is
recognised as a provision, see Note 2.25. For additional warranty, it is considered as a separate
performance obligation under IFRS 15, see Note 2.26(2).
Revenue from these sales is recognised based on the price specified in the contract, net of the
estimated discounts. Accumulated experience is used to estimate and provide for the discounts,
using the expected value method, and revenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur.
(2) Rendering of services
The Group provides service of automobile maintenance and additional warranty. Revenue is
recognised on the basis of inputs to the satisfaction of the performance obligation relative to the
total expected inputs to the satisfaction of that performance obligation.
Trade receivables are recognised when the Group recognised revenue according to the
completion process and has an unconditional right to consideration. Contract assets are
recognised when the Group satisfies a performance obligation but does not have an
unconditional right to consideration. The provision of trade receivables and contract assets are
subject to expected credit loss model. Contract liabilities are recognised when the consideration
received before the Group satisfies the performance obligation. The contract assets and
liabilities are presented on a net basis for the some contract.
80
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.26 Revenue recognition (continued)
(3) Accounting policies applied before 1 January 2018
Revenue was measured at the fair value of the consideration received or receivable, and
represented amounts receivable for goods supplied, stated net of discounts returns and value
added taxes. The Group recognised revenue when the amount of revenue can be reliably
measured; when it was probable that future economic benefits would flow to the entity; and
when specific criteria had been met for each of the Group’s activities, as described below. The
Group based its estimates of return on historical results, taking into consideration the type of
customer, the type of transaction and the specifics of each arrangement.
(i) Sales of goods
Revenue from the sale of goods was recognised when significant risks and rewards of
ownership of the goods were transferred to the customer, the customer had accepted the
products and collectability of the related receivables was reasonably assured.
(ii) Rental income
Rental income was recognised on a straight-line basis over the period of the rental contracts.
(iii) Rendering of services
The Group provided service of vehicle maintenance. The related revenue was recognised using
the percentage of completion method, with the stage of completion being determined based on
proportion of costs incurred to date to the estimated total costs.
81
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.27 Earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated by dividing: the profit attributable to owners of the
company, excluding any costs of servicing equity other than ordinary shares by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
(2) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
2.28 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.
2.29 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.
2.30 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.
82
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.30 Government grants (continued)
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.
2.31 Interest income
Interest income from financial assets at FVPL is included in other income/(expense)-net, see Note
8 below.
Interest income on financial assets at amortised cost and financial assets at FVOCI (2017 –loans
and receivables) calculated using the effective interest method is recognised in the statement of
profit or loss as part of finance income. Interest income is presented as finance income where it
is earned from financial assets that are held for cash management purposes, see Note 9 below.
Any other interest income is included in other income/(expense)-net.
Interest income is calculated by applying the effective interest rate to the gross carrying amount
of a financial asset except for financial assets that subsequently become credit-impaired. For
credit-impaired financial assets the effective interest rate is applied to the net carrying amount
of the financial asset (after deduction of the loss allowance).
3 Financial risk management
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.
The Group’s risk management is predominantly controlled by Finance Department under
policies approved by the Board of Directors. Group Finance Department identifies, evaluates
and hedges financial risks in close co-operation with the Group’s operating units. The board
provides written principles for overall risk management, as well as policies covering specific
areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative
financial instruments and non-derivative financial instruments, and investment of excess
liquidity.
3.1 Financial risk factors
(1) Market risk
(i) 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.
83
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(1) Market risk (continued)
(i) Foreign exchange risk (continued)
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in
RMB, was as follows:
31 December 2018 31 December 2017
Other Other
USD EUR currency USD EUR currency
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Derivative financial instruments
Foreign exchange forwards 979 - - - - -
Trade and other receivables - 265 - 5,711 8,706 100
Financial liabilities at fair value
through profit or loss
Foreign exchange forwards - - - (8,493) - -
Borrowings (4,044) - - (4,279) - -
Trade and other payables (164,599) (100,450) (4,045) (235,847) (116,320) (2,685)
(167,664) (100,185) (4,045) (242,908) (107,614) (2,585)
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/RMB and
Euro/RMB exchange rates.
As at 31 December 2018, if RMB had strengthened/weakened by 10% against USD with all
other variable held constant, the Group’s net profit for the year then ended would have been
approximately RMB14,187,000 (2017: RMB20,650,000) higher/lower.
As at 31 December 2018, if RMB had strengthened/weakened by 10% against Euro with all
other variable held constant, the Group’s net profit for the year then ended would have been
approximately RMB8,626,000 (2017: RMB9,263,000) higher/lower.
(ii) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 31 December 2018, a large portion of its bank deposits were at
variable rates and all of its borrowings were at fixed rate. The Group has not used any interest
rate swaps to hedge its exposure to interest rate risk.
As at 31 December 2018, if the interest rate of the Group’s bank deposits had been
increased/decreased by 10% and all other variables were held constant, the Group’s net profit
for the year then ended would have been increased/decreased by approximately
RMB14,174,000 (2017: RMB19,352,000).
As at 31 December 2018, the difference between the fair value and book value of the Group’s
borrowings with fixed rate is immaterial.
84
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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
Credit risk arises from cash and cash equivalents, contractual cash flows of other financial
instruments at fair value through comprehensive income and at fair value through profit or
loss, favourable derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposures to customers, including outstanding receivables.
(i) Risk management
Credit risk is managed on a group basis. Risk control assesses the credit quality of the
customer, taking into account its financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set
by the board. The compliance with credit limits by customers is regularly monitored by line
management.
(ii) Impairment of financial assets
The Group has four types of financial assets that are subject to the expected credit loss
model:
trade receivables for sales of inventory and from the provision of services, and
notes receivables carried at FVOCI
other financial assets at amortised cost
cash and cash equivalents.
Trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 24 month
before 31 December 2018 or 1 January 2018 respectively and the corresponding historical
credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. The Group has identified the GDP and the unemployment
rate of China in which it sells its goods and services to be the most relevant factors, and
accordingly adjusts the historical loss rates based on expected changes in these factors.
On that basis, the loss allowance as at 31 December 2018 and 1 January 2018 (on adoption
of IFRS 9) was determined as follows for trade receivables:
85
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(ii) Impairment of financial assets (continued)
(a) As at 31 December 2018, receivables with amounts are subject to separate assessment for
impairment as below:
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate - - - - 100% —
Gross carrying amount – trade
receivables - - - - 8,633 8,633
Loss allowance - - - - (8,633) (8,633)
As the above debtors involved in several lawsuits, the Group cannot be able to collect the
amount under the original terms, a full provision for bad debts of that receivable were made.
(b) As at 31 December 2018, trade receivables have been grouped on the basis of shared credit
risk characteristics and the days past due for the measurement of expected credit losses:
i) Notes receivables group
As at 31 December 2018, all the notes receivables are bank acceptance bills of
RMB626,509,000, which will be accepted mainly by large state-owned banks or national
commercial banks. The Group believes that there is no significant credit losses due to the
bank default.
ii) Automobiles sales group
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.43% 0.46% 10.59% 10.78% 10.93% —
Gross carrying amount – trade
receivables 2,037,061 80,081 10,253 420 16,305 2,144,120
Loss allowance (8,684) (366) (1,085) (45) (1,782) (11,962)
86
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(ii) Impairment of financial assets (continued)
(b) As at 31 December 2018, trade receivables have been grouped on the basis of shared credit
risk characteristics and the days past due for the measurement of expected credit losses
(continued):
iii) New energy automobiles subsidies group
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.30% - - - - —
Gross carrying amount – trade
receivables 228,543 - - - - 228,543
Loss allowance (686) - - - - (686)
iv) Automobile parts group:
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.30% 0.30% 0.50% 0.60% 5.00% —
Gross carrying amount – trade
receivables 313,028 614 484 485 1,021 315,632
Loss allowance (939) (2) (2) (3) (51) (997)
For the opening loss allowances for trade receivables as at 1 January 2018, the restatement
on transaction as a result of applying the expected credit risk model was not material. The
closing loss allowances for trade receivables as at 31 December 2018 reconcile to the
opening loss allowances as follows:
Trade receivables
2018 2017
RMB’000 RMB’000
31 December – calculated under IAS 39 21,016 15,940
Amounts restated through opening retained earnings - -
Opening loss allowance as at 1 January 2018 – calculated
under IFRS 9 21,016 15,940
Increase in loss allowance recognised in profit or loss during
the year 2,052 5,703
Receivables written off during the year as uncollectible (42) -
Unused amount reversed (748) (627)
At 31 December 22,278 21,016
87
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(ii) Impairment of financial assets (continued)
Trade receivables are written off when there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments.
Impairment losses on trade receivables are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited against
the same line item.
Previous accounting policy for impairment of trade receivables
In the prior year, the impairment of trade receivables was assessed based on the incurred loss
model. Individual receivables which were known to be uncollectible were written off by
reducing the carrying amount directly. The other receivables were assessed collectively to
determine whether there was objective evidence that an impairment had been incurred but not
yet been identified. For these receivables the estimated impairment losses were recognised in
a separate provision for impairment. The Group considered that there was evidence of
impairment if any of the following indicators were present:
significant financial difficulties of the debtor
probability that the debtor will enter bankruptcy or financial reorganisation, and
default or late payments.
Receivables for which an impairment provision was recognised were written off against the
provision when there was no expectation of recovering additional cash.
Financial assets at fair value through other comprehensive income
Notes receivables carried at FVOCI are considered to have low credit risk, and the loss
allowance recognised during the period was therefore limited to 12 months expected losses.
Management considers ‘low credit risk’ for the instruments that the issuer has a strong
capacity to meet its contractual cash flow obligations in the near term. JMC Heavy Duty
Vehicle Co., Ltd. (“JMCH”), the subsidiary of the Group, held notes receivables for
endorsement and presented as FVOCI at the statement of financial position. All the notes
receivables are bank acceptable bills and considered as low credit risk financial instruments
without significant credit risk because the banks have a strong capacity to meet its contractual
cash flow obligations in the near term.
Other financial assets at amortised cost
Other financial assets at amortised cost include bank interest receivables and other
receivables. For the opening loss allowances for other financial assets as at 1 January 2018,
the restatement on transaction as a result of applying the expected credit risk model was not
material. The closing loss allowances for other financial assets as at 31 December 2018
reconcile to the opening loss allowances as follows:
88
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(ii) Impairment of financial assets (continued)
Other financial assets at amortised cost (continued)
More than
1-30 days 90 days
past due: past due:
expected expected
credit losses credit losses
in the next 12 throughout
months lifetime Total
RMB’000 RMB’000 RMB’000
Closing loss allowance as at 31 December 2017
(calculated under IAS 39) 554 104 658
Amounts restated through opening retained earnings - - -
Opening loss allowance as at 1 January 2018
(calculated under IFRS 9) 554 104 658
Increase in the allowance recognised in profit or loss
during the period 14 99 113
Reverse of the allowance recognised in profit or loss
during the period (328) - (328)
Closing loss allowance as at 31 December 2018 240 203 443
All the bank interest receivables are considered as low credit risk financial instruments without
significant credit risk because the banks have a strong capacity to meet its contractual cash
flow obligations in the near term.
Net impairment losses on financial assets recognised in profit or loss
During the year, the following losses were recognised in profit or loss in relation to impaired
financial assets:
2018 2017
RMB’000 RMB’000
Impairment losses
- movement in loss allowance for trade receivables (2,052) (5,703)
Impairment losses on other financial assets (113) (225)
Reversal of previous impairment losses 1,076 627
Net impairment losses on financial and contract assets (1,089) (5,301)
Cash and cash equivalents
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9,
the identified impairment loss was immaterial.
89
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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)
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group 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 24) 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 Between 1 Between 2 Over
1 year and 2 years and 5 years 5 years
RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2018
Bank borrowings
- Principals 449 449 1,348 1,798
- Interests 59 52 116 61
Trade and other payables
(exclude payroll and welfare
payables, other tax payables) 11,658,259 - - -
11,658,767 501 1,464 1,859
At 31 December 2017
Bank borrowings
- Principals 428 428 1,284 2,139
- Interests 63 56 130 88
Financial liabilities at fair
value through profit or loss 8,493 - - -
Trade and other payables
(exclude payroll and welfare
payables, other tax payables) 12,641,368 - - -
12,650,352 484 1,414 2,227
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.
90
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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 (continued)
The gearing ratios at 31 December 2018 and 2017 were as follows:
31 December 2018 31 December 2017
Total borrowings 4,044 4,279
Total equity 10,384,498 12,572,402
Total capital 10,388,542 12,576,681
Gearing ratio 0.04% 0.03%
3.3 Fair value estimation
(1) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the
financial instruments that are recognised and measured at fair value in the financial
statements. The Group has classified its financial instruments into the three levels prescribed
under the accounting standards:
As at 31 December 2018 Level 1 Level 2 Level 3 Total
Financial assets
Derivatives
Foreign exchange forwards - 979 - 979
Financial assets at FVOCI
Notes receivables - - 6,246 6,246
Total financial assets - 979 6,246 7,225
As at 31 December 2017 Level 1 Level 2 Level 3 Total
Financial liabilities
Financial liabilities at FVPL
Foreign exchange forwards - 8,493 - 8,493
Total financial liabilities - 8,493 - 8,493
See Note 2.2 for reclassification following the adoption of IFRS 9 Financial Instruments.
There were no transfers between levels 1 and 2 for recurring fair value measurements during
the year.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels
as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly
traded derivatives, and equity securities) is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets held by the Group is the
current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) is determined using valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3. This is the case for unlisted equity securities.
91
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
(2) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
for foreign currency forwards - present value of future cash flows based on forward
exchange rates at the balance sheet date
for other financial instruments - discounted cash flow analysis.
(3) Fair value measurements using significant unobservable inputs (level 3)3)
The following table presents the changes in level 3 items for the periods ended 31 December
2018 and 31 December 2017:
Financial assets at Financial assets at
FVPL- monetary FVOCI- notes Total
fund receivables
Opening balance 1 January 2017 - — -
Acquisitions - — -
Disposals - — -
Closing balance 31 December 2017 - — -
Opening balance 1 January 2018 - - -
Acquisitions 10,353,000 102,802 10,455,802
Disposals (10,353,000) (96,556) (10,449,556)
Closing balance 31 December 2018 - 6,246 6,246
See Note 2.2 for reclassification following the adoption of IFRS 9 Financial Instruments.
There is no unrealised gains or losses recognised in profit or loss attributable to balances held
at the end of the reporting period. The gains or losses arising from the holding of the financial
assets measured at fair value during the financial period are recognised in other
income/(expense)-net.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and 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.
92
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates
(1) Measurement of expected credit losses
The Group calculates expected credit losses according to the default risk exposure and
expected credit loss rate, and determines the expected credit loss rate based on default
probability and default loss rate. In determining the expected credit loss rate, the Group uses
data such as internal historical credit loss experience, etc., and adjusts historical data based
on current conditions and forward-looking information. When considering forward-looking
information, the indicators used by the Group include the risk of economic downturn, the
expected increase in unemployment rate, the external market environment, the technological
environment and changes in customer conditions. The Group regularly monitors and reviews
assumptions related to the calculation of expected credit losses. In 2018, there was no
significant change in the above estimation techniques and key assumptions.
(2) 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.
The Group determines the fair value less costs of disposal based on discounted future cash
flow forecasts. The Group use the medium and long-term budgets of the business
development plan approved by the management as a starting point when applying the present
value technique, adjusting for market conditions.
Key judgements are made on revenue growth rate, sales price growth rate, discount rate and
long term growth rate when estimate the discounted future cash flow forecasts. The Group
uses relevant accessible information, including the production and sales volumn, relevant
market information which are based on the reasonable and supportable assumptions, to
estimate the recoverable amount of those long term assets.
(3) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added
tax and consumption tax. Significant judgment is required in determining the provision for
these taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from amounts that were initial
recorded, such differences will impact the tax provisions in the period of final tax outcome.
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.
93
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates (continued)
(3) Taxation (continued)
As at 31 December 2018, the Group recorded deferred tax assets of approximately
RMB743,096,000. To the extent that it is probable that taxable profit will be available against
which the deductible temporary differences will be utilised, deferred tax assets are
recognised mainly for temporary differences arising from accrued expenses and retirement
benefit obligations.
(4) Provisions
The Group provides statutory 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.
(5) Write-down 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 needs to consider increasing the write-down provision of 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 in the relevant accounting period.
4.2 Critical accounting judgements
(1) Classification of financial assets
Significant judgements made by the Group in the classification of financial assets include
business model and analysis on contractual cash flow characteristics.
The Group determines the business model for financial assets management on the group
basis, and factors to be considered include the methods for evaluating of the financial assets
performance and reporting the financial assets performance to key management personnel,
the risks relating to the financial assets performance and corresponding management
methods, the ways in which related business management personnel are remunerated, etc.
94
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements (continued)
(1) Classification of financial assets (continued)
When assessing whether contractual cash flow characteristics of financial assets are
consistent with basic lending arrangement, key judgements made by the Group include: the
possibility of changes in time schedule or amount of the principal during the lifetime due to
reasons such as repayment in advance; whether interest only include time value of money,
credit risks, other basic lending risks and considerations for costs and profits; whether the
repayment in advance reflects the principal outstanding and corresponding interest and
reasonable compensation paid for early termination of the contract.
(2) Judgement on significant increase in credit risk
Judgement made by the Group for significant increase in credit risk is mainly based on
whether the overdue days exceed 30 days, or whether one or more of the following indicators
change significantly: business environment of the debtor, internal and external credit rating,
significant changes in actual or expected operating results, significant decrease in value of
collateral or credit rate of guarantor, etc.
Judgement made by the Group for the occurrence of credit impairment is mainly based on
whether the overdue days exceed 90 days (i.e., a default has occurred), or whether one or
more of the following conditions is/are satisfied: the debtor is suffering significant financial
difficulties, the debtor is undergoing other debt restructuring, or the debtor probably goes
bankrupt, etc.
(3) Capitalisation of development costs
Development costs are capitalised when the criteria in Note 2.10(2) are fulfilled. The
assessments on whether the criteria for capitalisation of development have been met
involves the judgements of the Group, including the technical feasibility of the project, the
likelihood of the project generating sufficient future economic benefits and the timing to start
capitalisation particularly. The Group makes the judgements on the capitalisation of
development costs and recorded the process in meeting minutes based on feasibility analysis
and regular review on the development project phase etc.
(4) Timing of revenue recognition
The Group sells automobiles and automobile parts to distributors and ending customers. As
prescribed in the contract, control of automobiles is transferred to the customers when the
good are out of the warehouse, while control of automobile parts is transferred when the
parts are out of the warehouse or shipped to the designate destination based on the contract
terms. The distributors and ending customers sign the delivery documents after they accept
the products. Thereafter, the distributors or ending customers control the products and have
the right to set the price, bear the risks of any obsolescence and loss of the products. The
distributors and ending customers have obtained the control of the products after accepting
the products. Therefore, the Group recognises the sales revenue of the products at the time
when the delivery documents have been signed.
95
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements (continued)
(5) Sales with product warranties
The Group provides statutory warranty for automobiles and automobile parts, and the period and
terms of such warranty comply with the requirements of laws and regulations related to the
products. The Group does not provide any significant additional service for this purpose, thus
this kind of warranty does not identified as a separate performance obligation. In addition, the
Group also offers additional warranty other than the requirements of laws and regulations, which
identified as a separate performance obligation. The Group recognises the revenue of the
additional warranty over time during the period when services are rendered.
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.
The revenue by product of the whole business as follows:
2018
Automobiles Automobile Maintenance Materials and Total
parts services others
Main business income 25,178,860 2,696,240 71,799 - 27,946,899
-Recognition at a point
in time 25,178,860 2,696,240 - - 27,875,100
-Recognition over time - - 71,799 - 71,799
Other business income - - - 302,441 302,441
25,178,860 2,696,240 71,799 302,441 28,249,340
2017
Automobiles Automobile Maintenance Materials and Total
parts services others
Main business income 28,390,846 2,605,497 18,720 - 31,015,063
-Recognition at a point
in time 28,390,846 2,605,497 - - 30,996,343
-Recognition over time - - 18,720 - 18,720
Other business income - - - 330,684 330,684
28,390,846 2,605,497 18,720 330,684 31,345,747
As at 31 December 2018, the expected revenue of unsatisfied performance obligations from
signed contract is RMB92,838,000. The Group will recognise the revenue from 2019 to 2021.
96
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
5 Revenue and segment information (continued)
The Group has recognised the following assets and liabilities related to contracts with customers:
31 December 2018 1 January 2018
Contract liabilities
Automobiles and automobile parts 212,246 110,470
Maintenance services and additional warranty 92,838 57,592
Total contract liabilities 305,084 168,062
Less: non-current liabilities (38,382) (32,134)
Total current contract liabilities 266,702 135,928
See Note 2.2 for reclassification following the adoption of IFRS 15 Revenue from Contracts with
Customers.
As of 1 January 2018, the balance of the Group's contract liabilities was RMB168,062,000, of
which RMB110,470,000 from automobiles and automobile parts, and RMB25,458,000 from
maintenance services have been recognised in revenue in 2018.
6 Expenses by nature
2018 2017
Changes in inventories of finished goods and
work in progress (197,140) (139,613)
Raw materials and consumables used 21,532,654 22,638,768
Employee benefit expense (Note 7) 2,233,351 2,087,061
Depreciation of PPE (Note 12, 29) 925,888 845,100
Repairs and maintenance expenditure on PPE 160,692 186,019
Transportation expenses 656,297 558,395
Amortisation of lease prepayment (Note 13, 29) 15,574 15,574
Amortisation of intangible assets (Note 14, 29) 55,737 40,575
Provision of statutory warranty (Note 26) 291,471 313,289
Design fees 469,174 803,892
Sales promotion expenses 326,215 1,076,493
Advertising and new product planning expenses 194,932 309,267
Net impairment losses on financial assets — 5,301
Provision for inventories write-down 53,651 34,655
Others 1,407,343 1,709,693
Total cost of sales, distribution expenses and
administrative expenses 28,125,839 30,484,469
97
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
2018 2017
Wages and salaries 1,577,058 1,463,528
Social security costs 225,163 204,839
Pension costs defined contribution plans 267,737 251,727
Pension costs defined benefit plans (Note 25) 9,200 4,251
Others 154,193 162,716
2,233,351 2,087,061
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
make periodic benefit payments to certain early-retired employees until they reach their legal
retirement ages.
8 Other income
2018 2017
Government grants (a) 398,427 640,577
Net fair value gains/(losses) on derivative
financial instruments 9,472 (17,032)
Net loss on disposal of derivative financial
instruments (7,200) (58)
Others 25,979 8,549
426,678 632,036
(a) In 2018, the Group received grants of approximately RMB398,427,000, 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, Transformation and Comprehensive Reform Demonstration Zone Administrative
Commission of Shanxi. Those grants were income related government grants to support the
Group’s operation.
9 Finance income and expenses
2018 2017
(a) Finance income
Interest income on bank deposits 169,036 230,693
Interest income on credit sales 19,400 13,607
188,436 244,300
(b) Finance expenses
Interest expense on bank loans (217) (225)
Bank charges and others (5,632) (4,854)
(5,849) (5,079)
Net finance income 182,587 239,221
98
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation
(i) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2018, the Company is entitled to a preferential CIT rate of 15% from 2018 to
2020 (2017: 15%). The CIT rates of JMCH, Jiangling Motor Sales Co., Ltd. (“JMCS”),
Shenzhen Fujiang New Energy Automobile Sales Co., Ltd. (“SZFJ”), Guangzhou Fujiang New
Energy Automobile Sales Co., Ltd. (“GZFJ”) and Xiamen Fujiang New Energy Automobile
Sales Co., Ltd. (“XMFJ”), the subsidiaries of the Company, are 25%.
The amounts of income tax expense charged to profit or loss represented:
2018 2017
Current tax 213 206,893
Deferred tax (Note 17) (52,407) (136,008)
(52,194) 70,885
The difference between the actual income tax charge in profit or loss and the amounts which
result from applying the enacted tax rate to profit before income tax can be reconciled as
follows:
2018 2017
Profit before tax 39,639 761,823
Tax calculated at tax rates applicable to profits in
the respective companies (29,654) 96,654
Tax concessions (69) (28)
Expenses not deductible for tax purposes 561 726
R&D costs deduction (151,581) (79,044)
Income not subject to tax (336) (1,223)
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 32,929 (2,714)
Temporary differences for which no deferred
income tax asset was recognised 29,948 18,615
Tax losses for which no deferred income tax
asset was recognised 66,008 37,899
Tax charge (52,194) 70,885
The tax credit relating to other comprehensive income is as follows:
2018 2017
Before Tax After Before Tax After
tax credit tax tax credit tax
Actuarial loss on retirement
benefit obligations (4,590) 1,148 (3,442) (1,616) 404 (1,212)
Other comprehensive income (4,590) 1,148 (3,442) (1,616) 404 (1,212)
Current tax - -
Deferred tax (Note 17) 1,148 404
99
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(ii) Value-added tax (“VAT”)
Pursuant to the “Notice on the adjustment of VAT rate from the Ministry of Finance and the
State Administration of Taxation” (Cai Shui [2018] 32) jointly issued by the Ministry of Finance
and the State Administration of Taxation, the Group's taxable products sales income
applicable VAT rate is 16% from 1 May 2018, while the VAT rate was 17% before then. The
VAT rate applicable to the Group's transportation business is 10% from 1 May 2018, while the
VAT rate was 11% before then.
(iii) 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.
2018 2017
Profit attributable to shareholders of the
Company 91,833 690,938
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 0.11 0.80
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the year ended 31 December 2018.
100
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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 Automobiles Moulds other equipment constructions Total
At 1 January 2017
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
Year ended 31 December 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 - - - - - 921,700 921,700
Transfers 230,556 517,758 33,133 220,145 320,019 (1,321,611) -
Disposals (370) (351) (4,562) - (617) - (5,900)
Classified as held for sale (5,777) - - - - - (5,777)
Other deductions - (4,817) - - (433) (22,265) (27,515)
Impairment charge (Note 29) - (8,061) (352) - (3,021) (416) (11,850)
Depreciation charge (Note 6, 29) (47,385) (223,833) (30,926) (224,991) (317,965) - (845,100)
Closing net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
At 31 December 2017
Cost 2,084,217 3,954,028 280,071 2,411,080 3,137,100 678,684 12,545,180
Accumulated depreciation and impairment (414,792) (1,935,093) (144,009) (1,608,649) (1,727,441) (1,108) (5,831,092)
Net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
Year ended 31 December 2018
Opening net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
Additions - - - - - 1,214,241 1,214,241
Transfers 101,202 97,601 21,936 176,549 199,671 (596,959) -
Disposals (56) (1,164) (1,188) (5,986) (688) (7) (9,089)
Reclassification 2,965 (143,415) 29,462 3,871 107,117 - -
Other deductions - (10,119) - - (2,647) (32,151) (44,917)
Impairment charge (Note 29) - (2,832) (478) - (3,478) (355) (7,143)
Depreciation charge (Note 6, 29) (51,781) (246,570) (37,514) (252,144) (337,879) - (925,888)
Closing net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
At 31 December 2018
Cost 2,188,306 3,837,053 326,799 2,556,744 3,376,670 1,263,392 13,548,964
Accumulated depreciation and impairment (466,551) (2,124,617) (178,519) (1,832,023) (2,004,915) (1,047) (6,607,672)
Net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
101
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the year ended 31 December 2018, depreciation expense of approximately
RMB761,189,000 (2017: RMB738,069,000) has been charged in cost of sales, RMB3,099,000
(2017: RMB2,841,000) in distribution costs and RMB161,600,000 (2017: RMB104,190,000) in
administrative expenses.
(i) Temporarily idle property, plant and equipment
As at 31 December 2018, property, plant and equipment with book value of approximately RMB
2,497,000 (cost of RMB56,727,000) (31 December 2017: book value of approximately RMB
1,878,000 and cost of RMB53,297,000) were temporarily idle due to product process adjustment
and other reasons.The specific analysis is as follows:
Accumulated Net
Cost depreciation Impairment book amount
Plant and Machinery 28,138 (16,597) (10,609) 932
Motor Automobiles 3,826 (2,391) (470) 965
Electronic and other equipment 24,763 (21,988) (2,175) 600
56,727 (40,976) (13,254) 2,497
(ii) Property, plant and equipment not yet obtained proper certificate
Reasons for not completing
Net book amount proper certificate
Buildings 892,127,119 Procedure not yet completed
13 Lease prepayment
Lease prepayment represents the Group’s interests in land which are held on leases of 50
years. The movement is as follows:
31 December 2018 31 December 2017
Opening net book amount 616,834 632,408
Additions - -
Amortisation charge (Note 6, 29) (15,574) (15,574)
Closing net book amount 601,260 616,834
Cost 751,626 751,626
Accumulated amortisation (150,366) (134,792)
Net book amount 601,260 616,834
Amortisation expense was charged in administrative expenses.
102
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
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 2017
Opening net book amount 115,893 38,797 3,462 - 8 158,160
Addition 58,010 22,265 - - - 80,275
Amortisation charge (Note 6, 29) (27,347) (13,220) - - (8) (40,575)
Closing net book amount 146,556 47,842 3,462 - - 197,860
At 31 December 2017
Cost 182,597 120,282 89,028 36,978 1,649 430,534
Accumulated amortisation and impairment (36,041) (72,440) (85,566) (36,978) (1,649) (232,674)
Net book amount 146,556 47,842 3,462 - - 197,860
Year ended 31 December 2018
Opening net book amount 146,556 47,842 3,462 - - 197,860
Addition 71,814 32,152 - - - 103,966
Disposals - (63) - - - (63)
Amortisation charge (Note 6, 29) (38,952) (16,785) - - - (55,737)
Closing net book amount 179,418 63,146 3,462 - - 246,026
At 31 December 2018
Cost 254,412 152,014 89,028 36,978 1,649 534,081
Accumulated amortisation and impairment (74,994) (88,868) (85,566) (36,978) (1,649) (288,055)
Net book amount 179,418 63,146 3,462 - - 246,026
103
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(i) For the year ended 31 December 2018, amortisation expense of approximately
RMB54,860,000 (2017: RMB39,614,000) was charged in administrative expenses,
RMB537,000 (2017: RMB621,000) in cost of sales and RMB340,000 (2017: RMB340,000) in
distribution costs.
(ii) Development cost of approximately RMB71,814,000 (2017: RMB58,010,000) were capitalised
by the Group during the year ended 31 December 2018.
(iii) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the
cash generating unit level. The goodwill is allocated to the following cash generating unit
(“CGU”):
31 December 2017 Addition Impairment 31 December 2018
JMCH 3,462 - - 3,462
The recoverable amount of the CGU is determined based on fair value less costs of disposal.
These calculations use after-tax cash flow projections based on financial budgets approved by
management covering a seven-year period according to the medium and long-term budgets for
the business development plan approved by the management. Adjustments for market
conditions are also considered for the forecast. Cash flows beyond the seven-year period are
extrapolated using the estimated long term growth rate stated below. The long term growth rate
does not exceed the average growth rate for the heavy duty automobile business in which the
CGU operates.
The key assumptions used for calculations in 2018 are as follows:
Item JMCH
Revenue growth rate 84%
Sales price growth rate 0%
Long term growth rate 3%
Discount rate 19.10%
The key assumptions used for calculations in 2017 were as follows:
Item JMCH
Revenue growth rate 135%
Sales price growth rate 1%
Long term growth rate 3%
Discount rate 19.40%
The key assumptions used and forecast period are consistent with the heavy duty automobile
industry.
The discount rates used are after-tax and reflect specific risks relating to the relevant operating
subsidiary.
104
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(iii) Impairment test for goodwill (continued)
In the opinion of management, the recoverable amount of the CGU will not be lower than the
carrying amount even if taking into account a reasonably possible change in the key
assumptions on the calculation of recoverable amount of the CGU.
The fair value measurement is categorised in level 3 of the fair value hierarchy.
15 Financial instruments by category
The Group holds the following financial instruments:
Financial assets Notes 31 December 2018 31 December 2017
Financial assets at amortised cost
Trade receivables 19 2,674,650 2,307,119
Notes receivables 19 626,509 654,335
Other receivables 19 84,588 130,959
Interest receivables 19 37,923 79,217
Cash and cash equivalents 20 7,616,880 11,137,723
Financial assets at fair value through
other comprehensive income
Notes receivables 6,246 —
Financial assets at fair value through
profit or loss
Derivative financial instruments 979 -
11,047,775 14,309,353
Financial liabilities Notes 31 December 2018 31 December 2017
Liabilities at amortised cost
Trade and other payables(exclude
payroll and welfare payables, other
tax payables) 27 11,658,259 12,641,368
Borrowings 24 4,044 4,279
Financial liabilities at fair value through
profit or loss - 8,493
11,662,303 12,654,140
The Group’s exposure to various risks associated with the financial instruments is discussed in
Note 3. The maximum exposure to credit risk at the end of the reporting period is the carrying
amount of each class of financial assets mentioned above.
105
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date of Percentage of
Entity incorporation equity interest held Principal activities
JMCH Taiyuan, PRC Manufacture and sale of
/8 January 2013 100% automobiles and spare parts
JMCS Nanchang, PRC Sale of automobiles and
/11 October 2013 100% spare parts
SZFJ Shenzhen, PRC Sale of automobiles and
/3 May 2018 100% spare parts
GZFJ Guangzhou, PRC Sale of automobiles and
/15 June 2018 100% spare parts
XMFJ Xiamen, PRC Sale of automobiles and
/20 June 2018 100% spare parts
In 2018, the Company invested RMB10,000,000 respectively to set up subsidiaries, including
SZFJ, GZFJ and XMFJ.
16b Investments accounted for using the equity method
(i) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow:
31 December 2018 31 December 2017
Associate 40,112 37,874
The amount recognised in the consolidated statement of comprehensive income was as follow:
2018 2017
Share of profit 2,238 8,149
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.
(ii) Reconciliation of summarised financial information of the associate
2018 2017
At beginning of the year 197,774 208,317
Profit for the year 11,686 42,555
Dividends distributed - (53,098)
At end of the year 209,460 197,774
Interest in associate 19.15% 19.15%
Carrying value 40,112 37,874
106
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Deferred income tax
31 December 2018 31 December 2017
Deferred tax assets 926,630 757,877
Deferred tax liabilities-can be offset (183,534) (67,624)
Deferred tax liabilities-cannot be offset (26,024) (26,736)
Deferred tax assets-net 743,096 690,253
Deferred tax liabilities-net (26,024) (26,736)
The gross movement on the deferred income tax account is as follows:
31 December 2018 31 December 2017
At beginning of the year 663,517 527,105
Credited to profit or loss (Note 10(i)) 52,407 136,008
Credited to other comprehensive income
(Note 10(i)) 1,148 404
At end of the year 717,072 663,517
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:
Accrued
expenses
and Amortization
Provision for Retirement provision of non-
impairment of benefits for statutory patented Tax
Deferred tax assets assets obligation warranty technology losses Others Total
At 1 January 2017 7,586 14,094 567,486 1,087 - 646 590,899
Credited/(charged) to
profit or loss 4,563 (955) 155,901 3,418 - 3,647 166,574
Credited to other
comprehensive income - 404 - - - - 404
At 31 December 2017 12,149 13,543 723,387 4,505 - 4,293 757,877
Credited/(charged) to
profit or loss 4,549 1,405 (18,816) 4,869 178,791 (3,193) 167,605
Credited to other
comprehensive income - 1,148 - - - - 1,148
At 31 December 2018 16,698 16,096 704,571 9,374 178,791 1,100 926,630
Amortisation Forwards
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total
At 1 January 2017 (4,696) (30,434) (27,383) (1,281) (63,794)
Credited/(charged) to
profit or loss 1,151 (33,645) 647 1,281 (30,566)
At 31 December 2017 (3,545) (64,079) (26,736) - (94,360)
(Charged)/credited to
profit or loss (841) (114,922) 712 (147) (115,198)
At 31 December 2018 (4,386) (179,001) (26,024) (147) (209,558)
107
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Deferred income tax (continued)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
31 December 2018 31 December 2017
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 203,802 17,453
–Deferred tax asset to be recovered
within 12 months 722,828 740,424
926,630 757,877
31 December 2018 31 December 2017
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (182,373) (90,097)
–Deferred tax liabilities to be recovered
within 12 months (27,185) (4,263)
(209,558) (94,360)
Deductible temporary differences and tax losses which no deferred income tax assets were
recognised were as follows:
31 December 2018 31 December 2017
Deductible temporary differences 234,433 114,642
Tax losses 639,805 376,658
874,238 491,300
The expiry years of the tax losses are as follows:
31 December 2018 31 December 2017
2019 36,772 36,772
2020 72,470 72,470
2021 115,820 115,820
2022 150,713 151,596
2023 264,030 -
639,805 376,658
108
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Inventories
31 December 2018 31 December 2017
Raw materials 1,553,135 1,566,589
Work in progress 211,490 208,981
Finished goods 757,729 563,734
2,522,354 2,339,304
For the year ended 31 December 2018, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB21,121,474,000 (2017:
RMB22,318,293,000).
Movement on the provision for inventories write-down is as follows:
31 December 2018 31 December 2017
At beginning of the year (45,130) (26,491)
Provision for inventories write-down (Note
29) (53,651) (34,655)
Inventories written off during the year as
uncollectible 21,966 16,016
At end of the year (76,815) (45,130)
19 Trade and other receivables and prepayments
31 December 2018 31 December 2017
Trade receivables 2,696,928 2,328,135
Less: Provision for impairment of trade
receivables (22,278) (21,016)
Trade receivables – net 2,674,650 2,307,119
Notes receivables 626,509 654,335
Other receivables 85,031 131,617
Less: Provision for impairment of other
receivables (443) (658)
Other receivables – net 84,588 130,959
Prepayments 1,158,303 1,238,878
-Material payment in advance 525,777 571,001
-Advance payment of taxes and surcharges 632,048 656,366
-Others 478 11,511
Deductable VAT input tax 96,311 145,426
Interest receivables 37,923 79,217
4,678,284 4,555,934
Refer to Note 32 for details of receivables from related parties.
The carrying amounts of trade and other receivables approximate their fair values.
109
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2018 31 December 2017
At beginning of the year (21,674) (16,373)
Provision for receivables impairment
(Note 29) (1,089) (5,301)
Receivables written off during the year as
uncollectible 42 -
At end of the year (22,721) (21,674)
For the year ended 31 December 2018, the creation of provision for impaired receivables was
included in ‘Net expected credit losses on financial assets’ (2017: ‘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.
20 Cash and cash equivalents
31 December 2018 31 December 2017
Cash at bank and in hand 2,016,859 2,046,999
Short-term bank deposits (a) 5,600,021 9,090,724
7,616,880 11,137,723
As at 31 December 2018 and 31 December 2017, all bank deposits are in RMB.
As at 31 December 2018, the Group had cash of approximately RMB833,617,000 (2017:
RMB1,120,806,000) deposited in Jiangling Motor Group Finance Company (“JMCF”) (Note 32
(ix)). The interest rates range from 0.455%-2.25% per annum (2017: 1.495%-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.
110
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Assets classified as held for sale
31 December 2018 31 December 2017
Lease prepayment and buildings of
Transit plant - 93,413
As at 26 March 2015, under the authorization from the board of directors, the Company signed
an agreement of “state-owned land reserves” with Nanchang City Land Reserve Centre (the
“agreement”). According to the agreement, the Company sold its land use right and buildings
of Transit plant, with a consideration of RMB135,000,000 to Nanchang City Land Reserve
Centre.
The transfer of the asset was completed in 2018, and the Group recognised the disposal profit
of RMB33,840,000 in ‘other income’.
22 Share capital
Number of Tradable shares
shares “A” shares “B” shares Total
(thousands) Restricted Non-restricted
Year ended 31 December 2017
Balance at 1 January 2017 863,214 1,726 517,488 344,000 863,214
Transfer - (819) 819 - -
Balance at 31 December 2017 863,214 907 518,307 344,000 863,214
Year ended 31 December 2018
Balance at 1 January 2018 863,214 907 518,307 344,000 863,214
Transfer - (120) 120 - -
Balance at 31 December 2018 863,214 787 518,427 344,000 863,214
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, 787,000 shares
were still restricted as at 31 December 2018.
111
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
At 1 January 2017 431,607 18,627 1,892 452,126
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,212) (1,212)
At 31 December 2017 431,607 18,627 680 450,914
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (3,442) (3,442)
At 31 December 2018 431,607 18,627 (2,762) 447,472
(a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of
the Company, it is required to appropriate 10% of its annual net profit, after offsetting any prior
years’ losses as determined under the Accounting Standards for Business Enterprises in the
PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance
of the statutory surplus reserve fund reaches 50% of the Company’s share capital, any further
appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be
used to offset prior years’ losses, if any, and may be converted into share capital by issuing
new shares to shareholders in proportion to their existing shareholding or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation.
As the balance of the statutory surplus reserve fund has reached 50% of the Company’s share
capital, no further appropriations to the statutory surplus reserve fund were provided for the
years ended 31 December 2017 and 2018.
24 Borrowings
31 December 2018 31 December 2017
Current
Bank borrowings - guaranteed (a) 449 428
Non-current
Bank borrowings - guaranteed (a) 3,595 3,851
Total borrowings 4,044 4,279
(a) Bank borrowings of USD589,000 (equivalent to approximately RMB4,044,000) (2017:
USD655,000 equivalent to approximately RMB4,279,000) were guaranteed by JMCF (Note 32
(iii)).
The interest rate of bank borrowings is 1.50% per annum (2017: 1.50%).
The fair value of borrowings approximates their carrying values.
112
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2018 31 December 2017
Between 1 and 2 years 449 428
Between 2 and 5 years 1,348 1,284
Over 5 years 1,798 2,139
3,595 3,851
The Group has the following undrawn borrowing facilities:
31 December 2018 31 December 2017
Fixed rate
- Expiring within one year 2,270,784 2,113,140
25 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the
consolidated statement of financial position is as follows:
31 December 2018 31 December 2017
Present value of defined benefits obligations 68,020 59,184
The movement of early retirement and supplemental benefit obligations for the year ended 31
December 2018 is as follows:
31 December2018 31 December2017
At beginning of the year 59,184 58,188
For the year
-Current service cost 1,315 1,804
-Interest cost 2,410 1,951
-Payment (4,954) (4,871)
-Past service cost from the change of plan 2,386 670
-Actuarial loss 7,679 1,442
At end of the year 68,020 59,184
Current 4,595 4,420
Non-current 63,425 54,764
68,020 59,184
The material actuarial assumptions used in valuing these obligations are as follows:
(i) Discount rate adopted: 3.5% (2017: 4.25%)
(ii) Inflation rate adopted: 2.0% (2017: 2.0%)
(iii) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 6% (2017: 0% to 6% )
113
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
25 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2018, a
provision of RMB68,020,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB68,020,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,595,000 (2017:
RMB4,420,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Change in assumption Impact on overall liability
Discount rate Increase/decrease by 0.5% Decrease/increase by 5.7%/6.4%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 2.4%/2.1%
For the year ended 31 December 2018, approximately RMB9,200,000 (2017: RMB4,251,000)
were charged in ‘administrative expenses’ and RMB4,590,000 (2017: RMB1,616,000) were
charged in other comprehensive income.
26 Provisions for statutory warranty
The movement on the statutory warranty provisions and other liabilities is as follows:
31 December 2018 31 December 2017
At beginning of the year 374,981 284,627
Charged for the year (Note 6) 291,471 313,289
Utilised during the year (313,898) (222,935)
At end of the year 352,554 374,981
Analysis of total provisions:
31 December 2018 31 December 2017
Non-current 151,492 184,688
Current 201,062 190,293
352,554 374,981
The above represents the statutory warranty protecting customer from faults that arise after the
product has been transferred to the customer. The statutory warranty is estimated based on prior
years’ experience on the occurrence of such cost.
114
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
27 Trade and other payables
31 December 2018 31 December 2017
Trade payables 7,824,908 8,603,320
Payroll and welfare payables 304,322 273,666
Dividend payables 6,790 4,969
Other tax payables 233,385 139,442
Payables of sales rebates 1,714,485 1,767,366
Payables of R&D expenses 828,807 988,950
Others 1,283,269 1,444,827
12,195,966 13,222,540
Refer to Note 32 for details of amount due to related parties.
28 Dividends
A special interim dividend for 2018 of RMB2,000,067,000 (RMB2.317 per share) was paid in
2018.
A final dividend for 2017 of RMB276,228,000 (RMB0.32 per share) was paid in 2018.
29 Cash generated from operations
2018 2017
Profit before tax 39,639 761,823
Depreciation of PPE (Note 6, 12) 925,888 845,100
Amortisation of lease prepayment (Note 6, 13) 15,574 15,574
Amortisation of intangible assets (Note 6, 14) 55,737 40,575
Impairment charges of PPE (Note 12) 7,143 11,850
Provision for receivables impairment (Note 19) 1,089 5,301
Provision of inventories (Note 18) 53,651 34,655
(Gain)/loss on disposals of PPE (26,953) 976
Finance expenses (Note 9) 5,111 4,386
Finance income (Note 9) (188,436) (244,300)
Net foreign exchange transaction loss/(gain) 18,921 (4,423)
Share of profit from investment accounted for using
equity method (Note 16b) (2,238) (8,149)
Investment gain of finance asset investment (18,191) -
Investment loss of forwards exchange contracts 7,200 58
Changes on fair value of forwards exchange
contracts (9,472) 17,032
Provisions for statutory warranty (22,427) 90,354
Changes in working capital:
- Increase in inventories (289,820) (488,115)
- Increase in trade and other receivables (233,475) (1,804,557)
- (Decrease)/increase in trade and other payables (347,367) 1,619,201
- Increase/(decrease) in pensions and other
retirement benefits 4,246 (620)
Cash generated from operations (4,180) 896,721
115
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
29 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE, lease prepayment and intangible
assets comprise:
Year ended 31 December
2018 2017
Net book amount 102,565 5,900
Gain/(loss) on disposal of PPE, lease prepayment
and intangible assets 26,953 (976)
(Decrease)/increase in trade and other payables (126,745) 94,802
Proceeds from disposal of PPE, lease
prepayment and intangible assets 2,773 99,726
30 Contingencies
At 31 December 2018, the Group did not have any significant contingent liabilities.
31 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
31 December 2018 31 December 2017
Contracted but not provided for:
Purchases of buildings, plant and machinery 1,095,333 477,482
32 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 31 December 2018. 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 year ended 31
December 2018.
116
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
For the year ended 31 December 2018, 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 Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Co., Ltd. Associate of JMCG
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd Associate of JMCG
Nanchang JMCG Skyman Auto Component Co., Ltd. Associate of JMCG
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Associate of JMCG
Nanchang Hengou Industry Co. ,Ltd. Associate of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co.,Ltd. Associate of JMCG
Jiangxi JMCG Motorhome Co.,Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Associate of JMCG
Changan Ford Automobile Co.,Ltd. Joint venture of Ford
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. Joint venture of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd. Joint venture of JMCG
Nanchang Unistar Electric & Electronics Co., Ltd. Joint venture of JMCG
Nanchang Yinlun Heat-exchanger Co., Ltd. Joint venture of JMCG
Jiangxi ISUZU Engine Co., Ltd. Joint venture of JMCG
Jiangxi ISUZU Co., Ltd. Joint venture of JMCG
Ford Otomotiv Sanayi A.S. Subsidiary of Ford
Auto Alliance (Thailand) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Vietnam Limited Subsidiary of Ford
Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Jiangling Material Co.,Ltd. Subsidiary of JMCG
Jiangling Aowei Automobile Spare Part Co.,Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co.,Ltd. Subsidiary of JMCG
Jiangxi JMCG Industry Co.,Ltd. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
NC.Gear Forging Factory Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Jiangxi Lingrui Recycling Resources Development Corporation Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
JMCG Property Management Co. Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG
Jiang ling Motor Electricity Vehicle Sales Co., Ltd Subsidiary of JMCG
JMCF Subsidiary of JMCG
117
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services
Purchase of goods 2018 2017
Nanchang Baojiang Steel Processing Distribution Co., Ltd. 922,454 943,608
Jiangxi Jiangling Chassis Co., Ltd. 864,932 888,703
GETRAG (Jiangxi) Transmission Company 791,365 813,926
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 782,403 764,437
Ford 623,631 830,603
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. 515,419 543,846
Jiangxi Jiangling Lear Interior System Co., Ltd. 454,604 550,290
Nanchang JMCG Liancheng Auto Component Co., Ltd. 418,722 479,447
Nanchang Unistar Electric & Electronics Co., Ltd. 298,128 275,937
Hanon Systems 250,486 252,848
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. 195,453 221,553
Jiangxi JMCG Specialty Vehicles Co., Ltd. 192,509 178,147
Ford Otomotiv Sanayi A.S. 128,341 47,775
JMCG (a) 110,093 112,201
Auto Alliance (Thailand) Co., Ltd. 106,035 188,931
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 91,976 -
Nanchang Lianda Machinery Co., Ltd. 69,827 66,691
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. 63,649 64,907
Nanchang Yinlun Heat-exchanger Co., Ltd. 53,976 56,232
Nanchang JMCG Skyman Auto Component Co., Ltd. (d) 50,852 77,718
Jiangxi ISUZU Engine Co., Ltd. 49,911 10,028
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 42,967 12,129
Jiangling Material Co., Ltd. 30,399 29,441
Jiangling Aowei Automobile Spare Part Co., Ltd. 26,464 31,737
Nanchang JMCG Xinchen Auto Component Co., Ltd. 18,297 23,097
118
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of goods (continued) 2018 2017
Jiangxi JMCG Industry Co., Ltd. 17,581 5,683
Nanchang Gear Co., Ltd. 15,420 18,758
NC.Gear Forging Factory 13,240 -
JMH (d) 12,484 -
Changan Ford Automobile Co., Ltd. 10,993 191,815
Nanchang JMCG Shishun Logistics Co., Ltd. (b) 10,097 -
Jiangxi Biaohong Engine Tappet Co., Ltd. 6,649 8,329
Jiangxi Lingrui Recycling Resources Development Corporation(c) 4,378 3,956
Jiangxi JMCG Shangrao Industrial Co., Ltd. 4,235 6,567
JMCG Jiangxi Engineering Construction Co., Ltd. - 2,520
Others 211 6,888
7,248,181 7,708,748
(a) In January 2019, the Jiangling Motors Corporation Group has been renamed to Jiangling
Motors Group Corporation Limited.
(b) In June 2018, the Nanchang JMCG Shishun Logistics LLC has been renamed to
Nanchang JMCG Shishun Logistics Co., Ltd.
(c) In March 2018, Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd has been renamed
to Jiangxi Lingrui Recycling Resources Development Corporation.
(d) In December 2018, JMH absorbed Nanchang JMCG Skyman Auto Component Co., Ltd.
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.
119
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction 2018 2017
Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 247,762 304,852
Ford Global Technologies, LLC Royalty fee 186,454 250,088
Ford Engineering service and design 183,983 286,361
Nanchang Hengou Industry Co., Ltd. Packing/Truckage 47,407 53,218
Ford Otomotiv Sanayi A.S. Engineering service and design 42,734 74,245
Ford Secondments costs 36,965 33,331
Jiangxi JMCG Industry Co., Ltd. Working meal 35,249 33,451
Ford Otomotiv Sanayi A.S. Royalty fee 24,868 25,143
JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 16,830 64,940
Changan Ford Automobile Co., Ltd. Service fee/Design fee/Labor costs 16,509 15,091
Ford Otomotiv Sanayi A.S. Secondments costs 13,396 30,773
Ford Motor (China) Co., Ltd. Regional personnel costs 9,572 5,763
GETRAG (Jiangxi) Transmission Company Design fee/Experimental costs 9,546 11,572
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Promotion/Repairment 6,968 972
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business of importation 4,431 4,242
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Regional personnel costs 3,508 2,107
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Design fee 3,256 5,615
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Promotion/Experimental manufacturing costs 2,304 428
JMCG Property Management Co. Property management 2,100 2,040
120
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services (continued) Natures of transaction 2018 2017
Jiangxi JMCG Motorhome Co., Ltd. Promotion 1,855 154
JMH Secondments costs/Labor fee 2,054 1,904
Experimental manufacturing costs/
Jiangxi Jiangling Lear Interior System Co., Ltd. Design fee 704 3,649
Ford Motor (China) Co., Ltd. Software fee 466 3,327
Jiangxi JMCG Specialty Vehicles Co., Ltd. Promotion/Repairment 57 2,200
JMH Royalty fee - 29,434
Hanon Systems Experimental manufacturing costs - 2,263
Nanchang JMCG Liancheng Auto Component Co., Ltd. Experimental manufacturing costs - 1,824
Others 1,440 3,480
900,418 1,252,467
The Group purchased the service from related parties based on agreement price.
121
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase fuel consumption credits 2018 2017
JMH 20,375 -
Sales of goods 2018 2017
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,228,471 1,047,618
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. 155,313 -
Jiangxi JMCG Specialty Vehicles Co., Ltd. 102,068 95,331
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 94,214 67,557
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 85,326 22,006
Jiangxi Jiangling Chassis Co., Ltd. 74,362 83,408
Jiangxi Lingrui Recycling Resources Development Corporation 69,005 55,274
JMCG Jingma Motors Co., Ltd. 66,197 79,196
Nanchang JMCG Liancheng Auto Component Co., Ltd. 51,945 62,506
JMH 35,107 148,459
Nanchang Hengou Industry Co., Ltd. 28,878 79,976
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. 14,071 18,650
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 9,487 23,259
JMCG Property Management Co. 6,470 7,129
Jiangxi JMCG Industry Co., Ltd. 5,537 7,563
Jiangxi Jiangling Lear Interior System Co., Ltd. 5,516 7,467
Jiang ling Motor Electricity Vehicle Sales Co., Ltd 5,139 -
JMCG Jiangxi Engineering Construction Co., Ltd. 1,974 47
Jiangxi ISUZU Co., Ltd. 1,806 1,896
Nanchang Lianda Machinery Co., Ltd. 1,157 400
Nanchang JMCG Shishun Logistics Co., Ltd. 671 25,408
Others 1,701 950
2,044,415 1,834,100
The Group sold goods to related parties, based on agreement price.
122
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ii) Rental
Rental cost
Lessor Category Rental cost of 2018 Rental cost of 2017
JMCG Building 4,687 4,140
Jiangxi Jiangling Motors Imp. &
Exp. Co., Ltd. Building 4,297 4,400
JMCG Property Management Co. Building 422 422
9,406 8,962
Rental income
Lessee Category Rental income of Rental income of
2018 2017
Jiangling Material Co., Ltd. Building 120 132
GETRAG (Jiangxi) Transmission
Company Building 3 3
JMH Building 3 55
126 190
(iii) Guarantee
As at 31 December 2018, bank loans of USD589,000 (equivalent to approximately RMB
4,044,000) (2017:USD655,000, equivalent to approximately RMB4,279,000) were guaranteed by
JMCF (Note 24).
(iv) Sales of PPE
2018 2017
Jiangxi JMCG Industrial Co., Ltd. 1 5
(v) Purchase of PPE
2018 2017
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 6,424 -
Nanchang Jiangling HuaXiang Auto Components Co.,
Ltd. 5,548 -
Nanchang JMCG Liancheng Auto Component Co., Ltd. 677 -
JMH 534 -
Jiangxi JMCG Specialty Vehicles Co., Ltd. - 1,000
13,183 1,000
123
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(vi) Provide technique sharing
2018 2017
Ford Vietnam Limited 10,780 -
JMCG 3,606 -
14,386 -
(vii) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive
Committee, the Company Secretary and members of the Supervisory Board. During the year
ended 31 December 2018, the total remuneration of the key management was approximately
RMB11,591,000 (2017: RMB13,598,000).
(viii) Interest received from cash deposit in related parties
31 December 2018 31 December 2017
JMCF 17,323 20,156
In 2018, the interest rates range from 0.455% to 2.25% per annum (2017: 1.495% to 2.25%).
(ix) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2018 31 December 2017
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 251,236 171,475
Jiangxi JMCG Specialty Vehicles Sales
Corporation, Ltd. 32,940 -
Jiangxi Jiangling Chassis Co., Ltd. 9,803 -
JMCG Jingma Motors Co., Ltd. 6,162 8,543
Jiang ling Motor Electricity Vehicle Sales Co., Ltd 5,961 -
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 5,726 -
Ford Vietnam Limited 5,104 -
Nanchang Jiangling HuaXiang Auto Components
Co., Ltd. 1,899 3,765
Nanchang Hengou Industry Co., Ltd. 3 1,508
JMH - 170,853
Nanchang JMCG Shishun Logistics Co., Ltd. - 14,731
Nanchang JMCG Liancheng Auto Component
Co., Ltd. - 5,913
Others 356 549
319,190 377,337
Other receivables from related parties 31 December 2018 31 December 2017
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 35,027 42,356
Ford - 5,158
GETRAG (Jiangxi) Transmission Company - 2,770
Others. 11 964
35,038 51,248
124
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 31 December 2018 31 December 2017
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 496,146 457,613
Ford Otomotiv Sanayi A.S. - 31,069
496,146 488,682
Notes receivables from related parties 31December2018 31December2017
JMCG Jingma Motors Co., Ltd. 41,418 48,491
Prepayments for construction in progress 31 December 2018 31 December 2017
Jiangxi JMCG Specialty Vehicles Co., Ltd. 500 500
JMCG Jiangxi Engineering Construction Co., Ltd. - 2,231
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. - 572
500 3,303
Prepayments for mould lease 31 December 2018 31 December 2017
Changan Ford Automobile Co., Ltd. 478 11,990
Cash deposit in related parties 31 December 2018 31 December 2017
JMCF (Note 20) 833,617 1,120,806
125
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 31 December 2018 31 December 2017
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 336,126 262,946
Jiangxi Jiangling Chassis Co., Ltd. 333,431 303,148
Nanchang Jiangling HuaXiang Auto Components
Co., Ltd. 316,174 243,796
GETRAG (Jiangxi) Transmission Company 275,275 251,080
Jiangxi Jiangling Lear Interior System Co., Ltd. 214,139 352,627
Ford 151,749 86,504
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 148,483 153,529
Jiangxi JMCG Specialty Vehicles Co., Ltd. 138,209 209,228
Nanchang Unistar Electric & Electronics Co., Ltd. 96,905 118,889
Hanon Systems 91,656 135,846
JMCG 68,159 74,918
Changan Ford Automobile Co., Ltd. 67,622 68,221
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 58,966 83,113
Nanchang JMCG Mekra-Lang Vehicle Mirror
Co., Ltd 48,200 -
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 28,944 10,490
Nanchang Lianda Machinery Co., Ltd. 28,325 24,651
JMH 26,349 -
Nanchang Yinlun Heat-exchanger Co., Ltd. 24,756 25,151
Jiangxi Lingge Non-ferrous Metal Die-casting
Co., Ltd. 19,850 30,751
Jiangling Aowei Automobile Spare Part Co., Ltd. 14,533 17,142
Nanchang JMCG Shishun Logistics Co., Ltd. 10,113 293
Jiangxi ISUZU Engine Co., Ltd. 9,956 11,714
Jiangxi JMCG Industry Co., Ltd. 7,830 2,394
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 6,355 5,334
Nanchang Gear Co., Ltd. 6,179 7,902
NC.Gear Forging Factory 4,173 -
Auto Alliance (Thailand) Co., Ltd. 2,151 17,000
Jiangxi Biaohong Engine Tappet Co., Ltd. 2,037 2,891
Jiangxi Lingrui Recycling Resources
Development Corporation 1,736 1,712
Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,693 4,009
Jiangling Material Co., Ltd. 1,372 1,002
Ford Otomotiv Sanayi A.S. 1,031 29,711
Nanchang JMCG Skyman Auto Component Co.,
Ltd. - 36,998
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. - 1,007
Others 16 -
2,542,493 2,573,997
126
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2018 31 December 2017
Ford Otomotiv Sanayi A.S. 115,254 134,059
Ford 92,310 104,814
Ford Global Technologies, LLC 41,203 62,410
Jiangxi JMCG Specialty Vehicles Sales
Corporation, Ltd. 31,946 -
JMCG Jiangxi Engineering Construction Co., Ltd. 30,166 36,818
JMH 15,641 30,000
GETRAG (Jiangxi) Transmission Company 14,216 6,309
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 13,584 8,521
Nanchang Hengou Industry Co., Ltd. 10,211 3,498
Changan Ford Automobile Co., Ltd. 9,776 2,765
Nanchang JMCG Shishun Logistics Co., Ltd. 7,736 10,751
Nanchang Jiangling HuaXiang Auto Components
Co., Ltd. 7,222 3,693
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 6,921 484
Ford Motor (China) Co., Ltd. 4,803 1,755
Jiangxi Jiangling Lear Interior System Co., Ltd. 4,612 11,455
Jiangxi JMCG Industry Co., Ltd. 3,504 1,922
Jiangxi JMCG Motorhome Co., Ltd. 1,905 50
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 1,403 510
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 283 4,860
Hanon Systems 45 2,520
Others 3,736 5,139
416,477 432,333
Advance from related parties 31 December 2018 31 December 2017
Jiangxi JMCG Specialty Vehicles Co., Ltd. - 294
Others - 1,501
- 1,795
Capital commitments 31 December 2018 31 December 2017
JMCG Jiangxi Engineering Construction Co.,
Ltd. 29,456 35,178
33 Event after the balance sheet date
According to the resolution of the Board of Directors as at 26 March 2019, the board of directors
proposed that the Company distribute cash dividends to all shareholders at RMB0.04 per share.
Based on the issued shares of 863,214,000, totalled amount of proposed dividend is
RMB34,529,000.
127
Chapter XII Catalog on Documents for Reference
1. Originals of 2018 financial statements signed by legal representative and Chief
Financial Officer.
2. Originals of the Independent Auditor’s Reports signed by Independent
accountants and stamped by the accounting firm.
3. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in 2018.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 26, 2019
128
