Jiangling Motors Corporation, Ltd.
2014 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 ...................................................... 72
Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
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 2013 Annual Report for details.
Chapter III Operating Highlight
I. Main accounting data and financial ratios
Unit: RMB ‘000
Reporting period Same period Change (%)
(2014 first half)* last year*
Revenue 12,274,930 9,670,757 26.93
Profit Attributable to the Equity
1,164,377 937,503 24.20
Holders of the Company
Net Cash Generated From
1,256,162 1,488,194 -15.59
Operating Activities
Basic Earnings Per Share (RMB) 1.35 1.09 24.20
Diluted Earnings Per Share (RMB) 1.35 1.09 24.20
Weighted Average Return on Net Up 0.97
11.93 10.96
Asset Ratio percentage point
At the end of At the end of the Change (%)
reporting period* previous year
Total Assets 17,825,423 16,484,699 8.13
Shareholders’ Equity Attributable
to the Equity Holders of the 9,656,437 9,173,999 5.26
Company
Note: *unaudited financial indexes.
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Chapter IV Report of the Board of Directors
1. Summary
In the first half of 2014, China automobile industry production and sales volume
increased steadily and rationally. The first half total sales volume was 11.68 million,
increased 8.4% compared with the same period last year. Commercial vehicle sales
volume was 2.05 million, decreased 3.2% compared with the same period last year.
JMC’s core business is production and sales of light commercial vehicles and related
components. Its major products include JMC series light truck, pickup, Yusheng SUV,
Transit series commercial vehicles, and heavy duty trucks. The Company also
produces engines, castings and other components for sales to domestic and overseas
markets.
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 2014, JMC
achieved sales volume of 132,938 units, increased 21% compared with the same
period last year, achieved revenue of RMB 12.28 billion, which increased 27%
compared with the same period last year, and achieved net profit of RMB 1.16 billion,
which increased 24% compared with the same period last year.
2. Core Business Analysis
i. Sales Revenue Analysis
In the first half of 2014, JMC sales volume of 132,938 units, including JMC light
truck of 48,353 units, JMC pickup of 35,511 units, Yusheng SUV of 15,369 units and
Transit CV of 33,671 units and Heavy Truck of 34 units. Total sales volume increased
21% compared with the same period last year. Total production volume was 128,875
units, including JMC light truck of 48,090 units, JMC pickup of 33,739 units,
Yusheng SUV of 15,646 units and Transit CV of 31,356 units and Heavy Truck of 44
units.
In the first half of 2014, JMC achieved a market share at 1.14% of total industry, up
0.12 point from last year. JMC light truck and pickup accounted for 9.5% market
share, up 2.2 points from last year. Transit accounted for 18.5% market share, down
1.7 points from last year. (Data source for above data: China Association of
Automobile Manufacturers and the Company sales records)
In the first half of 2014, JMC total sales revenue was RMB 12.28 billion, increased 27%
compared with the same period last year.
In the first half of 2014, JMC total sales value to the top 5 customers was RMB 1,632
million, accounting for about 13% of JMC’s total turnover.
ii. Cost Analysis
Unit: RMB’000
Product 2014 1H 2013 1H YOY
5
Cost in Cost in change
proportion proportion
core core （%）
（%） （%）
business business
Vehicle 8,440,454 92.4% 6,505,300 92.0% 29.7%
Components 693,439 7.6% 565,224 8.0% 22.7%
The total value of purchases from the top 5 suppliers was RMB 1,855 million,
accounting for about 22% of JMC’s total annual purchase amount.
iii. Expense Analysis
Unit: RMB’000
Item 2014 1H 2013 1H Y-O-Y change（%）
Sales Tax 439,827 272,146 61.6%
Distribution Costs 844,977 567,567 48.9%
Finance income -net 124,815 88,202 41.5%
Sales tax increased by 62%, mainly due to the increase of consumption tax caused by
the volume increase of vehicles which need to pay the consumption tax.
Distribution costs increased by 49%, mainly due to the increase of sales volume.
Finance income -net increased by 42%, mainly due to the bank deposits increased.
iv. Product Development
In 2014, JMC continued to focus on development of new product programs. Product
related spending centered at future product development and compliance with
regulatory requirements. The N800, N352, N330, E802, J08, J09, J10, J15, J18
programs will reflect market driven improvements including increased payloads, new
styling, improved power lift, etc. The JX493 and E802 projects, self-development gas
engine will further expand the Company's engine development capability, engine
manufacturing capacity and ensure the Company is compliant with stringent emission
regulations. The development expenditure which accounted as administrative expense
is 588 Mils, 6% of net assets, 5% of the revenues.
v. Cash flow analysis
Generated from financial activities net cash outflow decreased by RMB 550 Mils,
down 99.9% from the same period last year, mainly due to repayment of accounts
payable of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) in the first half of 2013.
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)
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I. Vehicle 11,234,673 8,440,454 24.9% 27.7 29.7 -1.1
II. Components 936,601 693,439 26.0% 19.4 22.7 -1.9
Total 12,171,274 9,133,893 25.0% 27.0 29.2 -1.2
Including:
Related party
765,599 624,813 18.4% 3.8 3.4 0.3
transaction
The decrease of the margin in the reporting period reflects the negative production
mix change 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 475,351 13.17
North China 1,126,072 10.48
East China 5,549,832 17.46
South China 2,178,747 67.29
Central China 1,148,437 28.33
North-west China 489,915 20.80
South-west China 1,202,922 47.83
4. Analysis of assets and liabilities
i. Major changes in assets
Unit: RMB’000
YOY YOY
June 30, 2014 December 31, 2013 Amount Proportion
Asset item
change change
Amount Proportion Amount Proportion (%) (Points)
Property, plant and
5,352,529 30.0% 5,149,137 31.2% 4.0% -1.2
equipment
Inventories 1,576,061 8.8% 1,745,927 10.6% -9.7% -1.8
Trade and other receivables 2,465,725 13.8% 2,059,295 12.5% 19.7% 1.3
Cash and cash equivalents 7,331,382 41.1% 6,479,972 39.3% 13.1% 1.8
Lease prepayment 597,730 3.4% 604,831 3.7% -1.2% -0.3
Trade and other receivables at the end of report period increased by RMB 406 million,
up 20% from the end of 2013, mainly due to increase of sales volume and revenue.
Additionally, dealers can choose more mode of payment.
ii. Major changes in liabilities
Unit: RMB’000
Asset item June 30, 2014 December 31, 2013 YOY YOY
7
Amount Proportion
change change
Amount Proportion Amount Proportion (%) (Points)
Trade and other
7,744,004 94.8% 6,934,919 94.9% 11.7% -0.1
payables
iii. The fair value of the assets and liabilities - see the notes to financial statements for
17.
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 operations. As a mainstay of domestic
light commercial vehicle industry, JMC ranked among the top hundred Chinese listing
corporations with comprehensive strength for many years. Company has been certificated
as a national enterprise technology center, high-tech enterprise and national automobile
export base.
JMC's influence over auto industry is improving steadily, making considerable
progress both in technical equipment and new product development.JMC successfully
completed Xiaolan New Plant, R&D Center, which greatly strengthen the company’s
product development capacity, manufacturing efficiency and overall sales
performance.
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. In the first half of 2014, 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
Unit: RMB’000
Name of Type of Main Registered Operating Net
Assets Net Assets Turnover
Companies Companies Products Capital Profit Profit
Jiangling
RMB
Motors Sales Sales vehicle,
Subsidiary 50.00 2,008,209 104,908 10,797,221 73,554 54,908
Corporation, service parts
million
Ltd
Product
heavy
JMC Heavy commercial RMB
Duty Vehicle Subsidiary vehicle , 281.79 904,410 55,005 10,246 -90,062 -39,529
Co., Ltd engine, million
component,
and related
8
service
Visteon Auto Automotive
Joint RMB
Air-conditionin air
-Stock 46.63 349,017 182,310 297,223 82,904 60,862
g (Nanchang) conditioning
Company million
Co. 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 2012 Committed
Approval Date
(RMB Mils) (RMB Mils)
(RMB Mils)
J08 Program 1,233 149 418 First Half,
2015
J09 Program 2,416 233 723 First Half,
2016
Capacity
Investment in 2,133 38 1,746 Second 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 2014, China’s automobile industry sales were 11.68 million, up 8.4%
over 2013. Commercial vehicle sales continued to decline, decreasing by 3.2%
compared with the same period 2013. Meanwhile passenger vehicle industry
maintained growth, increasing by 11.2% compared with the same period 2013.
Especially SUV sales growth rate achieved 37.1%, becoming a major force in the
future growth of the auto market.
China's Car Parc per capita is less than half of the world’s average level. China’s auto
market has a great potential with strong demand in the future.
ii. Corporation Strategy
Company’s objective is to produce and sell world class products with the best
customer satisfaction in auto industry. JMC will continue to introduce new light truck,
pickup, light bus and SUV programs in the future to further strengthen the market
share performance. At the same time, JMC will strengthen SUV sales performance
and penetrate into heavy truck segment.
iii. 2014 Business Plan
The Company is targeting 2014 revenue level at RMB 24 billion, an increase of 16%
vs. 2013. 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 with the progress of new product
development and capacity expansion actions. To enhance profitability, the company is
committed to the following plans in 2014:
(1) Achieve volume and market share targets by enhancing the distribution network
and sales/marketing activities.
(2) Continue to improve product quality, pursue cost reduction opportunities, and
improve operating efficiency to achieve profit and cost targets.
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(3) Work with technical partners to execute the N800, N352, N330, E802, J08, J09,
J10, J15, J18 programs.
(4) Expand finished vehicle exports and OEM components sales business
iv. Potential Challenges and Solutions
In 2014, the company will continue to face fiercer competition, more stringent
regulatory requirements, intensifying cost pressures and a slowdown in China’s
economic growth.
To achieve steady growth, the company will continue to focus on the following
aspects in 2014.
(1) Optimizing company’s production system to improve efficiency and product
quality.
(2) Tactically optimizing marketing spending and sales promotion that improve
market share.
(3) Improve supplier’s capability and parts quality.
(4) Balancing management of controllable expenses, while ensuring achievement of
company’s long term growth strategy.
(5) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
(6) Optimize and deliver company’s growth strategies to ensure sustainable long-term
growth.
The Company will continue to implement previously established processes and
conduct cost reduction and waste elimination throughout the enterprise. Additionally,
we are maximizing design optimization and build in cost reduction concept in new
product design phase. With the support of our partners, we will continue to execute
those major projects approved by the Board, including N800, N352, N330, E802, J08,
J09, J10, J15 and J18 etc. These measures will accelerate the progress of new
competitive and profitable products entrance into the market. The Company will also
cast efforts to ensure timely delivery of quality heavy truck product for the heavy
truck operation. The Company will also devote efforts in strengthening dealer
network in the tier II, III cities and overseas markets to achieve better new vehicle and
parts sales in domestic and overseas markets.
8. Profit Distribution
The 2013 Annual Shareholders’ Meeting of the Company approved the 2013 calendar
year profit distribution plan on June 27, 2014. Announcement of 2013 calendar year
dividend distribution was published in China Securities, Securities Times and Hong
Kong Commercial Daily on July 8, 2014, and it has been executed accordingly.
The 2013 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 7.9 (including tax) per 10 shares is to be distributed to shareholders.
The cash dividends on B shares shall be paid in Hong Kong Dollars converted at
HKD 1.00 = RMB 0.7938, being the middle rate of the exchange rates between HK
dollar and RMB quoted by the People’s Bank of China on the first working day (June
30, 2014) immediately after the relevant resolutions were passed at the Company’s
Shareholders’ Meeting.
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Equity Record Date and Ex-dividend Date as follows:
i. Equity record date for A shares: July 14, 2014;
Ex-dividend date: July 15, 2014.
ii. Last trading date for B shares: July 14, 2014;
Ex-dividend date: July 15, 2014;
Equity record date for B shares: July 17, 2014.
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 Type of Object Information Discussed and
Method Object Materials offered
January 9, In the Oral Institution Seven analysts from Orient JMC Operating highlights
2014 Company Communication Securities Company
Limited, Bank of
Communications Schroder
Fund Management Co.,
Ltd., China Asset
Management Co., Ltd., First
Capital Securities Co., Ltd.,
Everbright Pramerica Fund
Management Co., Ltd.,
Minsheng Tonghui Asset
Management Co., Ltd.,
Industrial Securities Co.,
Ltd.
January 13, In the Oral Institution Two analysts from Shanghai JMC Operating highlights
2014 Company Communication Heqi Investment Consulting
Company, Owl Creek Asset
Management LP.
January 20, In the Oral Institution An analyst from CLSA JMC Operating highlights
2014 Company Communication Asia-Pacific Markets
February In the Oral Institution Two analysts from UBS JMC Operating highlights
14, 2014 Company Communication Securities Co., Ltd.
February In the Oral Institution Three analysts from Beijing JMC Operating highlights
19, 2014 Company Communication Runhui Asset Management
Co., Ltd., China Merchants
Securities Co., Ltd., CITIC
Securities Company Limited
March 17, In the Oral Institution An analyst from Changjiang JMC Operating highlights
2014 Company Communication Securities Company Limited
March 25, In the Oral Institution An analyst from China JMC Operating highlights
2014 Company Communication International Capital
Corporation Limited
March 27, In the Oral Institution Six analysts from Heshi JMC Operating highlights
2014 Company Communication Investment Consulting
Company, APS China
Research Pte Ltd., Soochow
Asset Management Co.,
Ltd., Essence Fund
Management Co., Ltd., UG
Investment Advisers
Limited, Industrial
11
Securities Co., Ltd.
April 22, In the Oral Institution Nine analysts from UBS JMC Operating highlights
2014 Company Communication Securities Co., Ltd.,
ABC-CA Fund Management
Co., Ltd., CITIC Private
Equity Funds Management
Co., Ltd., Galaxy Asset
Management Company,
Rongtong Fund
Management Co., Ltd., UG
Investment Advisers
Limited, BOC International
(China) Limited, Shenzhen
Hongchou Investment Co.,
Ltd.
April 30, In the Oral Institution Four analysts from Guotan JMC Operating highlights
2014 Company Communication Junan Securities Co., Ltd.,
First Capital Securities Co.,
Ltd., Bohai Securities Co.,
Ltd., Future Asset
Investment Consulting
(Shanghai) Company
May 13, In the Oral Institution An analysts from JMC Operating highlights
2014 Company Communication CITIC-Prudential Fund
Management Co., Ltd.
May 29, In the Oral Institution Three analysts from UBS JMC Operating highlights
2014 Company Communication Securities Co., Ltd., Bosera
Asset Management Co.,
Ltd., China Southern Asset
Management Co., Ltd.
June 16, In the Oral Institution Two analysts from CITIC JMC Operating highlights
2014 Company Communication Securities Co., Ltd., Harvest
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, approved JMC Year 2014 Amendment to the Articles of Association and
JMC Year 2014-2016 Shareholder Return Plan, and appointed
PricewaterhouseCoopers Zhong Tian LLP as JMC’s 2014 and 2015 C-SOX auditor.
2. There was neither major litigation, arbitration, query from the media, nor
bankruptcy in the reporting period.
3. JMC had no major purchase or sale of assets in the reporting period.
4. JMC had no equity incentive plan in the reporting period.
5. 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 200 million are listed as
12
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 400,796 4.85
invoicing
JMCG 30 days after
Contracted
JMCG Interior Trim Factory wholly-owned
price
delivery and 353,799 4.28
subsidiary invoicing
Associate of 60 days after
GETRAG (Jiangxi) Contracted
Transmission Company
JMCG
price
delivery and 315,566 3.82
invoicing
Nanchang Bao-jiang Steel Associate of
Contracted
Processing & Distribution JMCG
price
Prepayment 290,404 3.52
Co., Ltd.
Subsidiary of 60 days after
Jiangling-Lear Interior Trim Contracted
Factory
JMCG
price
delivery and 260,473 3.15
invoicing
Controlling
Contracted
Ford shareholder of
price
D/P 220,474 2.67
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 200
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 573,062 4.67
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.
ii. The Company had no major related party transaction concerning transfer of assets
or equity in the reporting period.
6. 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.
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iii. JMC did not entrust other people with cash asset management in the reporting
period.
7. 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 None None None N/A
in equity
Asset restructuring None None None N/A
Initial Public Offering
None None None N/A
or re-funding
Ford December within 6 In the reporting period,
2, 2013 months as of Ford exercised its
November 29, commitments sincerely and
2013 did not breach the promise.
Other commitments *
The commitments had been
exercised completely as of
the end of the reporting
period.
* 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.
Ford acquired an aggregate of 17,264,194 B Shares of JMC by the method of
centralized bidding and block transaction during the period from January 21, 2013 to
November 29, 2013, representing 2.000% of the aggregate issued shares of JMC, and
had finished this Shareholding Increase. After these shareholding increases, the B
Shares of JMC held by Ford are 276,228,394 shares (of which 100,000,000 shares are
indirectly held by Ford through Citibank N.A. in the form of American Depositary
Receipts), representing 32.000% of the aggregate issued shares of JMC.
8. Appointment or Dismissal of Accounting Firms
Upon the approval of 2013 Annual Shareholders’ Meeting, JMC agrees to appoint
PwC Zhong Tian as JMC’s 2014 and 2015 C-SOX auditor.
The compensation paid to the accounting firm is as follows:
Accountant Firm A & B Share 2013 C-SOX auditor Out of Pocket Expense
Auditor for Year
2013
PwC ZhongTian RMB 1.8 million RMB 0.44 million Included in audit fee.
9. Neither JMC nor its Directors or senior management were punished by regulatory
authorities in the reporting period.
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10. Others
JMC received government incentives of RMB 264.97 million appropriated by
Nanchang City, Xiaolan Economy Development Zone in Nanchang County,
Qingyunpu District in Nanchang City and Taiyuan Economic & Technological
Development Zone, which is to support JMC’s development. These government
incentives have been recorded into the current period profits and losses.
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
2,541,900 0.29% - - - -720,000 -720,000 1,821,900 0.21%
A shares
1.State-owned
- - - - - - - - -
shares
2. State-owned legal
- - - - - - - - -
person shares
3. Other domestic
2,541,900 0.29% - - - -720,000 -720,000 1,821,900 0.21%
shares
Including:
Domestic legal
2,421,000 0.29% - - - -636,000 -636,000 1,785,000 0.21%
person shares
Domestic natural
120,900 - - - - -84,000 -84,000 36,900 -
person shares
II. Unlimited
860,672,100 99.71% - - - 720,000 720,000 861,392,100 99.79%
tradable shares
1. A shares 516,672,100 59.86% - - - 720,000 720,000 517,392,100 59.94%
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:
1. The trading restriction on the limited tradable A shares of 600,000 shares held by
GWQM Company and the limited tradable A shares of 120,000 shares held by Mr.
Wang Zhenyi was relieved on June 5, 2014.
2. 36,000 shares with trading restriction held by Zaozhuang Central District Urban
Credit Cooperative, the former legal person shareholder, were transferred to Mr.
Chu Kun in April 2014 according to judicial decision.
II. Shareholders
1. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total shareholders (as of JMC had 16,656 shareholders, including 12,297 A-share holders and 4,359 B-share holders.
June 30, 2014)
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, 2014
(%) Restriction frozen
Jiangling Motor Holding State-owned 0
41.03 354,176,000 0 0
Co., Ltd. legal person
Ford Motor Company Foreign legal 0
32 276,228,394 0 0
person
Shanghai Automotive Co., State-owned 1.51 13,019,610 0 0 0
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Ltd. Legal person
Domestic
Canada Pension Plan
non-state-owned 0.92 7,923,990 0 0 0
Investment Board legal person
Domestic
CICC (Hong Kong) Asset
non-state-owned 0.75 6,487,675 0 0 0
Management Co., Ltd. legal person
Jpmblsa Re Ftif
Foreign legal
Templeton China Fund Gti 0.70 6,026,850 -45,000 0 0
person
5497
Bank of Communications
Domestic
Schroder Growth
non-state-owned 0.57 4,909,986 4,909,986 0 0
Securities Investment legal person
Fund
Bank of Communications
Domestic
Schroder Prudent &
non-state-owned 0.57 4,901,674 316,090 0 0
Mixed Securities legal person
Investment Fund
Foreign legal
Invesco Funds Sicav 0.54 4,698,109 0 0 0
person
Templeton Dragon Fund, Foreign legal
0.50 4,317,112 357,484 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 276,228,394 B share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Canada Pension Plan Investment Board 7,923,990 A share
CICC (Hong Kong) Asset Management Co.,
6,487,675 A share
Ltd.
Jpmblsa Re Ftif Templeton China Fund Gti
6,026,850 B share
5497
Bank of Communications Schroder Growth
4,909,986 A share
Securities Investment Fund
Bank of Communications Schroder Prudent
4,901,674 A share
& Mixed Securities Investment Fund
Invesco Funds Sicav 4,698,109 B share
Templeton Dragon Fund, Inc. 4,317,112 B share
Notes on association among above-mentioned Bank of Communications Schroder Growth Securities Investment Fund and
shareholders Bank of Communications Schroder Prudent & Mixed Securities Investment
Fund are in custody of Bank of Communications Schroder Fund Management
Co., Ltd.
2. Change of controlling shareholder or actual controller
There is no change in the controlling shareholders and actual controlling parties.
3. Intention or implementation of shareholding increase from the shareholder and its
person acting in the concert during the reporting period
As JMC knows, the shareholder and its person acting in the concert does not put
16
forward any shareholding increase plan in the reporting period, and does not execute
such plan.
4. Preferred shares
JMC did not issue any preferred share in the reporting period.
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
Directors Change:
Given the three-year term for the seventh Board expired, the Board members were
re-elected pursuant to the provisions of the Articles of Association of JMC.
Upon the approval of JMC 2013 Annual Shareholders’ Meeting, Mr. Wang Xigao, Mr.
John Lawler, Mr. Qiu Tiangao, Mr. Manto Wong, Mr. Yuan-Ching Chen and Mr.
Wang Kun were elected as Directors of JMC, and Ms. Wang Xu, Mr. Lu Song and Ms.
Wang Kun were elected as Independent Directors. Ms. Xiong Chunying and Mr. Cai
Yong did not hold the posts of Director of JMC, and Mr. Shi Jiansan and Mr. Vincent
Pun-Fong KWAN did not hold the posts of Independent Director of JMC.
Supervisors Changes:
Given the three-year term for the seventh Supervisory Board expired, the Supervisory
Board members were re-elected pursuant to the provisions of the Articles of
Association of JMC.
Upon the approval of JMC 2013 Annual Shareholders’ Meeting, Mr. Zhu Yi, Mr.
Alvin Qing Liu and Mr. Zhang Jian were elected as Supervisors of JMC. Mr. Liu
Niansheng and Ms. Xu Lanfeng were elected in the meeting of employee
representatives as members of the new Supervisory Board of JMC.
Senior Management changes:
Due to re-election of the Board of Directors, the first session of the new Board held
on June 27, 2014 approved the following resolutions: appointed Mr. Yuan-Ching Chen
as the President of the Company; based on the Chairman’s nomination, appointed Mr.
Wan Hong as the Board Secretary; based on the President’s nomination, appointed Ms.
Xiong Chunying and Ms. Liu Nianfeng as EVPs, Mr. Dennis Leu as CFO, Mr. Wan
Hong, Mr. Zhong Wanli, Mr. Li Qing, Mr. Zhu Shuixing, Mr. John Scholtes, Ms. Liu
Shuying and Mr. Liao Zanping as VPs.
Chapter VIII Financial Statements
17
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2014
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2014# 2013#
RMB’000 RMB’000
Revenue 5 12,274,930 9,670,757
Sales tax (439,827) (272,146)
Cost of sales 6 (9,236,375) (7,154,927)
Gross profit 2,598,728 2,243,684
Distribution costs 6 (844,977) (567,567)
Administrative expenses 6 (821,763) (675,574)
Other income 8 273,737 6,180
Operating profit 1,205,725 1,006,723
Finance income 9 125,317 92,971
Finance costs 9 (502) (4,769)
Finance income-net 9 124,815 88,202
Share of profit of investments accounted for 15
using the equity method 11,655 5,911
Profit before income tax 1,342,195 1,100,836
Income tax expense 10 (177,818) (144,073)
Profit for the period 1,164,377 956,763
Other comprehensive income - -
Total comprehensive income for the period 1,164,377 956,763
Profit attributable to:
Equity holders of the Company 1,164,377 937,503
Non-controlling interests - 19,260
1,164,377 956,763
Total comprehensive income attributable to:
Equity holders of the Company 1,164,377 937,503
Non-controlling interests - 19,260
1,164,377 956,763
Earnings per share for profit attributable to
the equity holders of the Company
(expressed in RMB per share)
- Basic and diluted 11 1.35 1.09
#Unaudited financial indexes
The notes on pages 22 to 71 are an integral part of these consolidated financial statements.
18
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
(All amounts in RMB unless otherwise stated)
As at
31 December
Note 30 June 2014#
2013
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment(“PPE”) 12 5,352,529 5,149,137
Lease prepayment 13 597,730 604,831
Intangible assets 14 107,458 108,035
Investments accounted for using the equity method 15 34,912 34,682
Deferred income tax assets 16 359,626 302,351
6,452,255 6,199,036
Current assets
Financial assets at fair value through profit or loss 17 - 469
Inventories 18 1,576,061 1,745,927
Trade and other receivables 19 2,465,725 2,059,295
Cash and cash equivalents 20 7,331,382 6,479,972
11,373,168 10,285,663
Total assets 17,825,423 16,484,699
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 22 456,451 456,451
Retained earnings 7,520,163 7,037,725
9,656,437 9,173,999
Non-controlling interests - -
Total equity 9,656,437 9,173,999
LIABILITIES
Non-current liabilities
Borrowings 23 5,037 5,190
Deferred income tax liabilities 16 29,992 30,535
Retirement benefit obligations 24 44,572 48,788
Provisions for warranty and other liabilities 25 225,305 191,095
Other non-current liabilities 5,520 5,560
310,426 281,168
Current liabilities
Financial liabilities at fair value through profit or loss 26 119 -
Trade and other payables 27 7,744,004 6,934,919
Current income tax liabilities 105,821 86,001
Borrowings 23 403 399
Retirement benefit obligations 24 8,213 8,213
7,858,560 7,029,532
Total liabilities 8,168,986 7,310,700
Total equity and liabilities 17,825,423 16,484,699
#Unaudited financial indexes
The notes on pages 22 to 71 are an integral part of these consolidated financial statements.
19
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2014
(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 2013, as
restated 863,214 816,609 454,316 5,945,668 106,378 8,186,185
Profit for the six months - - - 937,503 19,260 956,763
Dividend relating to 2012 - - - (604,250) (125,638) (729,888)
Other - - (1,540) - - (1,540)
Balance at 30 June 2013, as
restated 863,214 816,609 452,776 6,278,921 - 8,411,520
Balance at 1 January 2014 863,214 816,609 456,451 7,037,725 - 9,173,999
Profit for the six months - - - 1,164,377 - 1,164,377
Dividend relating to 2013 28 - - - (681,939) - (681,939)
Balance at 30 June 2014 863,214 816,609 456,451 7,520,163 - 9,656,437
#Unaudited financial indexes
The notes on pages 22 to 71 are an integral part of these consolidated financial statements.
20
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2014
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2014# 2013#
RMB’000 RMB’000
Cash flows from operating activities
Cash generated from operations 29 1,472,281 1,640,083
Interest paid (303) (5,211)
Income tax paid (215,816) (146,678)
Net cash generated from operating activities 1,256,162 1,488,194
Cash flows from investing activities
Purchase of held-to-maturity investments - (200,000)
Purchase of PPE (581,948) (443,625)
Acquisition of a subsidiary, net of cash acquired - (166,169)
Other cash paid relating to investing activities (143) (431)
Proceeds from disposal of PPE 29 6,631 1,644
Proceed from repayment of held-to-maturity investments - 200,524
Interest received 171,313 121,753
Other cash received from investing activities 59 154
Net cash used in investing activities (404,088) (486,150)
Cash flows from financing activities
Repayments of borrowings (204) (424,202)
Dividends paid to the Company’s shareholders (167) (845)
Dividends paid to minority shareholders of a subsidiary - (125,638)
Other cash paid relating to financing activities (293) (355)
Net cash used in financing activities (664) (551,040)
Net increase in cash and cash equivalents 851,410 451,004
Cash and cash equivalents at beginning of year 6,479,972 5,559,693
Effects of exchange rate changes - -
Cash and cash equivalents at end of period 7,331,382 6,010,697
#Unaudited financial indexes
The notes on pages 22 to 71 are an integral part of these consolidated financial statements.
21
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014, 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 26 August 2014.
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 2014
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 following standards have been adopted by the Group for the first time for the financial year
beginning on or after 1 January 2013 and have a material impact on the Group:
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).
IAS 19, 'Employee benefits' was revised in June 2011. The changes on the Group's
accounting policies has been 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).
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.
IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for
all forms of interests in other entities, including joint arrangements, associates, structured
entities and other off balance sheet vehicles.
(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:
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 profit or
loss, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9’s full
impact. 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 2014
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)
(b) New standards and interpretations not yet adopted (continued)
Amendment to IAS 32, ‘Financial instruments: Presentation’ on asset and liability
offsetting. These amendments are to the application guidance in IAS 32, ‘Financial
instruments: Presentation’, and clarify some of the requirements for offsetting financial
assets and financial liabilities on the balance sheet.
Amendments to IFRS 10, 12 and IAS 27 ‘Consolidation for investment entities’. These
amendments mean that many funds and similar entities will be exempt from consolidating
most of their subsidiaries. Instead, they will measure them at fair value through profit or
loss. The amendments give an exception to entities that meet an ‘investment entity’
definition and which display particular characteristics. Changes have also been made
IFRS 12 to introduce disclosures that an investment entity needs to make.
Amendment to IAS 36, 'Impairment of assets' on recoverable amount disclosures for
non-financial assets. This amendment addresses the disclosure of information about the
recoverable amount of impaired assets if that amount is based on fair value less costs of
disposal.
Amendment to IAS 39 ‘Financial Instruments: Recognition and Measurement’ - ‘Novation
of derivatives. This amendment provides relief from discontinuing hedge accounting when
novation of a hedging instrument to a central counterparty meets specified criteria.
IFRIC 21 ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income
tax. The interpretation addresses what the obligating event is that gives rise to pay a levy
and when should a liability be recognised. The Group is not currently subjected to
significant levies so the impact on the Group is not material.
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
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
(a) Business combinations
The Group applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. The Group recognises any non-controlling interest in
the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
24
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Subsidiaries (continued)
2.2.1 Consolidation (continued)
(a) Business combinations (continued)
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such re-measurement are recognised in profit
or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss
or as a change to other comprehensive income. Contingent consideration that is classified as
equity is not remeasured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over
the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of
consideration transferred, non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in profit or loss (Note 2.8).
(b) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its
fair value at the date when control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or financial asset. In addition,
any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive income are reclassified to
profit or loss.
2.3 Associates
An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the profit or loss of the investee
after the date of acquisition. The Group’s investment in associates includes goodwill identified
on acquisition.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share
of post-acquisition movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of
the associate.
25
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying
value and recognises the amount adjacent to ‘share of profit of investments accounted for
using equity method’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is
the Company’s functional and the Group’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying
cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within “other
income/(expense)-net”.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in amortised cost are recognised in profit or loss,
and other changes in carrying amount are recognised in other comprehensive income.
26
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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)
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.
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.
27
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration
transferred over company’s interest in net fair value of the net identifiable assets, liabilities and
contingent liabilities of the acquiree and the fair value of the non-controlling interest in the
acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to
each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in
circumstances indicate a potential impairment. The carrying value of goodwill is compared to the
recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any
impairment is recognised immediately as an expense and is not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development
projects (relating to the design and testing of new or improved products) are recognised as
intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic
benefits;
(e) adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably
measured.
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
2014.
(3) 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.
28
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(4) 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.
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.
29
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 Offsetting financial instruments
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.
30
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 referred to in (a) 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 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.
31
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 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.
2.14 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 allowace for impairment.
2.15 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.
2.16 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Where any group company purchases the Company’s equity share capital (treasury shares),
the consideration paid, including any directly attributable incremental costs (net of income taxes)
is deducted from equity attributable to owners of the Company until the shares are cancelled or
reissued. Where such shares are subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included
in equity attributable to the Company’s equity holders.
32
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 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.
2.18 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.
2.19 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.
2.20 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.
33
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Current and deferred income tax (continued)
(2) Deferred income tax
Inside basis differences
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Outside basis differences
Deferred income tax liabilities are provided on taxable temporary differences arising from
investments in subsidiaries, associates and joint arrangements, except for deferred income tax
liability where the timing of the reversal of the temporary difference is controlled by the group
and it is probable that the temporary difference will not reverse in the foreseeable future.
Generally the group is unable to control the reversal of the temporary difference for associates.
Only where there is an agreement in place that gives the group the ability to control the reversal
of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from
investments in subsidiaries only to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit available against which the temporary
difference can be utilised.
(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.
2.21 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.
34
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Employee benefits (continued)
(1) Pension obligations (continued)
In addition, the Group provides supplementary pension subsidies to certain qualified employees.
Such supplementary pension subsidies are considered as under defined benefit plans. The
liability recognised in the statement of financial position in respect of these defined benefit plans
is the present value of the defined benefit obligation at the balance sheet date less the fair value
of plan assets, together with adjustments for recognised actuarial gains or losses and past
service cost. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows according to the terms of the
related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period in
which they arise.
Past-service costs are recognised immediately in income.
35
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 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.
2.22 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.
2.23 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.
36
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 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) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
2.24 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is
impaired, the Group reduces the carrying amount to its recoverable amount, being the
estimated future cash flow discounted at the original effective interest rate of the instrument, and
continues unwinding the discount as interest income. Interest income on impaired loan and
receivables are recognised using the original effective interest rate.
2.25 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, where appropriate.
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.
37
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014, 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 2014 would
have been approximately RMB 12,859,000 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 2014, 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 2014, 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 2014 would have been increased/decreased by
approximately RMB 8,308,000.
(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 2014, the Group had cash of approximately RMB172,208,000 (2013:
RMB181,387,000) 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.
38
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014
Bank borrowings
- Principals 403 403 1,209 3,425
- Interests 80 74 186 231
Trade and other payables 6,574,962 - - -
Financial liabilities at fair
value through profit or loss 119 - - -
6,575,564 477 1,395 3,656
At 31 December 2013
Bank borrowings
- Principals 399 399 1,198 3,593
- Interests 82 76 193 256
Trade and other payables 6,353,471 - - -
6,353,952 475 1,391 3,849
39
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014 and 31 December 2013 were as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
Total borrowings 5,440 5,589
Total equity 9,656,437 9,173,999
Total capital 9,661,877 9,179,588
Gearing ratio 0.06% 0.06%
3.3 Fair value estimation
Financial assets at fair value through profit or loss 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,
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.
40
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
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.
41
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014, the Group has deferred tax assets of approximately RMB 359,626,000.
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.
As at 30 June 2014, the Group has deferred tax liabilities of approximately RMB 29,992,000.
Deferred tax liabilities were provided on taxable temporary differences arose from the fair value
gains on acquisition of a subsidiary.
(4) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with
the accounting policy stated in Note 2.8. The recoverable amounts of cash-generating units
have been determined based on fair value less cost of sale calculations. These calculations
require the use of estimates (Note 14).
42
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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
2014 2013
RMB’000 RMB’000
Changes in inventories of finished goods and
work in progress 289,238 (121,744)
Raw materials and consumables used 8,303,412 6,427,278
Employee benefit expenses (Note 7) 765,257 631,601
Depreciation of PPE (Note 12, 29) 268,159 205,700
Repairs and maintenance expenditure on PPE 38,232 29,214
Research and development expenditure 588,037 493,021
Amortisation of lease prepayment (Note 13, 29) 7,101 6,411
Amortisation of intangible assets (Note 14, 29) 3,692 3,514
Write-down of inventories (Note 29) - 2,608
Provision for receivables impairment (Note 19,
29) 1,896 1,458
Provision of warranty (Note 25) 114,578 73,453
Others 523,513 645,554
Total cost of sales, distribution costs and
administrative expenses 10,903,115 8,398,068
7 Employee benefit expenses
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Wages and salaries 570,078 460,241
Social security costs 65,323 52,640
Pension costs defined contribution plans 92,583 76,302
Others 37,273 42,418
765,257 631,601
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.
43
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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
making periodic benefit payments to certain early-retired employees until they reach their legal
retirement ages.
8 Other income
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Government grants(a) 273,905 5,653
Others (168) 527
273,737 6,180
(a) For the six months ended 30 June 2014, the Group received unconditional grants of
approximately RMB 273,905,000, mainly from Nanchang Municipal Government, Qinyunpu
District, Nanchang City, Xiaolan Economic Development District of Nanchang County and the
Economic Development District Administrative Commission of Taiyuan.
9 Finance income and cost
Six months ended 30 June
2014 2013
RMB’000 RMB’000
(a) Finance income
Interest income on bank deposits 98,181 75,359
Interest income on credit sales 27,136 17,612
125,317 92,971
(b) Finance cost
Interest expense on bank loans (209) (4,414)
Bank charges (293) (355)
(502) (4,769)
Net finance income 124,815 88,202
10 Taxation
(a) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2012, the Company is entitled to a preferential CIT rate of 15% from 2012 to 2014
(2013: 15%).
The amounts of income tax expense charged to profit or loss represented:
44
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation (continued)
(a) CIT (continued)
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Current tax (235,636) (142,317)
Deferred tax (Note 16) 57,818 (1,756)
(177,818) (144,073)
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
2014 2013
RMB’000 RMB’000
Profit before tax 1,342,195 1,100,836
Tax calculated at tax rates applicable to profits in
the respective companies (204,667) (168,025)
Tax concessions 469 43
Expense not deductible for tax purposes (3,073) 8,466
Income not subject to tax 40,009 39,553
Effect of different tax rates applied for the periods
in which the temporary differences are expected
to reverse (245) 4,122
Tax losses for which no deferred income tax
asset was recognised (10,311) (28,232)
Tax charge (177,818) (144,073)
The weighted average applicable tax rate was 15% (the six months ended 30 June 2013:
15%).
(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.
45
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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
2014 2013
Profit attributable to equity holders of the
Company (’000) 1,164,377 937,503
Weighted average number of ordinary shares in
issue (’000) 863,214 863,214
Basic earnings per share(RMB) 1.35 1.09
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 2014.
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)
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 2013
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
Year ended 31 December 2013
Opening net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276
Additions 214,810 43,625 16,394 5,408 46,004 1,283,797 1,610,038
Transfers 664,312 911,034 27,756 57,588 522,328 (2,183,018) -
Disposals (1,072) (3,446) (6,291) - (3,315) - (14,124)
Other deductions - - - - - (76,976) (76,976)
Impairment charge - (26,475) (1,075) (1,936) (17,878) - (47,364)
Depreciation charge (32,126) (154,472) (18,444) (97,534) (159,137) - (461,713)
Closing net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
At 31 December 2013
Cost 1,721,207 3,369,228 156,912 1,333,643 1,982,205 861,701 9,424,896
Accumulated depreciation and impairment (287,680) (1,756,039) (70,814) (1,057,826) (1,102,708) (692) (4,275,759)
Net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
Six months ended 30 June 2014
Opening net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
Additions - - - - - 494,380 494,380
Transfers 7,146 34,980 5,408 21,939 129,115 (198,588) -
Disposals - (13,686) (1,453) (581) (3,931) - (19,651)
Other deductions - - - - - (3,178) (3,178)
Impairment charge - - - - - - -
Depreciation charge (Note 6, 29) (21,173) (87,620) (9,744) (42,342) (107,280) - (268,159)
Closing net book amount 1,419,500 1,546,863 80,309 254,833 897,401 1,153,623 5,352,529
At 30 June 2014
Cost 1,728,353 3,282,113 153,307 1,353,990 1,849,595 1,154,315 9,521,673
Accumulated depreciation and impairment (308,853) (1,735,250) (72,998) (1,099,157) (952,194) (692) (4,169,144)
Net book amount 1,419,500 1,546,863 80,309 254,833 897,401 1,153,623 5,352,529
47
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014, depreciation expense of approximately
RMB232,201,000 (the six months ended 30 June 2013: RMB175,026,000) has been charged
in cost of sales, RMB1,048,000 (the six months ended 30 June 2013: RMB1,042,000) in
distribution costs and RMB34,910,000 (the six months ended 30 June 2013: RMB29,632,000)
in administrative expenses.
Lease rental expenses amounting to RMB 1,856,000 ((the six months ended 30 June 2013: RMB
2,957,000) 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 2014 31 December 2013
RMB’000 RMB’000
Opening net book amount 604,831 264,824
Additions - 353,173
Amortisation charge (Note 6, 29) (7,101) (13,166)
Closing net book amount 597,730 604,831
Cost 683,036 683,036
Accumulated amortisation (85,306) (78,205)
Net book amount 597,730 604,831
All amortisation expense was charged in administrative expenses.
48
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets
After-sale
management
model Software Goodwill Other Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2013
Opening net book amount - 17,678 - - 17,678
Addition - 8,335 89,028 49 97,412
Impairment charge - - - - -
Amortisation charge - (7,045) - (10) (7,055)
Closing net book amount - 18,968 89,028 39 108,035
At 31 December 2013
Cost 36,978 48,991 89,028 1,649 176,646
Accumulated amortisation (36,978) (30,023) - (1,610) (68,611)
Net book amount - 18,968 89,028 39 108,035
Six months ended 30 June
2014
Opening net book amount - 18,968 89,028 39 108,035
Addition - 3,115 - - 3,115
Impairment charge - - - - -
Amortisation charge (Note 6, 29) - (3,687) - (5) (3,692)
Closing net book amount - 18,396 89,028 34 107,458
At 30 June 2014
Cost 36,978 52,106 89,028 1,649 179,761
Accumulated amortisation (36,978) (33,710) - (1,615) (72,303)
Net book amount - 18,396 89,028 34 107,458
For the six months ended 30 June 2014, amortisation expense of approximately RMB 3,676,000 (the
six months ended 30 June 2013: RMB 3,498,000) was charged in administrative expenses and RMB
16,000 in distribution costs (the six months ended 30 June 2013: RMB 16,000).
49
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets (continued)
Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the
cash generating unit level. The goodwill is allocated to the following cash generating unit
(“CGU”):
31 December 2013 Addition Impairment 30 June 2014
RMB’000 RMB’000 RMB’000 RMB’000
JMC Heavy Duty Vehicle
Co., Ltd (‘JMCH’) 89,028 - - 89,028
The recoverable amount of the CGU is determined based on value in use calculations. These
calculations use pre-tax cash flow projections based on financial budgets approved by
management covering a five-year period. Cash flows beyond the five-year period are
extrapolated using the estimated growth rates stated below. The growth rate does not exceed
the long-term average growth rate for the heavy duty vehicle business in which the CGU
operates.
The key assumptions used for value in use calculations in 2014 are as follows:
Item JMCH
Compound annual volume growth rate 179%
Long term growth rate 3%
Discount rate 19.4%
The long term growth rates used are consistent with the forecasts included in industry reports.
The discount rates used are pre-tax and reflect specific risks relating to the relevant operating
subsidiary.
50
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15 Investments accounted for using the equity method
(a) Movement of investment accounted for using the equity method is set out as follows which is
an investment in an associate:
30 June 2014 31 December 2013
RMB’000 RMB’000
At beginning of the year 34,682 22,319
Share of profit (Note 29) 11,655 12,363
Dividends received (11,425) -
At end of the period 34,912 34,682
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”) in PRC, 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. (“Halla
Visteon Climate Control (Nanchang) Co.,Ltd”).On 14 May 2013, Visteon transferred its equity
interests of Visteon Hong Kong to Halla Visteon Climate Control Corporation, a subsidiary of
Visteon, and Visteon Climate Control Nanchang was renamed as Halla Visteon Climate
Control (Nanchang) Co., Ltd. (“Halla Visteon Climate Control (Nanchang)”).
Halla 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.
Although the Group holds less than 20% of the equity interests of Halla Visteon Climate
Control (Nanchang), the Group exercises significant influence by virtue of its appointment on
two directors to the board of directors of that company and has the power to participate in the
financial and operating policy decisions of Halla Visteon Climate Control (Nanchang), and is
regarded as an associate of the Group. The investment is accounted for using the equity
method of accounting.
(b) Summarised financial information for associate are as follows:
Summarised balance sheet
30 June 2014 31 December 2013
RMB’000 RMB’000
Current
Cash and cash equivalents 97,593 78,536
Other current assets (excluding cash) 199,915 163,095
Total current assets 297,508 241,631
Current liabilities (166,707) (113,574)
Non-current
Assets 51,509 53,048
Net assets 182,310 181,105
51
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15 Investments accounted for using the equity method (continued)
Summarised statement of comprehensive income
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Revenue 297,223 238,623
Cost of sales (193,093) (181,288)
Sale tax (2,330) (1,864)
Distribution costs (4,978) (1,167)
Administrative expenses (14,504) (12,659)
Financial income 586 7
Non-operating (expenses)/income 862 77
Profit before income tax 83,766 41,729
Income tax expense (22,904) (10,862)
Other comprehensive income - -
Total comprehensive income 60,862 30,867
(c) Reconciliation of summarised financial information
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Opening net assets 1 January 181,105 116,547
Profit for the period 60,862 30,867
Dividends distributed (59,657) -
Closing net assets 182,310 147,414
Interest in associate 19.15% 19.15%
Carrying value 34,912 28,230
52
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax
30 June 2014 31 December 2013
RMB’000 RMB’000
Deferred tax assets 362,013 302,421
Deferred tax liabilities- can be offset (2,387) (70)
Deferred tax liabilities- cannot be offset (29,992) (30,535)
Deferred tax assets (net) 359,626 302,351
Deferred tax liabilities (net) (29,992) (30,535)
The gross movement on the deferred income tax account is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
At beginning of the year 271,816 182,537
Acquisition of subsidiary - (32,253)
Credited to profit or loss
(Note 10) 57,818 122,244
Charged to other comprehensive income - (712)
At end of the period 329,634 271,816
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 2013
(Restated) 1,172 14,592 138,985 27,836 182,585
Credited /(Charged) to
profit or loss 6,029 (450) 111,359 3,610 120,548
Charged to other
comprehensive income - (712) - - (712)
At 31 December 2013 7,201 13,430 250,344 31,446 302,421
Charged /(Credited) to
profit or loss (3,077) (632) 63,506 (205) 59,592
At 30 June 2014 4,124 12,798 313,850 31,241 362,013
Deferred tax liabilities Forward
Amortisation of Fair value exchange
Intangible Assets gains contracts Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2013 - - (48) (48)
Credited/(Charged) to
profit or loss - 1,718 (22) 1,696
Acquisition of subsidiary - (32,253) - (32,253)
At 31 December 2013 - (30,535) (70) (30,605)
Charged/(Credited) to
profit or loss (2,387) 543 70 (1,774)
At 30 June 2014 (2,387) (29,992) - (32,379)
53
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 12,777 11,505
–Deferred tax asset to be recovered within
12 months 349,236 290,916
362,013 302,421
30 June 2014 31 December 2013
RMB’000 RMB’000
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (1,569) (1,789)
–Deferred tax liabilities to be recovered
within 12 months (30,810) (28,816)
(32,379) (30,605)
Tax losses for which no deferred income tax assets were recognised is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
Tax losses 214,189 231,162
The expiry years of the tax losses are as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
2015 32,459 32,459
2016 6,721 6,721
2017 89,447 89,447
2018 44,319 102,535
2019 41,243 -
214,189 231,162
17 Financial assets at fair value through profit or loss
30 June 2014 31 December 2013
RMB’000 RMB’000
Forward exchange contracts - 469
54
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
18 Inventories
30 June 2014 31 December 2013
RMB’000 RMB’000
Raw materials 971,412 852,041
Work in progress 139,013 126,919
Finished goods 465,636 766,967
1,576,061 1,745,927
For the six months ended 30 June 2014, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB8,592,650,000 ( the six months
ended 30 June 2013: RMB6,305,534,000).
A provision of RMB 19,410,000(2013: RMB 19,410,000) was made as at 30 June 2014. The
provision and reversal of the inventory write-down have been included in ‘cost of sales’ of
profit or loss.
19 Trade and other receivables
30 June 2014 31 December 2013
RMB’000 RMB’000
Trade receivables 807,975 472,540
Less: Provision for impairment of trade
receivables (7,885) (6,208)
Trade receivables – net 800,090 466,332
Notes receivables 944,258 951,012
Other receivables 79,945 36,155
Less: Provision for impairment of other
receivables (852) (633)
Other receivables – net 79,093 35,522
Prepayments 581,339 513,335
Dividends receivables 11,425 -
Interest receivables 49,520 93,094
2,465,725 2,059,295
Refer to Note 32 for details of receivables from related parties. The carrying amounts of the
Group’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables approximate their fair values.
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
At beginning of the year (6,841) (1,954)
Provision arose from business
combination - (3,736)
Provision for receivables impairment (Note
6, 29) (1,896) (1,151)
At end of the period (8,737) (6,841)
The creation of provision for impaired receivables have been included in ‘administrative
expense’ in profit or loss (Note 6).
55
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Trade and other receivables (continued)
As at 30 June 2014, trade receivables of approximately RMB 29,282,000 (2013: RMB
13,499,000) 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:
30 June 2014 31 December 2013
RMB’000 RMB’000
Up to 3 months 17,204 6,897
3 months to 6 months 7,409 359
Over 6 months 4,669 6,243
29,282 13,499
The other classes within trade and other receivables do not contain impaired assets.
As of 30 June 2014, trade receivables of RMB 3,864,000 (2013: RMB 3,864,000) were
impaired. The amount of the provision was RMB 3,864,000 as of 30 June 2014(2013: RMB
3,864,000).The individually impaired receivables mainly relate to customers, which are in
unexpectedly difficult economic situations. It was assessed that the receivable is expected to be
not recovered. The ageing of these receivables is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
Over 6 months 3,864 3,864
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 2014 31 December 2013
RMB’000 RMB’000
Cash at bank and in hand 1,149,832 874,972
Short-term bank deposits (a) 6,181,550 5,605,000
7,331,382 6,479,972
As at 30 June 2014, the Group had cash of approximately RMB 172,208,000 (2013: RMB
181,387,000) deposited in JMCF (Note 32 (iii)). The interest rates range from 0.39% to 1.27%
per annum (2013: 0.39% to 1.27%). 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.
56
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
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 2013
Balance at 1 January 2013 863,214 2,782 516,432 344,000 863,214
Transfer - (240) 240 - -
Balance at 31 December 2013 863,214 2,542 516,672 344,000 863,214
Six months ended 30 June
2014
Balance at 1 January 2014 863,214 2,542 516,672 344,000 863,214
Transfer - (720) 720 - -
Balance at 30 June 2014 863,214 1,822 517,392 344,000 863,214
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.
After the implementation of the share reform scheme on 13 February 2006, 1,822,000 shares
were still restricted as at 30 June 2014.
22 Other reserves
Statutory
surplus reserve Reserve
fund (a) fund Others Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 431,607 18,627 6,217 456,451
- Profit appropriation - - - -
- Other - - - -
At 30 June 2014 431,607 18,627 6,217 456,451
(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.
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 2014.
57
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
23 Borrowings
30 June 2014 31 December 2013
RMB’000 RMB’000
Current
Bank borrowings
- secured (a) 403 399
Non-current
Bank borrowings - secured (a) 5,037 5,190
Total borrowings 5,440 5,589
(a) Bank borrowings of USD 884,000 (equivalent to approximately RMB 5,440,000) (2013:
USD 917,000 equivalent to approximately RMB 5,589,000) were guaranteed by JMCF (Note 32
(v)).
The interest rate of bank borrowings is 1.50% per annum (2013: 1.50%).
The fair value of borrowings approximates their carrying values.
The maturity of non-current borrowings is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
Between 1 and 2 years 403 399
Between 2 and 5 years 1,209 1,198
Over 5 years 3,425 3,593
5,037 5,190
The Group has the following undrawn borrowing facilities:
30 June 2014 31 December 2013
RMB’000 RMB’000
Fixed rate
- Expiring within one year 1,711,933 1,630,324
58
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
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 2014 31 December 2013
RMB’000 RMB’000
Present value of defined benefits obligations 52,785 57,001
The movement of early retirement and supplemental benefit obligations for the six months ended
30 June 2014 is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
At beginning of the year 57,001 66,396
For the year
-Current service cost - 1,202
-Interest cost - 2,246
-Payment (4,216) (9,996)
-Past service cost - -
-Actuarial loss - (2,847)
At end of the period 52,785 57,001
Current 8,213 8,213
Non-current 44,572 48,788
52,785 57,001
The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted: 4.50% (2013: 4.50%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 5% (2013: 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 2014, a provision of
RMB 52,785,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB 52,785,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB 8,213,000 (2013: RMB
8,213,000) 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 4.2%/4.7%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 1.6%/1.4%
Rate of mortality Increase/decrease by 1 year Decrease/increase by 0.9%/1.1%
59
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
25 Provisions for warranty and other liabilities
The movement on the warranty provisions is as follows:
30 June 2014 31 December 2013
RMB’000 RMB’000
At beginning of the year 191,095 152,467
Charged for the year (Note 6) 114,578 182,196
Utilised during the year (80,368) (145,160)
Other addition - 1,592
At end of the period 225,305 191,095
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.
26 Financial liabilities at fair value through profit or loss
30 June 2014 31 December 2013
RMB’000 RMB’000
Forward exchange contracts 119 -
27 Trade and other payables
30 June 2014 31 December 2013
RMB’000 RMB’000
Trade payables 4,884,024 4,721,270
Payroll and welfare payable 206,053 216,913
Dividend payables 690,485 8,730
Other payables 1,963,442 1,988,006
7,744,004 6,934,919
Refer to Note 32 for details of amount due to related parties.
60
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
28 Dividends
A final dividend for 2013, amounting to a total dividend of RMB 681,939,000 has been
approved at the Shareholders’ meeting on 27 June 2014(RMB 0.79 per share).
29 Cash generated from operations
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Profit before tax 1,342,195 1,100,836
Depreciation of PPE (Note 6, 12) 268,159 205,700
Amortisation of lease prepayment (Note 6, 13) 7,101 6,411
Amortisation of intangible assets (Note 6, 14) 3,692 3,514
Provision for receivables impairment (Note 6, 19) 1,896 1,458
Write-down of inventories (Note 6) - 2,608
Loss on disposals of PPE 488 60
Finance cost (Note 9) 502 4,769
Finance income (Note 9) (125,317) (92,971)
Net foreign exchange transaction loss/(gain) 1,327 (549)
Share of profit from investment accounted for using
equity method (Note 15) (11,655) (5,911)
Investment income of held-to-maturity investments - (524)
Investment loss of forward exchange contracts 84 277
Changes on fair value of forward exchange
contracts 588 591
Changes in working capital:
- Decrease/(increase) in inventories 161,740 (219,468)
- Increase in trade and other receivables (439,725) (53,711)
- Increase in provisions for warranty 34,210 24,906
- Increase in trade and other payables 231,212 667,800
-Decrease in pensions and other retirement
benefits (4,216) (5,713)
Cash generated from operations 1,472,281 1,640,083
In the cash flow statement, proceeds from disposal of PPE comprise:
Six months ended 30 June
2014 2013
RMB’000 RMB’000
Net book amount 19,651 3,958
Loss on disposal of PPE (488) (60)
Offset with trade and other payables (12,532) (2,254)
Proceeds from disposal of PPE 6,631 1,644
61
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
30 Contingencies
At 30 June 2014, 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 2014 31 December 2013
RMB’000 RMB’000
Contracted but not provided for:
Purchases of buildings, plant and machinery 1,422,435 903,865
32 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 30 June 2014. For JMH, the shareholders are Chongqing
Changan Automobile Corporation Ltd. (“Changan Auto”) and JMCG, both of them hold 50%
equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, JMCG and its subsidiaries, Ford and its subsidiaries in the ordinary course of
business during the six months ended 30 June 2014.
62
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
For the six months ended 30 June 2014, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JMH
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford 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
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
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 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
Halla Visteon Climate Control (Nanchang) Co.,Ltd 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
Nanchang Yinlun Heat-exchanger Co.,Ltd. Subsidiary of JMCG
63
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
i) Purchases of goods and services
Purchase of goods Six months ended 30 June
2014 2013
RMB’000 RMB’000
JMCG 61,527 18,656
Ford 220,474 174,537
JMCG Interior Trim Factory 353,799 317,252
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 107,442 120,645
Jiangxi Isuzu Engine Co., Ltd. 4,721 4,667
Jiangling Material Co. 17,346 23,632
Halla Visteon Climate Control (Nanchang) Co.,Ltd 134,733 119,046
Jiangxi Jiangling Chassis Co., Ltd. 400,796 335,341
Jiangxi Jiangling Lear Interior System Co., Ltd. 260,473 186,733
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd 16,903 17,955
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 146,075 106,476
Nanchang Yinlun Heat-exchanger Co.,Ltd. 26,113 -
Nanchang Gear Co., Ltd. 4,222 1,285
Jiangxi JMCG Shangrao Industrial Co., Ltd. 10,606 5,926
Nanchang JMCG Printing Plant Co., Ltd. 2,842 2,112
GETRAG (Jiangxi) Transmission Company 315,566 322,463
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 143,494 119,125
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 290,404 261,224
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 12,663 11,605
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 20,118 19,557
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 39,549 28,906
Nanchang Lianda Machinery Co., Ltd. 32,531 31,356
Jiangxi Jiangling Material Utilization Co., Ltd. 5,054 3,671
Jiangxi Biaohong Engine Tappet Co., Ltd. 4,520 3,463
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 3,077 3,383
Nanchang Unistar Electrical and Electronics
Co.,Ltd. 130,902 33,988
Ford Motor (China) Co., Ltd. 12,500 -
Others 1,967 779
2,780,417 2,273,783
64
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchase of services Six months ended 30 June
2014 2013
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.
- commission expenses 2,682 2,451
JMCG
- rental expense 1,856 2,957
Ford
- services (a) 179,442 153,889
JMCG Jiangxi Engineering Construction Co., Ltd.
- services 8,218 2,805
Jiangxi JMCG Industry Co.,Ltd.
- services 13,889 13,288
Jiangxi Jiangling Lear Interior System Co., Ltd.
- services 2,337 -
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd.
- services 2,906 -
Nanchang JMCG Shishun Logistics Co., Ltd.
- services 94,900 59,097
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd
- services 28 1,021
GETRAG (Jiangxi) Transmission Company
- services 3,736 -
Others 2,347 3,224
312,341 238,732
(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 2014, the Company accrued service fee of USD 5,171,000 (equivalent to
approximately RMB 31,377,000) payable to Ford.
Pursuant to an agreement between the Company and Ford, the Company agreed to pay
engineering service fee for project J08 with the total amount of approximately USD 9,600,000
before 30 June 2015 in each quarter. During the six months ended 30 June 2014 the Company
accrued service fee of USD 2,749,000 (equivalent to approximately RMB 16,911,000) 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 2014, the Company accrued service fee of USD 13,288,000 (equivalent to
approximately RMB 83,100,000) payable to Ford.
Pursuant to an agreement between the Company and Ford, the Company agreed to pay
engineering service fee for project J09 with the total amount of approximately RMB
10,076,000. During the six months ended 30 June 2014 the Company accrued service fee of
RMB 10,076,000 payable to Ford.
65
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
i) Purchases of goods and services (continued)
Pursuant to an agreement between the Company and Ford, the Company agreed to pay
engineering service fee for project J09 with the total amount of approximately USD 13,300,000
before 30 June 2015 in each quarter. During the six months ended 30 June 2014, the
Company accrued service fee of USD 2,015,000 (equivalent to approximately RMB
12,395,000) payable to Ford.
Pursuant to an agreement between the Company and Ford, the Company agreed to pay
engineering service fee for project J09 with the total amount of approximately USD 16,100,000
before 31 January 2016 in each quarter. During the six months ended 30 June 2014, the
Company accrued service fee of USD 2,619,000 (equivalent to approximately RMB
16,114,000) payable to Ford.
ii) Sales of goods and provision of services
Sales of goods Six months ended 30 June
2014 2013
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 573,062 545,058
JMCG Interior Trim Factory 42,796 36,259
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 90,036 101,310
JMCG Property Management Co. 3,652 3,612
JMCG Jingma Motors Co., Ltd. 25,331 17,567
Jiangxi Jiangling Chassis Co., Ltd. 35,916 17,958
Jiangxi Jiangling Material Utilization Co., Ltd. 39,991 41,747
JMH 656 520
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 19,724 18,686
Jiangxi Jiangling Lear Interior System Co., Ltd. 7,825 6,224
Jiangling New-power Auto Manufacturing Co., Ltd. - 3,368
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 1,735 3,693
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 1,262 954
Jiangxi Sinodef International Trade Co.,Ltd. 8,909 9,205
Jiangxi Isuzu Engine Co., Ltd. 2,139 2,183
Jiangxi JMCG Industry Co.,Ltd. 1,120 591
Others 1,006 3,002
855,160 811,937
Sales of PPE Six months ended 30 June
2014 2013
RMB’000 RMB’000
JMCG - 207
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. - 103
Nanchang JMCG Liancheng Auto Component Co., 622 -
Ltd.
622 310
66
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
ii) Sales of goods and provision of services (continued)
Interest received from cash deposit in related Six months ended 30 June
parties
2014 2013
RMB’000 RMB’000
JMCF 2,124 2,057
iii) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 7,860 -
JMH 524 11
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 135,113 142,943
JMCG Jingma Motors Co., Ltd. 7,052 4,817
Others 563 -
151,112 147,771
Notes receivables from related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
JMCG Jingma Motors Co., Ltd. 25,666 14,847
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd.. - 23,737
25,666 38,584
Other receivables from related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
Ford Motor (China) Co., Ltd. 12,500 -
Ford Otosan Company 1,225 8,164
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 23,573 2,186
Others 126 -
37,424 10,350
Prepayments for purchasing of goods 30 June 2014 31 December 2013
RMB’000 RMB’000
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 334,189 268,940
67
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Prepayments for construction in progress 30 June 2014 31 December 2013
RMB’000 RMB’000
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 3,406 17,891
JMCG Jiangxi Engineering Construction Co., Ltd. 7,513 603
10,919 18,494
Trade payables to related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
Jiangxi Jiangling Chassis Co., Ltd. 260,194 256,590
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 268,354 252,203
GETRAG (Jiangxi) Transmission Company 144,028 184,361
JMCG Interior Trim Factory 180,968 161,939
Jiangxi Jiangling Lear Interior System Co., Ltd. 145,328 157,850
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 119,088 99,181
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 104,440 94,647
Halla Visteon Climate Control (Nanchang) Co.,
Ltd. 107,729 87,927
Ford 26,238 70,172
Nanchang Unistar Electric & Electronics Co.,ltd 64,162 55,293
JMCG 61,015 33,110
Nanchang Lianda Machinery Co., Ltd. 17,162 18,627
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 18,937 18,626
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 14,091 13,103
Nanchang Yinlun Heat-exchanger Co.,ltd 14,665 13,036
Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd. 8,263 10,891
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 7,910 7,191
Jiangxi JMCG Shangrao Industrial Co., Ltd. 8,300 4,752
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 3,371 3,865
Jiangxi ISUZU Engine Co., Ltd. 3,144 3,114
Jiangxi Jiangling Material Utilization Co., Ltd. 2,655 2,437
Nanchang Gear Co., Ltd. 2,225 2,388
Jiangxi Biaohong Engine Tappet Co., Ltd. 2,201 2,078
Jiangling Material Co. 737 2,039
Nanchang JMCG Printing Plant Co., Ltd. 1,225 962
Others 210 255
1,586,640 1,556,637
68
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
Ford 125,895 96,164
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 15,232 30,513
Ford Global Technologies,LLC 12,632 14,750
Ford Otosan Company 3,577 5,037
JMCG Jiangxi Engineering Construction Co., Ltd. 3,566 4,454
Nanchang JMCG Shishun Logistics Co., Ltd. 2,772 4,027
Jiangxi JMCG Industrial Co. 3,354 3,338
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 4,905 3,148
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 468 2,814
Jiangxi Jiangling Lear Interior System Co., Ltd. 2,508 2,257
GETRAG (Jiangxi) Transmission Company - 2,401
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 1,170 1,770
Jiangxi Jiangling Chassis Co., Ltd. 498 1,208
Ford Motor (China) Co., Ltd. 12,967 1,178
JMCG Property Management Co. 991 1,113
JMH 535 17
Others 2,796 4,468
193,866 178,657
Advance from related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling 39 3,816
Motors Group Co., Ltd.
Others 812 1,095
851 4,911
Cash deposit in related parties 30 June 2014 31 December 2013
RMB’000 RMB’000
JMCF (Note 20) 172,208 181,387
69
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 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 2014,
the Company accrued service fee of approximately USD4,094,000 (equivalent to
approximately RMB25,248,000), RMB961,000 and RMB1,916,000 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 2014, some employees
of JMH were assigned to the Company as management staff. During the six months ended 30
June 2014, the Company accrued service fee of approximately RMB 518,000 payable to JMH
for these employees.
v) Guarantee
As at 30 June 2014, bank loans of USD 884,000 (equivalent to approximately RMB 5,439,000)
(2013: USD 917,000 equivalent to approximately RMB 5,589,000) 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 2014, the total remuneration of the key management was
approximately RMB 6,335,000 (the six months ended 30 June 2013: RMB 7,142,000).
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 2014, the total royalty fee due to Ford Global Technologies, LLC and Ford Otosan
Company was approximately USD 3,939,000 (equivalent to approximately RMB 24,235,000).
As at 30 June 2014, the balance of USD 1,778,000 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 2014, the total licensing fee due to Ford Global Technologies, LLC was
approximately USD 1,994,000 (equivalent to approximately RMB 12,228,000). As at 30 June
2014, the balance of USD 856,000 not yet paid was included in other payables.
70
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 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
2014 2013
RMB’000 RMB’000
Purchase of goods 829,560 779,026
Purchase of fixed assets 8,237 6,570
Interest income 93,356 72,675
Balances with other state-owned entities
30 June 2014 31 December 2013
RMB’000 RMB’000
Cash and cash equivalents 7,004,147 6,147,016
Trade and other payables 496,756 471,479
33 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
automobiles and spare parts
8 January 2013
Jiangling Nanchang, PRC /11 100% Sale of automobiles and
spare parts
Motors Sales October 2013
Corporation,
Ltd
71
Chapter XI Catalog on Documents for Reference
1. Originals of 2014 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 2014 Half-year Report prepared in China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 28, 2014
72
