Jiangling Motors Corporation, Ltd.
2013 Half-year Report
1
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its members, and
the senior executives are jointly and severally liable for the truthfulness, accuracy and
completeness of the information disclosed in the report and confirm that the
information disclosed herein does not contain false statements, misrepresentations or
major omissions.
JMC decides not to distribute cash dividend, bonus shares, or convent capital reserve
to share capital this time.
Chairman Wang Xigao, President Yuan-Ching Chen, CFO Dennis Leu and Chief of
Finance Department, Ding Ni, confirm that the Financial Statements in this Half-year
Report are truthful and complete.
The prospective description regarding future business plan and development strategy
in this report does not constitute virtual commitment. The investors shall pay attention
to the risk.
All financial data in this report are prepared under International Financial Reporting
Standards (‘IFRS’) unless otherwise specified.
The Half-year Report is prepared in Chinese and English. In case of discrepancy, the
Chinese version will prevail.
2
Contents
Chapter I Important Notes, Contents and Abbreviations ........................................... 2
Chapter II Brief Introduction....................................................................................... 4
Chapter III Operating Highlight ................................................................................... 4
Chapter IV Report of the Board of Directors ............................................................... 5
Chapter V Major Events ............................................................................................ 12
Chapter VI Share Capital Changes & Shareholders ................................................... 15
Chapter VII Directors, Supervisors, Senior Management and Employees .................. 17
Chapter VIII Financial Statements ................................................................................ 17
Chapter XI Catalog on Documents for Reference ...................................................... 69
Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
Jiangling-Isuzu Jiangling-Isuzu Motors Company, Ltd.
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
TCHT Taiyuan Changan Heavy Truck Company
JMCH JMC Heavy Duty Vehicle Co., Ltd.
3
Chapter II Brief Introduction
Company’s Chinese name: 江铃汽车股份有限公司
English name: Jiangling Motors Corporation, Ltd.
Abbreviation: JMC
Company legal representative: Mr. Wang Xigao
JMC’s Board secretary: Mr. Wan Hong (Tel: 86-791-85235675)
Person for financial information disclosure:
Mr. Dennis Leu (Tel: 86-791-85266503)
JMC’s securities affairs representative:
Mr. Quan Shi (Tel: 86-791-85266178)
Contact address: No. 509, Northern Yingbin Avenue, Nanchang City,
Jiangxi Province, P.R.C
Switchboard: 86-791-85266000
Fax: 86-791-85232839
E-mail: relations@jmc.com.cn
There was no change in other information of JMC brief introduction in the reporting
period. Please refer to 2012 Annual Report for details.
Chapter III Operating Highlight
I. Main accounting data and financial ratios of the past three years.
Unit: RMB ‘000
Reporting period Same period Change (%)
(2013 first half)* last year*
Revenue 9,670,757 8,721,529 10.88
Profit Attributable to the Equity
937,503 838,898 11.75
Holders of the Company
Net Cash Generated From
1,488,194 972,431 53.04
Operating Activities
Basic Earnings Per Share (RMB) 1.09 0.97 11.75
Diluted Earnings Per Share (RMB) 1.09 0.97 11.75
Weighted Average Return on Net Up 0.11
10.96 10.85
Asset Ratio percentage points
At the end of At the end of the Change (%)
reporting period* previous year
Total Assets 14,931,213 13,111,354 13.88
Shareholders’ Equity Attributable
to the Equity Holders of the 8,414,585 8,082,872 4.10
Company
Note: *unaudited financial indexes.
4
Chapter IV Report of the Board of Directors
1. Summary
In the first half of 2013, under slowed down economy development, China automobile
industry production and sales volume increased steadily and rationally. The first half
total sales volume was 10.78 million, increased 12.3% compared with the same period
last year. Commercial vehicle sales volume was 3.06 million, decreased 4.0%
compared with the same period last year.
JMC’s core business is production and sales of commercial vehicles, SUV, and related
components. Its major products include JMC series light truck, pickup, heavy-duty
truck, Yusheng SUV and Transit series commercial vehicles. The Company also
produces engines, castings and other components.
During the reporting period, to face more severe competition, more stringent
regulatory requirement, intensifying cost pressures, and commercial vehicle industry
slowdown pressure, the Company focused on quality improvement, new product
development and new plant construction, simultaneously, the company introduced a
series of sales policy to respond market share pressure. In the first half of 2013, JMC
achieved sales volume of 110,230 units, increased 7% compared with the same period
last year, achieved revenue of RMB 9.67 billion, which increased 11% compared with
the same period last year, and achieved net profit of RMB 0.96 billion, which
increased 12% compared with the same period last year. The causes of net profit
increase are mainly increase of sales volume and revenue, improvement of marketing
combination and the sustained and effective cost control.
2. Core Business Analysis
i. Sales Revenue Analysis
In the first half of 2013, JMC achieved record sales volume of 110,230 units,
including JMC light truck of 38,035 units, JMC pickup of 34,455 units, Yusheng SUV
of 4,884 units and Transit CV of 32,553 units and Heavy Truck of 303 units. Total
sales volume increased 7% compared with the same period last year. Total production
volume was 111,525 units, including JMC light truck of 37,471 units, JMC pickup of
34,349 units, Yusheng SUV of 5,027 units and Transit CV of 34,597 units and Heavy
Truck of 81 units.
In the first half of 2013, JMC achieved a market share at 1.02% of total industry,
down 0.02 point from last year. JMC light truck and pickup accounted for 7.2%
market share, down 0.1 points from last year. Transit accounted for 17.2% market
share, up 0.7 points from last year. (Data source for above data: China Association of
Automobile Manufacturers and the Company sales records)
In the first half of 2013, JMC total sales revenue was RMB 9.67 billion, increased 11%
compared with the same period last year.
In the first half of 2013, total sales value to the top 5 customers was RMB 1,361
million, accounting for 14% of JMC’s total turnover.
5
ii. Cost Analysis
Unit: RMB’000
2013 1H 2012 1H
YOY
Cost in Cost in change
Product proportion proportion
core core
（%） （%） （%）
business business
Vehicle 6,505,300 92.0% 6,093,748 93.0% 6.8%
Components 565,224 8.0% 461,975 7.0% 22.3%
The total value of purchases from the top 5 suppliers was RMB 1,449 million,
accounting for 22% of JMC’s total annual buy.
iii. Expense Analysis
Unit: RMB’000
Item 2013 1H 2012 1H Y-O-Y change（%）
Administrative Expenses 675,574 375,191 80.1%
Income Tax Expense 144,073 220,496 -34.7%
Administrative expenses increased by 80% ， mainly due to the research and
development expenditure increased.
Income tax expense decreased by 35%, mainly due to the difference applicable tax
rate of deductible deferred income tax assets.
iv. Product Development
As a result of intensified efforts to develop and implement new vehicle programs,
product development efforts are focused on responding to market needs as well as
regulatory compliance. The V348 MCA, N330, N350, N351, N800, J08, J09, J10
programs will reflect market driven improvements including increased payloads, new
styling, improved power lift, etc. The JX4D24, JX493, and E802 projects,
self-development gas engine, V348 transit emission upgrade will further expand the
Company's engine development capability, engine manufacturing capacity and ensure
the Company is compliance with stringent emission regulations. The development
expenditure which accounted as administrative expense is RMB 493 million, 6% of
net assets, 5% of the revenues.
v. Cash flow analysis
Generated from operating activities net cash increased by RMB 516 million, up 53%
from the same period last year, mainly due to cash generated from operations
increase in the reporting period ;
Generated from financial activities net cash increased by RMB 550 million, up 71464%
from the same period last year, mainly due to repayment of accounts payable of JMC
Heavy Duty Vehicle Co., Ltd. (“JMCH”)
6
3. Composition of main business
Table below breaks down Revenue & Cost of Goods Sold from Core Business.
Unit: RMB’000
Y-O-Y Y-O-Y gross
Y-O-Y
Cost in core Gross Change in margin
Product Turnover turnover
business Margin costs of core change
change (%)
business (%) (points)
I. Vehicle 8,796,283 6,505,300 26.0% 9.9 6.8 2.2
784,275 565,224 27.9% 22.4 22.3 0.0
II. Components
9,580,558 7,070,524 26.2% 10.9 7.9 2.1
Total
Including:
Related party
737,757 604,403 18.1% 11.4 7.5 3.0
transaction
The increase of the margin in the reporting period reflects the favorable sales mix and
continuing and effective cost control of the Company.
Details pertaining to core business classified according to region:
Unit: RMB’000
Region Turnover Y-O-Y turnover change (%)
North-east China 420,041 -3.41
North China 1,019,297 19.22
East China 4,724,714 12.48
South China 1,302,347 0.34
Central China 894,879 16.31
North-west China 405,543 -4.90
South-west China 813,737 23.74
4. Analysis of assets and liabilities
i. Major changes in assets
Unit: RMB’000
YOY YOY
June 30, 2013 December 31, 2012 Amount Proportion
Asset item change change
Amount Proportion Amount Proportion (%) (Points)
Cash and cash 6,010,697 40.3% 5,559,693 42.4% 8.1% -2.1
equivalents
Trade and other 1,676,174 11.2% 1,649,916 12.6% 1.6% -1.4
receivables
Inventory 1,408,450 9.4% 1,194,811 9.1% 17.9% 0.3
Property, plant 4,980,871 33.4% 4,139,276 31.6% 20.3% 1.8
and equipment
Lease 542,845 3.6% 264,824 2.0% 105.0% 1.6
prepayment
7
Lease prepayment at the end of report period increased by RMB 278 million, up 105%
from the end of 2012, primarily reflecting the inclusion of the land property of JMC
Heavy Duty Vehicle Co., Ltd. (“JMCH”).
ii. Major changes in liabilities
Unit: RMB’000
YOY YOY
June 30, 2013 December 31, 2012 Amount Proportion
Liabilities change change
Amount Proportion (%) (Points) (%) （Point）
Trade and
other 6,226,103 95.5% 4,669,878 94.9% 33.3% 0.6
payables
Provisions
for warranty 177,373 2.7% 152,467 3.1% 16.3% -0.4
and other
liabilities
The fair value of the assets and liabilities - see the notes to financial statements for 12
5. Core competitiveness analysis
Steady Growth in Company’s core competitiveness.
JMC is a Sino-foreign joint venture with automotive R&D, manufacturing and sales.
As a mainstay of domestic light commercial vehicle industry, JMC ranked the top
hundred Chinese listing Corporation with comprehensive strength for many years.
Company is certificated as a national enterprise technology center, high-tech
enterprise and national automobile export base.
Company's influence over auto industry is improving steadily, making considerable
progress both in technical equipment and new product development. JMC is
promoting to execute Xiao Lan new Assembly Plant, National R&D Center, Test
Track and N800, N351 programs, thus leading to greatly strengthen company’s
competitive advantage.
6. Investment in the reporting period
i. External investment
During the reporting period, JMC did not invest in securities, or in holding the
corporate equity of other listed or non-listed financial enterprises.
ii. JMC did not entrust financial transactions, derivatives investment and entrust loan
during the reporting period.
iii. JMC did not raise equity funding, nor did it use equity funding raised in previous
years.
iv.Operating Results of Main Subsidiaries and Joint-Stock Companies
Net
Operating
Name of Type of Main Registered Assets Net Assets Turnover Profit
Profit
Companies Companies Products Capital (RMB’000) (RMB’000) (RMB’000) (RMB’
(RMB’000)
000)
JMC Heavy Duty Wholly-ow Automobile, RMB 903,810 114,095 55,526 -68,497 -66,877
8
Vehicle Co., Ltd. ned engine and 281.79
subsidiary other million
components
Visteon Auto Automotive
RMB
Air-conditioning Joint -Stock air 254,272 238,623 42,045 30,867
46.63 147,414
(Nanchang) Co. Company conditioning
million
Ltd. and Parts
v. Self-funded major projects of which amount invested reaches 10% of net asset :
Total Spending in Investment
Investment Planned Job#1
Project Name 2013 1H Committed
Approval Date
(RMB Mils) (RMB Mils)
(RMB Mils)
Capacity
Investment in 2,133 462 1,557 First Half, 2014
Xiaolan Site
The spending will be funded from cash reserves.
7．Outlook
i. Industry Competition and Development Trend
In the first half of 2013, total sales of domestic vehicle were around 10.8 million units,
up 12.3% over 2012. Commercial vehicle sales continued to decline, decreasing by
4.0% compared with the same period 2012. Meanwhile passenger vehicle industry
maintained growth, increasing by 13.8% compared with the same period 2012.
Especially SUV sales growth rate achieved 41.4%, becoming a major force in the
future growth of the auto market.
Since 2012, growth of domestic auto industry is obviously slowing down, which
comes back to rationale. But from the view of consumption, China's car parc per
capita is less than the half of world average level, Auto market has a great
development potential and the rigid demand of automobile consumption will exist for
a long time. Meanwhile, the world economy is recovering, which should be leading to
the rebound of international automobile industry and the growth of export.
ii. Corporation Strategy
Company’s aim is to produce and sell world class products with the best customer
satisfaction in auto industry. New type light truck, pickup and light bus will be
continuously launched in the future to strengthen the existing market share. At the
same time, efforts will be made to expand the SUV passenger car market and heavy
truck area.
iii. 2013 Business Planning
The Company is projecting revenue at RMB 20,000 million for 2013, increasing by
15% compared with 2012. Intensified competition resulting from new competitor and
new product entries will require increased levels of marketing expense. Additionally,
R&D and capital expenditures are projected to be higher as we progress with new
product programs and capacity expansion actions. To enhance profitability, the
company will be developing the following plan in the second half of 2013:
(1) Accelerate efforts to strengthen our brands through enhancing the Company's
distribution network to achieve volume and market share targets;
(2) Increase product cost reduction efforts and improve operating efficiencies to
achieve profit and cost targets;
(3) Work with technology partners to execute N800, N351,N330, E802, J08, J09, J18
and Xiao Lan new Assembly Plant, New R&D Center, etc.;
(4) Expand finished vehicle exports and OEM component sales business.
9
iv. Potential Challenges and Solutions
In 2013, company will continue to face fiercer competition challenges, more stringent
regulations requirements, cost rising pressures and auto industry slowdown
difficulties.
In order to maintain steady growth, company will continue to focus on the following
aspects:
(1) To accomplish the relocation of Transit plant and the launch of new plant as plan,
to Improve products’ quality and production efficiency;
(2) Increase marketing efforts to improve market share of existing products and new
product;
(3) Continue to reduce purchasing cost of parts and improve production efficiency;
(4) To ensure the long-term development and realize company’s objectives, more
strict management of controllable costs will be implemented including
expenditure on operation, capacity and related new product development;
(5) Strengthen corporate governance and improve mechanism of risk assessment and
control.
Company will continue to reduce existing product cost and minimize internal
operating waste through the established process and working group. Meanwhile
company will focus on maximizing new product design optimization and cost
reduction. With support of technology partners, company continue to promote
approved major programs, including N800, N351, N330, E802, J08, J09, J18, etc.
These measures will accelerate the progress of new competitive and profitable
product’s entrance into the market. Finally, company will put more efforts to
strengthen company's distribution network and continuously expand the overseas
market and OEM component sales business.
8. Profit Distribution
The 2012 Annual Shareholders’ Meeting of the Company approved the 2012 calendar
year profit distribution plan on June 21, 2013. Announcement of 2012 calendar year
dividend distribution was published in China Securities, Securities Times and Hong
Kong Commercial Daily on July 6, 2013, and it has been executed accordingly.
The 2012 calendar year dividend distribution plan was as follows:
Based on the Company’s total share capital of 863,214,000 shares, a cash dividend of
RMB 7 (including tax) per 10 shares is to be distributed to shareholders. Please refer
to income tax for cash dividends on the aforesaid public announcement on Year 2012
Dividend Distribution.
The cash dividends on B shares shall be paid in Hong Kong Dollars converted at
HKD 1.00 = RMB 0.7967, being the middle rate of the exchange rates between HK
dollar and RMB quoted by the People’s Bank of China on the first business day (June
24, 2013) immediately after the relevant resolutions were passed at the Company’s
Shareholders’ Meeting.
Equity Record Date and Ex-dividend Date as follows:
i. Equity record date for A shares: July 12, 2013;
Ex-dividend date: July 15, 2013.
10
ii. Last trading date for B shares: July 12, 2013;
Ex-dividend date: July 15, 2013;
Equity record date for B shares: July 17, 2013.
JMC did not convert capital reserves into share capital in the reporting period.
9. Table of external research, communication and media interviews with the Company
Date Place Communication Object Information Discussed and
Method Materials offered
January 7, In the Oral An analyst from JMC Operating highlights
2013 Company Communication Harvest Fund
Management Co., Ltd.
January 9, In the Oral An analyst from China JMC Operating highlights
2013 Company Communication International Capital
Corporation Limited.
January 10, In the Oral Four analysts from JMC Operating highlights
2013 Company Communication Guotai Junan Securities
Co., Ltd.
January 16, In the Oral An analyst from Tianli JMC Operating highlights
2013 Company Communication Investment Singapore
(Private) Company
January 18, In the Oral An analyst from BOC JMC Operating highlights
2013 Company Communication International (China)
Limited
January 24, In the Oral Eleven analysts from JMC Operating highlights
2013 Company Communication Sun Life Everbright
Asset Management Co.,
Ltd., Essence Fund
Management Co., Ltd,
SMC China Fund,
CITIC Securities Co.,
Ltd., Huashang Fund
Management Co., Ltd.,
AEGON-INDUSTRIAL
Fund Management Co.,
Ltd., New Times
Securities Co., Ltd.,
Juntai Consulting
Company, Keywise
Capital Management
Co., Ltd.
February In the Oral An analyst from JMC Operating highlights
20, 2013 Company Communication Changjiang Securities
Co., Ltd.
March 29, In the Oral Four analysts from JMC Operating highlights
2013 Company Communication China Fortune
Securities Company,
ABC-CA Fund
Management Co., Ltd.,
Haitong Securities Co.,
Ltd.
April 8, In the Oral Two analysts from JMC Operating highlights
2013 Company Communication ABC-CA Fund
Management Co., Ltd.,
Haitong Securities Co.,
Ltd.
11
April 16, In the Oral An analyst from JMC Operating highlights
2013 Company Communication Dongxing Securities
Co., Ltd.
May 16, In the Oral Two analysts from GF JMC Operating highlights
2013 Company Communication Securities Co., Ltd.,
Penghua Fund
Management Co., Ltd.
May 22, In the Oral An analyst from Great JMC Operating highlights
2013 Company Communication Wall Securities Co.,
Ltd.
May 24, In the Oral Four analysts from JMC Operating highlights
2013 Company Communication Pingan Securities
Co., .Ltd,
CITIC-Prudential Fund
Management Co., Ltd.,
Bank of
Communications
Schroder Fund
Management Co., Ltd.
Chapter V Major Events
1. 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, and appointed PricewaterhouseCoopers Zhong Tian CPAs Company
Limited as JMC’s 2013 C-SOX auditor.
2. There was neither major litigation or arbitration, nor query from the media in the
reporting period.
3. Purchase or sale of assets
i. On January 8, 2013, Taiyuan Changan Heavy Truck Company (“TCHT”) completed
its industrial and commercial registration changes and its company name was changed
as JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”). JMC paid off the remaining of
RMB 189,000,000 for acquiring 100% equity of TCHT in January 2013 (total
consideration concerning TCHT equity transfer was RMB 270 million, and
prepayment of RMB 81 million was paid off in 2012). Upon the completion of the
equity transfer, JMCH is a whole-owned subsidiary of the Company to manufacture
heavy duty trucks. In the reporting period, JMCH has been added into the
consolidated scope of JMC financial statements.
ii. Jiangling Motors Company (Group) had paid off RMB 318,499,168 to the
Company as a consideration of the equity transfer and profit distribution of
Jiangling-Isuzu Motors Company, Ltd. (“Jiangling-Isuzu”). The relevant government
approval and industrial and commercial registration changes concerning the equity
transfer has been completed. Jiangling-Isuzu has been deleted from the consolidated
scope of JMC financial statements.
Jiangling-Isuzu was a subsidiary of JMC in the past, and JMC held 75% equity of
Jiangling-Isuzu.
12
4. Major Related Transactions
i. Routine related party transactions
A. JMC purchased certain raw materials, auxiliary materials and components from
related parties. Transactions with annual value over RMB 150 million are listed as
below:
Pricing Amount As % of Total
Transaction Parties Relationship Settlement Method
Principle (RMB’000) Purchases
Subsidiary of 60 days after
Jiangxi Jiangling Chassis Contracted
Company
JMCG
price
delivery and 335,341 5.02
invoicing
Associate of 60 days after
GETRAG (Jiangxi) Contracted
Transmission Company
JMCG
price
delivery and 322,463 4.83
invoicing
JMCG 30 days after
Contracted
JMCG Interior Trim Factory wholly-owned
price
delivery and 317,252 4.75
subsidiary invoicing
Nanchang Bao-jiang Steel Associate of
Contracted
Processing & Distribution JMCG
price
Prepayment 261,224 3.91
Co., Ltd.
Subsidiary of 60 days after
Jiangling-Lear Interior Trim Contracted
Factory
JMCG
price
delivery and 186,733 2.80
invoicing
Controlling
Contracted
Ford shareholder of
price
D/P 174,537 2.62
JMC
Necessity and continuity: the purchase of the imported components will immediately
stop when the respective localization is achieved, and these components will be
substituted by localized ones; some components from other related parties were
unique parts for JMC’s Transit series, N series and T series, and other general
components were purchased through open bidding.
B. The sales of products by JMC to related party with annual value over RMB 150
million:
Pricing Settlement Amount As % of Total
Transaction Party Relationship
Principle Method (RMB’000) Revenue
40% of
prepayment and
JMCG Import and Export Subsidiary of Contracted
Co., Ltd. JMCG price
the remains paid 545,058 5.64
during 30 days
after delivery
Necessity and continuity: because JMCG Import and Export Co., Ltd. has a mature
network and human resources to support import & export trade, JMC will continue to
use its sales network to sell products to overseas markets.
C. The labor service by related party to JMC with annual value over RMB 150
million:
Pricing Settlement Amount As % of Total
Transaction Party Relationship
Principle Method (RMB’000) Revenue
13
Controlling
Contracted Payment
Ford shareholder
price quarterly
153,889 13.39
of JMC
Necessity and continuity: The engineering service fee to Ford for the Ford support in
the product development can make implementation of the program smooth. The
engineering service fee is determined by working hours taken in the program and the
generally external standard wage level accepted by Ford.
ii. The Company had no major related party transaction concerning transfer of assets
or equity in the reporting period.
5. Major Contracts and Execution
i. There was neither entrustment, contract or lease of assets from other companies, nor
entrustment, contract or lease of JMC’s assets to other companies from which profit
was generated to exceed 10% of total profit in the reporting period.
ii The Company had no outside guarantee in the reporting period.
iii. JMC did not entrust other people with cash asset management in the reporting
period.
6. Commitments of the Company or the shareholder holding 5% or more of the
Company shares
Promisor Content of Time Term of Implementation of
Item
Commitments Commitments commitments
Share reform None None None N/A
Acquisition report or
Statement of changes in None None None N/A
equity
Asset restructuring None None None N/A
Initial Public Offering or
None None None N/A
re-funding
Ford April 16, within 6 months
2013 as of the In the reporting period,
completion date Ford exercised its
Other commitments * of this commitments sincerely and
Shareholding did not breach the promise.
Increase
* Ford undertakes that the additional shares acquired by it within 12 months as of the
First Shareholding Increase Date (January 21, 2013) will not exceed 2% of the
aggregate issued shares of the Company, and it will not reduce the shares it acquires
in this Shareholding Increase within 6 months as of the completion date of this
Shareholding Increase.
Prior to the First Shareholding Increase Date (January 21, 2013), Ford held
258,964,200 B shares of JMC, representing 30% of the aggregate issued shares of
JMC. From January 21, 2013 to the end of the reporting period, Ford acquires
14,772,876 B shares of JMC, representing 1.71% of the aggregate issued shares of
JMC.
14
7. Appointment or Dismissal of Accounting Firms
Upon the approval of 2012 Annual Shareholders’ Meeting, JMC agrees to appoint
PwC Zhong Tian as JMC’s 2013 C-SOX auditor.
The compensation paid to the accounting firm is as follows:
Accountant Firm A & B Share 2012 C-SOX auditor Out of Pocket Expense
Auditor for Year
2012
PwC ZhongTian RMB 1.32 million RMB 0.8 million Included in audit fee.
8. Neither JMC nor its Directors or senior management were punished by regulatory
authorities in the reporting period.
9. Others
Ford, a controlling shareholder of the Company, acquired 14,772,876 B shares of
JMC in the first half year of 2013. Relevant items of this Shareholding Increase are as
follows:
Purpose of this Shareholding Increase: As having confidence in sustainable
development of JMC in the future, Ford intends to, by means of increasing its
shareholding of the Company, share the proceeds generated by the Company’s future
development.
Plan of this Shareholding Increase: Ford will acquire no more than 2% of the issued
shares of JMC in a method permitted by the securities trading system of the Shenzhen
Stock Exchange (including without limitation, centralized bidding and block
transaction) within 12 months as of the First Shareholding Increase Date.
Please refer to Article 6, Chapter V for the commitments of Ford regarding the
Shareholding Increase.
Chapter VI Share Capital Changes & Shareholders
I. Table of the changes of shareholding structure
Before the change Change (+, -) After the change
Proportion Reserve- Proportion
New Bonus
Shares of total converted Others Subtotal Shares of total
shares Shares
shares (%) shares shares (%)
I. Limited tradable - - -
2,781,900 0.32% -240,000 -240,000 2,541,900 0.29%
A shares
1.State-owned - - - - - - - - -
shares
2. State-owned legal - - - - -
- - - -
person shares
3. Other domestic - - - - -
2,781,000 0.32% 2,541,000 0.29%
shares
Including:
Domestic legal 2,781,000 - - -
- -240,000 -240,000 2,541,000 0.29%
person shares
Domestic natural - - - - -
0 - 0 -
person shares
4. Management 900 - - - - - - 900 -
Shares
15
II. Unlimited - - -
860,432,100 99.68% 240,000 240,000 860,672,100 99.71%
tradable shares
1. A shares 516,432,100 59.83% - - - 240,000 240,000 516,672,100 59.86%
2. B shares 344,000,000 39.85% - - - - - 344,000,000 39.85%
III. Total 863,214,000 100% - - - - - 863,214,000 100%
The change in shareholding structure was caused by the following reason:
The trading restriction on the limited tradable A shares of 240,000 shares held by
Anhui Wind Star Auto Company was relieved on April 25, 2013.
II. Shareholders
1. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total shareholders (as of JMC had 25,768 shareholders, including 20,374 A-share holders and 5,394 B-share holders.
June 30, 2013)
Shareholders holding 5% or above of total shares
Shareholding Shares with Shares due to
Shareholder Shares as of
Shareholder Name Percentage Change (+, -) Trading mortgage or
Type June 30, 2013
(%) Restriction frozen
Jiangling Motor Holding State-owned 0
41.03 354,176,000 0 0
Co., Ltd. legal person
Ford Motor Company Foreign legal 14,772,876
31.71 273,737,076 0 0
person
Shanghai Automotive Co., State-owned 0
1.51 13,019,610 0 0
Ltd. Legal person
Domestic
National Social Security
non-state-owned 0.98 8,500,000 -2,734,091 0 0
Fund- Portfolio 102 legal person
Domestic
National Social Security
non-state-owned 0.86 7,454,095 2,542,395 0 0
Fund- Portfolio 418 legal person
Jpmblsa Re Ftif
Foreign legal
Templeton China Fund Gti 0.70 6,071,850 1,036,587 0 0
person
5497
New China Select Domestic
Securities Investment non-state-owned 0.62 5,354,483 549,900 0 0
Fund legal person
Huaan Tactical Select Domestic
Securities Investment non-state-owned 0.58 4,970,154 -18,051,249 0 0
Fund legal person
Foreign legal
Invesco Funds Sicav 0.54 4,698,109 0 0 0
person
Templeton Dragon Fund, Foreign legal
0.44 3,792,650 157,630 0 0
Inc. person
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Share Type
Restriction
Jiangling Motor Holding Co., Ltd. 354,176,000 A share
Ford Motor Company 273,737,076 B share
Shanghai Automotive Co., Ltd. 13,019,610 A share
National Social Security Fund- Portfolio 102 8,500,000 A share
National Social Security Fund- Portfolio 418 7,454,095 A share
Jpmblsa Re Ftif Templeton China Fund Gti 6,071,850 B share
16
5497
New China Select Securities Investment Fund 5,354,483 A share
Huaan Tactical Select Securities Investment
4,970,154 A share
Fund
Invesco Funds Sicav 4,698,109 B share
Templeton Dragon Fund, Inc. 3,792,650 B share
Notes on association among above-mentioned None.
shareholders
2. Change of controlling shareholder or actual controller
There is no change in the controlling shareholders and actual controlling parties.
Chapter VII Directors, Supervisors, Senior Management and
Employees
1. There was no change in the status of JMC directors, supervisors and senior
management holding JMC shares in the reporting period.
2. Changes of Directors, Supervisors and Senior Management
Director Change:
Per approval of the JMC 2012 Annual Shareholders’ Meeting, Mr. John Lawler was
elected as a Director of JMC. Mr. Howard D. Welsh did not hold the post of Director
of JMC.
Subsequent event
Senior Management change:
The Board of Directors accepted Mr. Zhou Yazhuo’s resignation from the position of
Vice President of the Company due to work rotation on July 30, 2013, effective as of
August 1, 2013.
Chapter VIII Financial Statements
17
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2013
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2013# 2012#
RMB’000 RMB’000
Revenue 5 9,670,757 8,721,529
Sales tax (272,146) (255,970)
Cost of sales 6 (7,154,927) (6,591,019)
Gross profit 2,243,684 1,874,540
Distribution costs 6 (567,567) (551,581)
Administrative expenses 6 (675,574) (375,191)
Other income 8 6,180 8,449
Operating profit 1,006,723 956,217
Finance income 9 92,971 115,662
Finance costs 9 (4,769) (508)
Finance income-net 9 88,202 115,154
Share of profit of associates 15 5,911 3,412
Profit before income tax 1,100,836 1,074,783
Income tax expense 10 (144,073) (220,496)
Profit for the period 956,763 854,287
Profit attributable to:
Equity holders of the Company 937,503 838,898
Non-controlling interests 19,260 15,389
956,763 854,287
Other comprehensive income - -
Total comprehensive income for the period 956,763 854,287
Total comprehensive income attributable to:
Equity holders of the Company 937,503 838,898
Non-controlling interests 19,260 15,389
956,763 854,287
Earnings per share for profit attributable to
the equity holders of the Company
(expressed in RMB per share)
- Basic and diluted 11 1.09 0.97
#Unaudited financial indexes
The notes on pages 22 to 68 are an integral part of these consolidated financial statements.
18
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
(All amounts in RMB unless otherwise stated)
As at
31 December
Note 30 June 2013#
2012
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment 12 4,980,871 4,139,276
Lease prepayment 13 542,845 264,824
Intangible assets 14 105,433 17,678
Investments in associate 15 28,230 22,319
Other non-current assets - 81,000
Deferred income tax assets 16 178,513 181,515
5,835,892 4,706,612
Current assets
Financial assets at fair value through profit or loss 17 - 322
Inventories 18 1,408,450 1,194,811
Trade and other receivables 19 1,676,174 1,649,916
Cash and cash equivalents 20 6,010,697 5,559,693
9,095,321 8,404,742
Total assets 14,931,213 13,111,354
EQUITY
Capital and reserves attributable to the
Company’s equity holders
Share capital 21 863,214 863,214
Share premium 816,609 816,609
Other reserves 22 456,110 457,650
Retained earnings 6,278,652 5,945,399
8,414,585 8,082,872
Non-controlling interests - 106,378
Total equity 8,414,585 8,189,250
LIABILITIES
Non-current liabilities
Borrowings 23 5,462 5,762
Deferred income tax liabilities 16 31,008 -
Retirement benefit obligations 24 44,879 50,592
Provisions for warranty and other liabilities 25 177,373 152,467
Other non-current liabilities 5,600 -
264,322 208,821
Current liabilities
Financial liabilities at fair value through profit or loss 26 270 -
Trade and other payables 27 6,226,103 4,669,878
Current income tax liabilities 13,811 31,276
Borrowings 23 405 412
Retirement benefit obligations 24 11,717 11,717
6,252,306 4,713,283
Total liabilities 6,516,628 4,922,104
Total equity and liabilities 14,931,213 13,111,354
#Unaudited financial indexes
The notes on pages 22 to 68 are an integral part of these consolidated financial statements.
19
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
(All amounts in RMB unless otherwise stated)
Attributable to equity holders of the Company
Non-contr
Note Share Share Other Retained olling Total
capital premium reserves earnings Interests# Equity#
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2012 863,214 816,609 457,650 5,174,295 115,352 7,427,120
Profit for the six months - - - 838,898 15,389 854,287
Dividend relating to 2011 - - - (742,364) - (742,364)
Balance at 30 June 2012 863,214 816,609 457,650 5,270,829 130,741 7,539,043
Balance at 1 January 2013 863,214 816,609 457,650 5,945,399 106,378 8,189,250
Profit for the six months - - - 937,503 19,260 956,763
Dividend relating to 2012 28 - - - (604,250) (125,638) (729,888)
Other - - (1,540) - - (1,540)
Balance at 30 June 2013 863,214 816,609 456,110 6,278,652 - 8,414,585
#Unaudited financial indexes
The notes on pages 22 to 68 are an integral part of these consolidated financial statements.
20
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2013# 2012#
RMB’000 RMB’000
Cash flows from operating activities
Cash generated from operations 29 1,640,083 1,112,092
Interest paid (5,211) (271)
Income tax paid (146,678) (139,390)
Net cash generated from operating activities 1,488,194 972,431
Cash flows from investing activities
Purchase of held-to-maturity investments (200,000) -
Purchase of property, plant and equipment (“PPE”) (443,625) (754,004)
Acquisition of subsidiaries,net of cash acquired (166,169) -
Other cash paid relating to investing activities (431) (7,159)
Proceeds from disposal of PPE 29 1,644 1,151
Proceed from repayment of held-to-maturity investments 200,524 -
Interest received 121,753 95,534
Other cash received from investing activities 154 508
Net cash used in investing activities (486,150) (663,970)
Cash flows from financing activities
Repayments of borrowings (424,202) (206)
Dividends paid to the Company’s shareholders (845) (265)
Dividends paid to minority shareholders of a subsidiary (125,638) -
Other cash paid relating to financing activities (355) (299)
Net cash used in financing activities (551,040) (770)
Net increase/(decrease)in cash and cash equivalents 451,004 307,691
Cash and cash equivalents at beginning of year 5,559,693 5,384,977
Effects of exchange rate changes - -
Cash and cash equivalents at end of period 6,010,697 5,692,668
#Unaudited financial indexes
The notes on pages 22 to 68 are an integral part of these consolidated financial statements.
21
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in the People’s Republic
of China (the “PRC”) under the Company Law of the PRC and according to the approval of
Hongban (1992) No. 005 of Nangchang Revolution and Authorization Group of Company’s
Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of
the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was
owned by Jiangling Motors Corporation Group (“JMCG”). The legal representative’s operating
license of the Company is No. 360000511000021.
The address of the Company’s registered office is No.509, Northern Yingbin Avenue,
Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”).
In addition, the Company issued 25,214,000 A shares as bonus shares to the existing
shareholders in 1994. The bonus shares were issued by utilisation of the Company’s retained
earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and
the Company issued 170,000,000 additional B shares in 1998.
As at 30 June 2013, the total number of issued shares of the Company is 863,214,000 shares,
which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiary (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These consolidated financial statements were authorised for issue by the Board of Directors
on 28 August 2013.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards (“IFRS”). The consolidated financial statements
have been prepared under the historical cost convention except as disclosed in the accounting
policies below.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimations are significant to the
consolidated financial statements are disclosed in Note 4.
22
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
Changes in accounting policy and disclosures
(a) New and amended standards adopted by the group
The IASB has amended IAS 12, ‘Income taxes’, to introduce an exception to the principle
for the measurement of deferred tax assets or liabilities arising on an investment property
measured at fair value. IAS 12 requires an entity to measure the deferred tax relating to an
asset depending on whether the entity expects to recover the carrying amount of the asset
through use or sale. The amendment introduces a rebuttable presumption that an
investment property measured at fair value is recovered entirely by sale.
The amendments do not have a material impact on the Group.
(b) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2013, and have not been applied in
preparing these consolidated financial statements. None of these is expected to have a
significant effect on the consolidated financial statements of the group, except the
following set out below:
Amendment to IAS 1, 'Financial statement presentation' regarding other comprehensive
income. The main change resulting from these amendments is a requirement for entities
to group items presented in 'other comprehensive income' (OCI) on the basis of whether
they are potentially reclassifiable to profit or loss subsequently (reclassification
adjustments). The amendments do not address which items are presented in OCI.
IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity
by providing a precise definition of fair value and a single source of fair value
measurement and disclosure requirements for use across IFRSs. The requirements,
which are largely aligned between IFRSs and US GAAP, do not extend the use of fair
value accounting but provide guidance on how it should be applied where its use is
already required or permitted by other standards within IFRSs.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and
recognition of financial assets and financial liabilities. IFRS 9 was issued in November
2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and
measurement of financial instruments. IFRS 9 requires financial assets to be classified
into two measurement categories: those measured as at fair value and those measured at
amortised cost. The determination is made at initial recognition. The classification
depends on the entity's business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument. For financial liabilities, the standard
retains most of the IAS 39 requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair value change due to an
entity’s own credit risk is recorded in other comprehensive income rather than the income
statement, unless this creates an accounting mismatch. The group is yet to assess IFRS
9’s full impact and intends to adopt IFRS 9 no later than the accounting period beginning
on or after 1 January 2015. The group will also consider the impact of the remaining
phases of IFRS 9 when completed by the Board.
23
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
Changes in accounting policy and disclosures (continued)
IAS 19, 'Employee benefits', was amended in June 2011. The impact on the group will be
as follows: to immediately recognise all past service costs; and to replace interest cost and
expected return on plan assets with a net interest amount that is calculated by applying
the discount rate to the net defined benefit liability (asset). The group is yet to assess the
full impact of the amendments.
IFRS 10, Consolidated financial statements’, builds on existing principles by identifying the
concept of control as the determining factor in whether an entity should be included within
the consolidated financial statements of the parent company. The standard provides
additional guidance to assist in the determination of control where this is difficult to assess.
The group is yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later
than the accounting period beginning on or after 1 January 2013.
IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements
for all forms of interests in other entities, including joint arrangements, associates, special
purpose vehicles and other off balance sheet vehicles. The group is yet to assess IFRS
12’s full impact and intends to adopt IFRS 12 no later than the accounting period
beginning on or after 1 January 2013.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be
expected to have a material impact on the Group.
2.2 Subsidiaries
2.2.1 Consolidation
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.
Inter-company transactions, balances, income and expenses on transactions between group
companies are eliminated. Profits and losses resulting from inter-company transactions that
are recognised in assets are also eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
2.3 Associates
Associates are all entities over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the profit or loss of the investee
after the date of acquisition. The Group’s investment in associates includes goodwill identified
on acquisition.
24
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.3 Associates (continued)
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share
of post-acquisition movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of
the associate.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying
value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ in profit or
loss.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Dilution gains and losses arising in investments in associates are recognised in profit or loss.
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is
the Company’s functional and the Group’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying
cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within “other
income/(expense)-net”.
25
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.5 Foreign currency translation (continued)
(2) Transactions and balances (continued)
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in amortised cost are recognised in profit or loss,
and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at
fair value through profit or loss are recognised in profit or loss as part of the fair value gain or
loss. Translation differences on non-monetary financial assets, such as equities classified as
available-for-sale, are included in other comprehensive income.
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and
any impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition or construction of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All other repairs and maintenance are charged to profit or
loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Buildings 35-40 years
Plant and machinery 10-15 years
Motor vehicles 6-10 years
Moulds 5 years
Electronic and other equipments 5-7 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognised within ‘other income/(expense) – net’ in profit or loss.
Assets under construction represent buildings under construction and plant and equipment
pending installation, and are stated at cost. Costs include construction and acquisition costs.
No provision for depreciation is made on assets under construction until such time as the relevant
assets are completed and ready for intended use. When the assets concerned are brought into
use, the costs are transferred to property, plant and equipment and depreciated in accordance
with the policy as stated above.
26
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is expensed
in profit or loss on a straight line basis over the period of the lease or when there is impairment,
the impairment is expensed in profit or loss.
2.8 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
2013.
(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.
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful
lives of 5 years.
27
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.9 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.
2.10 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit
or loss, loans and receivables, held-to-maturity financial assets and available-for-sale. The
classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A
financial asset is classified in this category if acquired principally for the purpose of selling in
the short term. Derivatives are also categorised as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets if expected to be settled
within 12 months; otherwise, they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for the
amounts that are settled or expected to be settled more than 12 months after the end of the
reporting period. These are classified as non-current assets.
(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 end of the reporting period, which are
classified as current assets.
28
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 Financial assets (continued)
(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 the investment matures or management intends to dispose of it within 12 months
of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date – the
date on which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets
are derecognised when the rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity
financial assets are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value
through profit or loss’ category are presented in profit or loss within ‘other income/(expense) –
net’ in the period in which they arise. Dividend income from financial assets at fair value
through profit or loss is recognised in profit or loss as part of other income when the Group’s
right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as
available-for-sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments recognised in equity are included in profit or loss as ‘gains and losses from
investment securities’.
Interest on available-for-sale securities calculated using the effective interest method is
recognised in profit or loss as part of other income. Dividends on available-for-sale equity
instruments are recognised in profit or loss as part of other income when the Group’s right to
receive payments is established.
2.11 Financial liabilities at fair value through profit or loss and offsetting financial
instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A
financial liability is classified in this category if incurred principally for the purpose of selling in
the short term. A financial liability initially recognised at fair value, and transaction costs are
expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in
this category are classified as current liability if expected to be settled within 12 months;
otherwise, they are classified as non-current. A financial liability is derecognised when it is
extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously.
29
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or group of financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganisation, and
where observable data indicate that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of
the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group may measure
impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised (such as an
improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or a group of financial assets is impaired. For debt securities, the Group
uses the criteria refer to (1) above. In the case of equity investments classified as
available-for-sale, a significant or prolonged decline in the fair value of the security below its
cost is also evidence that the assets 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 profit or
loss. Impairment losses recognised in the profit or loss on equity instruments are not reversed
through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified
as available-for-sale increases and the increase can be objectively related to an event
occurring after the impairment loss was recognised in profit or loss, the impairment loss is
reversed through profit or loss.
30
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale (continued)
Impairment testing of the investments in subsidiaries or associates is required upon receiving
dividends from these investments if the dividend exceeds the total comprehensive income of
the subsidiary or associate in the period the dividend is declared or if the carrying amount of
the investment in the separate financial statements exceeds the carrying amount in the
consolidated financial statements of the investee’s net assets including goodwill.
2.13 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 re-measured 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 profit or loss.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
weighted average cost method. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal
operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
prices in the ordinary course of business, less applicable variable distribution costs.
2.15 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of business. If collection of trade and other receivables is expected in one
year or less (or in the normal operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for impairment.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts.
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
31
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings
are subsequently carried at amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the end of the report period.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the PRC. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
32
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax (continued)
(2) Deferred income tax
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries
and associates, except for deferred income tax liability where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable that the temporary difference
will not reverse in the foreseeable future.
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes
assets and liabilities relate to income taxes levied by the same taxation authority on either the
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
2.22 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed
by the PRC government. The contribution to the scheme is charged to profit or loss as and when
incurred. The Group’s obligations are determined at a certain percentage of the salaries of the
employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees.
Such supplementary pension subsidies are considered as under defined benefit plans. The
liability recognised in the statement of financial position in respect of these defined benefit plans
is the present value of the defined benefit obligation at the balance sheet date less the fair value
of plan assets, together with adjustments for 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 profit or loss in the period in which
they arise.
33
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Employee benefits (continued)
(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) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a
present legal or constructive obligation as a result of services rendered by employees and a
reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled
within twelve months and are measured at the amounts expected to be paid when they are
settled.
2.23 Provisions
Provisions, mainly warranty costs, are recognised when: the Group has a present legal or
constructive obligation as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount has been reliably estimated. Provisions are
not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in the provision due to
passage of time is recognised as interest expense.
2.24 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and
represents amounts receivable for goods supplied, stated net of discounts returns and value
added taxes. The Group recognises revenue when the amount of revenue can be reliably
measured; when it is probable that future economic benefits will flow to the entity; and when
specific criteria have been met for each of the Group’s activities, as described below. The Group
bases its estimates of return on historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
34
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Revenue recognition (continued)
(1) Sales of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership
of the goods are transferred to the customer, the customer has accepted the products and
collectability of the related receivables is reasonably assured.
(2) Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is
impaired, the group reduces the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loan and receivables
are recognised using the original effective interest rate.
(3) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
2.25 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit or loss on a straight-line basis over the
period of the lease.
2.26 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.
2.27 Government grants
Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and the Group will comply with all attached
conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the
period necessary to match them with the costs they are intended to compensate. Government
grants not relating to future costs are recognised on receipt basis.
Government grants relating to the purchase of property, plant and equipment are included in
non-current liabilities as deferred income and are credited to profit or loss on a straight line
basis over the expected lives of the related assets.
35
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board
of Directors.
(1) Market risk
(a) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to other payables dominated in U.S.dollar (“USD”).
Management has set up a policy to require the Group to manage their foreign exchange risk
against their functional currency. Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated in a currency that is not the
Company’s functional currency.
As at 30 June 2013, if RMB had strengthened/weakened by 10% against USD with all other
variable held constant, the Group’s net profit for the six months ended 30 June 2013 would
have been approximately RMB11,190,000 higher/lower.
(b) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 30 June 2013, a large portion of its bank deposits and all of its
borrowings were at floating rate. The Group has not used any interest rate swaps to hedge its
exposure to interest rate risk.
As at 30 June 2013, if the interest rate of the Group’s bank deposits had been
increased/decreased by 10% and all other variables were held constant, the Group’s net profit
for the six months ended 30 June 2013 would have been increased/decreased by
approximately RMB6,385,000(the six months ended 30 June 2012:RMB7,384,000).
(2) Credit risk
The Group’s maximum exposure to credit risk in relation to financial assets is the carrying
amounts of cash and cash equivalents and trade and other receivables.
As at 30 June 2013, the Group had cash of approximately RMB190,974,000 (2012:
RMB188,865,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a
non-bank financial institution and a subsidiary of JMCG (Note 20). The Group’s other bank
deposits are deposited in state-owned banks or other listed banks. Management believes all
these financial institutions have high credit quality without significant credit risk.
36
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
All the Group’s trade and other receivables have no collateral. However, the Group has policies
in place to ensure that sales are made to customers with appropriate credit history and the
Group performs periodic credit evaluations of its customers. The Group assesses the credit
quality of each customer by taking into account its financial position, past experience and other
factors. Credit limit and terms are reviewed on periodic basis, and the financial department is
responsible for such monitoring procedures. In determining whether provision for impairment is
required, the Group takes into consideration the aging status and the likelihood of collection. In
this regards, the directors of the Company are satisfied that the risks is minimal as all
customers are existing ones or related parties and have no default in the past and adequate
provision for impairment, if any, has been made in the financial statements after assessing the
collectability of individual debts. Further quantitative disclosures in respect of the impairment of
trade and other receivables are set out in Note 19.
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group in and aggregated by
Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities (Note 23) at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based
on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 and Between 2
year 2 years and 5 years Over 5 years
RMB ’000 RMB ’000 RMB ’000 RMB ’000
At 30 June 2013
Bank borrowings
- Principals 405 405 1,214 3,843
- Interests 86 81 205 288
Trade and other payables 5,207,559 - - -
Financial liabilities at fair
value through profit or loss 270 - - -
5,208,320 486 1,419 4,131
At 31 December 2012
Bank borrowings
- Principals 412 412 1,234 4,116
- Interests 91 85 218 324
Trade and other payables 4,328,461 - - -
4,328,964 497 1,452 4,440
37
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as borrowings divided by total capital. Total capital is calculated as
equity, as shown in the consolidated statement of financial position, plus borrowings. The
Group aims to maintain the gearing ratio at a reasonable level.
The gearing ratios at 30 June 2013 and 31 December 2012 were as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
Total borrowings 5,867 6,174
Total equity 8,414,585 8,189,250
Total capital 8,420,452 8,195,424
Gearing ratio 0.07% 0.08%
3.3 Fair value estimation
The financial liabilities held for trading contain forward exchange contracts which are not traded
in an active market. The fair value is determined by using valuation techniques which
maximised the use of observable market data where it is available and rely as little as possible
on entity specific estimates. The different levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (level 3).
Since all significant inputs required to value the instrument are observable, the forward
exchange contracts are classified as level 2.
The carrying amounts of the Group’s financial assets including cash and cash equivalents,
trade and other receivables and financial liabilities including trade and other payables,
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.
38
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
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.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
(1) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that
fail to perform satisfactorily based on certain pre-determined conditions. Management
estimates the related warranty claims based on historical warranty claim information including
level of repairs and returns as well as recent trends that might suggest that past cost
information may differ from future claims.
Factors that could impact the estimated claim information include the success of the Group’s
productivity and quality controls, as well as parts and labour costs. Any increase or decrease in
the provision would affect profit or loss in future years.
(2) Pension benefits
The present value of the pension obligations depend on a number of factors that are
determined on an actuarial basis using a number of assumptions. Any changes in these
assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the
interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations. In determining the
appropriate discount rate, the Group considers the interest rates of government bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating the terms of the related pension liability.
Other key assumptions for pension obligations are based in part on current market conditions.
Additional information is disclosed in Note 24.
39
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
(3) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added
tax and consumption tax. Significant judgment is required in determining the provision for these
taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from amounts that were initial recorded, such
differences will impact the tax provisions in the period such determination is made.
Deferred income tax assets relating to certain temporary differences are recognised as
management considers it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Where the expectation is different from the original
estimate, such differences will impact the recognition of deferred tax assets and tax in the
periods in which such estimate is changed.
As at 30 June 2013, the Group has deferred tax assets in the amount of approximately
RMB178,513,000. To the extent that it is probable that taxable profit will be available against
which the deductible temporary differences will be utilised, deferred tax assets are recognised
mainly for temporary differences arising from accrued expenses and retirement benefit
obligations.
40
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
5 Revenue and segment information
The Group principally derives its turnover from the manufacture, assembly and sale of
automobiles, related spare parts and components, and sales are made principally in the PRC.
Revenue represents the total invoiced value of goods supplied to customers, net of value-added
tax, returns and allowances.
Management has determined the operating segment based on the reports reviewed by the
strategic executive committee that are used to make strategic decisions. The committee
considers the business from the product perspective as all the Group’s sales are made in the
PRC. Since the Group principally derives its turnover from the sale of automobiles, the
committee considers the automobile business as a whole in allocating resources and assessing
performance. Accordingly, no segment information is presented.
6 Expenses by nature
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Changes in inventories of finished goods and
work in progress (121,744) (44,352)
Raw materials and consumables used 6,427,278 5,931,027
Employee benefit expenses (Note 7) 631,601 496,559
Depreciation of PPE 205,700 179,464
Repairs and maintenance expenditure on PPE 29,214 22,513
Research and development expenditure 493,021 219,523
Amortisation of lease prepayment (Note 13, 29) 6,411 3,262
Amortisation of intangible assets (Note 14, 29) 3,514 6,610
Write-down of inventories (Note 29) 2,608 1,205
Provision for receivables impairment (Note 19,
29) 1,458 51
Provision of warranty 73,453 89,775
Others 645,554 612,154
Total cost of sales, distribution costs and
administrative expenses 8,398,068 7,517,791
7 Employee benefit expenses
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Wages and salaries 460,241 358,520
Social security costs 52,640 42,060
Pension costs defined contribution plans 76,302 64,660
Others 42,418 31,319
631,601 496,559
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.
41
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
7 Employee benefit expenses (continued)
In addition, the Group also paid certain pension subsidies to certain retired employees. In
accordance with the Group’s early retirement programs, the Group was also committed to
make periodic benefit payments to certain early-retired employees until they reach their legal
retirement ages.
8 Other income
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Government grants 5,653 10,768
Others 527 (2,319)
6,180 8,449
9 Finance income and cost
Six months ended 30 June
2013 2012
RMB’000 RMB’000
(a) Finance income
Interest income on bank deposits 75,359 89,381
Interest income on credit sales 17,612 26,281
92,971 115,662
(b) Finance cost
Interest expense on bank loans (4,414) (209)
Bank charges (355) (299)
(4,769) (508)
Net finance income 88,202 115,154
10 Taxation
(a) CIT
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2012, the Company is entitled to a preferential corporate income tax (“CIT”) rate
of 15% from 2012 to 2014.
JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”), a subsidiary of the Company, applied 25% CIT
rate in 2013.
42
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation (continued)
(a) CIT (continued)
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Current tax (141,071) (141,071)
Deferred tax (Note 16) (3,002) (79,425)
(144,073) (220,496)
The difference between the actual income tax charge in profit or loss and the amounts which
result from applying the enacted tax rate to profit before income tax can be reconciled as
follows:
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Profit before tax 1,100,836 1,074,784
Tax calculated at tax rates applicable to profits in
the respective companies (183,810) (170,089)
Tax concessions 43 86
Expense not deductible for tax purposes (345) (1,200)
Income not subject to tax 35,917 14,796
Effect of different tax rates applied for the periods
in which the temporary differences are expected
to reverse 4,122 (64,089)
Tax charge (144,073) (220,496)
The weighted average applicable tax rate was 17% (the six months ended 30 June 2012:
16%).
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of 17% on the selling price of goods. Input VAT paid on
purchase of goods and equipment can be used to offset the output VAT to determine the net
VAT payable.
(c) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 5%-9% on the selling price of goods.
43
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
11 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
2013 2012
Profit attributable to equity holders of the
Company (’000) 937,503 838,898
Weighted average number of ordinary shares in
issue (thousands) 863,214 863,214
Basic earnings per share 1.09 0.97
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 2013.
44
JIANGLING MOTROS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and other Assets under
Buildings Machinery Vehicles Moulds equipments constructions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2012
Cost 804,670 2,324,487 107,433 1,206,775 1,335,013 992,418 6,770,796
Accumulated depreciation and impairment (215,202) (1,498,280) (49,981) (883,291) (851,660) (692) (3,499,106)
Net book amount 589,468 826,207 57,452 323,484 483,353 991,726 3,271,690
Year ended 31 December 2012
Opening net book amount 589,468 826,207 57,452 323,484 483,353 991,726 3,271,690
Additions - - - - - 1,248,714 1,248,714
Transfers 17,798 129,153 23,460 104,900 120,345 (395,656) -
Disposals - (3,006) (1,075) - (856) - (4,937)
Other deductions - - - - - (7,578) (7,578)
Impairment charge - (515) (4) - (640) - (1,159)
Depreciation charge (19,663) (108,916) (12,075) (116,093) (110,707) - (367,454)
Closing net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276
At 31 December 2012
Cost 822,468 2,439,904 125,753 1,308,927 1,437,180 1,837,898 7,972,130
Accumulated depreciation and impairment (234,865) (1,596,981) (57,995) (996,636) (945,685) (692) (3,832,854)
Net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276
Six months ended 30 June 2013
Opening net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276
Additions 214,810 43,542 15,698 5,492 46,701 727,101 1,053,344
Transfers 482,686 707,276 5,352 24,084 367,153 (1,586,551) -
Disposals - (234) (3,272) - (452) - (3,958)
Other deductions - - - - - (2,091) (2,091)
Impairment charge - - - - - - -
Depreciation charge (Note 6, 29) (13,350) (59,079) (9,134) (55,901) (68,236) - (205,700)
Closing net book amount 1,271,749 1,534,428 76,402 285,966 836,661 975,665 4,980,871
At 30 June 2013
Cost 1,540,653 3,188,771 141,706 1,322,960 1,848,494 976,357 9,018,941
Accumulated depreciation and impairment (268,904) (1,654,343) (65,304) (1,036,994) (1,011,833) (692) (4,038,070)
Net book amount 1,271,749 1,534,428 76,402 285,966 836,661 975,665 4,980,871
45
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the six months ended 30 June 2013, depreciation expense of approximately
RMB175,026,000 (the six months ended 30 June 2012: RMB160,910,000) has been charged
in cost of sales, RMB1,042,000 (the six months ended 30 June 2012: RMB684,000) in
distribution costs and RMB29,632,000 (the six months ended 30 June 2012: RMB17,870,000)
in administrative expenses.
Lease rental expenses amounting to RMB 2,957,000 ((the six months ended 30 June 2012:
RMB2,272,000) relating to the lease of property are included in profit or loss.
13 Lease prepayment
Lease prepayment represents the Group’s interests in land which are held on leases of 50 years.
The movement is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
Opening net book amount 264,824 271,347
Additions 284,432 -
Amortisation charge (Note 6, 29) (6,411) (6,523)
Closing net book amount 542,845 264,824
Cost 614,295 329,863
Accumulated amortisation (71,450) (65,039)
Net book amount 542,845 264,824
All amortisation expense was charged in administrative expenses.
46
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets
After-sale
management
model Software Other Total
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2012
Opening net book amount 4,624 17,132 198 21,954
Addition - 7,578 - 7,578
Impairment charge - - - -
Amortisation charge (4,624) (7,032) (198) (11,854)
Closing net book amount - 17,678 - 17,678
At 31 December 2012
Cost 36,978 40,656 1,600 79,234
Accumulated amortisation (36,978) (22,978) (1,600) (61,556)
Net book amount - 17,678 - 17,678
Six months ended 30 June 2013
Opening net book amount - 17,678 - 17,678
Addition - 2,192 89,077 91,269
Impairment charge - - - -
Amortisation charge (Note 6, 29) - (3,509) (5) (3,514)
Closing net book amount - 16,361 89,072 105,433
At 30 June 2013
Cost 36,978 42,848 90,677 170,503
Accumulated amortisation (36,978) (26,487) (1,605) (65,070)
Net book amount - 16,361 89,072 105,433
For the six months ended 30 June 2013, amortisation expense of approximately RMB 3,498,000
(the six months ended 30 June 2012: RMB 6,525,000) was charged in administrative expenses
and RMB 16,000 in distribution costs (the six months ended 30 June 2012: RMB 85,000).
47
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15 Investments in associate
(a) Movement of investment in associate is set out as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
At beginning of the year 22,319 17,851
Share of profit (Note 29) 5,911 7,984
Dividends received - (3,516)
At end of the period 28,230 22,319
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”), with operating period of 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 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 2013 31 December 2012
RMB’000 RMB’000
Total assets 48,693 40,867
Total liabilities (20,463) (18,548)
Net assets 28,230 22,319
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Revenue 45,696 26,273
Profit for the period 5,911 3,412
48
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax
(a) Deferred income tax assets
30 June 2013 31 December 2012
RMB’000 RMB’000
Deferred tax assets 178,513 181,563
Deferred tax liabilities - (48)
Deferred tax assets (net) 178,513 181,515
The gross movement on the deferred income tax account is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
At beginning of the year 181,515 250,182
Charged to profit or loss
(Note 10) (3,002) (68,667)
At end of the period 178,513 181,515
The movement in deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax assets Provision for Retirement
impairment of benefits Accrued
assets obligation expenses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2012 3,371 15,728 194,512 39,096 252,707
Charged to profit or
loss (2,199) (2,158) (55,527) (11,260) (71,144)
At 31 December 2012 1,172 13,570 138,985 27,836 181,563
Credited/(charged) to
profit or loss 33 (856) 240 (2,467) (3,050)
At 30 June 2013 1,205 12,714 139,225 25,369 178,513
Deferred tax liabilities Depreciation of Forward exchange Total
property, plant and contracts
equipment
RMB’000
At 1 January 2012 (2,525) - (2,525)
Credited(charged) to profit
or loss 2,525 (48) 2,477
At 31 December 2012 - (48) (48)
Credited to profit or loss - 48 48
At 30 June 2013 - - -
The amounts shown in the statement of financial position include the followings:
49
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
30 June 2013 31 December 2012
RMB’000 RMB’000
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 12,181 13,164
–Deferred tax asset to be recovered within
12 months 166,332 168,399
178,513 181,563
30 June 2013 31 December 2012
RMB’000 RMB’000
Deferred tax liabilities:
–Deferred tax liability to be recovered
within 12 months - (48)
(b) Deferred income tax liabilities
Acquisition of
subsidiary
RMB’000
At 1 January 2012 -
Credited to profit or loss -
At 31 December 2012 -
Charged to profit or loss (31,008)
At 30 June 2013 (31,008)
Financial assets at fair value through profit or loss
17
30 June 2013 31 December 2012
RMB’000 RMB’000
Forward exchange contracts - 322
18 Inventories
30 June 2013 31 December 2012
RMB’000 RMB’000
Raw materials 815,197 721,804
Work in progress 129,263 98,246
Finished goods 463,990 374,761
1,408,450 1,194,811
For the six months ended 30 June 2013, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB6,305,534,000 ( the six months
ended 30 June 2012: RMB5,886,675,000),which included inventory provision of RMB
2,608,000(the six months ended 30 June 2012:1,205,000).
A provision of RMB 8,452,000(2012:RMB 4,012,000) was made as at 30 June 2013.During
the six months ended 30 June 2013,the Group wrote-off inventories with provision of RMB
53,364,000 made in prior years. The provision and reversal of the inventory write-down have
been included in ‘cost of sales’ of profit or loss.
50
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Trade and other receivables
30 June 2013 31 December 2012
RMB’000 RMB’000
Trade receivables 657,411 368,883
Less: Provision for impairment of trade
receivables (6,855) (1,844)
Trade receivables – net 650,556 367,039
Notes receivables 636,901 688,561
Other receivables 35,120 21,881
Less: Provision for impairment of other
receivables (293) (110)
Other receivables – net 34,827 21,771
Prepayments 308,291 502,762
Interest receivables 45,599 69,783
1,676,174 1,649,916
Refer to Note 33 for details of receivables from related parties. The carrying amounts of the
Group’s trade and other receivables are denominated in the following currencies:
30 June 2013 31 December 2012
RMB’000 RMB’000
RMB 1,676,174 1,649,916
The carrying amounts of trade and other receivables approximate their fair values.
As at 30 June 2013, trade and other receivables of approximately RMB7,148,000 (2012:
RMB1,954,000) were impaired and provided for.
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
At beginning of the year (1,954) (1,632)
Provision arise from business
combination (3,736) -
Provision for receivables impairment (Note
6, 29) (1,458) (322)
At end of the period (7,148) (1,954)
The creation of provision for impaired receivables have been included in ‘administrative
expense’ in profit or loss (Note 6).
As at 30 June 2013, trade receivables of approximately RMB 22,405,000 (2012: RMB
11,179,000) were past due but not impaired. These balances related to a number of
independent customers for whom there was no recent history of default. The ageing analysis of
these trade receivables based on past due date is as below:
51
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Trade and other receivables (continued)
30 June 2013 31 December 2012
RMB’000 RMB’000
Up to 3 months 15,139 7,622
3 months to 6 months 1,566 1,249
6 months to 1 year 4,698 2,308
More than 1 year 1,002 -
22,405 11,179
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of
receivable mentioned above. The Group does not hold any collateral as security.
20 Cash and cash equivalents
30 June 2013 31 December 2012
RMB’000 RMB’000
Cash at bank and in hand 964,982 703,005
Short-term bank deposits (a) 5,045,715 4,856,688
6,010,697 5,559,693
As at 30 June 2013, the Group had cash of approximately RMB 190,974,000 (2012:
RMB188,865,000) deposited in JMCF (Note 33 (iii)). The interest rates range from 0.39% to
1.27% per annum (2012: 0.39% to 1.53%). 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.
21 Share capital
Number of Tradable shares Total
shares “A” shares “B” shares
(thousands) Restricted Non-restricted
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2012
Balance at 1 January 2012 863,214 2,782 516,432 344,000 863,214
Transfer - - - - -
Balance at 31 December 2012 863,214 2,782 516,432 344,000 863,214
Six months ended 30 June
2013
Balance at 1 January 2013 863,214 2,782 516,432 344,000 863,214
Transfer - (240) 240 - -
Balance at 30 June 2013 863,214 2,542 516,672 344,000 863,214
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.
52
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
21 Share capital (continued)
After implementation of the share reform scheme on 13 February 2006, all of the non-tradable A
shares became tradable with conditions of 1-3 years restricted period. As at 30 June 2013,
2,542,000 shares were still restricted.
22 Other reserves
Statutory
surplus reserve Reserve
fund (a) fund Others Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2013 431,607 18,627 7,416 457,650
- Profit appropriation - - - -
- Other - - (1,540) (1,540)
At 30 June 2013 431,607 18,627 5,876 456,110
(a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of
the Company, it is required to appropriate 10% of its annual net profit, after offsetting any prior
years’ losses as determined under the Accounting Standards for Business Enterprises in the
PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance
of the statutory surplus reserve fund reaches 50% of the Company’s share capital, any further
appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be
used to offset prior years’ losses, if any, and may be converted into share capital by issuing new
shares to shareholders in proportion to their existing shareholders or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation
situation.
As the balance of the statutory surplus reserve fund has reached 50% of the Company’s share
capital, there are no further appropriations to the statutory surplus reserve fund for the six
months ended 30 June 2013.
53
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
23 Borrowings
30 June 2013 31 December 2012
RMB’000 RMB’000
Current
Bank borrowings
- secured (a) 405 412
Non-current
Bank borrowings - secured (a) 5,462 5,762
Total borrowings 5,867 6,174
(a) Bank borrowings of USD950,000 (equivalent to approximately RMB5,867,000) (2012:
USD982,000 equivalent to approximately RMB6,174,000) were guaranteed by JMCF (Note 33
(v)).
The interest rate of bank borrowings is 1.50% per annum (2012: 1.50%).
The fair value of borrowings approximates their carrying values.
The maturity of non-current borrowings is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
Between 1 and 2 years 405 412
Between 2 and 5 years 1,214 1,234
Over 5 years 3,843 4,116
5,462 5,762
The Group has the following undrawn borrowing facilities:
30 June 2013 31 December 2012
RMB’000 RMB’000
Fixed rate
- Expiring within one year 2,052,464 1,725,301
- Expiring beyond one year 300,000 -
2,352,464 1,725,301
54
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement
of financial position is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
Present value of defined benefits obligations
Defined benefit obligations 56,596 66,396
Unrecognised past service cost - (4,087)
Liability on the statement of financial position 56,596 62,309
The movement of early retirement and supplemental benefit obligations for the six months ended
30 June 2013 is as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
At beginning of the year 62,309 62,912
For the year
-Current service cost - 451
-Interest cost - 2,088
-Payment (5,713) (11,980)
-Past service cost - 4,766
-Actuarial loss - 4,072
At end of the period 56,596 62,309
Current 11,717 11,717
Non-current 44,879 50,592
56,596 62,309
The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted: 3.75% (2012: 3.75%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 5% (2012: 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 2013, a provision of
RMB 56,596,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB 56,596,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB 11,717,000 (2012:
RMB11,717,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Change in assumption Impact on overall liability
Discount rate Increase/decrease by 0.5% Decrease/increase by 4.11%/4.56%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 1.69%/1.48%
Rate of mortality Increase/decrease by 1 year Decrease/increase by 1.09%/1.20%
55
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
25 Provisions for warranty and other liabilities
The movement on provisions for warranty and other liabilities is as follows:
Warranty
provisions (a) Other Total
RMB’000 RMB’000 RMB’000
At 1 January 2013 152,467 - 152,467
Charged for the period 74,204 82 74,286
Utilised for the period (49,380) - (49,380)
At 30 June 2013 177,291 82 177,373
(a) 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. For the business motor vehicles the warranty period is the sooner of 2 years and
50,000 kilometres since the motor vehicles are sold to consumer, while for the SUV the
warranty period is the sooner of 3 years and 60,000 kilometres since the motor vehicles are
sold to consumer. For the heavy truck (road vehicle) the warranty period is the sooner of 2
years and 200,000 kilometres since the motor vehicles are sold to consumer, while for the
heavy truck (off-road vehicle) the warranty period is the sooner of 9 months and 45,000
kilometres since the motor vehicles are sold to consumer.
26 Financial liabilities at fair value through profit or loss
30 June 2013 31 December 2012
RMB’000 RMB’000
Forward exchange contracts 270 -
27 Trade and other payables
30 June 2013 31 December 2012
RMB’000 RMB’000
Trade payables 3,906,560 3,315,268
Payroll and welfare payable 170,766 154,482
Dividend payables 614,239 10,879
Other payables 1,534,538 1,189,249
6,226,103 4,669,878
Refer to Note 33 for details of amount due to related parties.
56
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
28 Dividends
A final dividend for 2012, amounting to a total dividend of RMB 604,249,800 has been
approved at the Shareholders’ meeting on 21 June 2013(RMB0.7 per share).
29 Cash generated from operations
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Profit before tax 1,100,836 1,074,784
Depreciation of PPE (Note 6, 12) 205,700 179,464
Amortisation of lease prepayment (Note 6, 13) 6,411 3,262
Amortisation of intangible assets (Note 6, 14) 3,514 6,610
Provision for receivables impairment (Note 6, 19) 1,458 51
Write-down of inventories (Note 6) 2,608 1,205
Loss on disposals of PPE 60 468
Finance cost (Note 9) 4,769 508
Finance income (Note 9) (92,971) (115,662)
Net foreign exchange transaction (gain) /loss (549) 1,211
Share of profit of associate (Note 15) (5,911) (3,412)
Investment income of held-to-maturity investments (524) -
Investment loss of forward exchange contracts 277 6,651
Changes on fair value of forward exchange
contracts 591 (6,673)
Changes in working capital:
- Increase in inventories (219,468) (132,123)
-(Increase)/decrease in trade and other receivables (53,711) 9,741
- Increase in warranty provisions 24,906 15,577
- Increase in trade and other payables 667,800 77,027
-Decrease in pensions and other retirement
benefits (5,713) (6,597)
Cash generated from operations 1,640,083 1,112,092
In the cash flow statement, proceeds from disposal of property, plant and equipment comprise:
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Net book amount 3,958 1,559
Loss on disposal of property, plant and equipment (60) (468)
Offset with trade and other payables (2,254) 60
Proceeds from disposal of property, plant and
equipment 1,644 1,151
57
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
30 Contingencies
On 30 June 2013, the Group did not have any significant contingent liabilities.
31 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
30 June 2013 31 December 2012
RMB’000 RMB’000
Contracted but not provided for:
Purchases of buildings, plant and machinery 1,004,524 915,305
32 Business combinations
On January 8, 2013, Taiyuan Changan Heavy Truck Company (“TCHT”) completed changes of
industrial and commercial registration and renamed the company as JMC Heavy Duty Vehicle
Co., Ltd. (“JMCH”). JMC paid off the remaining acquisition price of RMB 189,000,000 for
acquiring 100% equity of TCHT in January 2013 (total concerned TCHT equity transfer was
RMB 270,000,000, and prepayment of RMB 81,000,000 was paid off in 2012). Upon
completion of the equity transfer, JMCH is a wholy-owned subsidiary of the Company for
manufacturing heavy duty trucks. During the reporting period, JMCH has been added into the
consolidated scope of JMC financial statements.
The following table summarises the consideration payment for Taiyuan Changan Heavy Truck
Company, the fair value of assets acquired, liabilities assumed at the acquisition date.
Consideration RMB’000
At 8 January 2013
-Cash 270,000
Total consideration transferred 270,000
Total consideration 270,000
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents 22,831
Trade and other receivables 62,036
Inventories 31,954
Property, plant and equipment 326,296
Lease prepayment 284,432
Intangible assets 149
Borrowings (335,000)
Deferred income tax liabilities (32,253)
Trade and other payables (173,001)
Warranty provisions (832)
Other non-current liabilities (5,640)
Total identifiable net assets 180,972
Goodwill 89,028
270,000
58
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Business combinations(continued)
Jiangling Motors Company (Group) had paid off RMB 318,499,000 to the Company as a
consideration of the equity transfer and profit distribution of Jiangling Isuzu Motors Company,
Ltd. (“Jiangling Isuzu”). The relevant government approval and industrial and commercial
registration changes concerning the equity transfer has been completed. Jiangling-Isuzu has
been deleted from the consolidated scope of JMC financial statements.
Jiangling Isuzu was a subsidiary of JMC in the past, and JMC held 75% equity of Jiangling
Isuzu.
At 28 February 2013 RMB’000
proceeds from disposal of subsidiary 318,499
Net cash received from disposal of subsidiary 318,499
Net assets of Jiangling ISUZU
Current assets 522,124
Current liabilities (97,458)
424,666
Non-controlling interests (106,167)
318,499
33 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 31.71% of the Company’s shares, are major shareholders of the Company
as at 30 June 2013. 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, JMCG and its subsidiaries, Ford and its subsidiaries in the ordinary course of
business during the six months ended 30 June 2013.
59
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
For the six months ended 30 June 2013, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JMH;
the same Chairman
as the Company
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford Otosan Company Subsidiary of Ford
Ford Motor Company of Australia Limited Subsidiary of Ford
JMCG Interior Trim Factory Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG
JMCG Property Management Co. Subsidiary of JMCG
Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG
Jiangling Material Co. Subsidiary of JMCG
Land Wind Sales Co., Ltd. Subsidiary of JMH
Nanchang JMCG Skyman Auto Component Co., Ltd. Subsidiary of JMH
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd. Subsidiary of JMCG
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. Subsidiary of JMCG
Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. Subsidiary of JMCG
JMCF Subsidiary of JMCG
Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Jiangling Auto Component Co. Subsidiary of JMCG
Jiangxi Jiangling Material Utilization Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG
Jiangling New-power Auto Manufacturing Co., Ltd. Subsidiary of JMCG
Jiangling Overseas Motors Sales & Service Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG
Jiangxi Isuzu Engine Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Trading Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Printing Plant Co., Ltd. Associate of JMCG
JMCG Hequn Costume Co., Ltd. Associate of JMCG
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
Jiangling Aowei Aotomobile Spare Part Co., Ltd. Associate of JMCG
Visteon Climate Control Nanchang Associate of the Company
GETRAG Ford Transmissions Gmbh Joint venture of Ford
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Nanchang Jiangling Huasheng Cleaner Co., Ltd. Subsidiary of JMCG
JMCG Special Purpose Vehicle Factory Subsidiary of JMCG
Jiangxi Sinodef International Trade Co.,Ltd. Subsidiary of JMCG
Nanchang Unistar Electrical and Electronics Co.,Ltd. Subsidiary of JMCG
60
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
i) Purchases of goods and services
Purchase of goods Six months ended 30 June
2013 2012
RMB’000 RMB’000
JMCG 18,656 61,928
Ford 174,537 117,830
JMCG Interior Trim Factory 317,252 243,391
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 120,645 95,320
Jiangxi Isuzu Engine Co., Ltd. 4,667 1,997
Jiangling Material Co. 23,632 24,653
Visteon Climate Control Nanchang 119,046 94,756
Jiangxi Jiangling Chassis Co., Ltd. 335,341 289,881
Jiangxi Jiangling Lear Interior System Co., Ltd. 186,733 170,354
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd 17,955 17,281
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 106,476 101,659
Jiangling Auto Component Co. - 1,489
Nanchang Gear Co., Ltd. 1,285 3,108
Jiangxi JMCG Shangrao Industrial Co., Ltd. 5,926 6,381
Nanchang JMCG Printing Plant Co., Ltd. 2,112 1,735
GETRAG (Jiangxi) Transmission Company 322,463 296,587
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 119,125 113,576
JMCG Hequn Costume Co., Ltd. 599 1,864
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 261,224 351,518
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 11,605 12,881
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 19,557 18,133
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 28,906 27,202
Nanchang Lianda Machinery Co., Ltd. 31,356 27,724
Jiangxi Jiangling Material Utilization Co., Ltd. 3,671 1,013
Jiangxi Biaohong Engine Tappet Co., Ltd. 3,463 3,976
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 3,383 2,247
Nanchang Unistar Electrical and Electronics
Co.,Ltd. 33,988 -
Others 180 153
2,273,783 2,088,637
61
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchase of services Six months ended 30 June
2013 2012
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.
- commission expenses 2,451 2,593
JMCG
- rental expense 2,957 2,272
Ford
- services (a) 153,889 18,554
JMCG Jiangxi Engineering Construction Co., Ltd.
- services 2,805 10,741
Jiangxi JMCG Industry Co.,Ltd.
- services 13,288 10,982
Ford Motor Research & Engineering (Nanjing)
Co., Ltd.
- services - 2,106
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd.
- services 2,993 1,239
Nanchang JMCG Shishun Logistics Co., Ltd.
- services 59,097 2,949
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd
- services 1,021 -
Others 231 3,305
238,732 54,741
(a) The purchase of services from Ford mainly included the following:
Pursuant to an agreement between the Company and Ford in 2012, the Company agreed to
pay engineering service fee for project J08 with the total amount of approximately USD
41,600,000 before 30 May 2015 in each quarter starting from 2012. During the six months
ended 30 June 2013, the Company accrued service fee of USD 5,140,000 (equivalent to
approximately RMB 30,105,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2012, the Company agreed to
pay engineering service fee for project J09 with the total amount of approximately USD
25,900,000 before 31 March 2013 in each quarter starting from 2012. During the six months
ended 30 June 2013, the Company accrued service fee of USD 7,000,000 (equivalent to
approximately RMB 45,947,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2013, the Company agreed to
pay engineering service fee for project J09 with the total amount of approximately USD
64,700,000 before 31 October 2015 in each quarter starting from 2013. During the six months
ended 30 June 2013, the Company accrued service fee of USD 9,100,000 (equivalent to
approximately RMB 56,940,000) payable to Ford.
62
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchases of property, plant and equipment Six months ended 30 June
2013 2012
RMB’000 RMB’000
Jiangling Overseas Motors Sales & Service Co., Ltd. - 207
- 207
ii) Sales of goods and provision of services
Sales of goods Six months ended 30 June
2013 2012
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 545,058 502,723
JMCG Interior Trim Factory 36,259 39,466
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 101,310 69,502
JMCG Property Management Co. 3,612 3,664
JMCG Jingma Motors Co., Ltd. 17,567 1,266
Jiangxi Jiangling Chassis Co., Ltd. 17,958 13,323
Jiangxi Jiangling Material Utilization Co., Ltd. 41,747 41,743
JMH 520 9,977
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 18,686 16,716
Jiangxi Jiangling Lear Interior System Co., Ltd. 6,224 4,298
Jiangling New-power Auto Manufacturing Co., Ltd. 3,368 20,199
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 3,693 754
JMCG Special Purpose Vehicle Factory
Jiangxi Sinodef International Trade Co.,Ltd. 9,205 -
Jiangxi Isuzu Engine Co., Ltd. 2,183 649
Others 4,547 3,614
811,937 727,894
Sales of property, plant and equipment Six months ended 30 June
2013 2012
RMB’000 RMB’000
JMCG 207 -
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 103 -
310 -
63
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33
Related party transactions (continued)
iii) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 18,101 17,943
JMH 461 1,469
Jiangxi Jiangling Material Utilization Co., Ltd. - 2,968
Nanchang JMCG Liancheng Auto Component
Co., Ltd. - 380
Jiangling New-power Auto Manufacturing Co.,
Ltd. - 4,381
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 103,238 101,822
Jiangxi Isuzu Engine Co., Ltd. 219 -
JMCG Special Purpose Vehicle Factory 206 3,296
Jiangxi Jiangling Lear Interior System Co., Ltd. 1,312 -
Jiangxi JMCG Industry Co., Ltd. 1 -
JMCG Jingma Motors Co., Ltd. 4,942 -
128,480 132,259
Notes receivables from related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 870 -
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd.. - 51,600
870 51,600
Other receivables from related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
JMCG Import & Export Co., Ltd 5,093 2,725
Prepayments for purchasing of goods 30 June 2013 31 December 2012
RMB’000 RMB’000
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 179,099 99,112
64
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Prepayments for construction in progress 30 June 2013 31 December 2012
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 9,002 2,265
JMCG Jiangxi Engineering Construction Co., Ltd. 2,643 738
11,645 3,003
Trade payables to related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
JMCG Interior Trim Factory 153,866 95,441
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 212,366 229,572
Jiangxi Jiangling Lear Interior System Co., Ltd. 105,743 107,978
Visteon Climate Control Nanchang 67,931 57,949
JMCG 9,243 18,199
Jiangxi Jiangling Chassis Co., Ltd. 234,171 165,597
Nanchang Gear Co., Ltd. 941 1,573
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 62,585 71,532
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd. 10,138 8,780
Jiangxi JMCG Shangrao Industrial Co., Ltd. 2,992 3,082
Nanchang JMCG Printing Plant Co., Ltd. 1,130 711
Nanchang Unistar Electrical and Electronics
Co.,Ltd. 29,989 -
Jiangling Material Co. 1,333 1,284
GETRAG (Jiangxi) Transmission Company 149,452 166,605
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 88,943 67,957
Ford 63,085 48,005
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 4,956 7,349
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 20,738 28,609
Nanchang Lianda Machinery Co., Ltd. 16,578 15,367
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 9,862 9,145
Jiangxi Isuzu Engine Co., Ltd. 3,308 854
Jiangxi Biaohong Engine Tappet Co., Ltd. 1,893 1,601
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 2,598 2,558
Jiangxi Jiangling Material Utilization Co., Ltd. 3,734 1,405
Others 414 631
1,257,989 1,111,784
65
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
Ford 98,948 141,059
Ford Otosan Company 8,290 6,585
Ford Motor (China) Co., Ltd. 1,271 534
JMCG Jiangxi Engineering Construction Co., Ltd. 2,029 5,840
Jiangxi Jiangling Lear Interior System Co., Ltd. 2,200 3,092
Ford Motor Company of Australia Limited 800 1,008
Ford Global Technologies,LLC 17,746 11,440
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd. 1,195 -
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 6,890 4,467
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 2,255 2,255
Jiangxi Jiangling Chassis Co., Ltd. 1,702 1,702
JMH 478 266
GETRAG Ford Transmissions Gmbh - 1,900
Nanchang JMCG Liancheng Auto Component
Co., Ltd. - 1,251
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 285 5,010
Nanchang JMCG Shishun Logistics Co., Ltd. 2,240 2,240
JMCG 1,038 69
Others 1,823 4,002
149,190 192,720
Advance from related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
Land Wind Sales Co., Ltd. 231 75
Jiangxi Sinodef International Trade
Co.,Ltd. 441 290
Others 24 51
696 416
Cash deposit in related parties 30 June 2013 31 December 2012
RMB’000 RMB’000
JMCF (Note 20) 190,974 188,865
66
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
iv) Service fee paid for management staff
Pursuant to an agreement among the Company, Ford, Ford Motor Research & Engineering
(Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. in 2008, some employees of Ford, Ford
Motor Research & Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. were
assigned to the Company as management staff. During the six months ended 30 June 2013,
the Company accrued service fee of approximately USD3,250,000 (equivalent to
approximately RMB20,313,000), RMB265,000 and RMB1,347,000 payable to Ford, Ford Motor
Research & Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. for these
employees, respectively.
Pursuant to an agreement between the Company and JMH in January 2012, some employees
of JMH were assigned to the Company as management staff. During the six months ended 30
June 2013, the Company accrued service fee of approximately RMB 478,000 payable to JMH
for these employees.
v) Guarantee
As at 30 June 2013, bank loans of USD 950,000 (equivalent to approximately RMB 5,867,000)
(2012: USD 982,000 equivalent to approximately RMB 6,174,000) were guaranteed by JMCF
(Note 23).
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 2013, the total remuneration of the key management was
approximately RMB 7,142,000 (the six months ended 30 June 2012: RMB 9,065,000).
vii) Royalty fee
a) Pursuant to a development agreement among the Company, Ford, Ford Global
Technologies, LLC and Ford Otosan Company in 2008, the Company agreed to pay royalty fee
to Ford at 2.6% on the net sales amount of V348 series automobiles till the sale of the products
ceased. The 67.31% and 32.69% of total royalty fee should be paid to Ford Global
Technologies, LLC and Ford Otosan Company respectively. During he six months ended 30
June 2013, the total royalty fee due to Ford Global Technologies, LLC and Ford Otosan
Company was approximately USD 3,566,000 (equivalent to approximately RMB 22,194,000).
As at 30 June 2013, the balance of USD 3,566,000 (equivalent to approximately RMB
22,194,000) not yet paid was included in other payables.
b) Pursuant to a technology licensing contract between the Company, Ford and Ford Global
Technologies, LLC in 2007, the Company agreed to pay of licensing fee to Ford or its designee
at USD92 for each of the Puma Diesel Engine manufactured by the Company. During the six
months ended 30 June 2013, the total licensing fee due to Ford Global Technologies, LLC was
approximately USD 774,000 (equivalent to approximately RMB 4,836,000). As at 30 June
2013, the balance of USD 774,000 (equivalent to approximately RMB 4,836,000) not yet paid
was included in other payables.
67
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
33 Related party transactions (continued)
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 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 the 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 management of the Company believes that meaningful
information relating to such kind of related parties transactions has been adequately disclosed.
The Group has certain transactions with other state-owned enterprises mainly including sales
and purchases of goods and services, payments for utilities, purchase of fixed assets and
depositing and borrowing money. Except for the transactions and balances disclosed as
follows, there is no individually or collectively significant transactions:
Transactions with other state-owned entities
Six months ended 30 June
2013 2012
RMB’000 RMB’000
Purchase of goods 779,026 693,188
Purchase of fixed assets 6,570 19,382
Interest income 72,675 86,228
Balances with other state-owned entities
30 June 2013 31 December 2012
RMB’000 RMB’000
Cash and cash equivalents 5,738,163 5,339,752
Trade and other payables 436,837 303,502
34 Principal subsidiary
As at the date of this report, the Group has the following subsidiary:
Place and date of Percentage of equity
Entity incorporation interest held Principal activities
JMCH Taiyuan, PRC / 100% Manufacture and sale of
8 January 2013 automobiles and spare parts
68
Chapter XI Catalog on Documents for Reference
1. Originals of 2013 half-year financial statements signed by Chairman, Chief Financial
Officer and Chief of Finance Department;
2. Originals of all the documents and public announcements disclosed in newspapers
designated by CSRC during the reporting period.
3. The 2013 Half-year Report prepared in China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 28, 2013
69
