Jiangling Motors Corporation, Ltd.
2015 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 .............................................................................................11
Chapter VI Share Capital Changes & Shareholders ................................................... 13
Chapter VII Directors, Supervisors, Senior Management and Employees .................. 15
Chapter VIII Financial Statements ................................................................................ 15
Chapter XI Catalog on Documents for Reference ...................................................... 71
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 to the information of JMC brief introduction in the reporting
period. Please refer to 2014 Annual Report for details.
Chapter III Operating Highlight
1. Main accounting data and financial ratios
Unit: RMB ‘000
Reporting period Same period Change (%)
(2015 first half)* last year*
Revenue 11,989,327 12,274,930 -2.33
Profit Attributable to the Equity
1,081,532 1,164,377 -7.12
Holders of the Company
Net Cash Generated From
230,322 1,256,162 -81.66
Operating Activities
Basic Earnings Per Share (RMB) 1.25 1.35 -7.12
Diluted Earnings Per Share (RMB) 1.25 1.35 -7.12
Weighted Average Return on Net Down 2.22
9.71 11.93
Asset Ratio percentage points
At the end of At the end of the Change (%)
reporting period* previous year
Total Assets 19,559,786 19,496,528 0.32
Shareholders’ Equity Attributable
to the Equity Holders of the 10,842,643 10,598,429 2.30
Company
Note: *unaudited financial indexes.
4
Chapter IV Report of the Board of Directors
1. Summary
In the first half of 2015, China automobile market has been transferred from rapid
growth to slight growth. The growth of market is slow-down and sales volume start to
decline. The first half total sales volume was 11.85 million, increased 1.4% compared
with the same period last year. Commercial vehicle sales volume was 1.75 million,
decreased 14.4% compared with the same period last year.
JMC’s core business is production and sales of light commercial vehicles，SUV and
related components. JMC’s major products include JMC series light truck, pickup,
Yusheng SUV, Transit series commercial vehicles, and heavy duty trucks. The
Company also produces and sells 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 and new product
development. Simultaneously, the Company introduced a series of sales policy to
respond the segment markets slowdown pressure. In the first half of 2015, JMC
achieved sales volume of 133,251 units, increased 0.24% compared with the same
period last year, achieved revenue of RMB 11.99 billion, which decreased 2.3%
compared with the same period last year, and achieved net profit of RMB 1.08 billion,
which decreased 7.1% compared with the same period last year.
2. Core Business Analysis
i. Sales Revenue Analysis
In the first half of 2015, JMC sales volume of 133,251 units, increased 0.24%
compared with the same period last year, including 59,804 units truck, 29,114 units
pickup, 10,918 units Yusheng SUV and 33,415 units Transit CV. Total production
volume was 130,961 units, including 60,211 units truck, 27,666 units pickup, 11,324
units Yusheng SUV and 31,760 units Transit CV.
In the first half of 2015, JMC achieved a market share at 1.12% of total industry,
down 0.02 point from last year. JMC light truck and pickup accounted for 11.6%
market share, up 2.1 points from last year. Transit accounted for 17.3% market share,
down 1.2 points from last year. (Data source for above data: China Association of
Automobile Manufacturers and the Company sales records)
In the first half of 2015, JMC total sales revenue was RMB 11.99 billion, decreased
2.3% compared with the same period last year.
In the first half of 2015, JMC total sales value to the top 5 customers was RMB 1,636
million, accounting for about 14% of JMC’s total turnover.
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ii. Cost Analysis
Unit: RMB’000
2015 1H 2014 1H YOY change
Cost in Cost in
Product proportion proportion （Percentage
core core
（%） （%） Points）
business business
Vehicle 8,149,896 91.4% 8,440,454 92.4% -3.4%
Components 768,378 8.6% 693,439 7.6% 10.8%
The total value of purchases from the top 5 suppliers was RMB 1,758 million,
accounting for about 22% of JMC’s total annual purchase amount.
iii. Expense Analysis
Unit: RMB’000
Item 2015 1H 2014 1H YOY change（%）
Distribution Costs 634,670 844,977 -24.9%
Administrative Expenses 1,059,639 821,763 28.9%
Distribution costs were decreased by about 25%, mainly due to the reduction of the
related marketing expense.
Administrative expenses were increased by about 29%, mainly due to the new product
research and development cost increasing.
iv. Product Development
In 2015, 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, J08, J09, J10, J18 programs will
incorporate market driven improvements including increased payloads, new styling,
and improved power lift, etc. The JX493, E802, J15 and self-developed gas engine
G501 projects 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 in
administrative expense was 801 million, representing 7% of net assets, or 7% of
revenue.
v. Cash flow analysis
Net cash generated from operating activities decreased by RMB 1,026 million, down
81.6% from 2014, mainly reflecting the increase of payment of commodity
purchasing and other operating activities.
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)
6
I. Vehicle 10,848,942 8,149,896 24.9% -3.4 -3.4 0.0
II. Components 1,047,335 768,378 26.6% 11.8 10.8 0.6
Total 11,896,277 8,918,274 25.0% -2.3 -2.4 0.0
Including:
Related party
187,368 128,414 31.5% -2.9 -0.6 -1.5
transaction
Details pertaining to core business classified according to region:
Unit: RMB’000
Region Turnover Y-O-Y turnover change (%)
North-east China 444,903 -6.41
North China 1,063,492 -5.56
East China 5,580,348 0.55
South China 1,909,359 -12.36
Central China 1,219,754 6.21
North-west China 457,970 -6.52
South-west China 1,220,451 1.46
4. Analysis of assets and liabilities
i. Major changes in assets
Unit: RMB’000
YOY YOY
June 30, 2015 December 31, 2014 Amount Proportion
Asset item
change change
Amount Proportion Amount Proportion (%) (Points)
Property, plant and
5,936,553 30.4% 5,736,408 29.4% 3.5% 1.0
equipment
Inventories 1,582,471 8.1% 1,658,707 8.5% -4.6% -0.4
Trade and other receivables 2,224,709 11.4% 2,006,162 10.3% 10.9% 1.1
Cash and cash equivalents 8,708,767 44.5% 8,963,468 46.0% -2.8% -1.5
Lease prepayment 602,741 3.1% 590,629 3.0% 2.1% 0.1
ii. Major changes in liabilities
Unit: RMB’000
YOY YOY
June 30, 2015 December 31, 2014 Amount Proportion
Asset item
change change
Amount Proportion Amount Proportion (%) (Points)
Trade and other
8,382,949 96.2% 8,420,273 94.6% -0.4% 1.6
payables
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iii. The fair value of the assets and liabilities - see the notes to financial statements for
25.
5. Core competitiveness analysis
JMC is a sino-foreign joint venture auto company with R&D, manufacturing and sales
operations. As a mainstream 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 which
improve company’s core business competence.
JMC's influence over auto industry is improving steadily, making considerable
progress both in technical equipment and new product development. JMC
successfully launched Xiaolan New Plant, R&D Center, which greatly strengthen the
company’s product development capability, manufacturing efficiency and overall
sales performance. Ford brand SUV EVEREST will be launched in 2015 which will
further improve the Company’s competitive advantage. Meanwhile, JMC has always
been strictly implementing national emission regulation, and has accumulated a
steady technical force and made full preparation for the emission standard promotion.
With the government’s emphasis on environment protection and the accelerated
progress of emission policies, the Company’s competitive advantage will be further
recognized.
6. Investment in the reporting period
i. External investment
During the reporting period, JMC did not invest in securities, or in holding the
corporate equity of other listed or non-listed financial enterprises.
ii. JMC did not entrust financial transactions, derivatives investment and entrust loan
during the reporting period.
iii. JMC did not raise equity funding, nor did it use equity funding raised in previous
years.
iv. Operating Results of Main Subsidiaries and Joint-Stock Companies
Unit: RMB’000
Name of Type of Main Registered Operating Net
Assets Net Assets Turnover
Companies Companies Products Capital Profit Profit
Jiangling
Motors Sales Sales vehicle,
Subsidiary 50,000 2,222,828 293,717 10,566,410 163,088 122,075
Corporation, service parts
Ltd
Product
heavy
commercial
JMC Heavy
vehicle ,
Duty Vehicle Subsidiary 281,793 1,027,166 -149,835 1,051 -219,061 -178,471
engine,
Co., Ltd
component,
and related
service
8
Visteon Auto Automotive
Joint
Air-conditionin air
-Stock 46,627 307,747 178,875 263,581 50,603 38,156
g (Nanchang) conditioning
Company
Co. Ltd. and Parts
v. Self-funded major projects of which amount invested reaches 10% of net asset:
Total
Spending Investment
Investment
in 2015 Committed Planned Job#1
Project Name Approval
Time
(RMB (RMB (RMB
Mils) Mils) Mils)
J08 Program 1,233 101 697 Second Half, 2015
J09 Program 2,414 195 1,201 First Half, 2016
Capacity Investment
2,133 22 1,826 First Half, 2017
in Xiaolan Site
N330 Program 1,212 105 480 Second Half, 2016
J20 Heavy Truck
Program Long Lead 1,173 164 168 First Half, 2019
Funding
The spending will be funded from cash reserves.
7．Outlook
i. Industry Competition and Development Trend
In the first half of 2015, China’s automobile industry sales were 11.85 million, up 1.4%
over 2014. Commercial vehicle sales continued to decline, decreasing by 14.4%
compared with the same period in 2014. Meanwhile passenger vehicle industry
maintained growth, increasing by 4.8% compared with the same period in 2014.
With the boost of domestic infrastructure construction and vigorous development of
logistics industry, there is still a great opportunity for the development of China’s
commercial vehicle market. Meanwhile, China's Car Parc per capita is still lower than
world’s average level indicating a strong auto market potential in the future.
ii. Corporation Strategy
Company’s mission 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 further improve SUV sales performance and
penetrate into heavy truck segment.
iii. 2015 Business Plan
The Company is targeting 2015 revenue level at RMB 26.5 billion, an increase of 4%
vs. 2014. With many new vehicle projects, the Company’s R&D expenditures will
continue to rise. To enhance profitability, the company is committed to the following
plans in 2015:
(1) Achieve volume and market share targets by enhancing the distribution network
and sales/marketing activities, especially successful Ford SUV EVEREST market
launch.
9
(2) Continue to improve product quality, pursue cost reduction opportunities, and
improve operating efficiency to achieve profit and cost targets.
(3) Initiate the new fuel economy and emission compliance program to satisfy
regulatory requirements.
(4) Work with technical partners to execute the N800, N352, N330, J08, J09, J10, J15,
J18, J20, J21 programs.
(5) Expand finished vehicle exports and OEM components sales business.
iv. Potential Challenges and Solutions
In 2015, 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 2015.
(1) Optimizing company’s production system to improve efficiency and product
quality.
(2) Optimizing dealer network and marketing spending to improve market share.
(3) Improve suppliers’ capability and parts quality; continue to reduce parts
purchasing cost.
(4) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
(5) Sustaining the expense management and control to optimize the business
structure.
(6) Optimize and execute company’s growth strategies to pursue sustainable
long-term growth.
The Company will continue to optimize cost structure, improve production efficiency,
mitigate management cost as well as focus on new product development to deliver the
launch quality and cost target. With the support from technical partner, the Company
has been working on major programs approved by the Board, including N800, N352,
N330, J08, J09, J10, J15, J18, J20, J21, etc. to accelerate the progress of launching
new competitive and profitable products to the market. Meanwhile, the Company will
strive to ensure the timely delivery of high quality heavy trucks, and devote to
strengthening dealer network, expanding overseas market and parts business.
8. Profit Distribution
The 2014 Annual Shareholders’ Meeting of the Company approved the 2014 calendar
year profit distribution plan on June 25, 2015. Announcement of 2014 calendar year
dividend distribution was published in China Securities, Securities Times and Hong
Kong Commercial Daily on July 16, 2015, and it has been executed accordingly.
The 2014 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 9.7 (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 0.7887, 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
26, 2015) 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 22, 2015;
Ex-dividend date: July 23, 2015.
ii. Last trading date for B shares: July 22, 2015;
Ex-dividend date: July 23, 2015;
Equity record date for B shares: July 27, 2015.
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 28, In the Oral Institution Thirteen analysts from JMC Operating highlights
2015 Company Communication China Merchants Securities
Co., Ltd., Runhui
Investment Company,
Bosera Asset Management
Co., Ltd., Sunshine Asset
Management Corporation
Limited, Lighthorse Asset
Management Co., Ltd.,
China Asset Management
Co., Ltd., Changcheng Fund
Management Co., Ltd.,
Fortune SG Fund
Management Co., Ltd.,
China Pacific Insurance
(Group) Co., Ltd.
February 6, In the Oral Institution Twelve analysts from JMC Operating highlights
2015 Company Communication Southwest Securities Co.,
Ltd., Citic Securities
Company Limited, Great
Wall Securities Co., Ltd.,
Hillhouse Capital Group,
First State Cinda Fund
Management Co., Ltd.,
Shanghai Baoyin
Investment Consulting
Company, Shanghai
Guanzeding Asset
Management Co., Ltd., E
Fund Management Co.,
Ltd., China Life Pension
Company Limited,
Congrong Investment
Management Co., Ltd.
February In the Oral Institution An analyst from Owl Creek JMC Operating highlights
13, 2015 Company Communication Asset Management LP.
March 20, In the Oral Institution Three analysts from China JMC Operating highlights
2015 Company Communication International Capital
Corporation Limited
Chapter V Major Events
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1. During the reporting period, the Company continued to operate its corporate
governance in compliance with the Company Law, the Securities Law, the Code of
Corporate Governance for Listed Companies in China, as well as relevant laws and
regulations, and appointed PricewaterhouseCoopers Zhong Tian CPAs LLP as JMC’s
external auditor and C-SOX auditor from 2016 to 2018.
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 250 million are listed as
below:
Pricing Amount As % of Total
Transaction Parties Relationship Settlement Method
Principle (RMB’000) Purchases
Subsidiary of 60 days after
Jiangxi Jiangling Chassis Contracted
Company
JMCG
price
delivery and 390,207 4.80
invoicing
Associate of 60 days after
GETRAG (Jiangxi) Contracted
Transmission Company
JMCG
price
delivery and 326,771 4.02
invoicing
Nanchang Bao-jiang Steel Associate of
Contracted
Processing & Distribution JMCG
price
Prepayment 313,992 3.86
Co., Ltd.
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.
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.
iii. JMC did not entrust other people with cash asset management in the reporting
period.
7. There was no commitment of the Company or the shareholder holding 5% or more
12
of the Company shares during the reporting period.
8. Appointment or Dismissal of Accounting Firms
Upon the approval of 2014 Annual Shareholders’ Meeting, JMC approved retaining
PricewaterhouseCoopers Zhong Tian CPAs LLP as external auditor from 2016 to
2018.
Upon the approval of 2014 Annual Shareholders’ Meeting, JMC approved retaining
PricewaterhouseCoopers Zhong Tian CPAs LLP as the C-Sox Auditor from 2016 and
2018
The compensation paid to the accounting firm is as follows:
Accountant Firm A & B Share 2014 C-SOX auditor Out of Pocket Expense
Auditor for Year
2014
PwC ZhongTian RMB 1.8 million RMB 0.64 million Included in audit fee.
9. Neither JMC nor its Directors or senior management were punished by regulatory
authorities in the reporting period.
10. Others
JMC received government incentives of RMB 198.84 million appropriated by
Nanchang City, 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.
Subsequent event
JMC received a Commitment Letter from JMH, the largest shareholder of the Company, on July 9, 2015.
Details of the Commitment Letter are as follows:
i. JMH will not reduce JMC shares by secondary market within six months since July
9, 2015;
ii. JMH will exercise its duties as a major shareholder, concentrate on the quality of
the listed company, push to establish a sound invest-return long-term mechanism
and continue to improve the return level.
Chapter VI Share Capital Changes & Shareholders
1. 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 - - -
1,821,900 0.21% -36,000 -36,000 1,785,900 0.21%
A shares
1.State-owned - - - - - - - - -
shares
2. State-owned legal - - - - - - -
- -
person shares
3. Other domestic - - -
1,821,900 0.21% -36,000 -36,000 1,785,900 0.21%
shares
Including:
Domestic legal - - -
1,785,000 0.21% - - 1,785,000 0.21%
person shares
13
Domestic natural - - -
36,900 - -36,000 -36,000 900 -
person shares
II. Unlimited - - -
861,392,100 99.79% 36,000 36,000 861,428,100 99.79%
tradable shares
1. A shares 517,392,100 59.94% - - - 36,000 36,000 517,428,100 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 trading restriction on the
limited tradable A shares of 120,000 shares held by Mr. Chu Kun was relieved on
January 22, 2015.
2. Shareholders
i. Total shareholders, top ten shareholders, and top ten shareholders holding unlimited
tradable shares
Total shareholders (as of JMC had 29,331 shareholders, including 24,798 A-share holders and 4,533 B-share holders.
June 30, 2015)
Top ten Shareholders
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 0
1.51 13,019,610 0 0
Ltd. Legal person
Gaoling Fund,L.P. Domestic 360,308
non-state-owned 0.81 7,013,320 0 0
legal person
Pingan Life Insurance Domestic
Specific Client Asset non-state-owned 0.74 6,347,354 6,347,354 0 0
Management Project-No.1 legal person
Jpmblsare Ftif Templeton Foreign legal
0.70 6,026,850 0 0 0
China Fund Gti 5497 person
Domestic
Templeton Dragon Fund,
non-state-owned 0.54 4,667,481 109,640 0 0
Inc.
legal person
E Fund SSE50 Index Domestic
Securities Investment non-state-owned 0.53 4,549,410 4,549,410 0 0
Fund legal person
Foreign legal
Invesco Funds Sicav 0.51 4,372,630 -325,479 0 0
person
Templeton Gbl Invstmt
Foreign legal
Trst-Tmpltn Emgng Mkts 0.46 3,948,718 0 0 0
person
Small Cap Fd
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
Gaoling Fund,L.P. 7,013,320 B share
Pingan Life Insurance Specific Client Asset
6,347,354 A share
Management Project-No.1
Jpmblsare Ftif Templeton China Fund Gti 6,026,850 B share
14
5497
Templeton Dragon Fund, Inc. 4,667,481 B share
E Fund SSE50 Index Securities Investment
4,549,410 A share
Fund
Invesco Funds Sicav 4,372,630 B share
Templeton Gbl Invstmt Trst-Tmpltn Emgng
3,948,718 B share
Mkts Small Cap Fd
Notes on association among above-mentioned
No.
shareholders
ii. Change of controlling shareholder or actual controller
There is no change in the controlling shareholders and actual controlling parties.
iii. 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
forward any shareholding increase plan in the reporting period, and does not execute
such plan.
iv. 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. Please refer to 2014 Annual
Report for details.
2. Changes of Directors, Supervisors and Senior Management
Senior Management changes:
The fourth session of the eighth Board of Directors reviewed and approved the
following resolution on March 16, 2015:
The Board of Director accepted Mr. John Scholtes’s resignation from Vice President
due to work rotation.
Per President Yuan-Ching Chen’s nomination, the Board of Directors appointed Mr.
Tim Slatter as a Vice President of the Company.
The fifth session of the eighth Board of Directors reviewed and approved the
following resolution on June 25, 2015:
Per President Yuan-Ching Chen’s nomination, the Board of Directors appointed Mr.
Arturo Mendoza and Mr. Li Xiaojun as Vice Presidents of the Company
Chapter VIII Financial Statements
15
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2015
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Not 2015# 2014#
e
RMB’000 RMB’000
Revenue 5 11,989,327 12,274,930
Sales tax (371,171) (439,827)
Cost of sales 6 (9,009,816) (9,236,375)
Gross profit 2,608,340 2,598,728
Distribution costs 6 (634,670) (844,977)
Administrative expenses 6 (1,059,639) (821,763)
Other income 8 198,598 273,737
Operating profit 1,112,629 1,205,725
Finance income 9 147,997 125,317
Finance costs 9 (477) (502)
Finance income-net 9 147,520 124,815
Share of profit of investments accounted for using the
equity method 15 7,307 11,655
Profit before income tax 1,267,456 1,342,195
Income tax expense 10 (185,924) (177,818)
Profit for the period 1,081,532 1,164,377
Total comprehensive income for the period 1,081,532 1,164,377
Profit attributable to:
Equity holders of the Company 1,081,532 1,164,377
Non-controlling interests - -
1,081,532 1,164,377
Total comprehensive income attributable to:
Equity holders of the Company 1,081,532 1,164,377
Non-controlling interests - -
1,081,532 1,164,377
Earnings per share for profit attributable to the equity
holders of the Company
(expressed in RMB per share)
- Basic and diluted 11 1.25 1.35
#Unaudited financial indexes
The notes on pages 20 to 70 are an integral part of these consolidated financial statements.
16
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
(All amounts in RMB unless otherwise stated)
As at
30 June 31 December
Note
2015# 2014
RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment (“PPE”) 12 5,936,553 5,736,408
Lease prepayment 13 602,741 590,629
Intangible assets 14 30,764 32,173
Investments accounted for using the equity method 15 34,255 26,948
Other non-current assets 40,618 34,493
Deferred income tax assets 16 398,908 440,730
7,043,839 6,861,381
Current assets
Inventories 17 1,582,471 1,658,707
Trade, other receivables and prepayments 18 2,224,709 2,006,162
Cash and cash equivalents 19(a) 8,708,767 8,963,468
Restricted cash 19(b) - 6,810
12,515,947 12,635,147
Total assets 19,559,786 19,496,528
EQUITY
Capital and reserves attributable to the
Company’s equity holders
Share capital 20 863,214 863,214
Share premium 816,609 816,609
Other reserves 21 454,968 454,968
Retained earnings 8,707,852 8,463,638
10,842,643 10,598,429
Non-controlling interests - -
Total equity 10,842,643 10,598,429
LIABILITIES
Non-current liabilities
Borrowings 22 4,604 4,808
Deferred income tax liabilities 16 28,917 29,458
Retirement benefit obligations 23 47,322 50,146
Provisions for warranty and other liabilities 24 194,080 226,503
Other non-current liabilities 440 480
275,363 311,395
Current liabilities
Financial liabilities at fair value through profit or loss 25 82 2,011
Trade and other payables 26 8,382,949 8,420,273
Current income tax liabilities 47,769 153,439
Borrowings 22 400 401
Retirement benefit obligations 23 5,580 5,580
Other current liabilities 5,000 5,000
8,441,780 8,586,704
Total liabilities 8,717,143 8,898,099
Total equity and liabilities 19,559,786 19,496,528
#Unaudited financial indexes
The notes on pages 20 to 70 are an integral part of these consolidated financial statements.
17
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2015
(All amounts in RMB unless otherwise stated)
Attributable to equity holders of the Company
Share Share Other Retained Total
Note capital premium reserves earnings Equity#
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
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
Other comprehensive income - - - - -
Dividend relating to 2013 - - - (681,939) (681,939)
Balance at 30 June 2014 863,214 816,609 456,451 7,520,163 9,656,437
Balance at 1 January 2015 863,214 816,609 454,968 8,463,638 10,598,429
Profit for the six months - - - 1,081,532 1,081,532
-
Other comprehensive income - - - -
Dividend relating to 2014 27 - - - (837,318) (837,318)
Balance at 30 June 2015 863,214 816,609 454,968 8,707,852 10,842,643
#Unaudited financial indexes
The notes on pages 20 to 70 are an integral part of these consolidated financial statements.
18
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
(All amounts in RMB unless otherwise stated)
Six months ended 30 June
Note 2015# 2014#
RMB’000 RMB’000
Cash flows from operating activities
Cash generated from operations 28 520,938 1,472,281
Interest paid (300) (303)
Income tax paid (290,316) (215,816)
Net cash generated from operating activities 230,322 1,256,162
Cash flows from investing activities
Purchase of PPE (681,892) (581,948)
Other cash paid relating to investing activities (6,256) (143)
Proceeds from disposal of PPE 28 2,125 6,631
Interest received 184,952 171,313
Dividends received 15,657 -
Other cash received from investing activities 891 59
Net cash used in investing activities (484,523) (404,088)
Cash flows from financing activities
Repayments of borrowings (203) (204)
Dividends paid to the Company’s shareholders (28) (167)
Other cash paid relating to financing activities (269) (293)
Net cash used in financing activities (500) (664)
Net (decrease)/increase in cash and cash equivalents (254,701) 851,410
Cash and cash equivalents at beginning of year 8,963,468 6,479,972
Effects of exchange rate changes - -
Cash and cash equivalents at end of period 19 8,708,767 7,331,382
#Unaudited financial indexes
The notes on pages 20 to 70 are an integral part of these consolidated financial statements.
19
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015, the total number of issued shares of the Company is 863,214,000 shares,
which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These consolidated financial statements were authorised for issue by the Board of Directors
on 26 August 2015.
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.
Changes in accounting policy and disclosures
New standards and interpretations not yet adopted
Amendment to IFRSs effective for the financial year ending 31 December 2015 do not have a
material impaction on the Group.
20
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
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.
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.
21
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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
(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.
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.
22
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
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 equipment’s 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.
23
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the fair value of the identified net
assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to
each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored for internal
management purposes. Goodwill 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
2015.
24
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful
lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use 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.
25
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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)
(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 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 (losses)/gains – 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.
26
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial liabilities at fair value through profit or loss and offsetting financial
instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A
financial liability is classified in this category if incurred principally for the purpose of selling in the
short term. A financial liability initially recognised at fair value, and transaction costs are
expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in
this category are classified as current liability if expected to be settled within 12 months;
otherwise, they are classified as non-current. A financial liability is derecognised when it is
extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must
be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the company or the counterparty.
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.
27
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
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, if any such evidence exists 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. 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.
For equity investments, 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 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.
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 allowance 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.
28
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
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.
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 reporting 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.
29
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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
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.
(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
when there is an agreement in place that gives the group the ability to control the reversal of the
temporary difference in the foreseeable future, deferred tax liability in relation to taxable
temporary differences arising from the associate’s undistributed profits is 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.
30
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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)
(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.
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.
The current service cost of the defined benefit plan, recognised in profit or loss in employee
benefit expense, except where included in the cost of an asset, reflects the increase in the
defined benefit obligation results from employee service in the current year, benefit changes,
curtailments and settlements.
Past-service costs are recognised immediately in income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in profit or loss.
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.
(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.
31
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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)
(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.
32
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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.
33
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 US 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 2015, 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 2015 would
have been approximately RMB31,118,000 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 2015, 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 2015, 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 2015 would have been increased/decreased by
approximately RMB10,933,000.
(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 2015, the Group had cash of approximately RMB386,036,000(2014:
RMB181,674,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a
non-bank financial institution and a subsidiary of JMCG (Note 19). 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.
34
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 18.
(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 22) 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 2015
Bank borrowings
- Principals 400 400 1,201 3,003
- Interests 74 68 167 180
Trade and other payables 7,110,513 - - -
Financial liabilities at fair
value through profit or loss 82 - - -
7,111,069 468 1,368 3,183
At 31 December 2014
Bank borrowings
- Principals 401 401 1,202 3,205
- Interests 77 71 176 204
Trade and other payables 7,828,285 - - -
Financial liabilities at fair
value through profit or loss 2,011 - - -
7,830,774 472 1,378 3,409
35
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015 and 31 December 2014 were as follows:
31 June 2015 31 December 2014
RMB’000 RMB’000
Total borrowings 5,004 5,209
Total equity 10,842,643 10,598,429
Total capital 10,847,647 10,603,638
Gearing ratio 0.05% 0.05%
3.3 Fair value estimation
Financial liabilities at fair value through profit or loss are forward exchange contracts which are
not traded in an active market. The fair value is determined by using valuation techniques
which maximised the use of observable market data where it is available and rely as little as
possible on entity specific estimates. The different levels have been defined as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level
2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (level 3).
Since all significant inputs required to value the instrument are observable, the forward
exchange contracts are classified as level 2.
The carrying amounts of the Group’s financial assets including cash and cash equivalents,
trade and other receivables and financial liabilities including trade and other payables,
borrowing, 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.
36
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 23.
37
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015, the Group has deferred tax assets of approximately RMB398,908,000. 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 2015, the Group has deferred tax liabilities of approximately RMB28,917,000.
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 value in use calculations. These calculations require the use
of estimates (Note 14).
(5) Impairment of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The Group will
reassess whether the inventories’ net realisable value is lower than the inventories’ cost at end
of each year. Impairment provision for inventories is recognised in profit or loss when the cost
is higher than the net realisable value.
38
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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
2015 2014
RMB’000 RMB’000
Changes in inventories of finished goods and
work in progress 167,151 289,238
Raw materials and consumables used 8,003,085 8,303,412
Employee benefit expenses (Note 7) 880,091 765,257
Depreciation of PPE (Note 12, 28) 270,989 253,642
Repairs and maintenance expenditure on PPE 43,641 38,232
Research and development expenditure 800,915 588,037
Amortisation of lease prepayment (Note 13, 28) 7,936 7,101
Amortisation of intangible assets (Note 14, 28) 3,286 2,051
Provision for receivables impairment (Note 18,
28) 985 1,896
Provision of warranty (Note 24) 55,961 114,578
Finance costs (Note 8, 9) 1,613 1,829
Others 470,085 539,671
Total cost of sales, distribution costs, impairment
charges of non-current assets, finance costs and
administrative expenses 10,705,738 10,904,944
For the six months ended 30 June 2015, depreciation of PPE of RMB17,987,000 (The six months
ended 30 June 2014: RMB14,518,000) and amortisation of intangible assets of RMB1,485,000
(The six months ended 30 June 2014: RMB1,641,000) were included in research and
development expenditure.
Finance costs included interest expense on bank loan, exchange losses and other finance costs.
39
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
7 Employee benefit expenses
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Wages and salaries 643,777 570,078
Social security costs 80,312 65,323
Pension costs defined contribution plans 107,826 92,583
Others 48,176 37,273
880,091 765,257
The employees of the Group participated in a retirement benefit plan organised by the
municipal and provincial governments under which the Group was required to make defined
contributions monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In
accordance with the Group’s early retirement programs, the Group was also committed to
making periodic benefit payments to certain early-retired employees until they reach their
legal retirement ages.
8 Other income
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Government grants (a) 204,078 273,905
Others (5,480) (168)
198,598 273,737
(a) For the six months ended 30 June 2015, the Group received grants of approximately
RMB204,078,000, mainly from Finance Bureau of Nanchang, Finance Bureau of Nanchang
Qingyunpu District and the Finance Bureau of Economic Development District Administrative
Commission of Taiyuan. Those grants were to support the group’s operation.
9 Finance income and cost
Six months ended 30 June
2015 2014
RMB’000 RMB’000
(a) Finance income
Interest income on bank deposits 129,404 98,181
Interest income on credit sales 18,593 27,136
147,997 125,317
(b) Finance cost
Interest expense on bank loans (209) (209)
Bank charges (268) (293)
(477) (502)
Net finance income 147,520 124,815
40
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
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. The application of the authorised certificate of High-Tech Enterprise is in
progress pursuant to the relevant PRC tax rules and regulations.The CIT rates of JMC Heavy
Duty Vehicle Co., Ltd (JMCH) and Jiangling Motor Sales Co, Ltd., the subsidiaries of the
Company are 25%.
The amounts of income tax expense charged to profit or loss represented:
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Current tax (144,643) (235,636)
Deferred tax (Note 16) (41,281) 57,818
(185,924) (177,818)
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
2015 2014
RMB’000 RMB’000
Profit before tax 1,267,456 1,342,195
Tax calculated at tax rates applicable to profits in
the respective companies (189,216) (204,667)
Tax concessions 160 469
Expenses not deductible for tax purposes (25,271) (3,073)
Income not subject to tax 53,365 40,009
Effect of different tax rates applied for the periods
in which the temporary differences are expected
to reverse (57) (245)
Tax losses for which no deferred income tax
asset was recognised (24,905) (10,311)
Tax charge (185,924) (177,818)
The weighted average applicable tax rate was 15% (the six months ended 30 June 2014:
15%).
41
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation (continued)
(a) 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.
(b) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 5% or 9% on the selling price of goods.
11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the year.
Six months ended 30 June
2015 2014
Profit attributable to equity holders of the
Company (‘000) 1,081,532 1,164,377
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 1.25 1.35
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 2015.
42
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 equipment’s constructions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014
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
Year ended 31 December 2014
Opening net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137
Additions - - - - - 1,250,711 1,250,711
Transfers 98,938 193,735 46,055 89,145 384,468 (812,341) -
Disposals (89) (10,203) (1,643) (581) (6,139) - (18,655)
Other deductions - (73,794) - - (3,627) (17,217) (94,638)
Impairment charge (Note 6, 28) - (1,229) - - (2,277) - (3,506)
Depreciation charge (Note 6, 28) (42,870) (178,027) (25,350) (87,230) (213,164) - (546,641)
Closing net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
At 31 December 2014
Cost 1,819,897 3,138,887 190,888 1,421,197 2,030,067 1,282,854 9,883,790
Accumulated depreciation and impairment (330,391) (1,595,216) (85,728) (1,144,046) (991,309) (692) (4,147,382)
Net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
Six months ended 30 June 2015
Opening net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
Additions - - - - - 605,388 605,388
Transfers 104,617 134,093 3,901 5,730 115,548 (363,889) -
Disposals (2,671) (1,004) (904) - (950) - (5,529)
Other deductions - (86,270) - - (910) (23,558) (110,738)
Impairment charge (Note 6, 28) - - - - - - -
Depreciation charge (Note 6, 28) (22,581) (89,287) (12,593) (50,843) (113,672) - (288,976)
Closing net book amount 1,568,871 1,501,203 95,564 232,038 1,038,774 1,500,103 5,936,553
At 30 June 2015
Cost 1,919,979 3,084,475 190,960 1,403,696 2,111,829 1,500,795 10,211,734
Accumulated depreciation and impairment (351,108) (1,583,272) (95,396) (1,171,658) (1,073,055) (692) (4,275,181)
Net book amount 1,568,871 1,501,203 95,564 232,038 1,038,774 1,500,103 5,936,553
43
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015, depreciation expense of approximately
RMB247,139,000 (the six months ended 30 June 2014: RMB232,201,000) has been charged in
cost of sales, RMB1,071,000 (The six months ended 30 June 2014: RMB1,048,000) in
distribution costs and RMB40,766,000 (The six months ended 30 June 2014: RMB34,910,000) in
administrative expenses.
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 2015 31 December 2014
RMB’000 RMB’000
Opening net book amount 590,629 604,831
Additions 20,048 -
Amortisation charge (Note 6, 28) (7,936) (14,202)
Closing net book amount 602,741 590,629
Cost 703,084 683,036
Accumulated amortisation (100,343) (92,407)
Net book amount 602,741 590,629
Amortisation expense was charged in administrative expenses.
44
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets
After-sale
manageme
nt model Software Goodwill Other Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2014
Opening net book amount - 18,968 89,028 39 108,035
Addition - 17,217 - - 17,217
Impairment charge - - (85,566) - (85,566)
Amortisation charge (Note 6, 28) - (7,503) - (10) (7,513)
Closing net book amount - 28,682 3,462 29 32,173
At 31 December 2014
Cost 36,978 68,040 89,028 1,649 195,695
Accumulated amortisation and
impairment (36,978) (39,358) (85,566) (1,620) (163,522)
Net book amount - 28,682 3,462 29 32,173
Six months ended 30 June
2015
Opening net book amount - 28,682 3,462 29 32,173
Addition - 3,362 - - 3,362
Impairment charge - - - - -
Amortisation charge (Note 6, 28) - (4,765) - (6) (4,771)
Closing net book amount - 27,279 3,462 23 30,764
At 30 June 2015
Cost 36,978 71,402 89,028 1,649 199,057
Accumulated amortisation and
impairment (36,978) (44,123) (85,566) (1,626) (168,293)
Net book amount - 27,279 3,462 23 30,764
For the six months ended 30 June 2015, amortisation expense of approximately RMB4,666,000 (the
six months ended 30 June 2014: RMB3,579,000) was charged in administrative expenses, RMB97,000
(the six months ended 30 June 2014: RMB97,000) in cost of sales and RMB8,000 in distribution costs
(the six months ended 30 June 2014: RMB16,000).
45
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 31 December 2014
RMB’000 RMB’000 RMB’000 RMB’000
JMCH 89,028 - (85,566) 3,462
31 December 2014 Addition Impairment 30 June 2015
RMB’000 RMB’000 RMB’000 RMB’000
JMCH 3,462 - - 3,462
The recoverable amount of the CGU is determined based on value in use calculations. These
calculations use after-tax cash flow projections based on financial budgets approved by
management covering a nine-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 257%
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 after-tax and reflect specific risks relating to the relevant operating
subsidiary.
The impairment charge arose in the wholesale CGU following a decision in 2014 to reduce the
manufacturing output and adjust the gross profit margin of products of JMCH. Following this
decision, the group reassessed the recoverable value of the CGU, and made impairment
provision in accordance with the accounting policy stated in Note 2.8. No other class of asset
other than goodwill was impaired.
46
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 26,948 34,682
Share of profit (Note 28) 7,307 19,347
Dividends receivable - (15,657)
Dividends received - (11,424)
At end of the period 34,255 26,948
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. (“Visteon Climate
Control Nanchang”).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 2015 31 December 2014
RMB’000 RMB’000
Current
Cash and cash equivalents 53,574 113,954
Other current assets (excluding cash) 198,938 202,430
Total current assets 252,512 316,384
Current liabilities (128,871) (233,321)
Non-current
Assets 55,234 57,656
Net assets 178,875 140,719
47
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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
2015 2014
RMB’000 RMB’000
Revenue 263,581 297,223
Cost of sales (187,858) (193,093)
Sale tax (1,179) (2,330)
Distribution costs (4,004) (4,978)
Administrative expenses (19,768) (14,504)
Financial income (170) 586
Non-operating income/(expenses) 73 862
Profit before income tax 50,675 83,766
Income tax expense (12,519) (22,904)
Other comprehensive income - -
Total comprehensive income 38,156 60,862
(c) Reconciliation of summarised financial information
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Opening net assets 1 January 140,719 181,105
Profit for the period 38,156 60,862
Dividends distributed (59,657)
Closing net assets 178,875 182,310
Interest in associate 19.15% 19.15%
Carrying value 34,255 34,912
16 Deferred income tax
30 June 2015 31 December 2014
RMB’000 RMB’000
Deferred tax assets 400,909 442,408
Deferred tax liabilities- can be offset (2,001) (1,678)
Deferred tax liabilities- cannot be offset (28,917) (29,458)
Deferred tax assets (net) 398,908 440,730
Deferred tax liabilities (net) (28,917) (29,458)
48
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
The gross movement on the deferred income tax account is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 411,272 271,816
Credited/(charged) to profit or loss (41,281) 138,961
Credited to other comprehensive income
(Note 10) - 495
At end of the period 369,991 411,272
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 2014 7,201 13,430 250,344 33,517 304,492
Credited/(Charged) to profit
or loss (1,872) (1,483) 131,093 9,683 137,421
Charged to other
comprehensive income - 495 - - 495
At 31 December 2014 5,329 12,442 381,437 43,200 442,408
Charged to profit or loss (256) (424) (30,235) (10,584) (41,499)
Charged to other
comprehensive income - - - - -
At 30 June 2015 5,073 12,018 351,202 32,616 400,909
Deferred tax liabilities Forward
Amortization of Fair value exchange
Intangible Assets gains contracts Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 (2,071) (30,535) (70) (32,676)
Credited to profit or loss 393 1,077 70 1,540
At 31 December 2014 (1,678) (29,458) - (31,136)
(Charged)/Credited to profit
or loss (323) 541 - 218
At 30 June 2015 (2,001) (28,917) - (30,918)
49
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 2015 31 December 2014
RMB’000 RMB’000
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 11,323 12,036
–Deferred tax asset to be recovered within
12 months 389,586 430,372
400,909 442,408
30 June 2015 31 December 2014
RMB’000 RMB’000
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (29,250) (29,458)
–Deferred tax liabilities to be recovered
within 12 months (1,668) (1,678)
(30,918) (31,136)
Tax losses for which no deferred income tax assets were recognised is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
Tax losses 209,719 275,289
The expiry years of the tax losses are as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
2015 32,459 32,459
2016 6,721 6,721
2017 89,447 89,447
2018 44,319 44,319
2019 36,773 102,343
209,719 275,289
50
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
17 Inventories
30 June 2015 31 December 2014
RMB’000 RMB’000
Raw materials 1,017,177 927,110
Work in progress 155,195 159,502
Finished goods 410,099 572,095
1,582,471 1,658,707
For the six months ended 30 June 2015, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB8,170,236,000 ( the six months
ended 30 June 2014: RMB8,592,650,000).
A provision of RMB32,367,000 (2014: RMB33,216,000) was made as at 30 June 2015. In
2015, the Group wrote-off inventories with provision of RMB849,000 made in prior years. The
provision and reversal of the inventory write-down have been included in ‘cost of sales’ of profit
or loss.
As at 30 June 2015, no inventory was pledged as security for liabilities.
18 Trade, other receivables and prepayments
30 June 2015 31 December 2014
RMB’000 RMB’000
Trade receivables 856,251 696,258
Less: Provision for impairment of trade
receivables (7,719) (6,919)
Trade receivables – net 848,532 689,339
Notes receivables 714,541 799,782
Other receivables 90,353 53,387
Less: Provision for impairment of other
receivables (887) (719)
Other receivables – net 89,466 52,668
Prepayments 498,900 340,880
Dividends receivables - 15,657
Interest receivables 73,270 107,836
2,224,709 2,006,162
Refer to Note 31 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.
51
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
18 Trade, other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year (7,638) (6,841)
Provision for receivables impairment
(Note 6, 28) (985) (1,623)
Receivables written off during the year as
uncollectible (Note 6, 28) 17 826
At end of the period (8,606) (7,638)
The creation of provision for impaired receivables have been included in ‘administrative
expense’ in profit or loss (Note 6).
As at 30 June 2015, trade receivables of approximately RMB98,311,000 (2014:
RMB42,191,000) 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 2015 31 December 2014
RMB’000 RMB’000
Up to 3 months 29,075 8,167
3 months to 6 months 38,579 23,858
Over 6 months 25,352 10,166
93,006 42,191
The other classes within trade and other receivables do not contain impaired assets.
As of 30 June 2015, trade receivables of RMB3,455,000 (2014:RMB3,455,000) were
individually impaired. The amount of the provision was RMB3,455,000 as of 30 June 2015
(2014: RMB3,455,000). 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 2015 31 December 2014
RMB’000 RMB’000
Over 6 months 3,455 3,455
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.
52
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Cash and bank balances
(a) Cash and cash equivalents
30 June 2015 31 December 2014
RMB’000 RMB’000
Cash at bank and in hand 963,767 982,460
Short-term bank deposits (i) 7,745,000 7,981,008
8,708,767 8,963,468
As at 30 June 2015, the Group had cash of approximately RMB386,036,000 (2014: RMB
181,674,000) deposited in JMCF (Note 31 (iii)). The interest rates range from 0.455% to 3.06%
per annum (2014: 0.42% to 1.38%). JMCF, a non-bank financial institution, is a subsidiary of
JMCG.
(i) Short-term bank deposits can be withdrawn at the discretion of the Group without any
restriction.
(b) Restricted cash
As at 30 June 2015, none(2014: RMB6,810,000) are restricted deposits held at bank as reserve
for bank acceptance note.
20 Share capital
Tradable shares Total
Number of “A” shares “B” shares
shares Non-
(thousands) Restricted restricted
RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31
December 2014
Balance at 1 January
2014 863,214 2,542 516,672 344,000 863,214
Transfer - (720) 720 - -
Balance at 31 December
2014 863,214 1,822 517,392 344,000 863,214
Year ended 31
December 2014
Balance at 1 January
2015 863,214 1,822 517,392 344,000 863,214
Transfer - (36) 36 - -
Balance at 30 June 2015 863,214 1,786 517,428 344,000 863,214
All the “A” and “B” shares are registered, issued and fully paid shares of RMB1 each.
All the “A” and “B” shares rank pari passu in all respects.
After the implementation of the share reform scheme on 13 February 2006, 1,786,000 shares
were still restricted as at 30 June 2015.
53
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
21 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2014 431,607 18,627 6,217 456,451
Other comprehensive income - - - -
-Remeasurements of retirement
benefit obligation, net of tax - - (1,483) (1,483)
At 31 December 2014 431,607 18,627 4,734 454,968
Other comprehensive income - - - -
-Remeasurements of retirement
benefit obligation, net of tax - - - -
At 30 June 2015 431,607 18,627 4,734 454,968
(a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of
the Company, it is required to appropriate 10% of its annual net profit, after offsetting any prior
years’ losses as determined under the Accounting Standards for Business Enterprises in the
PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance
of the statutory surplus reserve fund reaches 50% of the Company’s share capital, any further
appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be
used to offset prior years’ losses, if any, and may be converted into share capital by issuing new
shares to shareholders in proportion to their existing shareholding or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation.
As the balance of the statutory surplus reserve fund has reached 50% of the Company’s share
capital, there are no further appropriations to the statutory surplus reserve fund for the six
months ended 30 June 2015.
22 Borrowings
30 June 2015 31 December 2014
RMB’000 RMB’000
Current
Bank borrowings - guaranteed (a) 400 401
Non-current
Bank borrowings - guaranteed (a) 4,604 4,808
Total borrowings 5,004 5,209
(a) Bank borrowings of USD819,000 (equivalent to approximately RMB5,004,000)
(2014:USD851,000 equivalent to approximately RMB5,209,000) were guaranteed by JMCF
(Note 31 (v)).
The interest rate of bank borrowings is 1.50% per annum (2014: 1.50%).
The fair value of borrowings approximates their carrying values.
54
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
22 Borrowings (continued)
The maturity of non-current borrowings is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
Between 1 and 2 years 400 401
Between 2 and 5 years 1,201 1,202
Over 5 years 3,003 3,205
4,604 4,808
The Group has the following undrawn borrowing facilities:
30 June 2015 31 December 2014
RMB’000 RMB’000
Fixed rate
- Expiring within one year 1,314,455 1,174,626
23 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement
of financial position is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
Present value of defined benefits obligations 52,902 55,726
The movement of early retirement and supplemental benefit obligations For the six months ended
30 June 2015 is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 55,726 57,001
For the year
-Current service cost - 1,292
-Interest cost - 2,399
-Payment (2,824) (7,378)
-Actuarial loss - 2,412
At end of the period 52,902 55,726
Current 5,580 5,580
Non-current 47,322 50,146
52,902 55,726
The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2015 31 December 2014
Discount rate adopted —— 3.75%
The salary and supplemental benefits inflation
rate of retiree, early-retiree and employee at
post —— 0% to 6%
55
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
23 Retirement benefits obligations (continued)
As at 30 June 2015, the Group did not estimate the present value of defined benefits obligations .
Based on the assessment and IAS 19, the Group estimated that, at 30 June 2015, a provision of
RMB52,092,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB52,092,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB5,580,000 (2014:
RMB5,580,000) has been included under current liabilities.
24 Provisions for warranty and other liabilities
The movement on the warranty provisions is as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
At beginning of the year 226,503 191,095
Charged for the year (Note 6) 55,961 204,768
Utilised during the year (88,384) (169,360)
Other addition - -
At end of the period 194,080 226,503
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 occurrence 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.
25 Financial liabilities at fair value through profit or loss
30 June 2015 31 December 2014
RMB’000 RMB’000
Forward exchange contracts 82 2,011
56
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
26 Trade and other payables
30 June 2015 31 December 2014
RMB’000 RMB’000
Trade payables 4,986,635 5,626,580
Payroll and welfare payable 216,108 280,620
Dividend payables 847,253 10,001
Other payables 2,332,953 2,503,072
8,382,949 8,420,273
Refer to Note 31 for details of amount due to related parties.
27 Dividends
A final dividend for 2014 of RMB0.97 per share, amounting to a total dividend of
RMB837,318,000 is proposed at the Shareholders’ Meeting on 25 June 2015.
28 Cash generated from operations
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Profit before tax 1,267,456 1,342,195
Depreciation of PPE (Note 6, 12) 288,976 268,159
Amortisation of lease prepayment (Note 6, 13) 7,936 7,101
Amortisation of intangible assets (Note 6, 14) 4,771 3,692
Provision for receivables impairment (Note 6, 18) 985 1,896
Loss on disposals of PPE 3,508 488
Finance cost (Note 9) 477 502
Finance income (Note 9) (147,997) (125,317)
Net foreign exchange transaction loss /(gain) 1,136 1,327
Share of profit from investment accounted for using
equity method (Note 15) (7,307) (11,655)
Investment loss of forward exchange contracts 5,365 84
Changes on fair value of forward exchange contracts (1,929) 588
Changes in working capital:
- Decrease in restricted cash 6,810 -
- Decrease in inventories 67,841 161,740
- Increase in trade and other receivables (238,306) (439,725)
- (Decrease)/Increase in provisions for warranty (32,422) 34,210
- (Decrease)/Increase in trade and other payables (703,538) 231,212
- Decrease in pensions and other retirement benefits (2,824) (4,216)
Cash generated from operations 520,938 1,472,281
57
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Six months ended 30 June
2015 2014
RMB’000 RMB’000
Net book amount 5,529 7,502
Loss on disposal of PPE (3,508) (488)
Offset with trade and other payables 104 (383)
Proceeds from disposal of PPE 2,125 6,631
29 Contingencies
At 30 June 2015, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
30 June 2015 31 December 2014
RMB’000 RMB’000
Contracted but not provided for:
Purchases of buildings, plant and machinery 1,080,045 1,218,684
31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 30 June 2015. 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 2015.
58
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
For the six months ended 30 June 2015, 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
Nanchang JMCG Skyman Auto Component Co., Ltd. Subsidiary of JMH
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 Lingge 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
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
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Nanchang Jiangling Huasheng Cleaner Co., Ltd. Subsidiary of JMCG
Jiangxi Sinodef International Trade Co.,Ltd. Subsidiary of JMCG
Nanchang Unistar Electric & Electronics Co.,Ltd. Subsidiary of JMCG
Nanchang Yinlun Heat-exchanger Co.,Ltd. Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG
Nanchang Hengou Industry Co., Ltd. Subsidiary of JMCG
Changan Ford Automobile Co., Ltd. Joint venture of Ford
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Real Estate Co., Ltd. Subsidiary of JMCG
59
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services
Six months ended 30 June
Purchase of goods 2015 2014
RMB’000 RMB’000
Jiangxi Jiangling Chassis Co., Ltd. 390,207 400,796
GETRAG (Jiangxi) Transmission Company 326,771 315,566
JMCG Interior Trim Factory 190,610 353,799
Nanchang Baojiang Steel Processing Distribution Co., Ltd. 313,992 290,404
Jiangxi Jiangling Lear Interior System Co., Ltd. 236,173 260,473
Ford 178,711 220,474
Nanchang JMCG Liancheng Auto Component Co., Ltd. 148,015 143,494
Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 137,056 146,075
Halla Visteon Climate Control (Nanchang) Co., Ltd. 123,085 134,733
Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. 111,566 107,442
Nanchang Unistar Electric & Electronics Co.,Ltd. 111,874 130,902
JMCG 75,163 61,527
Nanchang JMCG Skyman Auto Component Co., Ltd. 37,907 39,549
Nanchang Lianda Machinery Co., Ltd. 40,705 32,531
Jiangling Material Co. 12,377 17,346
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 19,023 20,118
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. 18,890 16,903
Nanchang JMCG Xinchen Auto Component Co., Ltd. 13,488 12,663
Nanchang Yinlun Heat-exchanger Co.,ltd 26,826 26,113
Jiangxi JMCG Shangrao Industrial Co., Ltd. 4,555 10,606
Jiangxi Jiangling Material Utilization Co., Ltd. 2,287 5,054
Jiangxi ISUZU Engine Co., Ltd. 8,789 4,721
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 3,460 3,077
Jiangxi Biaohong Engine Tappet Co., Ltd. 5,277 4,520
Nanchang JMCG Printing Plant Co., Ltd. 2,625 2,842
Nanchang Gear Co., Ltd. 8,194 4,222
JMCG Hequn Costume Co., Ltd. 1,272 941
Faurecia Emissions Control Technologies (Nanchang)
Co., Ltd. 2,772 223
Ford Motor (China) Co., Ltd. - 12,500
Jiangxi JMCG industry Co., Ltd. 5,388 -
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 178,609 -
Others 209 803
2,735,876 2,780,417
60
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services (continued)
Six months ended 30 June
Purchase of services 2015 2014
RMB’000 RMB’000
Ford
- services (a) 185,150 179,442
Nanchang JMCG Shishun Logistics Co., Ltd.
- services 106,385 94,900
Jiangxi JMCG Industry Co.,Ltd.
- services 15,331 13,889
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd.
- services 4,251 -
JMCG Jiangxi Engineering Construction Co., Ltd.
- services 10,372 8,218
Ford Otosan Company
- services 161,576 -
Ford Motor Research & Engineering (Nanjing)
Co., Ltd.
- services 1,531 -
Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd.
- services - 2,906
Jiangxi Jiangling Lear Interior System Co., Ltd.
- services 5,124 2,337
GETRAG (Jiangxi) Transmission Company
- services - 3,736
Nanchang Hengou Industry Co., Ltd.
- services 16,971 -
JMCG
-rental expense 24 1,856
Jiangxi Jiangling Real Estate Co., Ltd.
-rental expense 5 -
Others 1,161 2,375
507,881 309,659
61
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchase of services (continued)
(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
USD41,600,000 before 30 May 2015 in each quarter starting from 2012. During the six months
ended 30 June 2015, the Company accrued service fee of USD4,371,000 (equivalent to
approximately RMB26,724,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to
pay engineering service fee for project J08 with the total amount of approximately
USD9,600,000 before 30 June 2015 in each quarter starting from 2014. During the six months
ended 30 June 2015, the Company accrued service fee of USD2,765,000 (equivalent to
approximately RMB16,903,000) 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
USD64,700,000 before 31 October 2015 in each quarter starting from 2013. During the six
months ended 30 June 2015, the Company accrued service fee of USD4,235,000 (equivalent
to approximately RMB26,230,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to
pay engineering service fee for project J09 with the total amount of approximately
USD13,300,000 before 30 June 2015 in each quarter starting from 2014. During the six
months ended 30 June 2015, the Company accrued service fee of USD7,386,000 (equivalent
to approximately RMB45,746,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to
pay engineering service fee for project J09 with the total amount of approximately
USD16,100,000 before 31 January 2016 in each quarter starting from 2014. During the six
months ended 30 June 2015, the Company accrued service fee of USD7,329,000 (equivalent
to approximately RMB45,453,000) payable to Ford.
Pursuant to an agreement among the Company,JMCH,Ford and Ford Otosan Company in
2015, the Company agreed to pay engineering service fee for project J20 with the total amount
of approximately USD41,200,000 before 1 December 2015. During the six months ended 30
June 2015, the Company accrued service fee of USD26,101,000 (equivalent to approximately
RMB161,576,000) payable to Ford Otosan Company.
62
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
ii) Sales of goods and provision of services
Sales of goods Six months ended 30 June
2015 2014
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 90,267 90,036
Jiangxi Jiangling Material Utilization Co., Ltd. 29,007 39,991
JMCG Interior Trim Factory 16,989 42,796
Jiangxi Jiangling Chassis Co., Ltd. 29,559 35,916
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 21,025 19,724
JMCG Jingma Motors Co., Ltd. 35,467 25,331
Jiangxi Sinodef International Trade Co.,Ltd. 10,504 8,909
Jiangxi Jiangling Lear Interior System Co., Ltd. 7,761 7,825
JMCG Property Management Co. 3,388 3,652
Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 529 1,735
Jiangxi ISUZU Engine Co., Ltd. 3,161 2,139
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 191 1,262
JMH 427 656
Jiangxi JMCG Industrial Co. 4,605 1,120
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 10,751 -
Others 1,931 1,006
265,562 282,098
Sales of PPE Six months ended 30 June
2015 2014
RMB’000 RMB’000
Nanchang JMCG Liancheng Auto Component Co.,
Ltd. - 622
Jiangxi JMCG Industrial Co. 3 -
3 622
63
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
iii) Balances arising from sales/purchases of goods/services
Trade receivables from related parties
30 June 2015 31 December 2014
RMB’000 RMB’000
JMCG Jingma Motors Co., Ltd. 5,847 2,309
JMH 267 12
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. - 3,287
Jiangxi JMCG Industrial Co. 1,320 13
Others 315 -
7,749 5,621
Notes receivables from related parties
30 June 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. - 15,044
JMCG Jingma Motors Co., Ltd. 24,864 34,378
24,864 49,422
Other receivables from related parties
30 June 2015 31 December 2014
RMB’000 RMB’000
Ford Otosan Company 3,782 3,758
JMCG Jiangxi Engineering Construction Co., Ltd. - 211
3,782 3,969
Prepayments for purchasing of goods
30 June 2015 31 December 2014
RMB’000 RMB’000
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 204,082 240,046
Changan Ford Automobile Co., Ltd. 22,220 17,109
226,302 257,155
64
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Prepayments for construction in progress
30 June 2015 31 December 2014
RMB’000 RMB’000
JMCG Jiangxi Engineering Construction Co., Ltd. 2,332 1,697
Trade payables to related parties
30 June 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Jiangling Chassis Co., Ltd. 171,567 326,231
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. 291,999 317,797
GETRAG (Jiangxi) Transmission Company 146,947 228,766
JMCG Interior Trim Factory 72,451 191,894
Jiangxi Jiangling Lear Interior System Co., Ltd. 193,676 188,264
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 124,287 102,423
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 100,728 116,829
Halla Visteon Climate Control (Nanchang) Co.,
Ltd. 91,508 83,065
Ford 55,545 53,668
Nanchang Unistar Electric & Electronics Co.,ltd. 46,839 76,056
JMCG 124,965 85,250
Nanchang Lianda Machinery Co., Ltd. 19,554 26,881
Nanchang JMCG Skyman Auto Component Co.,
Ltd. 19,172 25,826
Jiangling Aowei Aotomobile Spare Part Co., Ltd. 12,959 16,110
Nanchang Yinlun Heat-exchanger Co.,Ltd. 31,300 18,577
Jiangxi Lingge Non-ferrous Metal Die-casting
Co., Ltd. 8,614 12,612
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 4,742 8,699
Jiangxi JMCG Shangrao Industrial Co., Ltd. 13,178 14,153
Nanchang Jiangling Huasheng Cleaner Co., Ltd. 2,194 4,927
Jiangxi ISUZU Engine Co., Ltd. 5,607 4,697
Jiangxi Jiangling Material Utilization Co., Ltd. 1,409 2,060
Nanchang Gear Co., Ltd. 4,360 4,052
Jiangxi Biaohong Engine Tappet Co., Ltd. 2,403 3,359
Jiangling Material Co. 706 1,647
Nanchang JMCG Printing Plant Co., Ltd. 695 1,208
Jiangxi JMCG industrial Co. 2,979 353
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 96,772 -
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 2,656 271
Others 71 30
1,649,883 1,915,705
65
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i iii) Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2015 31 December 2014
RMB’000 RMB’000
Ford 155,622 118,926
Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd. 7,306 3,386
Ford Global Technologies,LLC 21,196 17,574
Ford Otosan Company 204,494 6,309
JMCG Jiangxi Engineering Construction Co., Ltd. 1,773 3,648
Nanchang JMCG Shishun Logistics Co., Ltd. 3,453 2,803
Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 5,936 8,687
Jiangxi Jiangling Lear Interior System Co., Ltd. 3,939 1,832
GETRAG (Jiangxi) Transmission Company 949 8,090
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 870 1,943
Ford Motor (China) Co., Ltd. 1,305 11,582
JMCG Property Management Co. 120 1,077
JMH 587 17
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 3,060 1,764
JMCG Hequn Costume Co., Ltd. 475 1,025
Nanchang Hengou Industry Co., Ltd. 7,466 10,785
Others 3,066 4,392
421,617 203,840
Advance from related parties 30 June 2015 31 December 2014
RMB’000 RMB’000
Jiangxi Specialty Vehicles Jiangling
Motors Group Co., Ltd. 486 9
Others 507 923
993 932
Cash deposit in related parties 30 June 2015 31 December 2014
RMB’000 RMB’000
JMCF (Note 19) 386,036 181,674
Six months ended 30 June
Interest received from cash deposit in related
2015 2014
parties
RMB’000 RMB’000
JMCF (Note 19) 5,236 2,124
66
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 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 2015,
the Company accrued service fee of approximately USD3,938,000 (equivalent to
approximately RMB24,260,000), RMB961,000 and RMB1,783,000 payable to Ford, Ford Motor
Research & Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. for these
employees, respectively.
Pursuant to an agreement among the subsidiary of Company, Ford and Ford Motor (China)
Co., Ltd. in 2014, some employees of Ford and Ford Motor (China) Co., Ltd. were assigned to
the subsidiary of Company as management staff. During the six months ended 30 June 2015,
the subsidiary of Company accrued service fee of approximately USD1,594,000 (equivalent to
approximately RMB9,773,000) and RMB530,000 payable to Ford and Ford Motor (China) Co.,
Ltd. for these employees, respectively.
Pursuant to an agreement between the Company and JMH in January 2015, some employees
of JMH were assigned to the Company as management staff. During the six months ended 30
June 2015, the Company accrued service fee of approximately RMB571,000 payable to JMH
for these employees.
Pursuant to an agreement between the subsidiary of Company and Ford Otosan Company in
2014, some employees of Ford Otosan Company were assigned to the subsidiary of Company
as management staff. During the six months ended 30 June 2015, the subsidiary of Company
accrued service fee of approximately EUR1,685,000(equivalent to approximately
RMB11,721,000) payable to Ford Otosan Company for these employees, respectively.
v) Guarantee
As at 30 June 2015, bank loans of USD819,000 (equivalent to approximately RMB5,004,000)
(2014:USD851,000 equivalent to approximately RMB5,209,000) were guaranteed by JMCF
(Note 22).
67
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
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 2015, the total remuneration of the key management was
approximately RMB8,117,000 (The six months ended 30 June 2014: RMB6,335,000 ).
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 the six months ended 30
June 2015, the total royalty fee payable to Ford Global Technologies, LLC and Ford Otosan
Company was approximately USD3,688,000 (equivalent to approximately RMB22,601,000). As
at 30 June 2015, the balance of USD3,299,000 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 2015, the total licensing fee payable to Ford Global Technologies, LLC
was approximately USD1,396,000 (equivalent to approximately RMB8,638,000). As at 30 June
2015, the balance of USD1,246,000 not yet paid was included in other payables.
c) Pursuant to a technology licensing contract between JMCH, the subsidiary of the Company,
and Ford Otosan Company in 2014, JMCH agreed to pay licensing fee to Ford Otosan
Company of approximately EUR8,000,000. During the six months ended 30 June 2015, JMCH
accrued licensing fee of EUR2,000,000 payable to Ford Otosan Company. As at 30 June 2015,
the balance of EUR2,000,000 not yet paid was included in other payables.
68
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
viii) Transaction with other state-owned entities
The Company’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
2015 2014
RMB’000 RMB’000
Purchase of goods 764,269 829,560
Purchase of fixed assets 101,608 8,237
Interest income 115,610 93,356
Balances with other state-owned entities
30 June 2015 31 December
2014
RMB’000 RMB’000
Cash and cash equivalents 7,811,979 8,142,814
Trade and other payables 501,161 550,149
69
Jiangling Motors Corporation, Ltd.
FOR THE SIX MONTHS ENDED 30 JUNE 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Principal subsidiary
As at the date of this report, the Group has the following subsidiary:
Place and date of Percentage of
Entity incorporation equity interest held Principal activities
JMCH Taiyuan, PRC / 100% Manufacture and sale of
8 January 2013 automobiles and spare parts
Jiangling Motors Nanchang, PRC / 100% Sale of automobiles and
Sales Corporation, 11 October 2013 spare parts
Ltd
33 Comparative figures
Certain comparative figures have been reclassified to conform to the current year’s
presentation.
70
Chapter XI Catalog on Documents for Reference
1. Originals of 2015 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 2015 Half-year Report prepared in China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 28, 2015
71
