Jiangling Motors Corporation, Ltd.
2019Half-year Report
2019-043
1
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its
members, and the senior executives are jointly and severally liable for the
truthfulness, accuracy and completeness of the information disclosed in the
report and confirm that the information disclosed herein does not contain 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 Half-year Report are
truthful, accurate and complete.
Director David Johnston did not attend this meeting, and he authorized Vice
Chairman Anning Chen to represent him at this meeting, and all the other
Directors were present at the Board meeting in person.
Neither cash dividend nor stock dividend was distributed. The Board decided
not to convert capital reserve to share capital this time.
All financial data in this report are prepared under International Financial
Reporting Standards (‘IFRS’) unless otherwise specified.
The Half-year Report is prepared in Chinese and English. In case of
discrepancy, the Chinese version will prevail.
2
Contents
Chapter I Important Notes, Contents and Abbreviations ................................ 2
Chapter II Brief Introduction ............................................................................ 4
Chapter V Major Events ................................................................................ 13
Chapter VI Share Capital Changes & Shareholders ...................................... 19
Chapter VII Preferred Shares.......................................................................... 23
Chapter VIII Directors, Supervisors and Senior Management ......................... 24
Chapter IX Company Bond ............................................................................ 25
Chapter X Financial Statements ................................................................... 26
Chapter XI Catalogue on Documents for Reference ...................................... 91
Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JHC Jiangling Motor Holdings Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
3
Chapter II Brief Introduction
1. Company’s information
Share’s name Jiangling Motors, Jiangling B Share’s Code 000550, 200550
Place of listing Shenzhen Stock Exchange
Company’s Chinese
江铃汽车股份有限公司
name
English name Jiangling Motors Corporation, Ltd.
Abbreviation JMC
Company legal
Qiu Tiangao
representative
2. Contact person and method
Securities Affairs
Board Secretary
Representative
Name Wan Hong Quan Shi
No. 509, Northern Yingbin No. 509, Northern Yingbin
Address Avenue, Nanchang City, Avenue, Nanchang City,
Jiangxi Province, P.R.C Jiangxi Province, P.R.C
Tel 86-791-85266178 86-791-85266178
Fax 86-791-85232839 86-791-85232839
E-mail relations@jmc.com.cn relations@jmc.com.cn
3. Other
I. Contact methods
Changes of registered address, headquarter address, postal code, website
and e-mail
□Applicable √Not Applicable
There is no change of registered address, headquarter address, postal code,
website and e-mail. Please refer to 2018 Annual Report for details.
II. Newspapers for information disclosure, website for publication of JMC’s
half-year report and place for achieving half-year report
□Applicable √Not Applicable
There is no change of newspapers for information disclosure, website
designated by CSRC for publication of JMC’s Half-year Report and place for
achieving Half-year Report. Please refer to 2018 Annual Report for details.
4
4. Main accounting data and financial ratios
Unit: RMB ‘000
Reporting period Same period
(2019 first half) last year Change (%)
Revenue 13,721,954 14,287,497 -3.96
Profit Attributable to the
Equity Holders of the 58,862 318,951 -81.55
Company
Net Cash Generated
1,435,202 -906,818 258.27
From Operating Activities
Basic Earnings Per Share
0.07 0.37 -81.55
(RMB)
Diluted Earnings Per
0.07 0.37 -81.55
Share (RMB)
Weighted Average Return Down 2.15
0.57% 2.72%
on Equity Ratio percentage points
At the end of At the end of the
reporting period previous year Change (%)
Total Assets 23,668,970 23,396,529 1.16
Shareholders’ Equity
Attributable to the Equity 10,408,831 10,384,498 0.23
Holders of the Company
5. Accounting data difference between domestic and foreign accounting
standards
I. Differences in net profit and net assets disclosed respectively per IFRS and
PRC GAAP.
□Applicable √Not Applicable
There is no difference between IFRS and PRC GAAP in net profit and net
assets.
II. Differences in net profit and net assets disclosed respectively per GAAP
and PRC GAAP.
□Applicable √Not Applicable
There is no difference between GAAP and PRC GAAP in net profit and net
assets.
5
Chapter III 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, advanced quality management enterprise
and national automobile export base; and had been ranked among the top
100 most valuable global brands for consecutive years.
JMC insists on the guide of strategy, focuses on strengthening the strategy
implementation: during the reporting period, the company developed “2025
Strategy” which identified the new vision of JMC, committed to become the
industry leader of light commercial vehicle and provider of Ford products with
excellent cost performance. Commercial vehicle is positioned on city/main line
logistics products and suppliers of comprehensive service scheme. Achieve
breakthrough and great development on small/middle passenger vehicle
segment.
Centered on innovation and service, promoting structural renovation: JMC
adheres to the road of scientific/technological and management innovation.
During the reporting period, the company continued vigorous implementation
of product innovation to drive development, integrate resources, strengthen
technological innovation, promote market-oriented product innovation; deepen
transformation and adjustment, adhere to business model innovation; develop
systematic cost reduction strategies, focus on promoting the transformation of
organization and efficiency, and comprehensively enhance the core
competitiveness of products.
6
Focusing on advantageous business and create product leadership: JMC
focuses on the core business, concentrates intensive cultivation on each
segment, insists on customer-centered, improve the market awareness of the
whole value chain, so as to actively makes the company's products the
leaders of each segment.
Collaborative integration of the industrial system, positive layout of “ASEC”:
aiming at the new trends in the development of the automotive industry, JMC
promotes the implementation of the "ASEC" development strategy of
"autonomous driving, sharing, electrification, connectivity". The company has
developed layout in the core areas such as new energy vehicles, smart
connectivity, and autonomous driving to accelerate the construction of a
future-oriented and globally competitive business ecosystem through the
overall collaboration and integration of “ASEC”.
7
Chapter IV Management Discussion and Analysis
1. Summary
In 2019, China's economy has maintained a trend of overall stable and
progressive development. The main macroeconomic indicators reflected the
operation in a reasonable range, and the economic structure is constantly
being optimized and adjusted. Total sales volume was 12.32 million units,
decreased 12.40% 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
the first half of 2019, JMC achieved sales volume of 136,643 units, decreased
7.27% compared with last year, achieved revenue of RMB 13.72 billion,
decreased 3.96% compared with last year, achieved net profit of RMB 59
million, decreased 81.55% compared with last year. It mainly reflects: I. the
volume decrease of passenger vehicle in the interim period and the change of
overall sales structure; II. Marketing expense increased to compete in the very
challenging market. III. Continued spending on new product and technology.
2. Core Business Analysis
Year-over-Year Changes of Main Financial Data
Unit: RMB ’000
YOY change
2019 1H 2018 1H Reason
（%）
Revenue 13,721,954 14,287,497 -3.96%
Cost of sales 11,683,969 12,277,724 -4.84%
Due to the marketing
Distribution costs 705,875 452,934 55.85% expense increase for
Territory launch.
Due to Territory
Administrative expenses 1,274,585 1,138,530 11.95% trademark royalty and
labour economic.
Finance Income-net 90,141 103,392 -12.82%
Income Due to operating loss.
-46,302 27,404 -268.96%
tax expense
Research and Development
914,829 820,752 11.46%
Expenditure
Net cash generated from Due to payment of the
1,435,202 -906,818 258.27%
operating activities goods decrease.
Due to cash payment
Net cash used in investing
-684,405 -442,747 -54.58% increase for fixed assets
activities
purchase.
Due to the 2017 mid-term
Net cash used in financing
-220 -2,000,548 99.99% special dividend paid in
activities
2018 Q1.
8
Due to increase of net
cash generated from
Net increase/(decrease) in
750,577 -3,350,113 122.40% operating activities and
cash and cash equivalents
the 2017 mid-term special
dividend paid in 2018 Q1.
Composition of Core Business
Unit: RMB ’000
Y-O-Y
Y-O-Y
Y-O-Y Cost gross
Gross turnover
Turnover Cost Change margin
Margin change
(%) change
(%)
(points)
By Industry
Automobile 13,540,007 11,511,538 14.98% -4.36% -5.32% 0.86%
Industry
By Products
Vehicle 12,327,573 10,656,459 13.56% -3.34% -4.31% 0.88%
By Region
China 13,540,007 11,511,538 14.98% -4.36% -5.32% 0.86%
3. Non- core business analysis
□√Applicable □Not Applicable
Unit: RMB ’000
Sustainability
Item Amount Proportion Explanation
（Y/N）
Government incentives to
Non-operating
158,387 1,261.10% support the Company’s Y
Revenue
development
financial investment such
Investment return 13,841 110.20%
as structural deposits
9
4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB ’000
YOY
June 30, 2019 December 31, 2018
Asset item Proportion
change
Amount Proportion Amount Proportion (Points)
Property, plant and
7,118,181 30.07% 6,941,292 29.67% 0.40
equipment
Inventories 2,173,276 9.18% 2,522,354 10.78% -1.60
Trade, other receivables
4,054,726 17.13% 4,678,284 20.00% -2.87
and prepayments
Cash and cash equivalents 8,367,457 35.35% 7,616,880 32.56% 2.79
Trade and other payables 12,454,392 52.62% 12,195,966 52.13% 0.49
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
Method/ Assets Spending in Investment
Project
source (Y/N) 2019 Committed Progress Index
Name
(RMB Mils) (RMB Mils)
Announcement of this
Fushan project (NO:2017-044) was
Self-funded Y 338 710 34.60%
Site published in the website
http://www.cninfo.com.cn
Total 338 710 -- --
IV. Financial Assets Investment
(a) Stock Investment
□Applicable □√Not Applicable
(b) Derivative Investment
□Applicable □√Not Applicable
6. Sales of Major Assets and Equity
10
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 Net Operating
Main Business Assets Turnover Net Profit
Companies Companies Capital Assets Profit
Jiangling
Motors Sale of vehicles,
Subsidiary 50,000 3,114,101 61,660 12,496,605 -250,459 -187,934
Sales Co., service parts
Ltd.
Production and
sale of heavy
JMC Heavy commercial
Duty vehicles,
Subsidiary 281,793 2,812,829 -821,670 145,829 -153,738 -145,814
Vehicle engines,
Co., Ltd. components,
and related
service
Acquisition and disposal of the subsidiary
□Applicable □√Not Applicable
8. Structured Entities Controlled by JMC
□Applicable □√Not Applicable
9．Business performance prediction in 1-9, 2019
□ Applicable √ Not Applicable
10. 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) Insight customer demand and improve channel capability to realize the
customer-centered business growth;
(2) Accelerating product platformization, redefine product portfolio, enrich line
up and net connectivity configuration to better satisfy customer demand;
(3) Optimizing company’s production system to improve efficiency and
product quality ;
(4) Improve suppliers’ capability and parts quality; continue to reduce parts
purchasing cost ;
(5) Sustaining the expense management and control to optimize the business
structure;
11
(6) Establish highly capable and efficient organization through the current
process optimization team to flexibly respond to the market change;
(7) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
The Company will focus on light commercial vehicle with the support of SUV,
maximize its own advantage and fully take advantage of shareholders
resource to realize sustainable profit. Strengthen channel coverage, improve
financing service ability; promote new products development and R&D ability
improvement, to accelerate the progress of launching new competitive
products to the market; develop more proactive cost reduction plan to improve
the company’s profit ability. Guided by the new strategy, the company will
continuously implement all the specific initiatives to accelerate the strategic
target achievement.
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Chapter V Major Events
1. Annual and special shareholders’ meeting
I. Shareholders’ meeting during the reporting period
Investors
Announcement
Number Name Attending Meeting Date Announcement Index
Date
Percentage (%)
Number 2019-007,
2019 First Special
1 77.45% Feb 20, 2019 published on the website
Feb 21, 2019
Shareholders’ Meeting
www.cninfo.com.cn.
Number 2019-032,
2018 Annual
2 76.86% June 28, 2019 June 29, 2019 published on the website
Shareholders’ Meeting
www.cninfo.com.cn.
II. Share holders who hold vote right restored preferred shares apply to hold a
special shareholders’ meeting
□Applicable √Not Applicable
2. Proposal on profit distribution and converting capital reserve to share
capital for the reporting period
□Applicable √Not Applicable
The Company planned that neither cash dividend nor stock dividend was
distributed, and not to convert capital reserve to share capital for the first half
of 2019.
3. Commitments of actual controlling parties, shareholders, related parties,
acquirers and the Company finished in the reporting period or overdue
unfinished by the end of the reporting period
□Applicable √Not Applicable
There is no commitments of actual controlling parties, shareholders, related
parties, acquirers and the Company finished in the reporting period or
overdue unfinished by the end of the reporting period.
4. Appointment or dismissal of accounting firm
Whether the 2019 half-year report is audited?
□Yes √No
JMC 2019 half-year report is not audited.
5. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm for the reporting period
□Applicable √Not Applicable
6. Explanation of the board of directors to abnormal opinions from accounting
firm in 2018
□Applicable √Not Applicable
7. Related matters regarding bankruptcy
□Applicable √Not Applicable
The Company did not go bankrupt during the reporting period.
8. Litigation or arbitration
13
Significant litigation or arbitration
□Applicable √Not Applicable
There is no significant litigation or arbitration in the reporting period.
Other litigation
□Applicable √Not Applicable
9. Punishment
□Applicable √Not Applicable
The Company have not been punished by regulatory authorities.
10. Honesty and credit of JMC and its controlling shareholder or actual
controlling party
□Applicable √Not Applicable
11. Implementation of equity incentive plan, employee stock ownership plan
and other employee incentive method
□Applicable √Not Applicable
12. Major related transactions
I. Routine operation related party transactions
Please refer to the note 31 “Related party Transactions” to the financial
statements for details.
II. Major related party transaction concerning transfer of assets or equity
□Applicable √Not Applicable
There was no major related party transaction concerning transfer of assets or
equity during the reporting period.
III. Related party transaction concerning outside co-investment
□Applicable √Not Applicable
There was no outside co-investment during the reporting period.
IV. Related credit and debt
√Applicable □Not Applicable
Is there non-operating related credit and debt?
□Yes √No
The Company had no non-operating related credit and debt during the
reporting period.
V. Other major related party transactions
□Applicable √Not Applicable
Please refer to the note 31 “Related party Transactions” to the financial
statements for details.
14
Index for the Announcement of Major related party transactions:
Announcement Title Announcement Disclosure Date Website for Disclosure
Jiangling Motors Corporation, Ltd.
Public Announcement on Forecast of
March 28, 2019 http://www.cninfo.com.cn
the Routine Related Party
Transactions in 2019
13. Non-operating funding in the Company occupied by controlling
shareholder and its affiliates
□Applicable √Not Applicable
There was no non-operating funding in the Company occupied by controlling
shareholder and its affiliates during the reporting period.
14. Major contracts and execution
I. Entrustment, contract or lease
a. Entrustment
□Applicable √Not Applicable
There was no entrustment during the reporting period.
b. Contract
□Applicable √Not Applicable
There was no contract during the reporting period.
c. Lease
√Applicable □Not Applicable
See the note 31(b) to financial statements for lease of related parties.
Project earns more than 10% of net profit.
□Applicable √Not Applicable
Project deficits more than 10% of net profit.
□Applicable √Not Applicable
II Major guarantee
□Applicable √Not Applicable
The Company had no outside guarantee during the reporting period.
III. Other important contracts
□Applicable √Not Applicable
There was no other important contract during the reporting period.
15. Corporation social responsibilities
I. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit
published by environmental protection administration?
√Yes □No
15
Emission Emission Meet
Main Emission Emission Outlet Emission Emission
Outlet Emission Standard Standard Standard
Pollutants Ways Distribution Concentration Amount
Number Amount or Not
3 in Mainsite, 1
“Wastewater COD:
Wastewater in Xiaolan Site,
(COD, NH- continuous "COD:128.8mg/L Discharge 47.862t, COD≤841.2t, Meet
6 1 in Cast Plant
N) discharge NH-N:12mg/L" Standard”(GB 8978- NH-N : NH-N≤21.72t Standard
and 1 in Axle
1996) 2.635t
Plant
Exhaust
gas (SO2, SO2: 44mg/m3, NOx : "The Emission
51 in Mainsite,
NOx, 187mg/m3, solid: Standard of Air SO2:
58 in Xiaolan
smoke, continuous 63.7mg/m3, toluol : Pollutants”,” Emission 9.856t, SO2≤93.01t, Meet
148 Site, 33 in Cast
toluol, discharge 1.83mg/m3, Standard of Air NOx : NOx≤60.91t Standard
Plant and 6 in
dimethylben dimethylbenzene: Pollutants for Boiler” 15.307t
Axle Plant
zene, 3.22mg/m3 . （GB 13271-2014）
NMHC）
The construction and operation of environmental protection 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 2019, the Company invested RMB 870
thousand to upgrade the wastewater treatment process of the wastewater
treatment station in Axle Plant, and enhance the treatment capacity to ensure
the treated wastewater will reach the national discharge standard.
.
For up-to-standard emission of waste gases, JMC has taken new control
measures over the years. In 2012, the Company invested RMB 10 million to
reconstruct the cupola furnace in the casting plant. In 2013, Xiaolan Branch
invested RMB 14 million to install a TNV waste gas incinerator. In 2014, JMC
invested RMB 14.6 million to construct the boiler coal-gas-switch project in the
south district. In 2017, the casting plant reconstructed the ventilation & dust
removal system for the smelting furnace in the large-size and middle & small-
sized parts workshop, and installed efficient environmental-friendly dust
removal equipment, effectively reducing the environmental pollution by dust.
From 2018 to 2019, the casting plant add electric furnace dust collectors in
the large-size part workshop, and reconstruct the sand shakeout & dust
removal system for KW moulding line, reducing the 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
16
process of hazardous wastes. In 2017, JMC invested RMB500 thousand to
extend Xiaolan storage yard for solid wastes. In 2018 JMC has renovated the
engine plant garbage station. In 2019, the Company plans to invest RMB600
thousand to extend Xiaolan Dangerous Waste Station. At the same time,
Qingyunpu plant actively adopt waste reduction measures and invested RMB
110 thousand to purchase primer robot waste solvent recycling device in 2019.
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 2019, the
Company obtained the environmental assessment approval of the vehicle
production expansion project, the new collision simulation 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 which were submitted to the Environmental Protection
Bureau for the record,so as to formulate corresponding control methods for
potential accidents and emergences occurred or that may probably occur.
JMC organized emergency drills every year to ensure the efficiency of
emergency plan.
Environmental self-monitoring scheme
In 2019, 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”.
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.
17
II. One-to-one poverty alleviation
a. Plan on one-to-one 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 one-to-one poverty alleviation in the first half
The Company regards the realization of precision poverty relief as the basic
strategy of precision poverty alleviation. The Company continued to
consolidate efforts of one-to-one poverty alleviation in the first half of 2019.
c. Status of targeted measures in poverty alleviation
Item Unit Amount/Progress
I. Brief Introduction —— ——
including：1. Funding RMB (‘000) 828.9
2. Sum converted from the materials RMB (‘000) 19.6
II. Investments —— ——
1. Anti-poverty depending on industry development —— ——
2. Anti-poverty depending on employment transfer —— ——
3. Anti-poverty depending on relocation —— ——
4. Anti-poverty depending on education —— ——
including：4.1 Grants in aid to poor students RMB (‘000) 806.9
5. Health Anti-poverty —— ——
6. Ecological protection anti-poverty —— ——
7. Miscellaneous provisions —— ——
including：7.1 Investments on stay-at-home
RMB (’000) 41.6
children, women and elderly
8. Social anti-poverty —— ——
9. Other —— ——
III. Awards —— ——
16. Other major events
√Applicable □Not Applicable
JMC received government incentives about RMB 260 million appropriated by
Nanchang County Xiaolan Economic& Technological Development Zone,
Nanchang City Wanli District and Shanxi Comprehensive Reform
Demonstration Zone during the reporting period, which is to support JMC’s
development.
17. Major event of JMC subsidiary
□Applicable √Not Applicable
18
Chapter VI Share Capital Changes & Shareholders
1. Changes of Shareholding Structure
I. Changes of shareholding structure
Before the change Change (+, -) After the change
Proportion Reserve- Proportion
New Bonus
Shares of total converted Others Subtotal Shares of total
shares Shares
shares (%) shares shares (%)
I. Limited tradable A
786,840 0.09% - - - 100 100 786,940 0.09%
shares
1. Other domestic
786,840 0.09% - - - 100 100 786,940 0.09%
shares
Including:
Domestic legal
785,940 0.09% - - - -36,000 -36,000 749,940 0.09%
person shares
Domestic natural
900 - - - - 36,100 36,100 37,000 -
person shares
II. Unlimited tradable
862,427,160 99.91% - - - -100 -100 862,427,060 99.91%
shares
1. A shares 518,307,145 60.06% - - - -100 -100 518,427,160 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
During the past three years as of June 30, 2019, the Company did not issue
shares and derivative securities. JMC’s total number of shares remained
unchanged. The change in shareholding structure was caused by the limited
A shares of 36,000 shares held by Shenzhen Airport Terminal Building Co.,
Ltd. were transferred to nature person shareholders in 2019.
Approval of changes of shareholding structure
□Applicable √Not Applicable
Shares transfer
□Applicable √Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS, shareholders’
equity attributable to the equity holders of the Company, generated from
shares changes
□Applicable √Not Applicable
Others to be disclosed necessarily or per the requirements of securities
regulator
□Applicable √Not Applicable
II. Changes of limited tradable shares
□Applicable √Not Applicable
19
2. Securities issuance and listing
□Applicable √Not Applicable
3. Shareholders and shareholding status
Total shareholders (as of JMC had 20,943 shareholders, including 15,772 A-share holders, and 5,171 B-share
June 30, 2018) holders.
Top ten shareholders
Shares
Shareholding Shares at Shares with
Shareholder Change due to
Shareholder Name Percentage the End of Trading
Type (+,-) mortgage
(%) Year Restriction
or frozen
Jiangling Motor Holdings State-owned
41.03 354,176,000 0 0 0
Co., Ltd. legal person
Foreign legal
Ford Motor Company 32.00 276,228,394 0 0 0
person
China Securities
Other 2.72 23,458,066 0 0 0
Corporation Limited
Shanghai Automotive Co., State-owned
1.51 13,019,610 0 0 0
Ltd. Legal person
Harvest Environmental
Protection Low Carbon Other 0.98 8,465,988 277,005 0 0
Stock Investment Fund
Central Huijin Investment State-owned
0.83 7,186,600 0 0 0
Ltd. legal person
JPMBLSA RE FTIF
Foreign legal
TEMPLETON CHINA 0.68 5,848,450 0 0 0
person
FUND GTI 5497
Foreign legal
GAOLING FUND, L.P. 0.63 5,453,086 0 0 0
person
National Social Security
Other 0.61 5,250,455 5,250,455 0 0
Fund 504 Portfolio
INVESCO FUNDS Foreign legal
0.58 5,035,746 0 0 0
SICAV person
Notes on association among above-mentioned shareholders None.
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 23,458,066 A share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Harvest Environmental Protection Low
8,465,988 A share
Carbon Stock Investment Fund
Central Huijin Investment Ltd. 7,186,600 A share
JPMBLSA RE FTIF TEMPLETON CHINA
5,848,450 B share
FUND GTI 5497
GAOLING FUND, L.P. 5,453,086 B share
National Social Security Fund 504
5,250,455 A share
Portfolio
TEMPLETON DRAGON FUND, INC. 5,035,746 B share
Notes on association among above- None.
mentioned shareholders
20
Stock buy-back by top ten shareholders or top ten shareholders holding
unlimited tradable shares in the reporting period
□Yes √No
There is no stock buy-back by top ten shareholders or top ten shareholders
holding unlimited tradable shares in the reporting period.
4. Change of controlling shareholders or actual controlling parties
Change of controlling shareholders
□Applicable √Not Applicable
There was no change of controlling shareholders during the reporting period.
Change of actual controlling parties
□Applicable √Not Applicable
There was no change of actual controlling parties during the reporting period.
Subsequent events
Jiangling Motor Holdings Co., Ltd. (hereinafter referred to as “JHC”), a
controlling shareholder of Jiangling Motors Co., Ltd. (hereinafter referred to as
“JMC” or “the Company”), has been divided and separated into the new
company, Nanchang Jiangling Investment Co., Ltd. (hereinafter referred to as
“JIC”) and Jiangling Motor Holdings Co., Ltd. (as an existing company). After
the separation, JHC intends to divide its hold 41.03% equity of JMC into the
new company, JIC, and therefore, the controlling shareholder of JMC will be
changed from JHC to JIC, but actual controllers of JMC remains unchanged.
As of July 26, 2019, the 354,176,000 JMC shares, accounting for about 41.03%
of the total share capital of the Company, held by JHC, the former controlling
shareholder of the Company, have been transferred to JIC, and JHC no
longer held the shares of the Company. JIC holds 354,176.000 shares of the
Company, accounting for about 41.03% of the total share capital of the
Company, and becomes a controlling shareholder of the Company.
Shareholding relationship with JMC and the shareholders of JHC before and
after the separation are shown as follows:
（1）Before the separation
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
JHC
41.03%
JMC
21
（2）After the separation
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
Nanchang Jiangling Investment Co., Ltd.
41.03%
JMC
22
Chapter VII Preferred Shares
□Applicable √Not Applicable
JMC have no preferred shares during the reporting period.
23
Chapter VIII Directors, Supervisors and Senior Management
1. Changes of shares held by directors, supervisors and senior management
□Applicable √Not Applicable
There was no change of shares held by Directors, Supervisors and senior
management in the reporting period. Please refer to 2018 annual report for
details.
2. Changes of directors, supervisors and senior management
√Applicable □Not Applicable
Name Position Status Date Reason
Manto Wong President Appointed March 1, 2019
Andy Ball VP Appointed April 1, 2019
Luo Xiaofang VP Appointed May 1, 2019
Manto Wong Director Elected June 28, 2019
Jin Wenhui Director Elected June 28, 2019
Milton Wong VP Appointed July 1, 2019
Thomas Fann President Leave March 1, 2019 Retirement.
Tim Slatter VP Leave March 1, 2019 Work rotation.
Christian Chen VP Leave May 1, 2019 Work rotation.
Resign from the vice
Andy Ball VP Leave May 1, 2019 president position for
the personal reasons.
24
Chapter IX Company Bond
Whether the Company owns the corporate bond that is lists in the securities
exchange and undue or is not paid in full although it’s due.
□Yes √No
25
Chapter X Financial Statements
JIANGLING MOTORS CORPORATION, LTD.
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30
JUNE 2019
26
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
Six Months Ended 30 June
Notes 2019# 2018#
Revenue from contracts with customers 5 13,721,954 14,287,497
Taxes and surcharges (368,975) (368,792)
Cost of sales 6 (11,683,969) (12,277,724)
Gross profit 1,669,010 1,640,981
Distribution costs 6 (705,875) (452,934)
Administrative expenses 6 (1,274,585) (1,138,530)
Net expected credit losses on financial assets 3.1(2) 1,056 (918)
Net impairment losses on property, plant and equipment (3,126) (3,607)
Other income 8 235,605 195,360
Operating (loss)/profit (77,915) 240,352
Finance income 9 92,765 106,654
Finance costs 9 (2,624) (3,262)
Finance income-net 9 90,141 103,392
Share of profit of investments accounted for using the
equity method 16b 334 2,611
Profit before income tax 12,560 346,355
Income tax credit/(expense) 10 46,302 (27,404)
Profit for the period 58,862 318,951
Profit attributable to:
Shareholders of the Company 58,862 318,951
Total comprehensive income for the period 58,862 318,951
Total comprehensive income attributable to:
Shareholders of the Company 58,862 318,951
Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.07 0.37
#Unaudited financial indexes
The notes on pages 32 to 90 are an integral part of these consolidated financial statements.
27
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
As at
31 December
Notes
30 June 2019# 2018
ASSETS
Non-current assets
Property, plant and equipment 12 7,118,181 6,941,292
Lease prepayment 13 593,473 601,260
Intangible assets 14 288,412 246,026
Deferred income tax assets 17 789,091 743,096
Investments accounted for using the equity method 16b 40,446 40,112
Total non-current assets 8,829,603 8,571,786
Current assets
Inventories 18 2,173,276 2,522,354
Trade and other receivables and prepayments 19 4,054,726 4,678,284
Derivative financial instruments 3.3 - 979
Financial assets at fair value through other
comprehensive income 3.3 223,907 6,246
Cash and cash equivalents 20 8,367,457 7,616,880
Restricted cash 20,001 -
Total current assets 14,839,367 14,824,743
Total assets 23,668,970 23,396,529
28
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
As at
Notes 31 December
30 June 2019# 2018
EQUITY
Share capital 21 863,214 863,214
Share premium 816,609 816,609
Other reserves 22 447,472 447,472
Retained earnings 8,281,536 8,257,203
Total equity 10,408,831 10,384,498
LIABILITIES
Non-current liabilities
Contract liabilities 5 54,499 38,382
Borrowings 23 3,376 3,595
Deferred income tax liabilities 17 25,676 26,024
Retirement benefit obligations 24 60,777 63,425
Provisions for statutory warranty 25 166,251 151,492
Other non-current liabilities 93,301 60,160
Total non-current liabilities 403,880 343,078
Current liabilities
Trade and other payables 26 12,454,356 12,195,966
Contract liabilities 5 188,911 266,702
Current income tax liabilities 72 179
Borrowings 23 450 449
Derivative financial instruments 2,578 -
Retirement benefit obligations 24 4,595 4,595
Provisions for statutory warranty 25 205,297 201,062
Total current liabilities 12,856,259 12,668,953
Total liabilities 13,260,139 13,012,031
Total equity and liabilities 23,668,970 23,396,529
#Unaudited financial indexes
The notes on pages 32 to 90 are an integral part of these consolidated financial statements.
29
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
Share Share Other Retained
Notes capital premium reserves earnings Total
Balance at 1 January 2018 863,214 816,609 450,914 10,441,665 12,572,402
Profit for the six months - - - 318,951 318,951
Dividends relating to 2017 - - - (2,276,295) (2,276,295)
Balance at 30 June 2018 863,214 816,609 450,914 8,484,321 10,615,058
Balance at 1 January 2019 863,214 816,609 447,472 8,257,203 10,384,498
Profit for the six months - - - 58,862 58,862
Dividends relating to 2018 27 - - - (34,529) (34,529)
Balance at 30 June 2019 863,214 816,609 447,472 8,281,536 10,408,831
#Unaudited financial indexes
The notes on pages 32 to 90 are an integral part of these consolidated financial statements.
30
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
Six Months Ended 30 June
Notes 2019# 2018#
Cash flows from operating activities
Cash generated from operations 28 1,435,500 (791,761)
Interest paid (150) (151)
Income tax paid (148) (114,906)
Net cash inflow/(outflow) from operating activities 1,435,202 (906,818)
Cash flows from investing activities
Payment for property, plant and equipment (“PPE”) (801,467) (572,583)
Purchase of financial assets at fair value through profit
or loss (4,700,000) (3,462,000)
Other cash paid relating to investing activities (7,591) (13,354)
Proceeds from disposal of PPE 28 2,990 2,569
Proceeds from disposal of financial assets at fair value
through profit or loss 4,700,000 3,462,000
Investment income from financial assets at fair value
through profit or loss 18,447 10,202
Interest received 100,566 129,686
Other cash received from investing activities 2,650 733
Net cash outflow from investing activities (684,405) (442,747)
Cash flows from financing activities
Repayments of borrowings (220) (207)
Dividends paid to shareholders of the Company - (1,999,237)
Other cash paid relating to financing activities - (1,104)
Net cash outflow from financing activities (220) (2,000,548)
Net increase/(decrease) in cash and cash equivalents 750,577 (3,350,113)
Cash and cash equivalents at beginning of year 7,616,880 11,137,723
Effects of exchange rate changes - -
Cash and cash equivalents at end of period 20 8,367,457 7,787,610
#Unaudited financial indexes
The notes on pages 32 to 90 are an integral part of these consolidated financial statements.
31
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019, 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 27 August 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.
32
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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)
New and amended standards adopted by the Group
The accounting policies adopted are consistent with those of the previous financial year and
corresponding interim reporting period, except for the adoption of new and amended
standards as set out below. The other standards did not have any impact on the Group’s
accounting policies and did not require retrospective adjustments.
IFRS 16 Leases
IFRS 16 has been effective from 1 January 2019. As permitted under the specific transitional
provisions in the standard, the Group has adopted IFRS 16 retrospectively, but has not
restated comparatives for the 2018 reporting period. There is no reclassifications and
adjustments arising from the new leasing rules need to be recognised in the opening balance
sheet on 1 January 2019 because the leases are short-term or for which the underlying asset
is of low value.
33
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are 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.
2.3 Associates
An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting, 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.
34
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.4 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.
2.5 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.
2.6 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.
35
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.7 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 2.10).
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.
2.8 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.
36
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.9 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.
37
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.9 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.
2.10 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.
2.11 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.
38
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2.12 Investments and other financial assets
(1) Classification
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.
39
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 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
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.
40
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 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.
2.14 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.
2.15 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.
41
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.16 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.
2.17 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.
2.18 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.
2.19 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.
2.20 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.
42
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 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.
2.21 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.
2.22 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.
43
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 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.
2.23 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.
44
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 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.
45
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 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.
2.24 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.
46
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.25 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 2.24. For additional warranty, it is considered as a separate
performance obligation under IFRS 15, see Note 2.25(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.
47
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.26 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.
2.27 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.
2.28 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.
2.29 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.
48
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.29 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.
2.30 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.
49
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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:
30 June 2019 31 December 2018
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 (2,578) - - 979 - -
Trade and other receivables - 266 - - 265 -
Borrowings (3,826) - - (4,044) - -
Trade and other payables (202,250) (106,365) (4,171) (164,599) (100,450) (4,045)
(208,654) (106,099) (4,171) (167,664) (100,185) (4,045)
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/RMB and
Euro/RMB exchange rates.
As at 30 June 2019, 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 RMB17,722,000 (2018: RMB14,187,000) higher/lower.
As at 30 June 2019, 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 RMB9,074,000 (2018: RMB8,626,000) 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 30 June 2019, 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 30 June 2019, 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
RMB7,313,000 (2018: RMB14,174,000).
As at 30 June 2019, the difference between the fair value and book value of the Group’s
borrowings with fixed rate is immaterial.
50
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019 was determined as follows for trade
receivables:
51
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019, 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
30 June 2019 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 30 June 2019, 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 30 June 2019, all the notes receivables are bank acceptance bills of RMB6,500,000,
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
30 June 2019 Current past due past due past due past due Total
Expected loss rate 0.31% 0.36% 0.93% 15.58% 15.97% —
Gross carrying amount – trade
receivables 1,893,816 47,929 8,611 5,115 22,607 1,978,078
Loss allowance (5,916) (173) (80) (797) (3,610) (10,576)
52
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019, 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
30 June 2019 Current past due past due past due past due Total
Expected loss rate 0.30% - - - - —
Gross carrying amount – trade
receivables 253,162 - - - - 253,162
Loss allowance (759) - - - - (759)
iv) Automobile parts group:
More than More than More than
1-30 days 30 days 60 days 90 days
30 June 2019 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 321,294 24,382 3,050 218 2,457 351,401
Loss allowance (964) (73) (15) (1) (123) (1,176)
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.
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
53
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
banks have a strong capacity to meet its contractual cash flow obligations in the near term.
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
Other financial assets at amortised cost include bank interest receivables and other
receivables. The closing loss allowances for other financial assets as at 30 June 2019
reconcile to the opening loss allowances as follows:
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
Opening loss allowance as at 1 January 2019 240 203 443
Increase in the allowance recognised in profit or loss
during the period 29 63 92
Reverse of the allowance recognised in profit or loss
during the period (15) - (15)
Closing loss allowance as at 30 June 2019 254 266 520
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
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.
54
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 23) at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities.
The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than Between 1 Between 2 Over
1 year and 2 years and 5 years 5 years
RMB’000 RMB’000 RMB’000 RMB’000
At 30 June 2019
Bank borrowings
- Principals 450 450 1,350 1,576
- Interests 56 49 106 47
Trade and other payables
(exclude payroll and welfare
payables, other tax payables) 12,081,645 - - -
12,082,151 499 1,456 1,623
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
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.
55
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019 and 31 December 2018 were as follows:
30 June 2019 31 December 2018
Total borrowings 3,826 4,044
Total equity 10,408,831 10,384,498
Total capital 10,412,657 10,388,542
Gearing ratio 0.04% 0.04%
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 30 June 2019 Level 1 Level 2 Level 3 Total
Financial assets
Financial assets at FVOCI
Notes receivables - - 223,907 223,907
Total financial assets - - 223,907 223,907
Financial Liabilities
Derivatives
Foreign exchange forwards - 2,578 - 2,578
Total financial liabilities - 2,578 - 2,578
As at 31 December 2018 Level 1 Level 2 Level 3 Total
Financial liabilities
Derivatives
Foreign exchange forwards - 979 - 979
Financial assets at FVOCI
Notes receivables - - 6,246 6,246
Total financial liabilities - 979 6,246 7,225
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.
56
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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)
The following table presents the changes in level 3 items for the periods ended 30 June 2019
and 31 December 2018:
Financial assets at
FVPL- monetary Financial assets at
fund and structural FVOCI- notes Total
deposits receivables
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
Opening balance 1 January 2019 - 6,246 6,246
Acquisitions 4,700,000 975,559 5,675,559
Disposals (4,700,000) (757,898) (5,457,898)
Closing balance 30 June 2019 - 223,907 223,907
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.
57
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 the six months ended
2019, 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.
58
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019, the Group recorded deferred tax assets of approximately
RMB789,091,000. 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.
59
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2.9(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.
60
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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:
Six months ended 30 June 2019
Automobiles Automobile Maintenance Materials and Total
parts services others
Main business income 12,327,573 1,168,533 43,900 - 13,540,006
-Recognition at a point
in time 12,327,573 1,168,533 - - 13,496,106
-Recognition over time - - 43,900 - 43,900
Other business income - - - 181,948 181,948
12,327,573 1,168,533 43,900 181,948 13,721,954
Six months ended 30 June 2018
Automobiles Automobile Maintenance Materials and Total
parts services others
Main business income 12,753,388 1,370,722 33,762 - 14,157,872
-Recognition at a point
in time 12,753,388 1,370,722 - - 14,124,110
-Recognition over time - - 33,762 - 33,762
Other business income - - - 129,625 129,625
12,753,388 1,370,722 33,762 129,625 14,287,497
As at 30 June 2019, the expected revenue of unsatisfied performance obligations from signed
contract is RMB103,676,000. The Group will recognise the revenue from 2019 to 2022.
61
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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:
30 June 2019 31 December 2018
Contract liabilities
Automobiles and automobile parts 139,734 212,246
Maintenance services and additional warranty 103,676 92,838
Total contract liabilities 243,410 305,084
Less: non-current liabilities (54,499) (38,382)
Total current contract liabilities 188,911 266,702
6 Expenses by nature
Six months ended 30 June
2019 2018
Changes in inventories of finished goods and 101,187 (53,018)
work in progress
Raw materials and consumables used 10,151,019 10,805,572
Employee benefit expense (Note 7) 1,246,623 1,118,958
Depreciation of PPE (Note 12, 28) 475,243 463,097
Repairs and maintenance expenditure on PPE 40,473 53,666
Transportation expenses 332,654 320,658
Amortisation of lease prepayment (Note 13, 28) 7,787 7,787
Amortisation of intangible assets (Note 14, 28) 35,164 25,814
Provision of statutory warranty (Note 25) 159,699 123,718
Design fees 243,684 250,316
Sales promotion expenses 106,691 94,463
Advertising and new product planning expenses 228,204 89,635
Provision for inventories write-down 5,310 5,195
Others 530,691 563,327
Total cost of sales, distribution expenses and
administrative expenses 13,664,429 13,869,188
62
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
Six months ended 30 June
2019 2018
Wages and salaries 907,635 812,503
Social security costs 119,810 109,307
Pension costs defined contribution plans 139,569 138,023
Others 79,609 59,125
1,246,623 1,118,958
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
Six months ended 30 June
2019 2018
Government grants (a) 230,279 159,254
Net fair value gains/(losses) on derivative
financial instruments (3,557) 6,915
Net loss on disposal of derivative financial
instruments (4,940) (12,620)
Others 13,823 41,811
235,605 195,360
(a) In the six months ended 2019, the Group received grants of approximately
RMB230,279,000, mainly from 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
Six months ended 30 June
2019 2018
(a) Finance income
Interest income on bank deposits 87,147 95,632
Interest income on credit sales 5,618 11,022
92,765 106,654
(b) Finance expenses
Interest expense on bank loans (106) (107)
Bank charges and others (2,518) (3,155)
(2,624) (3,262)
Net finance income
90,141 103,392
63
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 (2018: 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:
Six months ended 30 June
2019 2018
Current tax 41 7,428
Deferred tax (Note 17) (46,343) 19,976
(46,302) 27,404
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:
Six months ended 30 June
2019 2018
Profit before tax 12,560 346,355
Tax calculated at tax rates applicable to profits in
the respective companies (38,028) 29,341
Tax concessions (9) (69)
Expenses not deductible for tax purposes 294 297
R&D costs deduction (64,124) (47,715)
Income not subject to tax (882) (391)
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 18,925 10,116
Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised - (1,764)
Temporary differences for which no deferred
income tax asset was recognised 4,195 -
Tax losses for which no deferred income tax
asset was recognised 33,327 37,589
Tax charge (46,302) 27,404
64
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 No.39, 2019 notice jointly issued from the Ministry of Finance, the State
Administration of Taxation, the general administration of customs, the Group's taxable
products sales income applicable VAT rate is 13% from 1 April 2019, while the VAT rate was
16% before then. The VAT rate applicable to the Group's transportation business is 9% from 1
April 2019, while the VAT rate was 10% 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.
Six months ended 30 June
2019 2018
Profit attributable to shareholders of the
Company 58,862 318,951
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 0.07 0.37
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the year ended 30 June 2019.
65
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2018
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 - (2,832) (478) - (3,478) (355) (7,143)
Depreciation charge (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
Six months ended 30 June 2019
Opening net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
Additions - - - - - 669,832 669,832
Transfers 567 49,482 13,598 80,843 107,046 (251,536) -
Disposals - (4,768) (1,798) - (374) (10) (6,950)
Other deductions (1,986) (5,481) - - (5) (152) (7,624)
Impairment charge (Note 28) - (2,662) (91) - (373) - (3,126)
Depreciation charge (Note 6, 28) (27,016) (121,043) (18,623) (134,848) (173,713) - (475,243)
Closing net book amount 1,693,320 1,627,964 141,366 670,716 1,304,336 1,680,479 7,118,181
At 30 June 2019
Cost 2,186,887 3,819,204 333,327 2,626,163 3,460,597 1,681,171 14,107,349
Accumulated depreciation and impairment (493,567) (2,191,240) (191,961) (1,955,447) (2,156,261) (692) (6,989,168)
Net book amount 1,693,320 1,627,964 141,366 670,716 1,304,336 1,680,479 7,118,181
66
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the six months ended 30 June 2019, depreciation expense of approximately
RMB407,308,000 (the six months ended 30 June 2018: RMB404,610,000) has been charged in
cost of sales, RMB1,639,000 (the six months ended 30 June 2018: RMB1,568,000) in
distribution costs and RMB66,296,000 (the six months ended 30 June 2018: RMB56,919,000) in
administrative expenses.
(i) Temporarily idle property, plant and equipment
As at 30 June 2019, property, plant and equipment with book value of approximately RMB
13,170,000 (cost of RMB132,424,000) (31 December 2018: book value of approximately RMB
2,497,000 and cost of RMB56,727,000) 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 110,939 (89,092) (11,503) 10,344
Motor Automobiles 2,418 (1,947) (98) 373
Electronic and other equipment 19,067 (15,564) (1,050) 2,453
132,424 (106,603) (12,651) 13,170
(ii) Property, plant and equipment not yet obtained proper certificate
Reasons for not completing
Net book amount proper certificate
Buildings 882,715 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:
30 June 2019 31 December 2018
Opening net book amount 601,260 616,834
Additions - -
Amortisation charge (Note 6, 28) (7,787) (15,574)
Closing net book amount 593,473 601,260
Cost 751,626 751,626
Accumulated amortisation (158,153) (150,366)
Net book amount 593,473 601,260
Amortisation expense was charged in administrative expenses.
67
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 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 (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
Six months ended 30 June 2019
Opening net book amount 179,418 63,146 3,462 - - 246,026
Addition 77,398 152 - - - 77,550
Disposals - - - - - -
Amortisation charge (Note 6, 28) (25,002) (10,162) - - - (35,164)
Closing net book amount 231,814 53,136 3,462 - - 288,412
At 30 June 2019
Cost 331,809 152,165 89,028 36,978 1,649 611,629
Accumulated amortisation and impairment (99,995) (99,029) (85,566) (36,978) (1,649) (323,217)
Net book amount 231,814 53,136 3,462 - - 288,412
68
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(i) For six months ended 30 June 2019, amortisation expense of approximately RMB34,745,000
(the six months ended 30 June 2018: RMB25,356,000) was charged in administrative
expenses, RMB249,000 (the six months ended 30 June 2018: RMB288,000) in cost of sales
and RMB170,000 (the six months ended 30 June 2018: RMB170,000) in distribution costs.
(ii) Development cost of approximately RMB77,398,000 (the six months ended 30 June
2018:RMB19,693,000) were capitalised by the Group during the six months ended 30 June
2019.
(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 2018 Addition Impairment 30 June 2019
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.
69
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 30 June 2019 31 December 2018
Financial assets at amortised cost
Trade receivables 19 2,570,128 2,674,650
Notes receivables 19 6,500 626,509
Other receivables 19 89,423 84,588
Interest receivables 19 29,683 37,923
Cash and cash equivalents 20 8,367,457 7,616,880
Financial assets at fair value through
other comprehensive income
Notes receivables 223,907 6,246
Derivative financial instruments - 979
11,287,098 11,047,775
Financial liabilities Notes 30 June 2019 31 December 2018
Liabilities at amortised cost
Trade and other payables(exclude
payroll and welfare payables, other
tax payables) 26 12,081,645 11,658,259
Borrowings 23 3,826 4,044
Derivative financial instruments 2,578 -
12,088,049 11,662,303
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.
70
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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
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:
30 June 2019 31 December 2018
Associate 40,446 40,112
The amount recognised in the consolidated statement of comprehensive income was as follow:
Six months ended 30 June
2019 2018
Share of profit 334 2,611
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
Six months ended 30 June
2019 2018
At beginning of the year 209,460 197,774
Profit for the year 1,742 13,634
Dividends distributed - -
At end of the year 211,202 211,408
Interest in associate 19.15% 19.15%
Carrying value 40,446 40,485
71
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Deferred income tax
30 June 2019 31 December 2018
Deferred tax assets 1,016,943 926,630
Deferred tax liabilities-can be offset (227,852) (183,534)
Deferred tax liabilities-cannot be offset (25,676) (26,024)
Deferred tax assets-net 789,091 743,096
Deferred tax liabilities-net (25,676) (26,024)
The gross movement on the deferred income tax account is as follows:
30 June 2019 31 December 2018
At beginning of the year 717,072 663,517
Credited to profit or loss (Note 10(i)) 46,343 52,407
Credited to other comprehensive income
(Note 10(i)) - 1,148
At end of the year 763,415 717,072
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 2018 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
(Charged) /credited to
profit or loss (2,528) (397) 55,467 3,125 26,594 8,052 90,313
Credited to other
comprehensive income - - - - - - -
At 30 June 2019 14,170 15,699 760,038 12,499 205,385 9,152 1,016,943
Amortisation Forwards
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total
At 1 January 2018 (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)
(Charged)/credited to
(1,309) (43,156) 348 147 (43,970)
profit or loss
At 30 June 2019 (5,695) (222,157) (25,676) - (253,528)
72
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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:
30 June 2019 31 December 2018
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 233,281 203,802
–Deferred tax asset to be recovered
within 12 months 783,661 722,828
1,016,942 926,630
30 June 2019 31 December 2018
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (214,572) (182,373)
–Deferred tax liabilities to be recovered
within 12 months (38,956) (27,185)
(253,528) (209,558)
Deductible temporary differences and tax losses which no deferred income tax assets were
recognised were as follows:
30 June 2019 31 December 2018
Deductible temporary differences 251,214 234,433
Tax losses 749,897 639,805
1,001,111 874,238
The expiry years of the tax losses are as follows:
30 June 2019 31 December 2018
2019 36,772 36,772
2020 72,470 72,470
2021 115,820 115,820
2022 150,713 150,713
2023 240,815 264,030
2024 133,307 -
749,897 639,805
73
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Inventories
30 June 2019 31 December 2018
Raw materials 1,305,690 1,553,135
Work in progress 205,122 211,490
Finished goods 662,464 757,729
2,173,276 2,522,354
For the six months ended 30 June 2019, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB10,252,206,000 (the six months
ended 30 June 2018: RMB10,752,554,000).
Movement on the provision for inventories write-down is as follows:
30 June 2019 31 December 2018
At beginning of the year (76,815) (45,130)
Provision for inventories write-down (Note
28) (5,310) (53,651)
Inventories written off during the year as
uncollectible 21,192 21,966
At end of the year (60,933) (76,815)
19 Trade and other receivables and prepayments
30 June 2019 31 December 2018
Trade receivables 2,591,273 2,696,928
Less: Provision for impairment of trade
receivables (21,145) (22,278)
Trade receivables – net 2,570,128 2,674,650
Notes receivables 6,500 626,509
Other receivables 89,943 85,031
Less: Provision for impairment of other
receivables (520) (443)
Other receivables – net 89,423 84,588
Prepayments 1,192,605 1,158,303
-Material payment in advance 555,268 525,777
-Advance payment of taxes and surcharges 637,337 632,048
-Others - 478
Deductable VAT input tax 166,387 96,311
Interest receivables 29,683 37,923
4,054,726 4,678,284
Refer to Note 31 for details of receivables from related parties.
The carrying amounts of trade and other receivables approximate their fair values.
74
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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:
30 June 2019 31 December 2018
At beginning of the year (22,721) (21,674)
Provision for receivables impairment
(Note 28) 1,056 (1,089)
Receivables written off during the year as
uncollectible - 42
At end of the year (21,665) (22,721)
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
30 June 2019 31 December 2018
Cash at bank and in hand 6,655,457 2,016,859
Short-term bank deposits (a) 1,712,000 5,600,021
8,367,457 7,616,880
As at 30 June 2019 and 31 December 2018, all bank deposits are in RMB.
As at 30 June 2019, the Group had cash of approximately RMB577,916,000 (2018:
RMB833,617,000) deposited in Jiangling Motor Group Finance Company (“JMCF”) (Note 31
(ix)). 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.
75
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Number of Tradable shares
shares “A” shares “B” shares Total
(thousands) Restricted Non-restricted
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
Six months ended 30 June
2019
Balance at 1 January 2019 863,214 787 518,427 344,000 863,214
Transfer - - - - -
Balance at 30 June 2019 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 30 June 2019.
76
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
At 1 January 2018 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
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - - -
At 30 June 2019 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 six
months ended 30 June 2019.
23 Borrowings
30 June 2019 31 December 2018
Current
Bank borrowings - guaranteed (a) 450 449
Non-current
Bank borrowings - guaranteed (a) 3,376 3,595
Total borrowings 3,826 4,044
(a) Bank borrowings of USD557,000 (equivalent to approximately RMB3,826,000) (2018:
USD589,000 equivalent to approximately RMB4,044,000) were guaranteed by JMCF (Note 31
(iii)).
The interest rate of bank borrowings is 1.50% per annum (2018: 1.50%).
The fair value of borrowings approximates their carrying values.
77
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
30 June 2019 31 December 2018
Between 1 and 2 years 450 449
Between 2 and 5 years 1,350 1,348
Over 5 years 1,576 1,798
3,376 3,595
The Group has the following undrawn borrowing facilities:
30 June 2019 31 December 2018
Fixed rate
- Expiring within one year 1,973,097 2,270,784
24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the
consolidated statement of financial position is as follows:
30 June 2019 31 December 2018
Present value of defined benefits obligations 65,372 68,020
The movement of early retirement and supplemental benefit obligations for the year ended 31
December 2018 is as follows:
30 June 2019 31 December2018
At beginning of the year 68,020 59,184
For the year
-Current service cost - 1,315
-Interest cost - 2,410
-Payment (2,648) (4,954)
-Past service cost from the change of plan - 2,386
-Actuarial loss - 7,679
At end of the year 65,372 68,020
Current 4,595 4,595
Non-current 60,777 63,425
65,372 68,020
The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2019 31 December 2018
Discount rate adopted —— 3.5%
Inflation rate adopted —— 2%
The salary and supplemental benefits inflation
rate of retiree, early-retiree and employee at
post —— 0% to 6%
78
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 30 June 2019, a provision of
RMB65,372,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB65,372,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,595,000 (2018:
RMB4,595,000) has been included under current liabilities.
25 Provisions for statutory warranty
The movement on the statutory warranty provisions and other liabilities is as follows:
30 June 2019 31 December 2018
At beginning of the year 352,554 374,981
Charged for the year (Note 6) 159,699 291,471
Utilised during the year (140,705) (313,898)
At end of the period 371,548 352,554
Analysis of total provisions:
30 June 2019 31 December 2018
Non-current 166,251 151,492
Current 205,297 201,062
371,548 352,554
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.
79
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
30 June 2019 31 December 2018
Trade payables 7,914,886 7,824,908
Payroll and welfare payables 356,075 304,322
Dividend payables 41,313 6,790
Other tax payables 16,636 233,385
Payables of sales rebates 1,748,027 1,714,485
Payables of R&D expenses 930,737 828,807
Others 1,446,682 1,283,269
12,454,356 12,195,966
Refer to Note 31 for details of amount due to related parties.
27 Dividends
A final dividend for 2018 of RMB0.04 per share, amounting to a total dividend of approximately
RMB34,529,000 was proposed at the Board of Directors’ Meeting on 26 March 2019, and such
dividend is proposed at the Shareholders’ Meeting on 28 June 2019.
28 Cash generated from operations
Six months ended 30 June
2019 2018
Profit before tax 12,560 346,355
Depreciation of PPE (Note 6, 12) 475,243 463,097
Amortisation of lease prepayment (Note 6, 13) 7,787 7,787
Amortisation of intangible assets (Note 6, 14) 35,164 25,814
Impairment charges of PPE (Note 12) 3,126 3,607
Provision for receivables impairment (Note 19) (1,056) 918
Provision of inventories (Note 18) 5,310 5,195
(Gain)/loss on disposals of PPE 4,412 (34,273)
Finance expenses (Note 9) 2,170 2,879
Finance income (Note 9) (92,765) (106,654)
Net foreign exchange transaction loss/(gain) 451 3,219
Share of profit from investment accounted for using
equity method (Note 16b) (334) (2,611)
Investment gain of finance asset investment (18,447) (10,202)
Investment loss of forwards exchange contracts 4,940 12,620
Changes on fair value of forwards exchange
contracts 3,557 (6,915)
Provisions for statutory warranty 18,994 (7,799)
Changes in working capital:
-Increase in restricted cash (20,001) -
- Increase in inventories 333,470 (20,248)
- Increase in trade and other receivables 368,709 (399,396)
- (Decrease)/increase in trade and other payables 294,858 (1,072,349)
- Increase/(decrease) in pensions and other
retirement benefits (2,648) (2,805)
Cash generated from operations 1,435,500 (791,761)
80
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE, lease prepayment and intangible
assets comprise:
Six months ended 30 June
2019 2018
Net book amount 6,950 95,408
(Loss) /gain on disposal of PPE (4,412) 34,273
(Decrease)/increase in trade and other payables 452 (127,112)
Proceeds from disposal of PPE 2,990 2,569
29 Contingencies
At 30 June 2019, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
30 June 2019 31 December 2018
Contracted but not provided for:
Purchases of buildings, plant and machinery 946,316 1,095,333
31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JHC”) (a), which owns 41.03% of the Company’s shares,
and Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 30 June 2019. The shareholders of JHC are Chongqing
Changan Automobile Corporation Ltd. and JMCG, and both of them hold 50% equity interest
of JHC, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, JMCG and its subsidiaries, JHC and its subsidiaries and joint venture, Ford and its
subsidiaries and joint venture in the ordinary course of business during the six months ended
30 June 2019.
(a) As of July 26, 2019, JHC has transferred the total share capital of the Company to
Nanchang Jiangling Investment Co., Ltd. (“JIC”). JHC no longer held the shares of the
Company, the controlling shareholder of JMC will be changed from JHC to JIC.
81
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the six months ended 30 June 2019, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JHC
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Jiangling Material Co. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG
Jiangxi Lingrui Recycling Resources Development Corporation Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
JMCG Property Management Co. Subsidiary of JMCG
Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd Associate of JMCG
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. Associate of JMCG
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Associate of JMCG
Nanchang Hengou Industry Co., Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Associate of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Associate of JMCG
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Jiangxi jiangling overseas automobile sales and service Co., Ltd Associate of JMCG
Jiangxi JMCG Motorhome Co., Ltd. Associate of JMCG
Jiangxi Jiangling Chassis Co.,Ltd. Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG
JMCF Subsidiary of JMCG
Nanchang Jiangling Hua Xiang 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
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Jiangling Aowei Aotomobile Spare Part Co., Ltd. Subsidiary of JMCG
NC.Gear Forging Factory Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
JMCG Jiangxi Engineering Construction 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
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 Otomotiv Sanayi A.S. Subsidiary of Ford
Auto Alliance (Thailand) Co., Ltd. Subsidiary of Ford
Ford Vietnam Limitied Subsidiary of Ford
Changan Ford Automobile Co., Ltd. Joint venture of Ford
Jiangxi JMCG boya brake system Co., Ltd Subsidiary of JMCG
82
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services
Six months ended 30 June
Purchase of goods 2019 2018
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 360,407 397,028
Nanchang Baojiang Steel Processing Distribution Co., Ltd. 356,064 464,830
Jiangxi Jiangling Chassis Co., Ltd. 341,935 464,265
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 341,796 244,473
GETRAG (Jiangxi) Transmission Company 316,959 395,455
Jiangxi Jiangling Lear Interior System Co., Ltd. 255,709 234,271
Ford 187,925 301,095
Nanchang JMCG Liancheng Auto Component Co., Ltd. 170,539 211,971
Nanchang Unistar Electric & Electronics Co.,Ltd. 105,848 158,560
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. 95,764 89,486
Hanon Systems 87,086 136,338
Nanchang JMCG Shishun Logistics Co., Ltd. 86,296 1,406
JMCG 53,907 58,674
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 50,767 51,150
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. 33,620 34,052
Nanchang Yinlun Heat-exchanger Co., Ltd. 32,419 23,536
Nanchang Lianda Machinery Co., Ltd. 30,231 31,963
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 26,962 89,556
JHC 20,879 -
Jiangling Material Co. 13,022 15,044
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 12,366 13,928
Ford Otomotiv Sanayi A.S. 12,312 88,410
Auto Alliance (Thailand) Co., Ltd. 11,703 53,769
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 10,039 13,657
Nanchang JMCG Xinchen Auto Component Co., Ltd. 8,683 9,717
Jiangxi ISUZU Engine Co., Ltd. 7,416 33,131
Nanchang Gear Co., Ltd. 5,921 7,220
Jiangxi JMCG Industry Co., Ltd. 5,746 5,359
NC.Gear Forging Factory 3,283 6,829
Jiangxi Biaohong Engine Tappet Co., Ltd. 3,134 3,379
Jiangxi Lingrui Recycling Resources Development Corporation 3,012 1,932
Changan Ford Automobile Co., Ltd. 2,401 6,869
Jiangxi JMCG boya brake system Co., Ltd 2,114 24
Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,459 2,248
Nanchang JMCG Skyman Auto Component Co., Ltd. (a) - 39,904
Others 152 206
3,057,876 3,689,735
(a) In December 2018, JHC 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.
83
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2019 2018
Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 141,954 126,082
Ford Global Technologies, LLC Royalty fee 110,123 94,135
Ford Engineering service and design 106,018 134,540
Changan Ford Automobile Co., Ltd. Service fee/Labor costs 58,387 4,959
Ford Otomotiv Sanayi A.S. Engineering service and design 25,937 21,604
Ford Secondments costs 17,446 19,647
Jiangxi JMCG Industry Co., Ltd. Working meal 12,669 20,196
Nanchang Hengou Industry Co., Ltd. Packing/Truckage 12,063 19,944
Ford Otomotiv Sanayi A.S. Royalty fee 7,508 9,877
JHC Labor costs /Secondments costs 6,979 687
Ford Motor (China) Co., Ltd. Regional personnel costs 4,461 3,784
Ford Otomotiv Sanayi A.S. Secondments costs 3,349 10,746
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Regional personnel costs 3,279 1,561
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Promotion fee 2,902 -
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business of importation 2,439 2,167
JMCG Property Management Co. Property management 998 1,083
JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance fee 969 4,012
GETRAG (Jiangxi) Transmission Company Design fee 460 3,280
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Promotion fee 36 1,540
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Promotion fee - 1,959
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Design fee - 1,315
Others 1,401 922
519,378 484,040
The Group purchased the service from related parties based on agreement price.
84
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Sales of goods 2019 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 474,714 566,065
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. 63,909 91,265
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 41,557 35,586
Jiangxi Lingrui Recycling Resources Development Corporation 36,018 29,625
Jiangxi Jiangling Chassis Co., Ltd. 23,932 44,476
JMCG Jingma Motors Co., Ltd. 20,101 36,743
Nanchang JMCG Liancheng Auto Component Co., Ltd. 17,109 23,602
Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 12,667 61,448
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 9,066 57,568
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 7,640 7,707
Nanchang JMCG Shishun Logistics Co., Ltd. 4,499 -
Jiangxi jiangling overseas automobile sales and service Co.,
4,341 -
Ltd
Nanchang Hengou Industry Co., Ltd. 4,245 22,874
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 3,385 6,996
Jiangxi JMCG Industry Co., Ltd. 2,303 3,050
Jiangxi Jiangling Lear Interior System Co., Ltd. 1,723 2,902
Nanchang Lianda Machinery Co., Ltd. 1,026 81
JMCG Property Management Co. 204 3,191
JHC 35 23,080
JMCG Jiangxi Engineering Construction Co., Ltd. - 1,919
Others 1,374 881
729,848 1,019,059
The Group sold goods to related parties, based on agreement price.
85
31 Related party transactions (continued)
(ii) Rental
Rental cost
Lessor Category Rental cost of six Rental cost of six
months ended 30 months ended 30
June 2019 June 2018
JMCG Building 2,651 1,725
Jiangxi Jiangling Motors Imp. &
2,141 2,136
Exp. Co., Ltd. Building
JMCG Property Management Co. Building 190 211
4,982 4,072
Rental income
Lessee Category Rental income of six Rental income of six
months ended 30 months ended 30
June 2019 June 2018
GETRAG (Jiangxi) Transmission
7 -
Company Building
JHC Building 3 3
10 3
(iii) Guarantee
As at 30 June 2019, bank loans of USD557,000 (equivalent to approximately RMB 3,826,000)
(2018:USD589,000, equivalent to approximately RMB4,044,000) were guaranteed by JMCF
(Note 23).
(iv) Sales of PPE
Six months ended 30 June
2019 2018
Nanchang JMCG Shishun Logistics Co., Ltd. 299 -
(v) Purchase of PPE
Six months ended 30 June
2019 2018
Nanchang Jiangling Hua Xiang Auto Components Co.,
6,337 -
Ltd.
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. - 5,671
Nanchang JMCG Liancheng Auto Component Co., Ltd. - 677
6,337 6,348
86
31 Related party transactions (continued)
(vi) Provide technique sharing
Six months ended 30 June
2019 2018
Ford 28,810 -
Ford Vietnam Limited 2,874 -
31,684 -
(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 six
months ended 2019, the total remuneration of the key management was approximately
RMB6,361,000 (the six months ended 30 June 2018: RMB7,212,000).
(viii) Interest received from cash deposit in related parties
Six months ended 30 June
2019 2018
JMCF 6,771 9,739
(ix) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 165,281 251,236
Jiangxi JMCG Specialty Vehicles Sales
30,136 32,940
Corporation, Ltd.
Ford 17,610 -
JMCG Jingma Motors Co., Ltd. 10,499 6,162
Nanchang JMCG Liancheng Auto Component
8,456 -
Co., Ltd.
Jiangxi JMCG Specialty Vehicles Corporation,
8,190 237
Ltd.
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 8,162 5,726
Jiang ling Motor Electricity Vehicle Sales Co., Ltd 5,961 5,961
Nanchang JMCG Shishun Logistics Co., Ltd. 4,736 -
Ford Vietnam Limited 2,874 5,104
Nanchang Jiangling Hua Xiang Auto Components
1,522 1,899
Co., Ltd.
Jiangxi Jiangling Chassis Co., Ltd. - 9,803
Others 1,607 122
265,034 319,190
87
31 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Other receivables from related parties 30 June 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 39,142 35,027
Nanchang Unistar Electric & Electronics Co., Ltd. 28 -
Hanon Systems 2 -
Others - 11
39,172 35,038
Prepayments for purchasing of goods 30 June 2019 31 December 2018
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 536,715 496,146
536,715 496,146
Notes receivables from related parties 30 June 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 15,000 -
JMCG Jingma Motors Co., Ltd. - 41,418
15,000 41,418
Prepayments for construction in progress 30 June 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 121 -
Jiangxi JMCG Specialty Vehicles Corporation,
- 500
Ltd.
121 500
Prepayments for mould lease 30 June 2019 31 December 2018
Changan Ford Automobile Co., Ltd. - 478
Cash deposit in related parties 30 June 2019 31 December 2018
JMCF 577,916 833,617
88
31 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2019 31 December 2018
Nanchang Jiangling Hua Xiang Auto
415,736 316,174
Components Co., Ltd.
Jiangxi Jiangling Chassis Co., Ltd. 297,987 333,431
Jiangxi Jiangling Special Purpose Vehicle Co.,
269,443 336,126
Ltd.
Jiangxi Jiangling Lear Interior System Co., Ltd. 197,031 214,139
GETRAG (Jiangxi) Transmission Company 167,497 275,275
Jiangxi JMCG Specialty Vehicles Corporation,
144,038 138,209
Ltd.
Nanchang JMCG Liancheng Auto Component
122,978 148,483
Co., Ltd.
Hanon Systems 96,975 91,656
Nanchang JMCG Shishun Logistics Co., Ltd. 85,910 10,113
Nanchang JMCG Mekra-Lang Vehicle Mirror
62,152 48,200
Co., Ltd
Nanchang Unistar Electric & Electronics Co., Ltd. 61,872 96,905
Ford 55,833 151,749
Faurecia Emissions Control Technologies
54,896 58,966
(Nanchang) Co., Ltd.
JMCG 40,107 68,159
JHC 23,044 26,349
Jiangxi Lingge Non-ferrous Metal Die-casting
22,044 19,850
Co., Ltd.
Nanchang Yinlun Heat-exchanger Co., Ltd. 20,437 24,756
Nanchang Lianda Machinery Co., Ltd. 17,409 28,325
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 9,941 28,944
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 9,523 14,533
Jiangxi ISUZU Engine Co., Ltd. 8,784 9,956
Nanchang JMCG Xinchen Auto Component Co.,
6,314 6,355
Ltd.
Nanchang Gear Co., Ltd. 6,017 6,179
Jiangxi JMCG Industry Co., Ltd. 6,014 7,830
Auto Alliance (Thailand) Co., Ltd. 2,645 2,151
Jiangxi Lingrui Recycling Resources
2,607 1,736
Development Corporation
Jiangxi JMCG boya brake system Co., Ltd 2,322 -
Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,883 1,693
Jiangxi Biaohong Engine Tappet Co., Ltd. 1,586 2,037
NC.Gear Forging Factory 1,369 4,173
Ford Otomotiv Sanayi A.S. 1,344 1,031
Jiangling Material Co. 1,048 1,372
Changan Ford Automobile Co., Ltd. - 67,622
Others - 16
2,216,786 2,542,493
89
31 Related party transactions (continued)
(ix) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2019 31 December 2018
Ford 131,973 92,310
Ford Otomotiv Sanayi A.S. 101,544 115,254
Ford Global Technologies, LLC 64,933 41,203
Jiangxi JMCG Specialty Vehicles Sales
41,230 31,946
Corporation, Ltd.
Changan Ford Automobile Co., Ltd. 35,868 9,776
JMCG Jiangxi Engineering Construction Co., Ltd. 25,771 30,166
JHC 20,676 15,641
GETRAG (Jiangxi) Transmission Company 12,190 14,216
Nanchang JMCG Shishun Logistics Co., Ltd. 12,038 7,736
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 7,303 6,921
Faurecia Emissions Control Technologies
5,469 13,584
(Nanchang) Co., Ltd.
JMCG 2,666 623
Jiangxi JMCG Industry Co., Ltd. 2,486 3,504
Ford Motor (China) Co., Ltd. 2,135 4,803
Jiangxi Jiangling Lear Interior System Co., Ltd. 1,207 4,612
JMCG Property Management Co. 1,189 748
Ford Motor Research & Engineering (Nanjing)
1,004 607
Co., Ltd.
Nanchang Hengou Industry Co., Ltd. 413 10,211
Jiangxi Jiangling Special Purpose Vehicle Co.,
250 1,403
Ltd.
Nanchang Jiangling Hua Xiang Auto
- 7,222
Components Co., Ltd.
Jiangxi JMCG Motorhome Co., Ltd. - 1,905
Others 1,733 2,086
472,078 416,477
Capital commitments 30 June 2019 31 December 2018
JMCG Jiangxi Engineering Construction Co.,
Ltd. 31,940 29,456
90
Chapter XI Catalogue on Documents for Reference
1. Originals of 2019 Half-year financial statements signed by Chairman, Chief
Financial Officer and Chief of Finance Department.
2. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in the first half of 2019.
4. The Half-year Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 29, 2019
91
