Jiangling Motors Corporation, Ltd.
2009 Half-year Report
Contents
Section I JMC’s Basic Information 2
Section II Share Capital Changes & Main Shareholders 4
Section III Directors, Supervisors, Senior Management 5
Section IV Management Discussions and Analysis 6
Section V Major Events 11
Section VI Financial Statements 18
Section VII Catalog on Documents for Reference 64
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
undertake that the information disclosed herein does not contain false statements,
misrepresentations or major omissions.
Chairman Wang Xigao, President Yuan-Ching Chen, CFO Joseph Verga and Chief of
Finance Department, Wu Jiehong, ensure that the Financial Statements in this
Half-year Report are truthful and complete.
The Half-year Financial Statements have not been audited.
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 the event of any
discrepancy, the Chinese version will prevail.
Abbreviations:
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President2
Section I JMC’s Basic Information
I. Brief Introduction
Company name in Chinese: 江铃汽车股份有限公司
Company name in English: Jiangling Motors Corporation, Ltd.
Abbreviation: JMC
Place of listing: Shenzhen Stock Exchange
Share’s name: Jiangling Motors Jiangling B
Share’s code: 000550 200550
JMC’s registered address and head office’s address: 509, Northern Yingbin
Avenue, Nanchang City, Jiangxi Province, P.R.C.
Postcode: 330001
Internet web site: http://www.jmc.com.cn
Legal representative of JMC: Mr. Wang Xigao
Board Secretary: Mr. Wan Hong
Board securities affair representative: Mr. Quan Shi
Contact address: Jiangling Motors Corporation, Ltd., 509, Northern Yingbin Avenue,
Nanchang City, Jiangxi Province, P.R.C.
Telephone: 0791-5266178
Fax: 0791-5232839
E-mail: relations@jmc.com.cn
Persons for financial information disclosure: Mr. Joseph Verga
(Tel: 0791-5266503)
Newspapers for information disclosure: China Securities, Securities Times, Hong
Kong Commercial Daily
Website designated by CSRC for publication of JMC’s Half-year Report:
http://www.cninfo.com.cn
Place for placing Half-year Report: Securities Department, Jiangling Motors
Corporation, Ltd.
Other Information:
1. JMC was registered with Nanchang Municipal Bureau of Industrial & Commercial
Administration on November 28, 1993. The company registration was changed
with Jiangxi Provincial Bureau of Industrial & Commercial Administration on
January 8, 1997, on October 25, 2003, on September 23, 2004, on January 11, 2006
and on June 21, 2007.
2. Business License Registration Number: 002473.
3. Taxation Registration Number:
(State Administration of Taxation) 360108612446943
(Nanchang Local Taxation) 3601046124469433
II. Operating Highlights
Unit: RMB ’000
At the end of
reporting period*
At the end of the
previous year Change (%)
Total assets 7,055,561 5,963,778 18.31
Shareholder’s equity Attributable
to the Equity Holders of the
Company
4,221,270 4,050,382 4.22
Share Capital 863,214 863,214 0
Net Assets Per Share Attributable
to the Equity Holders of the
Company (RMB)
4.89 4.69 4.22
Reporting period
(2009 first half)*
Same period
last year* Change (%)
Revenue 4,722,446 4,584,730 3.00
Operating Profit 524,050 595,975 -12.07
Profit Before Income Tax 546,271 623,991 -12.46
Profit Attributable to the Equity
Holders of the Company 429,852 530,488 -18.97
Basic Earnings Per Share (RMB) 0.50 0.61 -18.97
Diluted Earnings Per Share (RMB) 0.50 0.61 -18.97
Return on Net Asset Ratio (%) 10.18 13.97 Down 3.79
percentage points
Net Cash Generated From
Operating Activities 1,739,290 319,607 444.20
Net Cash Flow Per Share from
Operating Activities (RMB) 2.01 0.37 444.20
*Unaudited financial indexes.
Impact of IFRS adjustments on the profit for the period:
Unit: RMB
Shareholder’s
equity Attributable
to the Equity
Holders of the
Company
Profit Attributable
to the Equity
Holders of the
Company
June 30, 2009 2009 first half
As Prepared under the China GAAP** 4,224,114,360 432,696,914
Adjustment per IFRS:
Staff bonus and welfare fund appropriated
from net profit of a subsidiary -2,844,346 -2,844,346
As Restated in Conformity with IFRS 4,221,270,014 429,852,568
** Based on the financial statements prepared by JMC under the China GAAP.4
Section II Share Capital Changes and Main Shareholders
I. Table of the changes of shareholding structure
Before the change Change (+, -) After the change
Shares
Proportion
of total
shares (%)
New
shares
Bonus
Shares
Reserveconverted
shares
Others Subtotal Shares
Proportion
of total
shares (%)
I. Limited tradable A
shares 271,372,145 31.44% -268,130,600 -268,130,600 3,241,545 0.38%
1.State-owned shares
2. State-owned legal
person shares 267,854,600 31.03% -267,854,600 -267,854,600 0 0
3. Other domestic shares 3,517,545 0.41% -276,000 -276,000 3,241,545 0.38%
Including:
Domestic legal person
shares 3,513,000 0.41% -276,000 -276,000 3,237,000 0.37%
Domestic natural person
shares 4,545 - 4,545 -
II. Unlimited tradable
shares 591,841,855 68.56% 268,130,600 268,130,600 859,972,455 99.62%
1. A shares 247,841,855 28.71% 268,130,600 268,130,600 515,972,455 59.77%
2. B shares 344,000,000 39.85% 344,000,000 39.85%
III. Total 863,214,000 100% 863,214,000 100%
Note: As of May 20, 2009, the trading restriction on parts of the limited tradable A
shares was relieved thereby causing the changes in shareholding structure.
II. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total
shareholders
JMC had 33,205 shareholders, including 23,690 A-share holders and
9,515B-share holders, as of June 30, 2009.
Top ten shareholders
Shareholder
Name
Shareholder
Type
Shareholding
Percentage
（%） Shares
Shares with
Trading
Restriction
Shares
Due to
Mortgage
or Frozen
Jiangling Motor
Holding Co., Ltd.
(“JMH”)
State-owned
legal person
41.03 354,176,000 - -
Ford Motor
Company
(‘Ford’)
Foreign
legal person
30 258,964,200 - -
Shanghai
Automotive Co.,
Ltd.
State-owned
legal person
2.05 17,692,500 - -
Bosera Thematic
Sector Equity
Securities
Investment Fund
Domestic non
-state-owned
legal person
1.54 13,304,508 - -
Bosera Emerging
Growth
Securities
Investment Fund
Domestic non
-state-owned
legal person
1.16 10,045,143 - -
Dragon Billion
China Master
Fund
Foreign
legal person
1.13 9,775,590 - -5
China Post
Growth
Securities
Investment Fund
Domestic non
-state-owned
legal person
0.60 5,217,574 - -
Abn Amro Teda
Evaluation
Securities
Investment Fund
Domestic non
-state-owned
legal person
0.55 4,704,540 - -
National Social
Security Fund-
Portfolio 102
Domestic non
-state-owned
legal person
0.52 4,476,400 - -
Lion Wealth
Increase Stock
Investment Fund
Domestic non
-State-owned
legal person
0.46 4,000,000 - -
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Restriction Share Type
Jiangling Motor Holding Co., Ltd. 354,176,000 A share
Ford Motor Company 258,964,200 B share
Shanghai Automotive Co., Ltd. 17,692,500 A share
Bosera Thematic Sector Equity
Securities Investment Fund
13,304,508 A share
Bosera Emerging Growth
Securities Investment Fund
10,045,143 A share
Dragon Billion China Master
Fund
9,775,590 B share
China Post Growth Securities
Investment Fund
5,217,574 A share
Abn Amro Teda Evaluation
Securities Investment Fund
4,704,540 A share
National Social Security Fund-
Portfolio 102
4,476,400 A share
Lion Wealth Increase Stock
Investment Fund
4,000,000 A share
Notes on association among
above-mentioned shareholders
Bosera Thematic Sector Equity Securities Investment Fund,
Bosera Emerging Growth Securities Investment Fund and
National Social Security Fund- Portfolio 102 are in custody of
Bosera Fund Management Co., Ltd.
Section III Directors, Supervisors and Senior Management
I. There was no change in the status of JMC directors, supervisors and senior
management holding JMC shares in the reporting period.
II. Changes of Directors, Supervisors and Senior Management During the Reporting
Period
Director Changes:
The fourth session of the sixth Board held on March 31, 2009 approved the following
resolution: whereas Mr. Mei Wei Cheng resigned from Vice Chairman position with6
the Company, the Board of Directors elected Mr. Robert J. Graziano as Vice
Chairman of the Company.
Upon Mr. Mei Wei Cheng’s resignation from his directorship in the Company, Mr.
Yuan-Ching Chen was elected on June 25, 2009 as a Director of the Company at the
2008 Annual Shareholders’ Meeting.
Senior Management Changes:
The fourth session of the sixth Board held on March 31, 2009 approved the following
resolutions: accepted Mr. Mustafa Menku’s resignation from the Vice President
position with the Company, and appointed Mr. Ravichandran Swaminathan as a Vice
President of the Company per President Yuan-Ching Chen’s nomination.
The fifth session of the sixth Board held on June 25, 2009 approved the following
resolution: appointed Mr. Peter John Dowding as a Vice President of the Company
per President Yuan-Ching Chen’s nomination.
Section IV Management Discussion and Analysis
I. Operating Results
JMC’s core business is production and sales of light vehicles and related components.
Its major products include JMC series light truck and pickup, and Transit series
commercial vehicles. The Company also produces engines, casting and other
components.
In First Half of 2009, China’s economy recovered from the global financial crisis
faster than anticipated with the assistance of the government stimulus economic
policy. JMC achieved record sales volume of 53,327 units including 22,352 JMC
series light trucks, 16,761 JMC series pickups and SUV, and 14,214 Ford Transit
series commercial vehicles. Total sales volume was up 2.55% from same period last
year. Total production volume was 52,002 units, including 21,704 JMC series light
trucks, 15,926 JMC series pickups and SUV, and 14,372 Transits.
The Company’s sales increase is primarily explained by industry increases. JMC
series light truck sales volume increased 6% compared with same period last year,
JMC series pickup and SUV sales volume increased 3%, Transit sales volume
decreased by 4%.
In First Half of 2009, the Company achieved a share of about 0.9% of the Chinese
automotive market, decreasing by 0.1 percentage points compared with same period
last year. In First Half of 2009, the Company achieved a share of about 2.1% of the
Chinese commercial automotive market, decreasing by 0.3 percentage points from
same period last year. JMC’s share of commercial automotive market declined
because the mini segment share of the commercial vehicle market increased from
36.5% to 48.1%. Mini share growth was stimulated by government incentives. JMC
has maintained or grown its share of the commercial vehicle segments in which it
competes. JMC light trucks (including pickup) accounted for 5.1% of the light truck
market, maintaining the same level compared with same period last year. Transit
achieved 13.5% share of the light bus market, about 1.5 percentage points higher than7
the same period last year. (Data source for above analysis: China Association of
Automobile Manufacturers and the Company sales records)
II. Financial Results
The Table summarizes revenue & cost of goods sold from core business:
Unit: RMB ’000
Product Turnover
Cost from
core
business
Gross
Margin
(%)
Turnover
change from
the same
period last
year (%)
Costs in core
business
change from
the same
period last
year (%)
Gross margin
change from the
same period last
year (%)
I. Vehicles 4,370,152 3,288,767 24.7% 5.1 4.9 0.1
II. Components 301,927 226,751 24.9% -4.1 -6.6 2.0
Total 4,672,079 3,515,518 24.8% 4.4 4.0 0.3
Involving:
related party
transactions
297,217 241,735 18.7% -39.3 -38.2 -1.4
Pricing
principle of
related party
transactions
Market Price
Details pertaining to core business classified according to region:
Unit: RMB ’000
Region Turnover Turnover change from the same
period last year (%)
North-east China 222,810 -0.2
North China 468,927 -1.0
East China 2,314,831 -2.7
South China 726,443 14.6
Central China 385,778 16.4
North-west China 226,526 25.8
South-west China 326,764 29.4
Revenue in First Half of 2009 was RMB 4,722 million, up 3% from same period last
year. This increase primarily reflects higher vehicle sales volume, partially offset by
price reduction.
Under International Financial Reporting Standards, net profits were RMB 430 million,
down RMB 100 million from same period last year. Excluding other one-time items
which occurred in 2008 (primarily government grants), net profits increased by 17%
compared with the same period in 2008. Higher gross profit derived from volume
increases and cost reductions was partially offset by price reduction. Distribution
costs decreased by RMB 47 million, down 13% from same period last year, primarily
reflecting absence of new product launch in first half of 2009. Other income8
decreased by RMB 165 million, down 99% from same period last year, primarily
reflecting a 2008 one-time gain derived from government grants for the Xiaolan site.
Cash flow from operations was positive RMB 1,739 million, reflecting profitability
and operating-related changes targeted at improving JMC’s balance sheet and cash
position. Cash flow from investing activities was negative RMB 158 million,
primarily reflecting spending for capital goods such as facilities, equipment and
tooling. Financing cash flow was negative RMB 14 million, primarily reflecting bank
loan reduction and interest expenses.
At the end of June 2009, Company cash and cash equivalents totaled RMB 3,079
million, up RMB 1,567 million from the end of 2008. The balance of bank borrowing
was RMB 33 million, down RMB 14 million from the end of 2008.
Total assets were RMB 7,056 million, up 18% from RMB 5,964 million at year-end
2008, primarily reflecting higher cash. The assets structure primarily remains
unchanged from 2008 but continues to become healthier.
Total liabilities were RMB 2,716 million, up RMB 903 million from at year-end 2008,
primarily reflecting dividend payment accrual and higher accounts payable due to
higher production volume and investment.
Shareholder equity, including minority interest, was RMB 4,340 million at June 30,
2009, up RMB 189 million from year-end 2008. This increase is explained by net
profit earned in the reporting period, partially offset by dividend payment accrual.
III. Operational Challenges and Resolutions
In First Half of 2009, the Company continued to face competitive challenges with
new product entries and intensifying cost pressures. The Company focused on
initiating new product development and expanding production capacity, with
appropriate assessment of the existing market conditions and future trend analysis.
Regarding competition, the Company continued to experience market share pressure
from lower-priced competitors in all of its segments. In response, the Company
lowered price for Diesel Stage II Pickup 2007 model in Quarter 4 2008, and the
Diesel Stage III Pickup 2007 model and N301 Diesel Pickup models in Quarter 2
2009. Additionally, proactive marketing plans were initiated to help generate sales.
The Company also accelerated development of second Tier markets and enhanced its
customer purchase experience.
In response to the global financial crisis, the company continued to focus on (1)
ensuring steady cash flow, (2) defending market share and accelerating sales
promotion for support both present and new products, (3) leveraging the government
market stimulus plan, (4) fully leveraging the latest developments associated with
reduced cost of global primary commodity prices to reduce component prices, (5)
balancing management of controllable expenses, including operating, capacity-related,
and new product development-related spending, while ensuring that the company’s
long term development remains consistent with company objectives, and (6)
strengthening corporate governance and application of appropriate risk assessment
and control mechanisms.9
The company anticipates continued market pressures including a rebound in raw
material prices, competitive vehicle price reduction, new vehicle entries in selected
market segments, government policy revisions and more stringent regulatory
requirements.
The Company continues to leverage previously established processes and work
groups to reduce existing production cost and eliminate operating waste throughout
the enterprise. Additionally, we are providing emphasized focus on maximizing part
sourcing localization and cost reduction for the new products to be introduced in 2009.
The company’s management remains focused on (1) leveraging existing product
platforms to generate new revenue streams, (2) introducing new products, and (3)
expanding production capacity as appropriate and consistent with changing market
forecasts. The Company continues to execute several approved major projects with
the support of our technology partners. These programs include the N900 project (the
next generation truck product which is developed independently), the N350 project
(the next generation Pickup and SUV vehicle product which is developed
independently), the N800 project (the next generation truck product which is
developed independently), the A4 Press Line and the JX4D24, E802 engine
manufacturing projects which support our vehicles with locally produced sheet metal
stampings and engines to meet future regulatory requirements. These actions will
introduce competitive and profitable products into the light commercial vehicle
market as soon as possible and will effectively upgrade manufacturing capability.
Finally, the company is continuing its efforts to ensure sustainable growth, including
studying opportunities for adding incremental products and expanding export and
OEM sales.
IV. Investment in the Reporting Period
1. In First Half year of 2009, JMC did not raise equity funding, nor did it use equity
funding raised in previous years.
2. Self funded major projects:
Project Name
Total
Investment
Estimate
(RMB Mils)
Spending To
Date
(RMB Mils)
Future Investment
Forecast
(RMB Mils)
Planned
Completion
Date
N800 725 44 681 Second Half,
2012
N350 598 307 291 Second Half,
2010
A4 Press Line 384 74 310 First Half,
2010
JX4D24 Engine 350 311.7 13.3 Second Half,
2009
JX4D24 Engine
Phase II
315 0.3 314.7 Second Half,
2011
N900 250 169 81 Second Half,
2009
Frame Press
Machine
53 41.3 11.7 Second Half,
200910
Vehicle storage and
delivery facility
Phase I
35 4.4 30.6 First Half,
2010
JX4D24 Engine for
N350
30 14 16 Second Half,
2009
High Speed CNC
Milling Machine 11.7
0.8 10.9 First Half,
2010
PDM Program 10.5 4.7 5.8 Second Half,
2010
V348 2010 MY
Program
17 1 16 First Half,
2010
E802 Engine
Program
419 2 417 First Half,
2012
V348 A4 Line Die
Modification
Program
10 - 10 Second Half,
2010
V348 China Stage
IV Heavy Duty
Truck Program
59 26 33 Second Half,
2010
Stage V and VI
Emissions Facilities
Program
26.6 - 26.6 Second Half,
2010
Total 3,293.8 1,000.2 2,268.6
The Spending will be funded from cash reserves.
V. 2009 Second Half Year Plan
The Company is projecting revenue in the range of RMB 4,000 to 5,000 million for
the Second Half of 2009. Intensified competition resulting from new market entries
and the launch of news models will require increased levels of marketing expense to
support market share expansion. Additionally, R&D and capital expenditures are
projected to be higher as we progress with new product programs and capacity
expansion actions.
In the Second Half, the Company continues to focus on generating cash and profits,
enhance formulation of new product development strategies, and execute plans for
future growth. Specific actions include:
i. Accelerate efforts to strengthen our brand image by enhancing the Company's
distribution network, including distribution network expansion and improving
customer sales service.
ii. Work with technology partners to execute the N900, JX4D24, N350, N800, E802,
V348 Heavy Duty Stage IV and A4 Press Line projects, and continue to expand
production capacity.
iii. Increase cost reduction efforts by focusing on customer value and eliminating
waste.
iv. Develop product plans to add new products for introduction in the Chinese
market.
v. Expand the export and OEM component sales business.11
Section V Major Events
I. Status of the Corporate Governance in JMC
During the reporting period, the Company continued to operate its corporate
governance in compliance with the Company Law, the Securities Law, the Code of
Corporate Governance for Listed Companies in China, as well as relevant laws and
regulations. Generally, the actual situation of the corporate governance in JMC meets
the requirements of the laws and regulations promulgated by CSRC.
II. Execution of Profit Distribution Plan
The 2008 Annual Shareholders’ Meeting of the Company approved the 2008 calendar
year profit distribution plan on June 25, 2009. Announcement of 2008 calendar year
dividend distribution was published in China Securities, Securities Times and Hong
Kong Commercial Daily on July 11, 2009, and it has been executed accordingly.
The 2008 calendar year dividend distribution plan was as follows:
Based on the total share capital of 863,214,000 shares, cash dividend of RMB 3
(before tax) per 10 shares is to be distributed to shareholders. Individual shareholders,
investment funds and qualified foreign institutional investors holding the Company’s
A shares will receive an after-tax cash dividend of RMB 2.7 per 10 shares, and the
cash dividend for B-share holders is not subject to taxation at present. For other
non-resident enterprises, the Company will not withhold nor pay the income tax on
their behalf, and the taxpayer shall pay the tax in the place where the income is
received. The cash dividends on B shares shall be paid in Hong Kong Dollars
converted at HKD1.00 = RMB0.8816, reflecting the mid point between the exchange
rates for the HK dollar and RMB quoted by the People’s Bank of China on the first
business day (June 26, 2009) immediately after the relevant resolutions were passed at
the Company’s Shareholders’ Meeting.
Equity record date and ex-dividend date for A shares were July 17 and July 20, 2009
respectively; last trading date, ex-dividend date and equity record date for B shares
were July 17, July 20, and July 22, 2009 respectively.
JMC did not convert capital reserves into share capital in the reporting period.
III. JMC had no major litigation or arbitration issues in the reporting period.
IV. JMC did not acquire or sell operation during the reporting period.
V. Major related party transactions
1. Related party transactions for purchase of commodities and services in the
reporting period
(1) JMC purchased certain raw materials, auxiliary materials and components from
related parties. Transactions with half-year value over RMB 15 million are listed12
bellow:
Transaction Parties Pricing
Principle
Settlement
Method
Amount
(RMB ’000)
% of Total
Purchases
Jiangxi Jiangling Chassis
Company
Contracted
price
60 days after
delivery
149,328 4.91
Nanchang Bao-jiang Steel
Processing & Distribution
Co., Ltd.
Contracted
price
Prepayment 145,755 4.79
JMCG Interior Trim Factory Contracted
price
60 days after
delivery
128,737 4.23
GETRAG (Jiangxi)
Transmission Company
Contracted
price
60 days after d
elivery
117,157 3.85
Jiangling-Lear Interior Trim
Factory
Contracted
price
60 days after
delivery
83,290 2.74
Ford Contracted
price
Letter of credit 79,867 2.62
JMCG Contracted
price
60 days after
delivery
71,095 2.34
Visteon Climate Control
(Nanchang) Co., Ltd.
Contracted
price
60 days after
delivery
52,593 1.73
Jiangxi Specialty Vehicles
Jiangling Motors Group Co.,
Ltd.
Contracted
price
Monthly Netting
off payment of
purchased goods
42,865 1.41
Nanchang Jiangling
Huaxiang Auto Components
Co.
Contracted
price
60 days after
delivery
40,346 1.33
Jiangxi JMCG Industrial
Company
Contracted
price
60 days after
delivery
25,522 0.84
(2) The sales of products by JMC to related parties with half-year value over RMB
15 million are listed bellow:
Transaction Parties Pricing
Principle
Settlement
Method
Amount
(RMB’000)
% of Total Sales
Revenue
JMCG Import and Export Co.,
Ltd.
Contracted
price
30 days after
delivery 196,530 4.16
Jiangxi Specialty Vehicles
Jiangling Motors Group Co.,
Ltd.
Contracted
price
Monthly
Netting off
payment of
purchased
goods
47,543 1.01
JMCG Interior Trim Factory Contracted
price
Consignment
after receiving
payment of
purchased
goods
21,404 0.45
JMH Contracted
price
30 days after
invoicing 20,419 0.43
In the above mentioned pricing principle, market price means that it is based on the
market price of similar products, and contracted price means that for unique products
or services for which comparable market data is difficult to obtain, prices are13
determined through the process of supplier quotation, cost assessment and
negotiations.
(3) Secondee Compensations
Pursuant to revised Personnel Secondment Agreement signed between JMC and Ford
and Ford Affiliates, in the first half of 2009, the Company should pay approximately
US$ 1,688 thousand and RMB 1,170 thousand to Ford as service fee for expatriate
secondees and Chinese secondees assigned by Ford, and should pay approximately
US$ 160 thousand to Ford Otosan as service fee for expatriate secondees assigned by
Ford Otosan.
Pursuant to an agreement signed on January 1, 2009 between JMC and JMH, in the
first half of 2009, JMC should pay approximately RMB 349 thousand to JMH as
service fee for the employees assigned by JMH.
(4) General Service
JMCG bears the middle school and primary school educational fees of existing
employees and certain retired employees' expenses of JMC, and provides services
such as cable television. The related costs were borne by JMC according to agreed
percentages as determined by headcount ratio of JMC and JMCG. In the reporting
period, RMB 600 thousand of the above-mentioned costs was shared by JMC and its
subsidiaries.
(5) Purchasing Agency
JMCG Import & Export Co., Ltd. was the import agent of JMC for acquiring import
materials, equipment and technology services. In the first half of 2009, JMC paid
JMCG Import & Export Co., Ltd. commission of RMB 2.34 million pursuant to the
Supplemental Contract to Exclusive Import Agency Agreement signed between JMC
and JMCG Import & Export Co., Ltd.
2. The Company had no related party transaction concerning transfer of assets or
equity in the reporting period.
3. Creditor’s rights, liabilities and guarantees between JMC and related parties
(1) Balance of accounts due to or due from main related parties with value over RMB
30 million:
Unit: RMB ’000
Item Related Parties Amount
(RMB thousands)
% of Each
Account
Balance
Prepayment
Nanchang Bao-jiang
Steel & Processing
Distribution Co., Ltd.
91,145 72.97
Accounts and
bills payable
Jiangxi Jiangling Chasis
Company 77,231 4.93
Accounts and
bills payable
Jiangling-Lear Interior
Trim Factory 60,906 3.89
Accounts and
bills payable
Jiangxi Specialty
Vehicles Jiangling
Motors Group Co., Ltd.
58,962 3.77
Accounts and GETRAG (Jiangxi) 53,777 3.4414
bills payable Transmission Company
Accounts and
bills payable
JMCG Interior Trim
Factory 53,706 3.43
Accounts and
bills payable
JMCG 35,428 2.25
Other payable Ford 43,901 10.06
(2) Deposit
On June 30, 2009, JMC had a deposit of RMB 91.93 million in JMCG Finance Co.,
Ltd. JMC received a total of RMB 1.16 million in interest from JMCG Finance Co.,
Ltd. during the first half of 2009.
(3) Guarantees to JMC
As of June 30, 2009, JMCG Finance Co, Ltd provided a guarantee for JMC’s bank
loans of US$ 1.21 million.
4. Other major related party transactions during the first half of 2009
According to the Joint Development Agreement and the 2nd Amendment Contract to
the Joint Development Agreement signed by JMC and Ford, JMC shall pay
technology development fee totaling US$ 40 million to Ford. JMC had paid off the
aforesaid fee as of June 30, 2009.
According to the V348 Transit Vehicles Series Technology Licensing Contract
(“V348 TLC”) signed by JMC and Ford as well as Supplemental Agreement to V348
TLC jointly signed by Ford, Ford Global Technologies LLC, Ford Otosan and JMC,
JMC is to pay licensing fee annually reflecting 2.6% of V348 Transit net sales
revenue. Ford Global Technologies LLC shall receive 67.31% of the licensing fee and
Ford Otosan shall receive the reminder 32.69%. JMC bore a licensing fee of US$ 1.50
million (equal to RMB 10.22 million) in the first half o f 2009. US$ 0.9 million had
not paid yet through June 30, 2009.
VI. There were neither entrustment, contracts or leased assets from other
companies, nor entrustment, contracts or leases of JMC’s assets to other
companies from which profit was generated in excess of 10% of the reporting
period total profit. JMC did not entrust other people with cash asset
management in the reporting period.
VII. Commitments of the Company, its shareholders, its Directors, its Supervisors or
its Senior Executives
JMH, which holds 41.03% of JMC total shares, issued letters of commitment, and
declared and promised the following:
(1) according to the requirements of Rules on Implementing the Full Tradable Share
Reform of the Listed Companies, legal commitments will be fulfilled in
accordance with provisions of the stock exchange laws and regulations;
(2) the promisor ensures that it will compensate losses resulting from partial or
complete non-fulfillment of its promises to other shareholders; and
(3) the promisor will fulfill its commitments faithfully and accept relevant legal
responsibility, and it will not transfer its shares unless the transferee agrees and
accepts liability to undertake the responsibility of the promise.15
JMH promises specifically to pay the consideration on behalf of the unlisted-share
holders who oppose the Share Reform or did not express their opinions. The
above-mentioned unlisted-share holders should repay the consideration paid by JMH
and the interest, or obtain written consent from JMH, if they want to list their shares.
In the reporting period, JMH exercised its commitments sincerely and did not breach
the promise.
VIII. Neither the Company nor its directors or senior management were punished by
regulatory authorities in the reporting period.
IX. JMC guarantees to outside companies
The Company Board of Directors approved on December 13, 2007 to provide
guarantee to Ford Automotive Finance (China) Ltd. (“FAFC”) with vehicle pledge for
Suzhou Hejun Auto Trading Limited, Shanghai Jiuhua Auto Industrial Limited, Wuxi
Jiangling Auto Sales Limited and Shenzhen Shuncheng Jiangling Auto Trading
Limited with a total credit line of no more than RMB 55.5 million.
The table below summarizes JMC outside guarantees in first half of 2009.
Outside Guarantees (excluding the guarantees to the subsidiaries of the Company)
Name Date
（Signature
Date of the
Agreement）
Amount
(RMB)
Type of
Guarantee
Term of
Guarantee
Whether
Has Been
Executed
Completely
(Y/N)
Whether For
A Related
Entity (Y/N)
Suzhou Hejun Auto
Trading Limited
December 24,
2007
4,240,000 Pledge 12
months
N N
Total amount of the guarantees in the reporting
period
61,588,710
Balance of the guarantees as of the end of the
reporting period
4,240,000
Guarantees to the subsidiaries of the Company
Total amount of the guarantees to the
subsidiaries of the Company in the reporting
period
0
Balance of the guarantees to the subsidiaries of
the Company as of the end of the reporting
period
0
Total Guarantees (including the guarantees to the subsidiaries of the Company)
Total Amount 4,240,000
As % of the Company’s net assets 0.1%
Including:
Guarantees offered to shareholders, actual
controlling parties and its related parties
016
Guarantees directly or indirectly offered to
guaranteed parties whose ratio of liabilities to
assets exceed 70%
0
Amount of the guarantees exceeding 50% of the
Company’s net assets
0
Subtotal of the aforesaid three items 0
X. Independent directors’ explanation and independent opinions on the
Company’s account receivables by related parties and outside guarantees
Independent Director Zhang Zongyi, Shi Jiansan and Vincent Pun Fong Kwan
expressed their opinions on the Company’s account receivables by related parties and
outside guarantees as follows:
We are aware of the cash flow occurring between the Company and its controlling
shareholders and other related parties and the Company’s outside guarantees, and
believe that:
1. Cash flow occurring between the Company and its controlling shareholders and
other related parties resulted from normal business transactions. There was no illegal
embezzlement of company funds.
2. The risk derived from the vehicle pledge provided for such credit facilities is offset
because the Company has received the cash payment of the vehicles from FAFC on
behalf of the dealers. The Company has no other outside guarantees except the
aforesaid guarantees provided for the dealers in the reporting period.
XI. External research and media interviews of the Company
Date Place Communication
Method
Object Information Discussed
and Materials Offered
February
27, 2009
In the
Company
Oral
Communication
Three analysts from
China Asset
Management Co., Ltd.,
Haitong Securities
Company Limited,
China Universal Asset
Management Co., Ltd.
JMC Operating highlights
March 5,
2009
In the
Company
Oral
Communication
An analyst from Orient
Securities Company
Limited
JMC Operating highlights
March 11,
2009
In the
Company
Oral
Communication
Three analysts from
China Asset
Management Co., Ltd.,
Everbright Securities
Co., Ltd.
JMC Operating highlights
March 13,
2009
In the
Company
Oral
Communication
An analyst from China
International Capital
Corporation Limited.
JMC Operating highlights
March 19,
2009
In the
Company
Oral
Communication
Five analysts from E
Fund Management Co.,
Ltd., China Post &
Capital Fund
Management Co., Ltd.,
GF Securities Co., Ltd.,
JMC Operating highlights17
Fullgoal Fund
Management Co., Ltd.,
Donghai Securities Co.,
Ltd.
April 14 In the
Company
Oral
Communication
Three analysts from
Penghua Fund
Management Co., Ltd.,
First State Cinda Fund
Management Co., Ltd.,
China Merchants
Securities Co., Ltd.
JMC Operating highlights
April 29 In the
Company
Oral
Communication
An analyst from Harvest
Fund Management Co.,
Ltd.
JMC Operating highlights
May 6 In the
Company
Oral
Communication
An analyst from Bopo
Consulting Company
JMC Operating highlights
June 9 In the
Company
Oral
Communication
Two analysts from
Lianhe Securities Co.,
Ltd., Fullgoal Fund
Management Co., Ltd.
JMC Operating highlights
XII. Establishment and Implementation of Internal Control System
During the reporting period, in order to meet the provisions of Fundamental Guideline
on Enterprise Internal Control, the Company founded a group that is led by senior
executives and in charge of implementation of internal control guidelines, defined the
responsibilities of the group, and established in an action plan. The group has
reviewed the status of the Company internal control thoroughly and made
improvements in accordance with Fundamental Guideline on Enterprise Internal
Control, which ensured the effectiveness of the Company internal control.
XIII JMC did not participate in securities investments nor did it hold equity in other
listed companies during the reporting period.
XIV Indexes for publication of information disclosure
All announcements of the Company are published in China Securities, Securities
Time and Hong Kong Commercial Daily. The website for information disclosure is
http: //www.cninfo.com.cn. The listing of information disclosed in the first half of
2009 is as follows:
1. Production and sales volume information in December 2008 was published on
January 9, 2009.
2. Production and sales volume information in January 2009 was published on
February 6, 2009.
3. Production and sales volume information in February 2009 was published on
March 4, 2009.
4. Extracts from the 2008 Annual Report and announcements on the relevant
resolutions of the Board of Directors and the Supervisory Board were published
on March 18, 2009.
5. Announcement on the resolutions of the fourth session of the sixth Board of
Directors and production and sales volume information in March 2009 were
published on April 2, 2009.
6. 2009 First Quarter Report was published on April 24, 2009.
7. Production and sales volume information in April 2009 was published on May 6,
2009.18
8. The prompt announcement on relieving the trading restriction on the limited
tradable shares in Full Tradable Share Reform was published on May 19, 2009.
9. Announcements on the resolutions of the Board of Directors, the Notice on
Holding 2008 Annual Shareholders’ Meeting and production and sales volume
information in May 2009 were published on June 3, 2009.
10. Announcement on the resolutions of the 2008 Annual Shareholders’ Meeting was
published on June 26, 2009.
11. Announcement on the resolutions of the fifth session of the sixth Board was
published on June 27, 2009.
Section VI Financial Statements
The Half-year Financial Statements have not been audited.19
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2009
(All amounts in RMB unless otherwise stated)
As at
Note 30 June 2009# 31 December 2008
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment 6 2,353,840 2,362,871
Lease prepayment 7 287,654 290,916
Intangible assets 8 33,760 35,680
Investments in associates 9 13,759 16,136
Other non-current assets 233 300
Deferred income tax assets 10 88,354 105,233
2,777,600 2,811,136
Current assets
Inventories 11 850,495 1,057,873
Trade and other receivables 12 348,631 583,161
Cash and cash equivalents 13 3,078,835 1,511,608
4,277,961 3,152,642
Total assets 7,055,561 5,963,778
EQUITY
Capital and reserves attributable to the
Company’s equity holders
Share capital 14 863,214 863,214
Share premium 816,609 816,609
Other reserves 15 457,650 457,650
Retained earnings 2,083,797 1,912,909
4,221,270 4,050,382
Minority interest in equity 118,722 100,708
Total equity 4,339,992 4,151,090
LIABILITIES
Non-current liabilities
Borrowings 16 7,829 8,056
Retirement benefit obligations 17 70,493 72,602
Warranty provisions 18 111,934 99,079
190,256 179,737
Current liabilities
Trade and other payables 19 2,442,146 1,580,530
Current income tax liabilities 43,770 -
Borrowings 16 25,447 39,117
Retirement benefit obligations 17 13,950 13,304
2,525,313 1,632,951
Total liabilities 2,715,569 1,812,688
Total equity and liabilities 7,055,561 5,963,778
#Unaudited financial indexes
The notes on pages 7 to 47 are an integral part of these consolidated financial statements.20
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2009
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2009# 2008#
RMB’000 RMB’000
(restated)
Revenue 20 4,722,446 4,584,730
Sales tax (76,245) (79,429)
Cost of sales (3,549,912) (3,457,990)
Gross profit 1,096,289 1,047,311
Distribution costs (319,154) (365,660)
Administrative expenses (255,378) (252,503)
Other income 23 2,293 166,827
Operating profit 524,050 595,975
Finance income 24 21,784 25,942
Finance costs 24 (1,480) (1,420)
Finance income-net 24 20,304 24,522
Share of profit of associates 1,917 3,494
Profit before income tax 546,271 623,991
Income tax expense 25 (98,405) (88,009)
Profit for the period 447,866 535,982
Attributable to:
Equity holders of the Company 429,852 530,488
Minority interest 18,014 5,494
447,866 535,982
Earnings per share for profit attributable
to the equity holders of the Company
(expressed in RMB per share)
- Basic and diluted 26 0.50 0.61
#Unaudited financial indexes
The notes on pages 7 to 47 are an integral part of these consolidated financial statements.21
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2009
(All amounts in RMB unless otherwise stated)
Attributable to equity holders of the Company#
Note
Share
Capital
Share
Premium
Other
Reserves
Retained
Earnings
Minority
Interest#
Total
Equity#
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2008 863,214 816,609 442,331 1,404,836 88,299 3,615,289
Profit for the six months - - - 530,488 5,494 535,982
Dividend relating to 2007 - - (258,964) - (258,964)
Balance at 30 June 2008 863,214 816,609 442,331 1,676,360 93,793 3,892,307
Balance at 1 January 2009 863,214 816,609 457,650 1,912,909 100,708 4,151,090
Profit for the six months - - - 429,852 18,014 447,866
Dividend relating to 2008 27 - - - (258,964) - (258,964)
Balance at 30June 2009 863,214 816,609 457,650 2,083,797 118,722 4,339,992
#Unaudited financial indexes
The notes on pages 7 to 47 are an integral part of these consolidated financial statements.- 22 -
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2009
(All amounts in RMB unless otherwise stated)
Six months ended June 30
Note 2009# 2008#
RMB’000 RMB’000
Cash flows from operating activities
Cash generated from operations 28 1,746,477 364,076
Interest paid (881) (1,240)
Income tax paid (6,306) (43,229)
Net cash generated from operating activities 1,739,290 319,607
Cash flows from investing activities
Purchase of held-to-maturity investments - (199,461)
Purchase of property, plant and equipment (“PPE”) (189,824) (401,296)
Proceeds from disposal of PPE 28 1,989 1,164
Interest received 23,009 28,409
Dividends received 6,944 -
Proceed from repayment of held-to-maturity investments - 200,000
Net cash used in investing activities (157,882) (371,184)
Cash flows from financing activities
Proceeds from borrowings 35,000 39,107
Repayments of borrowings (48,901) (39,336)
Dividends paid to the Company’s shareholders - (181)
Other cash paid relating to financing activities (181) (182)
Net cash used in financing activities (14,082) (592)
Net decrease in cash and cash equivalents 1,567,326 (52,169)
Cash and cash equivalents at beginning of year 1,511,608 2,106,912
Effects of exchange rate changes (99) (213)
Cash and cash equivalents at end of period 3,078,835 2,054,530
#Unaudited financial indexes
The notes on pages 7 to 47 are an integral part of these consolidated financial statements.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 23 -
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 Nanchang Revolution and Authorization Group of Company’s
Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of
the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was
owned by Jiangling Motors Corporation Group (“JMCG”). The legal representative’s operating
license of the Company is No.002473.
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 2009, the total issued shares of the Company are 863,214,000 shares, which
are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiary (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These group consolidated financial statements were authorised for issue by the Board of
Directors on 21 August 2009.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
A Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards (“IFRS”). They have been prepared under the
historical cost convention except as disclosed in the accounting policies below.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimations are significant to the
consolidated financial statements are disclosed in Note 4.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 24 -
2 Summary of significant accounting policies (continued)
B Consolidation
(1) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the
power to govern the financial and operating policies generally accompanying a shareholding
of more than one half of the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by
the Group. The cost of an acquisition is measured at the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of
the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
(2) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as transactions with
equity owners of the Group. For purchases from minority interests, the difference between any
consideration paid and the relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to minority interests are also
recorded in equity.
(3) Associates
Associates are all entities over which the Group has significant influence but not control.
Investments in associates are accounted for using the equity method of accounting and are
initially recognised at cost. The Group’s investment in associates includes goodwill identified
on acquisition, net of any accumulated impairment loss. See Note 2 H for the impairment of
non-financial assets including goodwill.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the
income statement, and its share of post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements are adjusted against 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 obligations or made payments on
behalf of the associate.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 25 -
2 Summary of significant accounting policies (continued)
B Consolidation (continued)
(3) Associates (continued)
Unrealised gains on transactions between the Group and its associates are eliminated to the
extent of the Group’s interest in the associates. Unrealised losses are also 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.
Dilution gains and losses arising in investment in associates are recognised in the income
statement.
C Segment Reporting
The Group’s turnover and profit for the six months ended 30 June 2009 were mainly derived
from the manufacture and domestic sale of automobiles, related spare parts and components,
and the principal assets employed by the Group are located in the PRC. Therefore, no
additional business segment or geographical segment data is presented.
D 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 the income statement, except when
deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in the income statement within ‘other
income/(expenses)’.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available for sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in the amortised cost are recognised in profit or
loss, and other changes in carrying amount are recognised in equity.
Translation differences on non-monetary financial assets and liabilities such as equities held
at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss. Translation differences on non-monetary financial assets such as equities classified as
available-for-sale are included in the available-for-sale reserve in equity.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 26 -
2 Summary of significant accounting policies (continued)
E Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and
any impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition or construction of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
the income statement during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Buildings 35-40 years
Plant and machinery 10-15 years
Motor vehicles 6-10 years
Moulds 5 years
Others 5-7 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
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 H).
Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognised within ‘other income/(expenses) – net’ in the income statement.
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.
F Lease prepayment
Lease prepayments represent upfront prepayments made for the land use rights, and are
expensed in the income statement on a straight line basis over the period of the lease or when
there is impairment; the impairment is expensed in the income statement.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 27 -
2 Summary of significant accounting policies (continued)
G Intangible assets
(1) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development
projects (relating to the design and testing of new or improved products) are recognised as
intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic
benefits;
(e) adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably
measured.
Other development expenditures that do not meet these criteria are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use on a straight-line basis over its
useful life.
No development costs were capitalised by the Group during the six months ended 30 June
2009.
(2) Technical know-how
Technical know-how referred to after-sale management model are initially recorded at costs
incurred to acquire and are amortised over the estimated useful lives of 6 years.
H Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation
and are tested annually for impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at each reporting
date.
I Non-current assets held for sale
Non-current assets are classified as assets 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 stated at the lower of carrying amount and fair value less costs to sell if their carrying amount
is to be recovered principally through a sale transaction rather than through continuing use.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 28 -
2 Summary of significant accounting policies (continued)
J Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit
or loss, loans and receivables, held-to-maturity financial assets and available for sale. The
classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A
financial asset is classified in this category if acquired principally for the purpose of selling in
the short term. Derivatives are classified as held for trading unless they are designated as
hedges. Assets in this category are classified as current assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for
maturities greater than 12 months after the balance sheet date. These are classified as
non-current assets. The group’s loans and receivables comprise ‘trade and other receivables’
and cash and cash equivalents in the balance sheet (Notes 2 M and 2 N ).
(c) Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Group’s management has the positive intention and
ability to hold to maturity. If the Group were to sell other than an insignificant amount of
held-to-maturity financial assets, the whole category would be tainted and reclassified as
available for sale. Held-to-maturity financial assets are included in non-current assets, except
for those with maturities less than 12 months from the balance sheet date, these are classified
as current assets.
(d) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the
balance sheet date.
(2) Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date – the date
on which the Group commits to purchase or sell the asset. Investments are initially recognised
at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit or loss are initially recognised at
fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity
financial assets are carried at amortised cost using the effective interest method.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 29 -
2 Summary of significant accounting policies (continued)
J Financial assets (continued)
(2) Recognition and measurement (continued)
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value
through profit or loss’ category are presented in the income statement within ‘other
income/(expenses) – net’ in the period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in the income statement as part of
other income when the Group’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and
classified as available for sale are analysed between translation differences resulting from
changes in amortised cost of the security and other changes in the carrying amount of the
security. The translation differences on monetary securities are recognised in profit or loss,
while translation differences on non-monetary securities are recognised in equity. Changes in
the fair value of monetary and non-monetary securities classified as available for sale are
recognised in equity.
When securities classified as available for sale are sold or impaired, the accumulated fair value
adjustments recognised in equity are included in the income statement as ‘gains and losses
from investment securities’.
K Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured at their fair value. The method of recognising the resulting
gain or loss depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged. The Group has no derivative instruments that qualifying for
hedge accounting. Changes in the fair value of any derivative instruments that do not qualify
for hedge accounting are recognised immediately in the income statement.
Interest on available for sale securities calculated using the effective interest method is
recognised in the income statement as part of other income. Dividends on available for sale
equity instruments are recognised in the income statement as part of other income when the
Group’s right to receive payments is established.
The fair values of quoted investments are based on current bid prices. If the market for a
financial asset is not active (and for unlisted securities), the Group establishes fair value by
using valuation techniques. These include the use of recent arm’s length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis
and option pricing models, making maximum use of market inputs and relying as little as
possible on entity-specific inputs.
The Group assesses at each balance sheet date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. In the case of equity securities
classified as available for sale, a significant or prolonged decline in the fair value of the security
below its cost is considered as an indicator that the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on
that financial asset previously recognised in profit or loss – is removed from equity and
recognised in the income statement. Impairment losses recognised in the income statement
on equity instruments are not reversed through the income statement. Impairment testing of
trade receivables is described in Note 2 M.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 30 -
2 Summary of significant accounting policies (continued)
L Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
weighted average cost method. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal
operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
prices in the ordinary course of business, less applicable variable costs of completion and
distribution costs.
M Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision made for impairment. A
provision for impairment of trade receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according to the original terms of
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered
indicators that the trade receivable is impaired. The amount of the provision is the difference
between the carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The carrying amount of the asset is reduced through the
use of an allowance account, and the amount of the loss is recognised in the income
statement within “administrative expenses”. When a trade receivable is uncollectible, it is
written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against “administrative expenses” in the income
statement.
N Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance
sheet.
O Share capital
Share capital consists of “A” and “B” ordinary shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
P Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
Q Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet date.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 31 -
2 Summary of significant accounting policies (continued)
R Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the
income statement, except to the extent that it relates to items recognised directly in equity. In
this case, the tax is also recognised in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the 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.
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising from investments in
subsidiaries and associates, except where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary difference will not reverse in the
foreseeable future.
S Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed
by the PRC government. The contribution to the scheme is charged to the income statement as
and when incurred. The Group’s obligations are determined at a certain percentage of the
salaries of the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees.
Such supplementary pension subsidies are considered as under defined benefit plans. The
liability recognised in the balance sheet in respect of these defined benefit plans is the present
value of the defined benefit obligation at the balance sheet date less the fair value of plan
assets, together with adjustments for unrecognised actuarial gains or losses and past service
cost. The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows according to the terms of the related pension
liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to the income statement in the period in which they arise.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 32 -
2 Summary of significant accounting policies (continued)
S Employee benefits (continued)
(2) Housing fund and other benefits
The Group’s full-time employees are entitled to participate in a state-sponsored housing fund.
The fund can be used by the employees for the purchase of apartment accommodation, or
may be withdrawn upon their retirement. The Group is required to make annual contributions
to the state-sponsored housing fund equivalent to a certain percentage of the employees’
salaries.
(3) Profit sharing and bonus plan
The Group recognises a liability and expense for bonus plans based on a formula that takes into
consideration the profit attributable to the Company’s shareholders. The Group recognises a
provision where contractually obliged or where there is a past practice that has created a
constructive obligation.
T 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.
U Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of
goods and services in the ordinary course of the Group’s activities. Revenue is shown net of
value-added tax, returns, rebates and discounts and after elimination sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is
probable that future economic benefits will flow to the entity and specific criteria have been
met for each of the Group’s activities as described below. The amount of revenue is not
considered to be reliably measurable until all contingencies relating to the sale have been
resolved. The Group bases its estimates on historical results, taking into consideration the type
of customer, the type of transaction and the specifics of each arrangement.
(1) Sales of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership
of the goods are transferred to the customer, and the customer has accepted the products and
collectability of the related receivables is reasonably assured.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 33 -
2 Summary of significant accounting policies (continued)
U Revenue recognition (continued)
(2) Interest income
Interest income is recognised on a time-proportion basis, taking account of the principal
outstanding and the effective rate over the period to maturity, when it is determined that such
income will accrue to the Group.
(3) Rental income
Rental income is recognised on an accruals basis in accordance with the substance of the
relevant agreements.
V 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 the income statement on a straight-line basis
over the period of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and
equipment where the Group has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s commencement at the
lower of the fair value of the leased property and the present value of the minimum lease
payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The corresponding rental obligations, net of
finance charges, are included in other long-term payables. The interest element of the finance
cost is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The property,
plant and equipment acquired under finance leases are depreciated over the shorter of the
useful life of the asset and the lease term.
W 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.
X Government grants
Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and the Group will comply with all attached
conditions.
Government grants relating to costs are deferred and recognised in the income statement
over the period necessary to match them with the costs they are intended to compensate.
Government grants not relating to future costs are recognised on receipt basis.
Government grants relating to the purchase of property, plant and equipment are included in
non-current liabilities as deferred income and are credited to the income statement on a
straight line basis over the expected lives of the related assets.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 34 -
3 Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk
and liquidity risk. The Group’s overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board
of Directors.
(1) Market risk
(a) Currency risk
The Group is not significantly exposed to foreign exchange risk as all of its assets and
liabilities are denominated in RMB except for an insignificant amount of bank deposits and
borrowings which are denominated in U.S. dollar, UK pound and Japanese Yen.
(b) Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 30 June 2009, substantially all of its bank deposits and 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 2009, 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
and owners’ equity would increase/decrease by RMB1,727,000 for the six months ended 30
June 2009.
As at 30 June 2009, if the interest rate of the Group’s bank borrowings had been
increased/decreased by 10% and all other variables were held constant, the Group’s net profit
and owners’ equity would decrease/increase by RMB112,000 for the six months ended 30
June 2009.
(2) Credit risk
The Group does not have a significant exposure to any individual customer or counterparty.
As at 30 June 2009, the Group had cash deposits of approximately RMB91,928,000 (2008:
RMB75,238,000) placed with Jiangling Motor Group Finance Company (“JMCF”), which is a
non-bank financial institution and a subsidiary of JMCG (Note 13). The Group’s other bank
deposits are deposited in major banks which are state-owned entities incorporated in the
PRC. Management believes all these financial institutions have high credit quality without
significant credit risk.
As at 30 June 2009, notes receivable were all bank acceptance notes issued by reputable
banks in the PRC, which is considered by management without significant credit risk.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 35 -
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
All the Group’s trade and other receivables have no collateral. However, the Group has
policies in place to ensure that sales are made to customers with appropriate credit history
and the Group performs periodic credit evaluations of its customers. The Group assesses the
credit quality of each customer by taking into account its financial position, past experience
and other factors. Credit limit and terms are reviewed on periodic basis, and the financial
department is responsible for such monitoring procedures. In determining whether allowance
for bad and doubtful debts is required, the Group takes into consideration the aging status and
the likelihood of collection. In this regards, the directors of the Company are satisfied that the
risks is minimal as all customers have no default in the past and adequate allowance for
doubtful debts, if any, has been made in the financial statements after assessing the
collectability of individual debts. Further quantitative disclosures in respect of the impairment
of trade and other receivables are set out in Note 12.
(3) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out
market positions. Due to the dynamic nature of the underlying businesses, the Group aims to
maintain flexibility in funding by keeping committed credit lines available.
Management monitors the Group’s undrawn borrowing facility (Note 16) and cash and cash
equivalents (Note 13) on the regular basis of expected cash flow.
The maturity analysis of borrowings that shows the remaining contractual maturities is
disclosed in Note 16. Generally there is no specific credit period granted by the suppliers but
the related trade payables are normally expected to be settled within one year after receipt of
goods or services.
The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due
within 12 months equal their carrying balances, as the impact of discounting is not significant.
At 31 December 2008
Bank borrowings
- Principals 39,117 448 1,343 6,265
- Interests 906 119 317 681
Trade and other payables 1,580,530 - - -
1,620,553 567 1,660 6,946
Less than 1
year
Between 1 and
2 years
Between 2
and 5 years
Over 5 years
RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000
At 30 June 2009
Bank borrowings
- Principals 25,447 447 1,342 6,040
- Interests 703 116 307 634
Trade and other payables 2,442,146 - - -
2,468,296 563 1,649 6,674JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 36 -
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
3 Financial risk management (continued)
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as borrowings divided by total capital. Total capital is calculated
as equity, as shown in the consolidated balance sheets, plus borrowings. The Group aims to
maintain the gearing ratio at a reasonable level.
The gearing ratios at 30 June 2009 and 31 December 2008 were as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
Total borrowings 33,276 47,173
Total equity 4,339,992 4,151,090
Total capital 4,373,268 4,198,263
Gearing ratio 0.76% 1.12%
3.3 Fair value estimation
The carrying amounts of the Group’s financial assets including cash and cash equivalents,
deposits in approved financial institutions, trade and other receivables and financial liabilities
including trade and other payables, short-term borrowings, approximate their fair values due to
their short maturities. The face values less any estimated credit adjustments for financial
assets and liabilities with a maturity of less than one year are assumed to approximate their
fair values.
In assessing the fair value of non-traded financial instruments, the Group uses a variety of
methods and makes assumptions that are based on market conditions existing at the balance
sheet date. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate available to the
Group for similar financial instruments.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 37 -
(2) Pension benefits
The present value of the pension obligations depend on a number of factors that are
determined on an actuarial basis using a number of assumptions. Any changes in these
assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the
interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations. In determining the
appropriate discount rate, the Group considers the interest rates of government bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating the terms of the related pension liability.
Other key assumptions for pension obligations are based in part on current market conditions.
Additional information is disclosed in Note 17.
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
(1) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that
fail to perform satisfactorily based on certain pre-determined conditions. Management
estimates the related warranty claims based on historical warranty claim information including
level of repairs and returns as well as recent trends that might suggest that past cost
information may differ from future claims.
Factors that could impact the estimated claim information include the success of the Group’s
productivity and quality controls, as well as parts and labour costs. Any increase or decrease
in the provision would affect profit or loss in future years.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
- 38 -
5 Change in accounting policy and its effect
Starting from 2008, the Group has voluntarily changed the accounting policy to recognise the
Foreign Enterprise Income Tax (“FEIT”) reduction in relation to the purchase of domestically
produced equipment with the income tax liabilities upon the receipt of the notices from tax
bureau for approval of income tax reduction, while FEIT reduction is recorded in the
consolidated financial statements as at 30 June 2008 as deferred income and recognised as
income on straight-line basis over the expected lives of the related assets.
As a result of this new policy, which has been applied retrospectively, the Group’s profit after
tax for the six months ended 30 June 2008 has increased by RMB 21,491,000 as a result of
recognising the deferred income in full and the recognition of FEIT reduction entitled during the
six months and the Group’s equity as at 30 June 2008 has increased by RMB 53,282,000.
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates and assumptions (continued)
(3) Taxation
The Group is subject to various taxes in the PRC, e.g. profit tax, value added tax,
consumption tax, etc. Significant judgment is required in determining the provision for these
taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from amounts that were initial recorded, such
differences will impact the tax provisions in the period such determination is made.
Deferred income tax assets relating to certain temporary differences are recognised as
management considers it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Where the expectation is different from the original
estimate, such differences will impact the recognition of deferred tax assets and tax in the
periods in which such estimate is changed.
As at 30 June 2009, the Group has deferred tax assets in the amount of approximately
RMB88,354,000. 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
for temporary differences arising from impairment provisions taken on inventory and
receivables, accrued expenses and retirement benefit obligations. Should the Group be
required to increase the tax rate, every 1% increment in tax rate would render a further write
up of deferred tax asset in the amount of approximately RMB5,334,000.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
39
6 Property, plant and equipment
Buildings
Plant and
Machinery
Motor
Vehicles Moulds Others
Assets under
construction Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2008
Cost 654,535 1,806,859 59,923 706,159 886,340 661,343 4,775,159
Accumulated depreciation and impairment (152,966) (1,210,166) (34,137) (581,727) (587,415) (692) (2,567,103)
Net book amount 501,569 596,693 25,786 124,432 298,925 660,651 2,208,056
Year ended 31 December 2008
Opening net book amount 501,569 596,693 25,786 124,432 298,925 660,651 2,208,056
Additions - - - - 712 592,536 593,248
Transfers 53,683 264,784 11,911 249,906 193,543 (773,827) -
Disposals (18,877) (615) (1,080) - (479) - (21,051)
Other deduction - - - (239) - (185,148) (185,387)
Impairment charge - (45) - - (474) - (519)
Depreciation charge (16,102) (63,758) (6,064) (71,360) (74,192) - (231,476)
Closing net book amount 520,273 797,059 30,553 302,739 418,035 294,212 2,362,871
At 31 December 2008
Cost 682,944 2,056,176 66,936 955,826 1,057,654 294,904 5,114,440
Accumulated depreciation and impairment (162,671) (1,259,117) (36,383) (653,087) (639,619) (692) (2,751,569)
Net book amount 520,273 797,059 30,553 302,739 418,035 294,212 2,362,871
Six month ended 30 June 2009
Opening net book amount 520,273 797,059 30,553 302,739 418,035 294,212 2,362,871
Additions - - - - 27 136,610 136,637
Transfers 12,376 58,233 3,051 14,490 17,363 (105,513) -
Disposals - (257) (130) (308) (254) - (949)
Other deduction - - - - - (7,176) (7,176)
Impairment charge - - - - - - -
Depreciation charge (Note 21,28) (9,168) (42,574) (3,631) (41,180) (40,990) - (137,543)
Closing net book amount 523,481 812,461 29,843 275,741 394,181 318,133 2,353,840
At 30 June 2009
Cost 695,320 2,112,011 69,149 969,632 1,069,104 318,825 5,234,041
Accumulated depreciation and impairment (171,839) (1,299,550) (39,306) (693,891) (674,923) (692) (2,880,201)
Net book amount 523,481 812,461 29,843 275,741 394,181 318,133 2,353,840JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
40
6 Property, plant and equipment (continued)
For the six months ended 30 June 2009, depreciation expense of approximately
RMB118,423,000 (the six months ended 30 June 2008: RMB96,245,000) was charged in cost
of sales, RMB606,000 (the six months ended 30 June 2008: RMB869,000) in distribution costs
and RMB18,514,000 (the six months ended 30 June 2008: RMB13,692,000) in administrative
expenses.
7 Lease prepayment
Lease prepayments represent the Group’s interests in land which are held on leases of 50
years. The movement is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
Opening net book amount 290,916 139,813
Addition 1,974 171,324
Disposals - (14,848)
Amortisation charge (Note 21,28) (5,236) (5,373)
Closing net book amount 287,654 290,916
Cost 329,863 327,889
Accumulated amortisation (42,209) (36,973)
Net book amount 287,654 290,916
All amortisation expense was charged in administrative expenses.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
41
8 Intangible assets
After-sale
management
model Software
Other Total
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2008
Opening net book amount 29,274 5,447 1,266 35,987
Addition - 7,891 - 7,891
Amortisation charge (6,162) (1,769) (267) (8,198)
Closing net book amount 23,112 11,569 999 35,680
At 31 December 2008
Cost 36,978 13,523 1,600 52,101
Accumulated amortisation (13,866) (1,954) (601) (16,421)
Net book amount 23,112 11,569 999 35,680
Six month ended 30 June 2009
Opening net book amount 23,112 11,569 999 35,680
Addition - 2,747 - 2,747
Amortisation charge (Note 21, 28) (3,082) (1,453) (132) (4,667)
Closing net book amount 20,030 12,863 867 33,760
At 30 June 2009
Cost 36,979 16,269 1,599 54,847
Accumulated amortisation (16,949) (3,406) (732) (21,087)
Net book amount 20,030 12,863 867 33,760
For the six months ended 30 June 2009, amortisation expense of approximately RMB4,565,000
(the six months ended 30 June 2008: RMB3,867,000) was charged in administrative expenses
and RMB102,000 in distribution costs (the six months ended 30 June 2008: RMB 69,000).JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
42
9 Investments in associate
(a) Movement of investment in associate is set out as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
At beginning of the period / year 16,136 17,764
Share of profit (Note 28) 1,917 5,316
Dividends receivables (4,294) (6,944)
Dividends received - -
At end of the period / year 13,759 16,136
In March 1996, the Company entered into a Sino-foreign equity joint venture agreement with
Visteon International Holding Co., Ltd. (“Visteon”) to form Jiangxi Fuchang Climate Systems
Co., Ltd. (“Jiangxi Fuchang”). The tenure of Jiangxi Fuchang is 30 years, and its principal
activities include manufacture and sale of air-conditioners and spare parts for motor vehicles.
On 1 June 2008, Visteon transferred its equity interests of Jiangxi Fuchang to Visteon Motor
Climate Control Holding (Hong Kong) Co., Ltd. (“Visteon Hong Kong”), a subsidiary of
Visteon, and Jiangxi Fuchang was renamed as Visteon Climate Control (Nanchang) Co., Ltd.
(“Visteon Climate Control Nanchang”).
Visteon Climate Control Nanchang has a registered capital of USD5.6 million, of which
Visteon Hong Kong has an 80.85% interest and the Company has the remaining 19.15%
interest. As the Company has 2 out of 6 seats in the board, Visteon Climate Control
Nanchang is regarded as a 19.15% owned associate of the Company.
(b) The Group’s share of assets, liabilities, revenue and results of its associates are as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
Total assets 25,383 22,159
Total liabilities (11,624) (6,023)
Net assets 13,759 16,136
Six months ended 30 June
2009 2008
RMB’000 RMB’000
Revenue 16,071 18,810
Profit for the period 1,917 3,494JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
43
10 Deferred income tax assets
Deferred income taxes are calculated in full on temporary differences under the liability
method using applicable tax rate as stated in Note 25(a).
The movement on the deferred income tax assets account is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
At beginning of the period / year 105,233 107,902
Credit/(charged) to income statement
(Note 25) 4,280 (2,669)
At end of the period /year 109,513 105,233
Provision for
impairment of
Retirement
benefits
obligation
Accrued
expenses
Depreciation
of property,
plant and
equipment Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2008 5,411 13,963 70,665 9,770 8,093 107,902
Credited/(charged) to
the income statement (2,883) 623 1,151 903 (2,463) (2,669)
At 31 December 2008 2,528 14,586 71,816 10,673 5,630 105,233
Credited/(charged) to the
income statement (471) (4,080) (5,486) (11,684) 4,842 (16,879)
At 30 June 2009 2,057 10,506 66,330 (1,011) 10,472 88,354
The amounts shown in the balance sheet include the followings:
30 June 2009 31 December 2008
RMB’000 RMB’000
Deferred tax assets to be recovered after
more than 12 months
10,407 15,083
As at 30 June 2009, the subsidiary of the Group did not recognise deferred tax assets of
RMB3,106,000 in respect of the FEIT reduction in relation to the purchase of domestically
produced equipment amounting to RMB17,257,000, among which the amount of
RMB2,129,000 will be expired at the end of 2011, the amount of RMB10,783,000 will be
expired at the end of 2012 and the remaining RMB4,345,000 will be expired at the end of
2013, as management believes it is more than likely that such FEIT reduction would not be
utilised before they expire.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
44
12 Trade and other receivables
30 June 2009 31 December 2008
RMB’000 RMB’000
Trade receivables 158,261 168,077
Less: Provision for impairment of trade
receivables (791) (841)
Trade receivables – net 157,470 167,236
Notes receivables 51,553 220,609
Other receivables 10,460 42,749
Less: Provision for impairment of other
receivables (56) (60)
Other receivables – net 10,404 42,689
Prepayments 124,910 145,683
Dividends receivables 4,294 6,944
348,631 583,161
Refer to Note 31 for details of receivables from related parties.
The carrying amounts of accounts receivable approximate their fair values.
As at 30 June 2009, trade and other receivables of approximately RMB847,000 (31 December
2008: RMB901,000) were impaired and provided for.
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
At beginning of the period / year (901) (1,758)
Reversal for impairment of receivables 54 641
Receivables written-off during the period
as uncollectible - 216
At end of period / year (847) (901)
11 Inventories
30 June 2009 31 December 2008
RMB’000 RMB’000
Raw materials 451,616 619,757
Work in progress 154,347 85,652
Finished goods 244,532 352,464
850,495 1,057,873JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
45
12 Trade and other receivables (continued)
Trade receivables that are past due are not considered impaired except the amount of
approximately RMB847,000. As at 30 June 2009, trade receivables of RMB1,742,000 (31
December 2008: RMB3,113,000) were past due but not impaired. The aging analysis of these
trade receivables is as below:
30 June 2009 31 December 2008
RMB’000 RMB’000
Up to three months 1,742 3,113
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.
13 Cash and cash equivalents
30 June 2009 31 December 2008
RMB’000 RMB’000
Cash at bank and in hand 1,078,161 662,474
Short-term bank deposits (a) 2,000,674 849,134
3,078,835 1,511,608
As at 30 June 2009, the Group had cash deposits of approximately RMB91,928,000 (31
December 2008: RMB75,238,000) placed with Jiangling Motor Group Finance Company
(“JMCF”) (Note 31 (iii)). The interest rates range from 0.05% to 1.35% per annum (2008:
0.05% to 1.71%). 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.
14 Share capital
Tradable shares Total
“A” shares “B” shares
Number of
shares
(thousands) Restricted Non-restricted
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2008
Balance at 1 January 2008 863,214 316,693 202,521 344,000 863,214
Transfer - (45,321) 45,321 - -
Balance at 31 December 2008 863,214 271,372 247,842 344,000 863,214
The six months ended
30 June 2009
Balance at 1 January 2009 863,214 271,372 247,842 344,000 863,214
Transfer - (268,130) 268,130 - -
Balance at 30 June 2009 863,214 3,242 515,972 344,000 863,214
All the “A” and “B” shares are registered, issued and fully paid ordinary shares of RMB1 each.
All the “A” and “B” shares rank pari passu in all respects.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
46
14 Share capital (continued)
In January 2006, the Company implemented the share reform scheme (the “Share Reform
Scheme”) in accordance with relevant PRC regulations after which the Company’s shares
would become tradable in the stock market.
With the approval from State-Owned Assets Supervision and Administration Committee of
Guozichanquan [2006] No. 36, the shareholders of the Company approved the Share Reform
Scheme on 16 January 2006.
On 25 January 2006, the change on the nature of the shares relating to the Share Reform
Scheme was approved by the Ministry of Commerce of the PRC of Shangzipi [2006] No. 387.
According to the Share Reform Scheme, registered tradable A-share shareholders of the
Company as at 13 February 2006 received cash consideration of RMB13.40 per 10 shares on
14 February 2006, and subsequently these previously non-tradable A shares became tradable
with conditions.
15 Other reserves
Statutory surplus
reserve fund (a) Reserve fund Others (b) Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2009 and 30
June 2009 431,607 18,627 7,416 457,650
(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 PRC Accounting Standards for Business Enterprises, 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 shareholders or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation
situation.
No statutory surplus reserve fund was appropriated during the six months ended 30 June
2009. (2008: RMB15,319,000). As the balance of the statutory surplus reserve fund has
reached 50% of the Company’s share capital after the appropriation in 2008, there are no
further appropriations to the statutory surplus reserve fund.
(b) The Group owned 20% equity interests in Jiangxi Fujiang After-Sales Services Co., Ltd.
(“Jiangxi Fujiang”) prior to 30 September 2006 and has been accounted for as an associate of
the Group. On 30 September 2006, the Group acquired the remaining 80% equity interests in
Jiangxi Fujiang. Thereafter, Jiangxi Fujiang became wholly owned by the Group. In this
connection, the difference between the carrying amount of Jiangxi Fujiang and the attributable
share of the fair value of Jiangxi Fujiang before this acquisition is recorded as "other reserve"
in 2006.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
47
16 Borrowings
30 June 2009 31 December 2008
RMB’000 RMB’000
Current
Bank borrowings
- secured (a) 447 448
- unsecured 25,000 38,669
25,447 39,117
Non-current
Bank borrowings - secured (a) 7,829 8,056
Total borrowings 33,276 47,173
(a) Bank borrowings of USD1,211,457 ( equivalent to approximately RMB8,277,000) (31
December 2008: USD1,244,199, equivalent to approximately RMB8,504,000) were
guaranteed by JMCF (Note 31 (v)).
The interest rate of bank borrowings is ranging from1.5% to 6.72% per annum (2008: 1.50% to
6.99%).
The fair value of borrowings approximates their carrying values.
The maturity of non-current borrowings is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
Between 1 and 2 years 447 448
Between 2 and 5 years 1,342 1,343
Over 5 years 6,040 6,265
7,829 8,056
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
30 June 2009 31 December 2008
RMB’000 RMB’000
RMB 25,000 25,000
US dollar 8,276 22,173
33,276 47,173
The Group has the following undrawn borrowing facilities:
30 June 2009 31 December 2008
RMB’000 RMB’000
Fixed rate
- Expiring within one year 2,053,366 1,156,138JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
48
Change in assumption Impact on overall liability
Discount rate Increase/decrease by 0.5% Decrease/increase by 3.2%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 2.9%
Rate of mortality Increase/decrease by 1 year Decrease/increase by 1.1%
17 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the balance
sheet is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
Present value of defined benefits obligations
Defined benefit obligations 84,443 88,633
Unrecognised past service cost - (2,727)
Liability on the balance sheet 84,443 85,906
The movement of early retirement and supplemental benefit obligations for the six months
ended 30 June 2009 is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
At beginning of the period / year 85,906 84,691
For the year
-Current service cost 5,965 346
-Interest cost - 3,501
-Payment (7,428) (15,021)
-Past service cost - 2,850
-Actuarial loss/(gains) - 9,539
At end of the period / year 84,443 85,906
Current 13,950 13,304
Non-current 70,493 72,602
84,443 85,906
The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted: 3.25% (2008: 3.25%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 5% (2008: 0% to 5%)
(3) Mortality: average life expectancy of residents in the PRC
Based on the assessment and IAS 19, the Group estimated that, at 30 June 2009, a provision
of RMB84,443,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB84,443,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB13,950,000 (2008:
RMB13,304,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions
is:JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
49
18 Warranty provisions
The movement on the warranty provisions is as follows:
30 June 2009 31 December 2008
RMB’000 RMB’000
At beginning of the period / year 99,079 106,910
Charged for the period / year 48,836 66,101
Utilised during the period / year (35,981) (73,932)
At end of the period / year 111,934 99,079
The above represents the warranty costs for repairs and maintenance, which are estimated
based on present after-sale service policies and prior years’ experience on the incurrence of
such cost. The warranty period is the sooner of two years and fifty thousand kilometres since
the motor vehicles are sold to consumer.
19 Trade and other payables
30 June 2009 31 December 2008
RMB’000 RMB’000
Trade payables 1,565,707 1,024,072
Payroll and welfare payable 74,444 98,710
Dividend payables 263,881 4,930
Other payables 473,696 396,841
Provision related to distribution costs 64,418 55,977
2,442,146 1,580,530
Refer to Note 31 for details of amount due to related parties.
20 Revenue
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. Accordingly, no segment information is presented.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
50
21 Expenses by nature
Six months ended 30 June
2009 2008
RMB’000 RMB’000
(restated)
Raw materials and consumables used 3,162,136 3,130,720
Employee benefit expenses (Note 22) 254,069 232,693
Depreciation on property, plant and equipment
(Note 6,28) 137,543
110,806
Repairs and maintenance expenditure on
property, plant and equipment 19,169 19,802
Research and development expenditure 108,900 111,177
Amortisation of lease prepayment (Note 7,28) 5,236 2,048
Amortisation of intangible assets (Note 8,28) 4,667 3,936
Impairment charges for inventory (Note 28) 183 315
Reversal of receivables and other receivables
(Note 12,28) (54)
(186)
Provision of warranty 48,836 35,288
Others 383,759 429,554
Total cost of sales, distribution costs and
administrative expenses 4,124,444 4,076,153
22 Employee benefit expenses
Six months ended 30 June
2009 2008
RMB’000 RMB’000
Wages and salaries 194,909 185,452
Social security costs 14,695 12,167
Pension costs 儃 defined contribution plans 21,625 18,664
Pension costs 儃 defined benefit plan (Note 17) 5,965 -
Others 16,875 16,410
254,069 232,693
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.
23 Other income
Six months ended 30 June
2009 2008
RMB’000 RMB’000
Government grants - 164,417
Others 2,293 2,410
2,293 166,827JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
51
24 Finance income and cost
Six months ended 30 June
2009 2008
RMB’000 RMB’000
(a) Finance income
Interest income on bank deposits 20,314 17,783
Interest income on credit sales 1,470 8,159
21,784 25,942
(b) Finance cost
Interest expense on bank loans (1,314) (1,239)
Bank charges (166) (181)
(1,480) (1,420)
Net finance income 20,304 24,522
25 Taxation
(a) Enterprise income tax (“EIT”)
Jiangling Motors Corporation, Ltd. has been recognized as a Jiangxi Province hi-tech
enterprise upon the approval of the Gan Ke Fa Gao [2009] No. 143 Circular jointly
promulgated by Jiangxi Province Department of Science and Technology, Jiangxi Province
Department of Finance, Jiangxi Province Office of State Administration of Taxation, Jiangxi
Province Office of Local Taxation. The hi-tech enterprise qualification to the Company will be
valid for three years (from April 15, 2009 to April 14, 2012), and the Company will enjoy an
enterprise income tax preferential policy during the period from January 1, 2009 to December
31, 2011.
For the six months ended 30 June 2009, the Company applicable EIT rate is 15%.
In March 2007, the PRC Government passed the China Corporate Income Tax Law (“CIT
Law”). Under the CIT Law, the enterprise income tax (“EIT”) for domestic invested enterprises
and foreign invested enterprises are combined into one and the new EIT rate is 25%, which
has become effective on 1 January 2008. The new EIT rate of 25% is gradually effective in a 5
years period for enterprises. According to the Notice of enterprise income tax rate transition
regulation issued by the State Council of the PRC, the Jiangling Isuzu applied 18% EIT rate in
2008, 20% in 2009, 22% in 2010, 24% in 2011 and 25% in 2012.
For the six months ended 30 June 2009, the Jiangling Isuzu applicable EIT rate is 20%.
The amounts of income tax expense charged to the income statements represented:
Six months ended 30 June
2009 2008
RMB’000 RMB’000
(restated)
Current tax (81,526) (85,623)
Deferred tax (Note 10) (16,879) (2,386)
(98,405) (88,009)JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
52
25 Taxation (continued)
(a) Enterprise income tax (“EIT”) (continued)
The difference between the actual income tax charge in the income statements 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
2009 2008
RMB’000 RMB’000
(restated)
Profit before tax 546,271 623,991
Tax calculated (86,464) (112,318)
Tax concessions 10,603 -
Expense not deductible for tax purposes (1,082) (543)
Income not subject to tax 950 24,762
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse (22,412)
90
Tax charge (98,405) (88,009)
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of 17% on the selling price of goods. Input VAT paid
on purchase of goods can be used to offset the output VAT to determine the net VAT payable.
(c) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 5% on the selling price of goods.
26 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the period.
Six months ended 30 June
2009 2008
(restated)
Profit attributable to equity holders of the
Company (RMB ‘000) 429,852
530,488
Weighted average number of ordinary shares in
issue (thousands) 863,214 863,214
Basic earnings per share 0.50 0.61
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the six months ended 30 June 2009.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
53
27 Dividends
A final dividend for 2008, amounting to a total dividend of RMB258,964,200 has been
approved at the Shareholders’ Meeting on 25 June 2009 (RMB0.3 per share).
28 Cash generated from operations
Six months ended 30 June
2009 2008
RMB’000 RMB’000
(restated)
Profit before tax 546,271 623,991
Depreciation (Note 6,21) 137,543 110,806
Amortisation of lease prepayment (Note 7,21) 5,236 2,048
Amortisation of intangible assets (Note 8,21) 4,667 3,936
Reversal of receivables and other receivables
(Note 12,21) (54) (186)
Impairment for write-down of inventory (Note
21) 183 315
Gain on disposals of PPE and lease prepayment (1,311) (71)
Interest expense (Note 24) 1,480 1,420
Interest income (Note 24) (21,784) (25,942)
Net foreign exchange transaction gain (26) (2,094
Share of profit of associates (Note 9) (1,917) (3,494)
Investment income of held-to-maturity investment - (539
Changes in working capital:
- Decrease/(increase) in inventories 207,195 (214,890)
- Decrease/(increase) in trade and other
receivables 199,520 (166,061)
- Increase in warranty provisions 12,855 2,833
- Increase in trade and other payables 658,082 39,936
- Decrease in pensions and other retirement
benefits (1,463) (7,932)
Cash generated from operations 1,746,477 364,076
In the cash flow statement, proceeds from disposal of PPE and lease prepayment comprise:
Six months ended 30 June
2009 2008
RMB’000 RMB’000
Net book amount 678 1,093
Gain on disposal of PPE and lease prepayment 1,311 71
Proceeds from disposal of property, plant and
equipment 1,989 1,164JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
54
29 Contingencies
At 30 June 2009, 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 2009 31 December 2008
RMB’000 RMB’000
Contracted but not provided for:
Purchases of buildings, plant and machinery 375,164 430,000
31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered
to be related if they are subject to common control.
Jiangling Motor Holdings Co., Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford, which owns 30% of the Company’s shares, are major shareholders of the Company as
at 30 June 2009. In addition, Chongqing Changan Automobile Corporation Ltd. (“Changan
Auto”) and JMCG hold 50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, Changan Auto and its subsidiaries, JMCG and its subsidiaries, Ford and its
subsidiaries in the ordinary course of business during the six months ended 30 June 2009 and
2008:JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
55
31 Related party transactions (continued)
For the six months ended 30 June 2009, related parties, other than the subsidiary, and their
relationship with the Group are as follow:
Name of related Party Relationship
JMCG Shareholder of JMH;
the same Chairman
as the Company’s
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Trading Company Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford Otosan Company Subsidiary of Ford
Ford Motor Company of Australia Limited Subsidiary of Ford
JMCG Interior Trim Factory Subsidiary of JMCG
Jiangxi JMCG Industrial Co. Subsidiary of JMCG
JMCG Property Co. Subsidiary of JMCG
Jiangxi Jiangling Chassis Company Subsidiary of JMCG
Jiangling Material Co. Subsidiary of JMCG
Land Wind Sales Company Subsidiary of JMH
JMCG Import & Export Co., Ltd. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Jiangling-Lear Interior Trim Factory Subsidiary of JMCG
Nanchang Jiangling Hua Xiang Auto Components Co. Subsidiary of JMCG
Jiangxi Specialty Vehicles Jiangling Motors Group Co.,
Ltd. Subsidiary of JMCG
JMCF Subsidiary of JMCG
Jiangling Metal Casting Co. Subsidiary of JMCG
Jiangling Auto Component Co. Subsidiary of JMCG
Jiangxi Jiangling Material Utilization Co., Ltd. Subsidiary of JMCG
JMCG Industry Co. Printing Plant Subsidiary of JMCG
JMCG Industrial Co. Shangrao Motor parts Plant Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co. Subsidiary of JMCG
Jiangling New-power Auto manufacturing Co. Subsidiary of JMCG
Jiangling Overseas Motors Sales&Service Co., Ltd. Subsidiary of JMCG
JMCG Hequn Costume Co., Ltd. Associate of JMCG
Nanchang JMCG Liancheng Auto Component Co. The same Chairman
as the Company’s
Visteon Climate Control Nanchang Associate of the Company
GETRAG (Jiangxi) Transmission Company Joint venture of Ford, GETRAG
Corporate Group and JMCG
GETRAG Ford Transmissions Gmbh Joint venture of Ford and GETRAG
Corporate Group
Nanchang Baojiang Steel Processing Distribution
Co., Ltd.
Joint venture of JMCG and Shanghai
Baogang International Economic
Trade Co., Ltd
Jiangxi JMCG Aowei Auto Component Co. Subsidiary of JMCG
Nanchang JMCG Tianren Auto Component Co. Associate of JMCGJIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
56
31 Related party transactions (continued)
i) Purchases of goods, provision of services
Purchase of goods Six months ended 30 June
2009 2008
RMB’000 RMB’000
JMCG 71,095 75,972
Ford 79,867 177,319
JMCG Interior Trim Factory 128,737 123,894
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 42,865 39,891
Jiangxi JMCG Industrial Co. 25,522 62,173
Jiangling Material Co. 14,270 18,764
Visteon Climate Control Nanchang 52,593 59,623
Jiangxi Jiangling Chassis Company 149,328 152,451
Jiangling-Lear Interior Trim Factory 83,290 85,000
Jiangling Metal Casting Co. 6,382 7,483
Nanchang Gear Co., Ltd. 3,078 3,013
Nanchang Jiangling Hua Xiang Auto Components
Co. 40,346 37,452
Jiangling Auto Component Co. 4,423 4,167
Ford Trading Company - 46,950
JMCG Industrial Co. Shangrao Motor parts Plant 1,558 2,359
GETRAG (Jiangxi) Transmission Company 117,157 117,422
Ford Otosan Company 480 3,552
Nanchang JMCG Liancheng Auto Component Co. 34,878 30,969
JMCG Hequn Costume Co., Ltd. 1,024 2,005
GETRAG Ford Transmissions Gmbh - 3,839
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 145,755 126,929
Nanchang JMCG Xinchen Auto Component Co. 6,972 166
Nanchang JMCG Tianren Auto Component Co. 1,275 32
Jiangxi JMCG Aowei Auto Component Co. 10,206 -
Others 952 1,187
1,022,053 1,182,612JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
57
31 Related party transactions (continued)
i) Purchases of goods, provision of services (continued)
Provision of services and others Six months ended 30 June
2009 2008
RMB’000 RMB’000
JMCG Import & Export Co., Ltd.
- commission expenses 2,337 1,072
JMCG
- services (a) 485 990
- rental expense 1,620 1,550
- other 118 112
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd.
- services 2,282 21
Ford Motor Company of Australia Limited
- services 1,156 -
Ford Motor (China) Co., Ltd.
- services 1,684 -
Ford
- services 5,730 10,065
JMCG Jiangxi Engineering Construction Co., Ltd.
- services 14,507 8,127
Jiangling-Lear Interior Trim Factory
- services 1,680 288
GETRAG (Jiangxi) Transmission Company
- services 12 9,000
Jiangxi JMCG Industrial Co.
- services 5,598 5,545
Ford Motor Research & Engineering (Nanjing)
Co., Ltd.
- services 2,019 -
Visteon Climate Control Nanchang
- services 1,249 -
Others 2,494 1,123
42,971 37,893
(a) JMCG bears the middle school and primary school educational fees of existing
employees and certain retired employees' expenses of the Group, and provides services
such as cable television. The related costs were borne by the Group according to agreed
percentages as determined by headcount ratio of the Group and JMCG.JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
58
31 Related party transactions (continued)
i) Purchases of goods, provision of services (continued)
Purchases of property, plant and equipment Six months ended 30 June
2009 2008
RMB’000 RMB’000
Visteon Climate Control Nanchang 500 -
Others 400 240
900 240
Sales of property, plant and equipment Six months ended 30 June
2009 2008
RMB’000 RMB’000
Nanchang JMCG Liancheng Auto Component Co. 1,280 -
ii) Sales of goods and provision of services
Sales of goods Six months ended 30 June
2009 2008
RMB’000 RMB’000
JMCG Import & Export Co., Ltd. 196,530 372,815
JMCG Interior Trim Factory 21,404 18,399
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 47,543 61,317
JMCG Property Co. 3,191 3,062
Jiangxi JMCG Industrial Co. 4,929 40,084
Jiangxi Jiangling Chassis Company 8,380 9,000
Land Wind Sales Company 847 1,137
Jiangxi Jiangling Material Utilization Co., Ltd. 14,751 22,409
JMH 20,419 31,474
GETRAG (Jiangxi) Transmission Company 4,687 18,267
Nanchang JMCG Liancheng Auto Component Co. 8,334 6,300
Jiangling New-power Auto manufacturing Co. 4,846 825
Others 4,038 1,670
339,899 586,759
Six months ended 30 June
Rental income 2009 2008
RMB’000 RMB’000
Jiangling Material Co. 132 132
Others - 11
132 143JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
59
31 Related party transactions (continued)
iii) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 15,400 1,812
JMH 2,645 471
Jiangxi Jiangling Material Utilization Co., Ltd. 1,962 2,322
Nanchang JMCG Liancheng Auto Component Co. 5,584 3,199
Jiangling New-power Auto manufacturing Co. 1,641 1,126
Others 316 517
27,548 9,447
Other receivables from related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
JMCG Import & Export Co., Ltd. 1,364 1,910
Others 600 600
1,964 2,510
Prepayment for purchasing of goods 30 June 2009 31 December 2008
RMB’000 RMB’000
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 91,145
119,121
JMCG Import & Export Co., Ltd. 5,454 10,616
96,599 129,737
Prepayment for construction in progress 30 June 2009 31 December 2008
RMB’000 RMB’000
JMCG Import & Export Co., Ltd. - 3,789
JMCG Jiangxi Engineering Construction Co., Ltd. 12,424 1,800
Others 400 -
12,824 5,589JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
60
31 Related party transactions (continued)
iii) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
JMCG Interior Trim Factory 53,706 48,027
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 58,962 48,894
Jiangling-Lear Interior Trim Factory 60,906 40,518
Visteon Climate Control Nanchang 24,852 22,614
JMCG 35,248 19,441
Jiangxi Jiangling Chassis Company 77,231 49,252
Nanchang Gear Co., Ltd. 2,210 1,634
Nanchang Jiangling Hua Xiang Auto Components
Co. 28,008 17,217
Jiangling Metal Casting Co. 3,105 2,632
Jiangxi JMCG Industrial Co. 13,804 12,922
Jiangling Auto Component Co. 2,739 1,284
JMCG Import & Export Co., Ltd. 154 1,984
GETRAG (Jiangxi) Transmission Company 53,777 37,711
Nanchang JMCG Liancheng Auto Component Co. 24,744 14,466
Ford 25,606 7,171
Nanchang JMCG Xinchen Auto Component Co. 3,639 3,066
Jiangxi JMCG Aowei Auto Component Co. 9,563 -
Others 3,086 2,217
481,340 331,050
Other payables to related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
Ford 43,901 83,804
Ford Otosan Company 2,234 6,992
Ford Motor (China) Co., Ltd. 2,634 3,041
GETRAG (Jiangxi) Transmission Company 1,012 10,500
JMCG Jiangxi Engineering Construction Co., Ltd. 1,755 5,584
Jiangling-Lear Interior Trim Factory 1,680 -
Ford Motor Company of Australia Limited 2,244 1,448
Ford Global Technologies,LLC 3,718 10,093
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 1,907 1,945
Nanchang JMCG Liancheng Auto Component Co. 1,776 2,543
JMCG 1,538 66
Nanchang Jiangling Hua Xiang Auto
Components Co. 2,650 -
Others 3,916 4,614
70,965 130,630JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
61
31 Related party transactions (continued)
iii) Balances arising from sales/purchases of goods/services (continued)
Advance form related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
JMCG Import & Export Co., Ltd. 613 4,280
Others 161 114
774 4,394
Cash deposit in related parties 30 June 2009 31 December 2008
RMB’000 RMB’000
JMCF (Note 13) 91,928 75,238
iv) Service fee paid to Ford, Ford Otosan Company and JMH for management staff
Pursuant to an agreement among the Company, Ford, Ford Otosan Company and Ford Motor
(China) Co., Ltd. in 2008, some employees of Ford, Ford Otosan Company and Ford Motor
(China) Co., Ltd. were assigned to the Company as management staff. During the six
months ended 30 June 2009, the Company should pay approximately USD1,688,000
(equivalent to approximately RMB11,532,000), USD160,000 (equivalent to approximately
RMB1,093,000) and RMB1,170,000 to Ford, Ford Otosan Company and Ford Motor (China)
Co., Ltd. as service fee for these employees respectively.
Pursuant to an agreement between the Company and JMH in January 2009, some employees
of JMH were assigned to the Company as management staff. During the six months ended 30
June 2009, the Company should pay approximately RMB349,000 to JMH as service fee for
these employees.
v) Guarantee
As at 30 June 2009, bank loans of USD1,211,457 (equivalent to approximately
RMB8,277,000) (2008: USD1,244,199, equivalent to approximately RMB8,504,000) were
guaranteed by JMCF (Note 16).
vi) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive
Committee, the Company Secretary and members of the Supervisory Board. During the six
months ended 30 June 2009, the total remuneration of the key management was about
RMB4,154,000 (six months ended 30 June 2008: RMB4,429,000).JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
62
31 Related party transactions (continued)
vii) Royalty fee
Pursuant to the joint development agreement, the Company agreed the payment of royalty fee
to Ford at 1.8% of sale value of VE83 series automobiles with a maximum payment amount of
USD40,000,000, As at 30 June 2009, the Company has paid all the royalty fee.
Pursuant to a development agreement among the Company, Ford, Ford Global Technologies,
LLC and Ford Otosan Company in 2008, the Company agreed the payment of royalty fee to
Ford at 2.6% of V348 series automobiles net sale till production stopped. The 67.31% and
32.69% of total royalty fee will be paid to Ford Global Technologies, LLC and Ford Otosan
Company respectively. During the six months ended 30 June 2009, the total royalty fee due to
Ford Global Technologies, LLC and Ford Otosan Company was approximately USD1,496,000
(equivalent to approximately RMB10,224,000). As at 30 June 2009, The outstanding amount
of approximately USD898,000 will be paid in future.
viii) Transaction with other state-owned entities
The Group’s largest shareholder is JMH, which was established by state-owned enterprises,
Changan Auto and JMCG, with the equity interests of 50% and 50%, respectively. The Group
is thereby considered to be significantly influenced by the PRC Government, which controls a
substantial number of entities in the PRC. For purpose of related party transactions disclosure,
the Group has in place procedures to assist the identification of the immediate ownership
structure of its customers and suppliers as to whether they are state-owned entities. Many
state-owned entities have multi-layered corporate structure and the ownership structures
change overtime. Nevertheless the Management believes that meaningful information relating
to such kind of related parties transactions has been adequately disclosed.
Transactions with other state-owned entities
Six months ended 30 June
2009 2008
RMB’000 RMB’000
Purchase of goods 325,080 499,825
Purchase of fixed assets 8,169 23,189
Purchase of services 8,649 11,325
Sales of goods 10,676 466
Interest income 19,157 16,815
Interest expense 1,314 1,240
Borrowings 35,000 39,107
Repayment of borrowings 48,901 39,336JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
63
31 Related party transactions (continued)
viii) Transaction with other state-owned entities (continued)
Balances with other state-owned entities
30 June 2009 31 December 2008
RMB’000 RMB’000
Cash and cash equivalents 2,986,907 1,436,370
Borrowings 33,276 47,173
Trade and other receivables 29,366 13,940
Trade and other payables 165,525 126,310
32 Principal subsidiary
As at the date of this report, the Group has the following subsidiary:
Entity
Place and date of
incorporation
Percentage of equity
interest held Principal activities
Jiangling Isuzu Nanchang, PRC /
10 March 1993
75% Manufacture and sale of
automobiles and spare parts64
Section VII Catalog on Documents for reference
I. Originals of 2009 half-year report signed by Chairman;
I. Originals of 2009 half-year financial statements signed by Chairman, Chief Financial
Officer and Chief of Finance Department;
II. Originals of all the documents and public announcements disclosed in newspapers
designated by CSRC during the reporting period.
III. The Half-year Report in China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 21, 2009
