Jiangling Motors Corporation, Ltd.
2019 Annual Report
2020-03
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its members,
and the senior executives are jointly and severally liable for the truthfulness,
accuracy and completeness of the information disclosed in the report and confirm
that the information disclosed herein does not contain any false statement,
misrepresentation or major omission.
Chairman Qiu Tiangao, CFO Li Weihua and Chief of Finance Department, Ding
Ni, confirm that the Financial Statements in this Annual Report are truthful and
complete.
All Directors were present at the Board meeting to review this Annual Report.
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 Annual Report is prepared in Chinese and English. In case of discrepancy,
the Chinese version will prevail.
The year 2019 profit distribution proposal approved by the Board of Directors is
as follows:
A cash dividend of RMB 0.70 (including tax) will be distributed for every 10
shares held based on the total share capital of 863,214,000 shares, and there is
no stock dividend. The Board decided not to convert capital reserve to share
capital this time.
1
Contents
Chapter I Important Notes, Contents and Abbreviations ............................... 1
Chapter II Brief Introduction and Operating Highlight .................................... 3
Chapter III Operating Overview ...................................................................... 7
Chapter IV Management Discussion and Analysis .......................................... 9
Chapter V Major Events ............................................................................... 21
Chapter VI Share Capital Changes & Shareholders ...................................... 33
Chapter VII Preferred Shares.......................................................................... 38
Chapter VIII Directors, Supervisors, Senior Management and Employees ...... 39
Chapter IX Corporate Governance Structure ................................................. 52
Chapter X Corporate Bond............................................................................ 52
Chapter XI Financial Statements ................................................................... 59
Chapter XII Catalog on Documents for Reference ........................................ 128
Abbreviations:
JMC or the Company Jiangling Motors Corporation, Ltd.
JIC Nanchang Jiangling Investment Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Group Co., Ltd.
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
2
Chapter II Brief Introduction and Operating Highlight
1. Company’s Information
Share’s name Jiangling Motors, Jiangling B Share’s Code 000550, 200550
Place of listing Shenzhen Stock Exchange
Company’s Chinese
江铃汽车股份有限公司
name
English name Jiangling Motors Corporation, Ltd.
Abbreviation JMC
Company legal
Qiu Tiangao
representative
No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Registered Address
Province, P.R.C
Postal Code of
330001
Registered Address
Headquarters No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi
Address Province, P.R.C
Postal Code of
Headquarters 330001
Address
Website http://www.jmc.com.cn
E-mail relations@jmc.com.cn
2. Contact Person and Method
Board Secretary Securities Affairs Representative
Name Wan Hong Quan Shi
No. 509, Northern Yingbin Avenue, No. 509, Northern Yingbin Avenue,
Address Nanchang City, Jiangxi Province, Nanchang City, Jiangxi Province,
P.R.C P.R.C
Tel 86-791-85266178 86-791-85266178
Fax 86-791-85232839 86-791-85232839
E-mail relations@jmc.com.cn relations@jmc.com.cn
3. Information Disclosure and Place for Achieving Annual Report
Newspapers for information China Securities, Securities Times, Hong Kong
disclosure Commercial Daily
Website designated by CSRC for
http://www.cninfo.com.cn
publication of JMC’s Annual Report
Securities Department, Jiangling Motors
Place for Achieving Annual Report
Corporation, Ltd.
3
4. Changes of Registration
Organization Code 913600006124469438
Changes in the Main
No change.
Business since the Listing
On December 1, 1993, JMC A shares were listed on
Shenzhen Stock Exchange, while JMCG, the founder-
member, was the controlling shareholder of the Company.
On September 29, 1995 and November 12, 1998, JMC
issued additional 344 million B shares totally, while, after the
additional B share issuance, JMCG and Ford were the
controlling shareholders of the Company. On December 8,
2005, the 354.176 million JMC shares held by JMCG, the
former controlling shareholder, were transferred to Jiangling
Changes of Controlling
Motor Holdings Co., Ltd. After the transference, Jiangling
Shareholders
Motor Holdings Co., Ltd. and Ford were the controlling
shareholders of the Company.
In 2019, Jiangling Motor Holdings Co., Ltd., the former
controlling shareholder, was divided and separated into
Jangling Motor Holdings Co., Ltd. and Nanchang Jiangling
Investment Co., Ltd., and transferred the 354.176 million
JMC shares it held to Nanchang Jiangling Investment Co.,
Ltd. Presently, Nanchang Jiangling Investment Co., Ltd. and
Ford are the controlling shareholders of the Company.
5. Other Information
Accounting Firm Appointed by JMC for Audit
PricewaterhouseCoopers Zhong Tian LLP
Name
(‘PwC Zhong Tian’)
11/F, PricewaterhouseCoopers Center Link Square 2,202 Hu
Headquarters address
Bin Road, Huangpu District Shanghai 200021, PRC
Names of Signed
Lei Fang, Ye Dan
Accountants
4
6. Main accounting data and financial ratios
Unit: RMB’ 000
2019 2018 Change (%) 2017
Revenue 29,173,636 28,249,340 3.27% 31,345,747
Profit Attributable to the
Equity Holders of the 147,812 91,833 60.96% 690,938
Company
Net Cash Generated
2,733,963 -101,808 2785.41% 674,588
From Operating Activities
Basic Earnings Per Share
0.17 0.11 60.96% 0.8
(RMB)
Diluted Earnings Per
0.17 0.11 60.96% 0.8
Share (RMB)
Weighted Average Return
1.42% 0.83% 0.59% 5.51%
on Equity Ratio
End of Year End of Year End of Year
Change (%)
2019 2018 2017
Total Assets 24,298,529 23,396,529 3.86% 26,383,761
Shareholders’ Equity
Attributable to the Equity 10,496,564 10,384,498 1.08% 12,572,402
Holders of the Company
7. Accounting data difference between China GAAP and IFRS
I. Differences in net profit and net assets in financial statements between in
accordance with international accounting standards and Chinese accounting
standards
□Applicable □√Not Applicable
II. Differences in net profit and net assets in financial statements between in
accordance with overseas accounting standards and Chinese accounting
standards
□Applicable □√Not Applicable
5
8. Main accounting data quarterly
Unit: RMB’ 000
Q1 Q2 Q3 Q4
Revenue 6,506,386 7,215,568 6,686,321 8,765,361
Profit Attributable to the
Equity Holders of the 25,158 33,704 98,811 -9,861
Company
Net Cash Generated
From Operating -191,400 1,626,602 -151,987 1,450,748
Activities
6
Chapter III Operating Overview
1. Company’s Core Business during the Reporting Period
JMC’s core business is production and sales of commercial vehicles, SUV and
related components. JMC’s major products include JMC series light truck, heavy
truck, pickup and light bus; Yusheng SUV; Ford-brand light bus, MPV and Ford
SUV. The Company also produces and sells engines, castings and other
components for sales to domestic and overseas markets.
2. Major Change of Main Assets
I. Major Change of Main Assets
There’s no major change of main assets during the reporting period.
II. Main Overseas Assets
□Applicable □√Not Applicable
3. Core Competitiveness Analysis
JMC is a sino-foreign joint venture auto company with R&D, manufacturing and
sales operations. With leading position and advanced technology of commercial
vehicles, JMC is a China auto industry pioneer providing excellent products and
solutions to smart logistics, which is certificated as a national high-tech enterprise,
national innovative pilot enterprise, national enterprise technology centre,
national industrial design centre, national intellectual property demonstration
enterprises and national automobile export base; and had been ranked among
the top 100 most valuable global brands for consecutive years.
On traditional business, with the support from Ford's advanced technology and
management experience, JMC's influence over auto industry is improving
steadily, making considerable progress both in new product development and
technical equipment. With the implementation of the national phase six emission
standards, JMC as the "bellwether" of the commercial vehicle market, rapidly
responds to the national policy to upgrade the emission of vehicle products by
virtue of its advanced product research and development technology and high-
quality manufacturing capacity. The JMC brand light truck EVI, Ford brand light
bus EVI and other series of products were successively launched. The new Ford
Territory SUV, based on deep insights into Chinese consumers, not only has
leading space and size at the same level, but also takes the lead in introducing
domestic technologies such as the Miller cycle engine, 48V micro-hybrid power,
and Feiyu Intelligent Voice Control System. Respond quickly to market demands,
increase comfort, intelligent network connectivity and assisted driving, including
16 all-standard 28-class leading configurations, which have been widely
recognized by the market and customers since launched. High standard Xiaolan
7
manufacturing site continues to expand modern plants of vehicle, engine and
frame, which will further ensure JMC's product production and quality
improvement. With the construction of Fushan new energy base, JMC will deliver
more new energy vehicles in the future which will lay a solid foundation for JMC’s
sustainable and healthy growth.
While continuous consolidating the traditional advantages, JMC has been
developing new business areas and innovative business models in response to
the new trend of overseas and domestic industries. In the new business field of
intelligent driving, as one of the first demonstration companies certified by the
vehicle networking product of China's self-developed global satellite positioning
system Beidou system, based on 5G and vehicle networking technology
application, the Company has researched and developed the first domestic
intelligent driving pure electric TeShun light bus product with autonomous driving
technology on the mass production model, achieve multiple functions such as
high-speed automatic formation, automatic remove formation, automatic obstacle
avoidance, automatic pull over, etc. The Company cooperated with Jiangxi
provincial Department of Transportation, China mobile, Huawei and other leading
enterprises to complete the Changjiu intelligent high-speed formation
autonomous driving demonstration project, Yingtan international IoT conference
collaboration and presentation project, 2019 World VR industry conference
collaboration and presentation project, etc. Based on the Company's new energy
light truck platform, cooperated with partners to build a full series of large-
tonnage autonomous special vehicles for environmental sanitation，the vehicles
will be used in municipal environmental sanitation and other demonstration
projects. Combining with the above intelligent driving cooperation projects, the
Company has become a member of National Science and Technology Major
Project, , joint National Science and Technology Major Project -- "Zhi Gan Xing"
subject research. In the field of new energy technology, based on the commercial
scenario, the Company vigorously promotes the research and sales of pure
electric vehicle, and develops hydrogen fuel and methanol fuel vehicle
technology with advantageous partners. In the new business ecology field, the
Company participates in the construction of the automobile business ecosystem,
and creates a new ecology of cross-industry intelligent service for commercial
vehicles with domestic financial enterprises, communication enterprises, logistics
enterprises and mobile travel operating enterprises.
8
Chapter IV Management Discussion and Analysis
1. Summary
In 2019, China’s economic growth is slowing, so as its auto market. Total sales
volume was 25.72million units, decreased 7.51% compared with last year.
During the reporting period, to cope with more severe competition, more stringent
regulatory requirement and intensifying cost pressures, the Company focused on
quality improvement, new product development, operating cost control and
production efficiency enhancement. Simultaneously, the Company introduced
series of sales policy to respond the market risk. In 2019, JMC achieved sales
volume of 290,058 units, increased 1.75% compared with last year, achieved
revenue of RMB 29.17 billion, increased 3.27% compared with last year,
achieved net profit of RMB 148 million, increased 60.96% compared with last
year. It mainly reflects the rise in sales and the improvement of profitability
resulted from the Company has taken positive measures to reduce cost and
increase efficiency.
2. Core Business Analysis
I. Summary
In 2019, JMC sales volume achieved 290,058 units, increased 1.75% compared
with last year, including96,915 units JMC series truck, 59,486 units JMC series
pickup, 52,056 units SUV, 45,974 units Transit series commercial vehicle, and
35,627 units JMC branded light bus.
2019 total production volume was 288,074 units, increased 0.44% compared with
last year, including 96,513 units JMC series truck, 58,368 units JMC series
pickup, 51,881 units SUV, 45,735 units Transit series commercial vehicle, and
35,577 units JMC branded light bus.
JMC total sales revenue in 2019 was RMB 29.17 billion, increased 3.27%
compared with last year.
II. Revenue and Cost
9
(a) Composition of Sales Revenue
Unit: RMB
2019 FY 2018 FY
YOY change
Proportion Proportion
Amount Amount (%)
(%) (%)
Revenue 29,173,636,262 100.00% 28,249,339,672 100.00% 3.27%
By Industry
Automobile Industry 29,173,636,262 100.00% 28,249,339,672 100.00% 3.27%
By Products
Vehicle 26,252,631,564 89.99% 25,178,859,631 89.13% 4.26%
Components 2,351,979,223 8.06% 2,696,240,006 9.55% -12.77%
Automobile Maintenance
103,582,678 0.36% 71,798,771 0.25%
services 44.27%
Material
465,442,797 1.60% 302,441,264 1.07%
& Others 53.90%
By region
China 29,173,636,262 100.00% 28,249,339,672 100.00% 3.27%
(b) Reach to 10% of Revenue or Profit by Industry, Product or Region
□√Applicable □Not Applicable
Unit: RMB
Y-O-Y Y-O-Y gross
Y-O-Y Cost
Gross turnover margin
Turnover Cost Change
Margin change change
(%)
(%) (points)
By Industry
Automobile
29,173,636,262 24,530,857,150 15.91% 3.27% 0.50% 2.32%
Industry
By Products
Vehicle 26,252,631,564 22,303,937,803 15.04% 4.26% 0.72% 2.99%
By Region
China 29,173,636,262 24,530,857,150 15.91% 3.27% 0.50% 2.32%
If the Company’s core business scope is adjusted during the reporting period, the
Company’s core business data of last year need to be adjusted per the scope in
this year
□Applicable □√Not Applicable
(c) Whether Company’s Goods Revenue Higher Than Service Revenue
□√Yes □No
Industry Item Unit 2019 2018 Change (%)
Sales volume unit 290,058 285,066 1.75%
Automobile
Production volume unit 288,074 286,808 0.44%
10
Explanation on YOY change of over 30%
□Applicable □√Not Applicable
(d) Execution of Company’s Signed Major Sales Contract
□Applicable □√Not Applicable
(e) Composition of Operating Cost
Unit: RMB
2019 FY 2018 FY
YOY
Product Proportion Proportion change
Cost Cost
(%) (%) （%）
Vehicle 22,303,937,803 90.92% 22,143,813,493 90.72% 0.72%
Components 1,696,042,274 6.92% 1,921,477,490 7.87% -11.73%
Automobile Maintenance services 98,395,291 0.40% 69,559,583 0.29% 41.45%
Material & Others 432,481,782 1.76% 274,696,188 1.12% 57.44%
(f) Whether Consolidated Scope was Changed During the Reporting Period
□Yes □√No
Xiamen Fujiang New Energy Automobile Sales Co., Ltd. was cancelled on
December 16, 2019.
(g) Major Change or Adjustment on Business, Products or Services During the
Reporting Period
□Applicable □√Not Applicable
(h) Main Customers and Suppliers
Top 5 Customers:
Total sales value to top 5 customers（RMB） 3,239,393,170
Accounted for the proportion of JMC’s total annual turnover 11.11%
Included related party transaction accounted for the
3.75%
proportion of JMC’s total annual turnover
11
Percentage of
Sales Value
No. Name of the Customer JMC’s Total
(RMB)
Turnover (%)
1 Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,093,233,543 3.75%
2 Zhejiang Jiangling Motors Sales Company 1,075,100,487 3.69%
Hunan Transit Jiangling Motors Sales
3 399,887,905 1.37%
Company
4 Shanghai Keda Zhoupu Auto Sales Company 335,775,073 1.15%
5 Beijing Jinglingshun Auto Sales Company 335,396,162 1.15%
Total 3,239,393,170 11.11%
Other introduction to main customers
□√Applicable □Not Applicable
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. is a related party of the Company.
VP Li Xiaojun holds the position of Director of Jiangxi Jiangling Motors Imp. &
Exp. Co., Ltd.
Top 5 Suppliers:
Total purchase value from top 5 suppliers（RMB） 3,732,511,710
Accounted for the proportion of JMC’s total annual purchase
16.96%
amount
Included related party transaction accounted for the proportion of
13.60%
JMC’s total annual purchase amount
Percentage of
Purchase JMC’s Total
No. Name of the Supplier
Value (RMB) Annual Purchase
Amount (%)
Nanchang Baojiang Steel Processing
1 809,328,079 3.68%
Distribution Co., Ltd.
Nanchang Jiangling HuaXiang Auto
2 751,247,981 3.41%
Components Co., Ltd.
Bosch Auto Diesel System (Wuxi)
3 739,472,213 3.36%
Company
4 Jiangxi Jiangling Chassis Co., Ltd. 719,674,742 3.27%
Jiangxi Jiangling Special Purpose
5 712,788,695 3.24%
Vehicle Co., Ltd.
Total 3,732,511,710 16.96%
Other introduction to main suppliers
□√Applicable □Not Applicable
Except Bosch Auto Diesel System (Wuxi) Company, the other four suppliers are
related parties of the Company.
12
III. Expense Analysis
Unit: RMB’ 000
YOY Major Changes
2019 2018
Change Explanation
Distribution Expenses 1,525,883 1,202,382 26.91%
Administrative Expenses 2,731,887 2,460,259 11.04%
Finance Income-net 195,644 182,587 7.15%
IV. Research & Development
In 2019, JMC continued to focus on development of new product programs.
Product related spending centered at future product development and
compliance with regulatory requirements, including new model, increased
payloads, new styling, and improved power, ensuring the Company is compliant
with stringent environmental and safety regulations. The competitive R&D will
ensure the Company’s volume and profit growth in the future. Development
expenditure in 2019 was 1,937 million, representing 18.45% of net assets, or
6.64% of revenue.
R&D
2019 2018 Change (%)
R&D Staff (person) 2,758 2,692 2.45%
R&D Staff as % of total employees 18.65% 16.28% 2.37%
R&D Investment (RMB) 1,937,077,557 1,735,368,721 11.62%
R&D Investment as % of revenue 6.64% 6.14% 0.50%
Capitalization of R&D investment 160,756,911 71,814,337 123.85%
Capitalization of R&D investment
8.30% 4.14% 4.16%
as % of R&D Investment
Major change of R&D Investment as % of revenue
□Applicable □√Not Applicable
Major change of capitalization of R&D investment
□√Applicable □Not Applicable
Please refer to the Note 15 Intangible Assets of the notes to the consolidated
financial statements in the Chapter XI Financial Statements for details.
V. Cash Flow Analysis
RMB’000
Y-O-Y
Item 2019 2018
Change
Net cash generated from operating activities 2,733,963 -101,808 2,785.41%
Net cash used in investing activities -1,365,093 -1,138,924 -19.86%
Net cash used in financing activities -47,813 -2,280,111 97.90%
Net (decrease)/increase cash and cash equivalents 1,321,057 -3,520,843 137.52%
Explanation on the major factors regarding major change of related data
13
□√Applicable □Not Applicable
Increase of the net cash generated from operating activities compared with the
same period mainly reflected the increase of sales revenue and the decrease of
inventory level, as well as the increase of operating payables.
Decrease of the net cash used in investing activities compared with the same
period mainly reflected the increase in cash paid for the purchase and
construction of fixed assets.
Decrease of the net cash used in financing activities compared with the same
period mainly reflected the payment of 2017 interim special dividends in 2018.
Increase of the net cash and cash equivalents compared with the same period
mainly reflected the increase of net cash generated from operating activities and
the payment of 2017 interim special dividends in 2018.
Explanation on significant difference between net cash generated from operating
activities and net profit during the reporting period.
□Applicable □√Not Applicable
3. Non- core business analysis
□√Applicable □Not Applicable
Unit: RMB
Proportion Sustainability
Item Amount Explanation
of PBT （Y/N）
Government subsidies to
Non-operating
222,840,220 212.26% support the Company’s Y
Revenue
development
4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB’ 000
YOY
December 31, 2019 December 31, 2018 Major Changes
Asset item Proportion
Change Explanation
Amount Proportion Amount Proportion (Points)
Property, plant and equipment 7,212,614 29.68% 6,941,292 29.67% 0.01
Inventories 1,946,869 8.01% 2,522,354 10.78% -2.77
Trade and other receivables
3,900,585 16.05% 4,678,284 20.00% -3.95
and prepayments
Cash and cash equivalents 8,937,937 36.78% 7,616,880 32.56% 4.22
Trade and other payables 12,826,996 52.79% 12,195,966 52.13% 0.66
14
II. The fair value of the assets and liabilities (not applicable).
III. Restriction on Assets Rights as of the End of the Reporting Period
There was no major restriction on assets rights as of the end of the reporting
period.
5. Investment
I. Summary
□Applicable □√Not Applicable
II. Obtained Major Equity Investment during the Reporting Period
□Applicable □√Not Applicable
III. Ongoing Major Non-Equity Investment during the Reporting Period
□√Applicable □Not Applicable
Cumulative
Investment Fixed Spending
Project Actual
Method/ Assets in 2019 Progress Index
Name Investment
source (Y/N) (RMB mils)
(RMB mils)
Fushan Self-
Y 489 861 42% *
Plant funded
Total 489 861 -- --
**The announcement (No. 2017-044) was published on the website:
www.cninfo.com.cn.
IV. Financial Assets Investment
(a) Stock Investment
□Applicable □√Not Applicable
(b)Derivative Investment
□Applicable □√Not Applicable
V. Usage of Raised Fund
□Applicable □√Not Applicable
6. Sales of Major Assets and Equity
I. Sale of Major Assets
□Applicable □√Not Applicable
II. Sales of Major Equity
□Applicable □√Not Applicable
15
7. Operating Results of Main Subsidiaries and Joint-Stock Companies whose
impact on JMC’s net profit more than 10%
Unit: RMB’000
Name of Type of Main Registered Net Operating
Assets Turnover Net Profit
Companies Companies Business Capital Assets Profit
Jiangling
Sales
Motors Sales
Subsidiary vehicle, 50,000 3,261,398 231,472 26,527,567 -23,853 -18,125
Corporation,
service parts
Ltd
Product
heavy
commercial
JMC Heavy
vehicle ,
Duty Vehicle Subsidiary 281,793 2,789,891 -980,202 332,808 -305,397 -304,345
engine,
Co., Ltd.
component,
and related
service
Acquisition and disposal of the subsidiaries
□√Applicable □Not Applicable
Acquisition and disposal of
Name of Companies Influence
the subsidiaries
Xiamen Fujiang New Energy Cancellation None
Automobile Sales Co., Ltd.
8. Structured Entities Controlled by JMC
□Applicable □√Not Applicable
9. Outlook
I. Industry Competition and Development Trend
At present China is still in the stage of industrial and urbanization development.
China's economic operation is remaining at a reasonable level, its macro-control
targets are well achieved, its imports and exports are stable, and its balance of
payments is basically balanced. Domestic demand is stable, innovation is
encouraged, and the combination of Internet and industry is further deepened.
The long-term fundamentals of the Chinese economy have not changed, but
short-term growth is expected to slow due to the COVID-19. Due to the impact of
the COVID-19, the delayed resumption of work across the country will affect the
normal operation of automobile OEMs, component companies, and logistics
companies in the short term. There will be certain matching difficulties between
supply and demand in the upstream and downstream of the supply chain,
thereby reducing the industry overall capacity utilization. At the same time,
because the automotive industry is a labor-intensive industry, the epidemic will
inevitably lead to a short-term rise in the industry's overall labor costs, raw
material costs, and logistics costs.
16
From the demand side, due to the epidemic, it is expected that car sales in the
first quarter will be larger decrease in amplitude. In addition, in the context of the
outbreak of the COVID-19, the online car-hailing service has been greatly
impacted. As new energy vehicles are important models of the online car-hailing
vehicle, the epidemic will inevitably lead to a sharp decline in demand for new
energy vehicles in the short term.
Along with the epidemic's impact on the country's production and operation, the
state level is also reviving the vitality of SMEs through measures such as tax
reductions and low interest rate loans, and using monetary policy to promote the
construction of a number of key projects, while expanding domestic consumption
and overseas trade, these measures will help reduce the negative impact of the
epidemic on the automotive industry.
Meanwhile, China's Car Parc per capita is still lower than world’s average level
indicating a strong auto market potential in the future. Currently automobile
industry development is affected by the urban traffic congestion, environment
pollution, purchase tax incentive cancellation and new energy vehicle incentive
cancellation gradually. However, as the economic progressing steadily, the
consumption level and purchasing power improved, domestic automobile sales
volume is expected to achieve higher level. In 2020, sales volume is still
expected to continue to grow slightly. The production, sales and use of
automobile is significantly changed by the combination of technology revolution
characterized by electrification, digital, network and smart and innovative
business model featured by platform and sharing. The pattern has continued for
several hundred years of auto industry is facing great changes, new energy
vehicles and smart internet is becoming a clear direction of auto industry to lead
its upgrade, transformation and structure adjustment.
II. Corporation Strategy
The company has formulated a new development strategy, with the vision of
“becoming a leader in the light commercial vehicle industry and a supplier of
cost-effective products for Ford”, we uphold the values of “integrity, dedication,
innovation and cooperation”. The company's commercial vehicles are positioned
as a supplier of comprehensive solutions for urban and mainline logistics
products and services, and passenger cars have made breakthroughs and large
developments in the small and medium-sized markets. In the future, the
company will focus on innovation and services, promote structural adjustment,
continue to vigorously implement product innovation-driven development,
integrate resources to strengthen technological innovation, and promote product
innovation in the market; deepen transformation and adjustment, adhere to
business model innovation; and comprehensively enhance product core
competitiveness. The company will focus on core business, focus on intensive
cultivation in segmented areas, take customers as the center, improve market
awareness of the entire value chain, and actively build the company's products
17
into market segment leaders. The company will also aim at the new trends in the
automotive industry, and promote the implementation of the "new four
modernization" development strategy of "electrification, intelligent networking,
sharing, and autonomous driving". In the core of new energy vehicles, intelligent
connected vehicles, and autonomous driving, etc. The field has been laid out,
and through the overall coordination and integration of the four modernizations,
the construction of a future-oriented and globally competitive business
ecosystem is accelerated.
III. 2020 Business Plan
The Company is targeting 2020 sales volume level at 331 thousand units and
revenue level at RMB 32 billion, increases of 14% and 10% vs. 2019 respectively.
To enhance profitability, the company is committed to the following plans in 2020:
(1) Continue to consolidate and enhance the company's leading advantage in the
field of light commercial vehicles, and vigorously increase the popularity of
passenger vehicle products and sales; continue to promote the layout of the
"new four modernization" development strategy;
(2) Continue to strengthen the company's sales network and channels, actively
lay out network channels in low-tier cities, establish flexible marketing
programs to achieve sales and market share targets, strengthen the capacity
building of dealer channels, and improve dealer channel performance;
(3) High-quality production and launch of new models of Ford Territory, Ford
Everest EVI models, and light bus all models upgraded to national phase six
emission standards and other new products, perfecting light truck and pickup
truck lineages;
(4) Promote cost reduction and efficiency, further reduce structural risks, and
improve the overall operating efficiency of the company;
(5) Continue to promote new fuel economy and emission adaptation projects to
meet the further requirements of national regulations on energy conservation
and environmental protection;
(6) Strengthen cooperation with technology partners to continuously promote
future product development and R & D capabilities;
(7) Expand finished vehicle exports and OEM components sales business.
(8) Actively explore and try innovative business.
IV. Potential Challenges and Solutions
18
Affected by the epidemic in 2020,the company faces huge growth tests,
increased industry competition, stricter regulatory requirements, rising cost
pressures, and slowing economic growth. To maintain steady growth, the
company will continue to focus on the following areas:
(1) Based on the prevention and control of the epidemic, steadily promote the
resumption of production and production at the factory;
(2) Insight into customer needs, design and release customer-oriented products,
improve channel performance, and achieve customer-centric business growth;
(3) Accelerate product platform, redefine product portfolio, enrich pedigree and
network connection configuration to better meet customer needs; promote the
development of modified vehicle business, and improve market performance
and industrial share in special modified vehicle fields such as medical rescue,
logistics and transportation;
(4) Continue to optimize JMC's lean production, improve production efficiency
and product quality level;
(5) Improve supplier capabilities and component quality, and continue to reduce
component procurement costs;
(6) Strengthen corporate governance, strictly follow national laws and regulations,
and improve risk assessment and control mechanisms;
(7) Continuous expense management and control to optimize business structure;
(8) Through the established process optimization team, create a lean and
efficient organization to respond flexibly to market changes.
The Company will focus on light commercial vehicle with the support of SUV,
maximize its own advantage and fully take advantage of shareholders resource
to realize sustainable profit. Strengthen channel coverage, improve financing
service ability; promote new products development and R&D ability improvement,
to accelerate the progress of launching new competitive products to the market;
develop more proactive cost reduction plan to improve the company’s profit
ability. The company will accelerate the development and cultivation of the heavy
truck market and increase the company's influence in the field of commercial
vehicles. Guided by the new strategy, the company will continuously implement
all the specific initiatives to accelerate the strategic target achievement.
19
10. External research and media interview to the Company
I. Table of external research, communication and media interviews with the
Company in the reporting period
□√Applicable □Not Applicable
Date Communication Type of Information Discussed
Method Object and Materials offered
July 11, On-the-spot Other JMC Operating highlights
2019 research
July 18, On-the-spot Institution JMC Operating highlights
2019 research
Reception times 2
Visiting institution number 31
Visiting person number 20
Other objects 4
Whether to disclose, reveal or divulge the None
undisclosed material information
20
Chapter V Major Events
1. Profit distribution and capital reserve conversion regarding common stock
Establishment, implementation or adjustment of profit distribution policy, esp. cash
dividend distribution policy, regarding common stock during the reporting period
□√Applicable □Not Applicable
In accordance with the requirements of laws, regulations and the Articles of
Association of the Company, the Company's profit distribution policy maintains
continuity and stability, and the Company pays attention to the reasonable return to
investors. The Company gives priority to cash dividend, and subject to the
provisions of laws, regulations and the Articles of Association of the Company, the
Board of Directors can put forward a mid-term or special profit distribution proposal.
The Company's profit distribution policy is in line with the CSRC's guidance on
encouraging cash dividends for listed companies.
Special Explanation on Cash Dividend Policy
Whether to comply with the requirements of the Articles of Association of JMC or
Y
resolution of the Shareholders’ Meeting (Y/N)
Whether the standards and proportion of dividends on profit distribution are clear
Y
(Y/N)
Whether the procedures are valid and legal (Y/N) Y
Whether the Independent Director fulfil their duties (Y/N) Y
Whether middle and small shareholders have opportunities to claim their appeals and
Y
their legal rights and interests are completely protected (Y/N)
Whether the condition and procedure are reasonable and transparent when the cash
Y
dividend policy is being changed (Y/N)
Profit distribution plan or proposal in the recent three years
(1) Proposal on 2019 Year Profit Distribution
Details on the profit available for appropriation of the Company in 2019 prepared
in accordance with the China GAAP and International Financial Reporting
Standard (‘IFRS’) are as follows:
Unit: RMB’000
China GAAP IFRS
Retained earnings at Dec. 31, 2018 8,260,412 8,257,203
2019 net profit 147,812 147,812
Allocation of dividend for 2018 34,529 34,529
Retained earnings at Dec. 31, 2019 8,373,695 8,370,486
The upper limit of profit available for distribution was based on the lower of the un-
appropriated profit calculated in accordance with the China GAAP and that
calculated in accordance with IFRS. Therefore, the Company’s retained earnings
available for distribution as of December 31, 2019 were RMB 8,370,486 thousand.
The Board approved to submit to the 2019Annual Shareholders’ Meeting the
following proposal on year 2019profit distribution:
(i). to appropriate for the dividend distribution from the profit available for
distribution, which shall be equal to RMB 0.07 per share and shall apply to the
Company’s total share capital; and
(ii). to carry forward the un-appropriated portion to the following fiscal year.
21
Profit distribution proposal: a cash dividend of RMB 0.7 (including tax) per 10
shares will be distributed to shareholders. Based on the total share capital of
863,214,000 shares as of December 31, 2019, total cash dividend distribution
amounts shall be RMB 60,424,980.
The cash dividend on B share shall be paid in Hong Kong Dollars and converted
at the middle rate of the HK dollar’s exchange rate against RMB quoted by the
People’s Bank of China on the first working day following the relevant resolution
adopted by the Company’s Annual Shareholders’ Meeting.
The Board decided not to convert the capital reserve to the share capital this time.
(2) 2018 Year Profit Distribution Plan
a cash dividend of RMB 0.4 (including tax) per 10 shares will be distributed to
shareholders. Based on the total share capital of 863,214,000 shares as of
December 31, 2018, total cash dividend distribution amounts shall be RMB
34,528,560.
The cash dividend on B share shall be paid in Hong Kong Dollars and converted
at the middle rate of the HK dollar’s exchange rate against RMB quoted by the
People’s Bank of China on the first working day following the relevant resolution
adopted by the Company’s Annual Shareholders’ Meeting.
The Board decided not to convert the capital reserve to the share capital this time.
(3) 2017 Year Profit Distribution Plan
A cash dividend of RMB 3.2 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of December 31,
2017, the total cash dividend distribution amounts were RMB 276,228,480.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by
the Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(4) 2017 Interim Special Dividend Distribution Plan
A cash dividend of RMB 23.17 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of September 30,
2017, the total cash dividend distribution amounts were RMB 2,000,066,838.
B share dividend was paid in Hong Kong Dollars and converted based on the
HKD-to-RMB standard exchange rate published by the People’s Bank of China on
the first working day following the approval on the profit distribution proposal by
the Shareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
Table of cash dividend in the recent three years
22
Unit: RMB’000
Profit attributable to the Cash dividend as % of profit
Cash dividend
equity holders of the attributable to the equity holders of the
(Including tax)
Company in that year Company
2019
60,425 147812 40.88%
(Proposed)
2018 34,529 91,833 37.60%
2017 2,276,295 690,938 329.45%
The Company made a profit during the reporting period and the profit of the parent
company distributable to the common shareholders is positive, but a distribution
plan of cash dividends for the common shares is not put forward
□Applicable □√Not Applicable
2. Proposal on 2019 Year Profit Distribution Plan or Capital Reserve Conversion
□√Applicable □Not Applicable
Please refer to Article 1, Chapter V of this Report.
3. Commitments
3.1 Commitments of the Company, the shareholder, the actual controlling party,
the acquirer, the Director, the Supervisor, the senior executive or other related
party of the Company
□Applicable □√Not Applicable
3.2 Earnings forecast of the assets or project and the explanations
□Applicable □√Not Applicable
4. Non-operating funding in the Company occupied by controlling shareholder and
its affiliates
□Applicable □√Not Applicable
There was no non-operating funding in the Company occupied by controlling
shareholder and its affiliates.
5. Explanation of the Board of Directors, Supervisory Committee and Independent
Directors to abnormal opinions from accounting firm
□Applicable □√Not Applicable
6. Explanation on the changes of accounting policy, accounting estimates,
estimation method compared with that of last year
□√Applicable □Not Applicable
Please refer to the Note 2 Summary of Significant Accounting Policies of the notes
to the consolidated financial statements in the Chapter XII Financial Statements
for details.
7. Explanation on major accounting errors that shall be restated during the
reporting period
□Applicable □√Not Applicable
There was no major accounting error that shall be restated during the reporting
period.
23
8. Explanation on consolidated scope change compared with that of last year
□Applicable □√Not Applicable
9. Appointment or Dismissal of Accounting Firm
Current accounting firm
Name PricewaterhouseCoopers Zhong Tian LLP
Compensation (RMB’000) 2,000
Consecutive years offering audit services 18
Names of signed accountants Lei Fang, Ye Dan
Consecutive years offering audit services of
Lei Fang 3 year, Ye Dan 2 year
signed accountants
Dismissal of accounting firm
□Applicable □√Not Applicable
Appointment of C-SOX auditor, financial consultant or sponsor
□√Applicable □Not Applicable
Upon the approval of 2017 Annual Shareholders’ Meeting, JMC agreed to appoint
PricewaterhouseCoopers Zhong Tian LLP as JMC’s 2019 to 2021 C-SOX auditor.
In 2019, JMC paid RMB 550 thousand to PricewaterhouseCoopers Zhong Tian
LLP for the C-SOX audit.
10. Suspension and Termination of Listing after Annual Report Disclosed
□Applicable □√Not Applicable
11. Related Matters regarding Bankruptcy
□Applicable □√Not Applicable
There was no matter involving bankruptcy during the reporting period.
12. Major Litigation or Arbitration
□Applicable □√Not Applicable
There was no major litigation or arbitration during the reporting period.
13. Punishment
□Applicable □√Not Applicable
Neither JMC nor its Directors or senior management were punished by regulatory
authorities during the reporting period.
14. Honesty and credit of JMC and its controlling shareholder or actual controlling
party
□Applicable □√Not Applicable
15. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan and
Other Employee Incentive Method
□Applicable □√Not Applicable
There was neither equity incentive plan or ESOP, nor other employee incentive
method during the reporting period.
16. Major Related Transactions
I. Routine related party transactions
24
Please refer to the Note 32 related party transactions of the notes to the
consolidated financial statements in the Chapter XII Financial Statements for
details.
II. Major related party transaction concerning transfer of assets or equity
□Applicable □√Not Applicable
There was no major related party transaction concerning transfer of assets or
equity in the reporting period.
III. Related party transaction concerning outside co-investment
□Applicable □√Not Applicable
There was no outside co-investment in the reporting period.
IV. Related credit and debt
□√Applicable □Not Applicable
Is there non-operating related credit and debt?
□Yes □√No
The Company had no non-operating related credit and debt in the reporting period.
V. Other major related party transactions
□√Applicable □Not Applicable
The announcement on Related Party Transactions
Name Disclosure Date Index
Public Announcement on the 2019 The announcement (No: 2019-014)
Forecast Routine Related Party March 28, 2019 was published in the website
Transactions www.cninfo.com.cn.
Public Announcement on Related
The announcement (No: 2019-017)
Party Transactions of the Eighth
April 2, 2019 was published in the website
Session of the Ninth Board of
www.cninfo.com.cn.
Directors
The announcement (No: 2019-028)
Public Announcement on Related
June 1, 2019 was published in the website
Party Transactions
www.cninfo.com.cn.
Public Announcement on Related
Party Transactions of the Ninth The announcement (No: 2019-034)
June 29, 2019
Session of the Ninth Board of was published in the website
Directors
The announcement (No: 2019-051)
Public Announcement on Related
September 28, 2019 was published in the website
Party Transactions
www.cninfo.com.cn.
The announcement (No: 2019-059)
Public Announcement on Related
November 13, 2019 was published in the website
Party Transactions
www.cninfo.com.cn.
Public Announcement on the 2020 The announcement (No: 2020-0XX)
Forecast Routine Related Party March 26, 2020 was published in the website
Transactions www.cninfo.com.cn.
17. Major Contracts and Execution
I. Entrustment, contract or lease
a. Entrustment
25
□Applicable □√Not Applicable
There was no entrustment in the reporting period.
b. Contract
□Applicable □√Not Applicable
There was no contract in the reporting period.
c. Lease
□√Applicable □Not Applicable
Please refer to the note14 Lease Prepayment of the notes to the consolidated
statements in the Chapter XI Financial Statements for detail.
Project with more than 10% of net profit
□Applicable □√Not Applicable
There was no lease project with more than 10% of net profit in the reporting period.
II. Major guarantee
□Applicable □√Not Applicable
The Company had no outside guarantee in the reporting period.
III. Entrustment on cash asset management
a. Trust investment
□Applicable □√Not Applicable
There was no trust investment in the reporting period.
b. Entrusted loan
□Applicable □√Not Applicable
There was no entrusted loan in the reporting period.
IV. Other major contract
□Applicable □√Not Applicable
18. Corporation Social Responsibilities
I. Corporation Social Responsibilities
JMC always consciously undertake social responsibility and create brand public-
benefit “Jiangling Xiqiao Project” with the aim of “green, love, and safe”. By 2019,
387 bridges have been donated in 24 provinces, benefiting nearly 600,000 people.
After JMC had been awarded China Poverty Alleviation Ambassador Prize, China
Responsible Public Partners Prize and China Social Responsibility Excellent
Brand Prize, the video work "Bridge" recording the development process of
"Jiangxi Xiqiao Project" won the "2019 Public Welfare Image Award". JMC has
won the "China Charity Festival" award for many years.
During the reporting period, the Company operated according to law and
regulations, upheld the interest of the shareholders, especially small & medium-
sized shareholders, protected the legitimate rights and interests of employees, and
treated suppliers, customers and consumers sincerely. Simultaneously, JMC paid
attention to environmental protection, energy saving and consumption reduction,
fully reduced energy consumption and pollutant discharge, and actively fulfilled
corporate social responsibility.
26
JMC 2019 Corporation Social Responsibilities Report can be downloaded from
JMC official website: www.jmc.com.cn or the website: www.cninfo.com.cn.
II. Targeted Measures in Poverty Alleviation
a. Plan on poverty alleviation
The Company joined the one-to-one poverty alleviation, depending on JMCG, in
Qianmo Village, Dai Jiapu Township, Suichuang County, Jiangxi Province and
Xianting Village, Songhu Town, Xinjian District, Nanchang City in accordance with
the working arrangement of Jiangxi Provincial Party Committee and Provincial
Government. The overall goal is: to help the poor village to achieve a well-off
standard of living before 2020 by cooperating with the local government.
b. Summary of poverty alleviation in 2019
The Company regards the realization of precision poverty relief as the basic
strategy of precision poverty alleviation. The Company continued to consolidate
efforts of one-to-one poverty alleviation in 2019.
c. Status of targeted measures in poverty alleviation
Item Unit Amount/Progress
I. Brief Introduction —— ——
including：1. Funding RMB (’000) 2,859.9
2. Sum converted from the materials RMB (’000) 30.8
3. Persons get rid of poverty Persons 3
II. Investments —— ——
1. Anti-poverty depending on industry development —— ——
including：1.1 Type ——
1.2 Projects Number
1.3 Investment amount RMB (’000)
1.4 Persons get rid of poverty Persons 3
2. Anti-poverty depending on employment transfer —— ——
including：2.1 Investments on vocational skills RMB (’000)
2.2 Training persons regarding vocational skills Persons
2.3 Employment Persons Persons
3. Anti-poverty depending on relocation —— ——
including：3.1 Employment persons among relocated
Persons
persons
4. Anti-poverty depending on education —— ——
including：4.1 Grants in aid to poor students RMB (’000) 36.9
4.2 Poor students in aid Persons
4.3 Investments on the improvement of
RMB (’000) 800
educational source in poverty-stricken are
5. Health Anti-poverty —— ——
Including: 5.1 Investments on medical and health
RMB (’000)
services in poverty-stricken area
6. Ecological protection anti-poverty —— ——
including：6.1 Project type ——
6.2 Investment amount RMB (’000)
7. Miscellaneous provisions —— ——
including：7.1 Investments on stay-at-home children,
RMB (’000) 53.8
women and elderly
7.2 Number of stay-at-home children, women
Persons
and elderly in aid
27
7.3 Investments on poor & disable people RMB (’000)
7.4 Number of poor & disable people in aid Persons
8. Social anti-poverty —— ——
including：8.1 Investments on cooperation between
RMB (’000)
West China and East China
8.2 Investments on one-to-one anti-poverty RMB (’000)
8.3 Investments from anti-poverty charity fund RMB (’000) 2,000
9. Other —— ——
including：9.1.Project Number
9.2.Investment amount RMB (’000)
9.3. Persons getting rid of poverty Persons
III. Awards —— ——
2019 listed companies Social responsibility award
(the 9th China public welfare festival)
d. On-going plan regarding targeted measures in poverty alleviation
The year 2020 will be a decisive year in the fight against poverty, JMC will make
unremitting efforts to implement the strategy of precise poverty alleviation,
strengthen the combination of poverty alleviation, ambition and wisdom, and
contribute to the fight against poverty.
III. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit published
by environmental protection administration?
□√Yes □No
Name of
Applicable Total
principal Number of
Mode of Distribution of Discharge standard for Total amount amount of Excessive
pollutant and discharge
discharge discharge outlet concentration pollutant of discharge discharge discharge
specific outlet
discharge audited
pollutant
3 in Mainsite, 1
“Wastewater
Wastewater continuous in Xiaolan Site, "COD:145.4mg/L COD: COD≤841.
Discharge Meet
(COD, NH-N) discharge 6 1 in Cast Plant NH- 113.615t; N 68t; NH-
Standard”(GB Standard
and 1 in Axle N:12.64mg/L" H-N: 3.401t N≤83.1414t
8978-1996)
Plant
"The Emission
SO2: 13mg/m3;
Exhaust gas Standard of Air
51 in Mainsite, NOx :111mg/m3;
(SO2,NOx,sm Pollutants”, SO2:
58 in Xiaolan smoke:
oke,toluol, continuous "Emission 17.195t; NOx≤37.6 Meet
148 Site, 33 in Cast 20mg/m3; toluol
dimethylbenz discharge Standard of Air NOx : 9t Standard
Plant and 6 in :1.913mg/m3;
ene, Pollutants for 24.935t
Axle Plant dimethylbenzene
NMHC） Boiler”（GB
:23mg/m3;
13271-2014）
The construction and operation of pollutant preventive and control facilities
In 2019, JMC built Wastewater Treatment Station and Solid Waste Storage
Station at Fushan Plant. Fushan Plant mainly contained Stamping workshop,
welding workshop, painting workshop and final assembly workshop. The plant
produced industrial wastewater including phosphating wastewater and
comprehensive wastewater, and domestic sewage. Industrial wastewater was
categorized, collected and pre-treated through two physicochemical treatment
systems respectively. Comprehensive wastewater after pre-treatment, together
with domestic sewage, was transported to biochemical treatment system. At
28
present, wastewater to be discharged outside must reach Level 1 national
standard. At second stage, wastewater after biochemical treatment will be all
reused by the plant. Solid Waste Storage Station was nicely designed, and its
exterior look was consistent with the overall plant outlook standard. Normal solid
waste and hazardous solid waste were separated in the Station, according to the
strict legitimate requirements.
In 2019, JMC introduced an organic system for exhaust gas treatment in Fushan
Plant, including one set of zeolite roller equipment and one set of regenerative
thermal oxidizer equipment (RTO). Exhaust gas from solvent spray paint and paint
mixing was collected and condensed through zeolite roller system and finally burnt
in RTO system. Exhaust gas from electrical coating-drying, PVC glue drying, paint
drying, and solvent recollection was collectively burnt in RTO.
The zeolite roller system can condense a big amount of low-density exhaust gas
to a small amount of high-density enriched gas, by conducting three temperature-
changing procedures of absorption and desorption. The system is especially
designed for treating large amounts of low-density exhaust gas with various
compositions.
JMC Fushan Plant, dubbed as a smart plant with green and energy-efficient
technologies, introduced several energy-saving and emission-reducing measures.
The plant used LEDs for all the lighting in the plant, and an energy management
system to monitor energy use and consumption in the plant. The air supply in the
Paint workshop can achieve 75% recycling of the air. The Paint Drying Furnace/
RTO smoke residue heat was recollected to heat up the pre-treatment system and
air conditioning for cooling or heating. Broad Air Conditioning system with
comprehensive energy-conservative technology was introduced. Photovoltaic
power generation equipment was installed in the Vehicle Shipyard and employees’
vehicle parking lot. BIM technology was adopted to help build a digitalized plant.
In 2019, JMC Casting Plant introduced electrical furnace dust collector in the large
workshop. After this action, the outdoor dust density and indoor post area dust
density could meet the national standard, which effectively improved indoor
working environment and outdoor air quality.
EIA on construction project and other administrative permits for environmental
protection
The Company strictly implements the construction project environmental impact
assessment system. With respect to new construction, expansion and
reconstruction, JMC comprehensively planned environmental protection and
evaluated the “Three Simultaneities”. From the source of design, JMC carried out
the philosophy of energy saving and low carbon all the time. The Company carries
on the environmental monitoring every year according to the requirements,
ensures the pollutant discharge meeting the requirements of discharge permit,
formulates the stricter internal control target, and strives to reduce the impact of
environmental pollution to the minimum. In 2019, the Company completed the
environmental inspection and acceptance of the new energy vehicle
transformation project of Xiaolan Plant, New energy laboratory project and the
intelligent equipment center, and obtained the environmental assessment approval
of Vehicle production expansion project and the project of expanding the capacity
of 300 thousand vehicle parts and components per year (Phase II).
29
Emergency plan on emergency environmental incidents
In order to dilute or prevent environmental risks, JMC established an emergency
preparation and response procedure and specific environmental emergency plans,
so as to formulate corresponding control methods for potential accidents and
emergences occurred or that may probably occur, and has been filed with the
environmental protection bureau.JMC organize various emergency drills to the
effectiveness of the plan.
Environmental self-monitoring scheme
In 2019, JMC’s Qingyunpu Main Plant Area and Xiaolan Plant Areawere listed as
a key pollutant discharging organization of wastewater/hazardous wastes, and its
monitored by itself in strict accordance with the Method for Self-monitoring and
Information Disclosure of State Key Monitoring Enterprises (Trial). Its self-
monitoring schemes, monitoring results and annual monitoring reports on pollution
sources were disclosed on the “pollution source self-monitoring reporting platform
of Jiangxi Province”.
Other information related to environmental protection
JMC paid high attention to environmental protection and pollution source control,
taking resource saving and cost reduction as the primary task. Moreover, the
Company also took full advantage of 6sigma, and controlled from the source, so
as to achieve the effect of environmental improvement. In the new expansion and
reconstruction projects, JMC laid emphasis on improving the environmental
performance, strictly implemented the system of “Three Simultaneities”, transacted
the EIA procedure according to national standards, stipulated the preventive and
control measures for environmental pollution, and reported to competent
administrative departments on environmental protection for approval.
19. Other Major Events
□√Applicable □Not Applicable
JMC received government incentives of approximate RMB 441 million
appropriated by Nanchang County Xiaolan Economy Development Zone, and
Shanxi Transformation and Comprehensive Reform Demonstration Zone in 2019,
which is to support JMC’s development.
20. Major event of JMC subsidiary
□√Applicable □Not Applicable
Xiamen Fujiang New Energy Automobile Sales Co., Ltd., a wholly-owned
subsidiary of the Company established in 2018 with a cash investment of RMB 10
million, was cancelled on December 16, 2019.
30
Chapter VI Share Capital Changes & Shareholders
1. Changes of shareholding structure
I. Table of the changes of shareholding structure
Before the change Change (+, -) After the change
Proportion New Reserve- Proportion
Bonus
Shares of total share converted Others Subtotal Shares of total
Shares
shares (%) s shares shares (%)
I. Limited tradable
786,840 0.09% - - - -35,925 -35,925 750,915 0.09%
A shares
1. Other domestic
786,840 0.09% - - - -35,925 -35,925 750,915 0.09%
shares
Including:
Domestic legal
785,940 0.09% - - - -36,000 -36,000 749,940 0.09%
person shares
Domestic natural
900 0.00% - - - 75 75 975
person shares
II. Unlimited
862,427,160 99.91% - - - 35,925 35,925 862,463,085 99.91%
tradable shares
1. A shares 518,427,160 60.06% - - - 35,925 35,925 518,463,085 60.06%
2. B shares 344,000,000 39.85% - - - - - 344,000,000 39.85%
III. Total 863,214,000 100.00% - - - - - 863,214,000 100.00%
Causes of shareholding changes
□√Applicable □Not Applicable
JMC did not issue shares or derivative securities during the past three years as of
December 31, 2019. JMC’s total shares remained unchanged in 2019, and the
change in shareholding structure was caused by the trading restriction on limited A
shares of 36,000 shares held by 17 natural persons, Huang Weiqing and others,
were relived on December 30, 2019.
Approval of changes of shareholding structure
□Applicable □√Not Applicable
Shares Transfer
□Applicable □√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS, shareholders’
equity attributable to the equity holders of the Company, generated from shares
transfer
□Applicable □√Not Applicable
Others to be disclosed necessarily or per the requirements of securities regulator
□Applicable □√Not Applicable
31
II. Changes of limited A shares
□√Applicable □Not Applicable
2. Securities Issuance and Listing
I. Securities issuance (not including preferred shares) in the reporting period
□Applicable □√Not Applicable
II. Explanation on changes of shares, shareholding structure, assets and liabilities
structure
□Applicable □√Not Applicable
III. Current staff shares
□Applicable □√Not Applicable
3. Shareholders and actual controlling parties
I. Total shareholders, top ten shareholders, and top ten shareholders holding
unlimited tradable shares
Total shareholders as JMC had 27,891 shareholders, including 22,479 A-share holders, and 5,412 B-share
of the end of the holders, as of December 31, 2019.
reporting period
Total shareholders as JMC had 29,711 shareholders, including 24,112 A-share holders, and 5,599 B-share
of the last month-end holders, as of February 29, 2020.
prior to the disclosure
date of the Report
Top ten shareholders
Shares Shares
Shareholding Shares at
Shareholder Change (+,- with due to
Shareholder Name Percentage the End of
Type ) Trading mortgage
(%) Year
Restriction or frozen
Nanchang Jiangling State-owned
41.03 354,176,000 354,176,000 0 0
Investment Co., Ltd. legal person
Ford Motor Company Foreign legal
32 276,228,394 0 0 0
person
China Securities Domestic non-
Corporation Limited State-owned 2.72 23,458,066 0 0 0
legal persons
Shanghai Automotive State-owned
1.51 13,019,610 0 0 0
Co., Ltd. legal person
Central Huijin State-owned
0.83 7,186,600 0 0 0
Investment Ltd. legal person
Harvest Environmental
Protection Low Carbon
Other 0.74 6,420,188 4,070,159 0 0
Stock Investment
Fund
Foreign legal
GAOLING FUND, L.P. 0.63 5,453,086 0 0 0
person
INVESCO FUNDS Foreign legal
0.56 4,841,889 -193,857 0 0
SICAV person
Hong Kong
Foreign legal
Central Clearing 0.54 4,664,502 3,959,166 0 0
person
Limited
National Social
Security Fund Other 0.52 4,488,212 2,706,312 0 0
602 Portfolio
32
Notes on association among above-mentioned None.
shareholders
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Restriction Share Type
Nanchang Jiangling Investment Co., Ltd. 354,176,000 A share
Ford Motor Company 276,228,394 B share
China Securities Corporation Limited 23,458,066 A share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Central Huijin Investment Ltd. 7,186,600 A share
Harvest Environmental Protection Low
6,420,188 A share
Carbon Stock Investment Fund
GAOLING FUND, L.P. 5,453,086 B share
INVESCO FUNDS SICAV 4,841,889 B share
Hong Kong Central Clearing Limited 4,664,502 B share
National Social Security Fund
4,488,212 A share
602 Portfolio
Notes on association among above- None.
mentioned shareholders
Stock buy-back by top ten shareholders or top ten shareholders holding unlimited
tradable shares in the reporting period
□Applicable □√Not Applicable
II. Controlling Shareholders
Nature of controlling shareholders: Central/Local government holdings,
foreign holdings
Type: Legal person
Legal Establishe Organization
Name Main scope of business
representative d Date code
investment management, industrial
Nanchang Jiangling May 28, 91360125MA
Qiu Tiangao investment, asset management
Investment Co., Ltd. 2019 38LUR91F
and other business.
to design, manufacture, market,
and service a full line of Ford cars,
trucks, sport utility vehicles
(“SUVs”), electrified vehicles, and
Ford Motor William Clay Ford, January 1, Lincoln luxury vehicles, provide
Company Jr. 1903 financial services through Ford
Motor Credit Company LLC, and
be pursuing leadership positions in
electrification, autonomous
vehicles, and mobility solutions.
Change of controlling shareholders
□√Applicable □Not Applicable
New Controlling Shareholders Nanchang Jiangling Investment Co., Ltd.
Change Date July 26, 2019
Index http://www.cninfo.com.cn
Disclosure Date July 27, 2019
III. Actual Controlling Parties
Nature of controlling shareholders: Central/Local State-owned Assets Supervision
and Administration
Type: Legal person
33
Legal Established Organization
Name Main scope of business
representative Date code
manufacturing of automobiles, engines,
chassis, specialty vehicle, transmission,
other products, automotive quality testing,
sales of self-produced products and raw
materials, equipment, electronic products,
9136000015
JMCG Qiu Tiangao July 27, 1991 parts and others, as well as related after-
8263759R
sales services and maintenance services;
development of products derived from JMC
brand light vehicle; overseas auto project-
contracting, export equipment, material and
related labour services.
development, manufacturing, sales, import &
Chongqing
export business of auto (including sedan),
Changan October 31, 9150000020
Zhang Baolin engine, automotive components, die, tools,
Automobile 1996 286320X6
installation of machinery, technological
Co., Ltd.
consultant services.
Equity of listed company in domestic and aboard
market held by the entity controlled by the actual None
controlling party during the reporting period
Change of actual controlling parties
□Applicable □√Not Applicable
There was no change of actual controlling parties in the reporting period.
Ownership and control relations between the Company and the actual controlling
parties are shown as follows:
SASAC
Nanchang State-owned Assets
Supervision and Administration
Committee
43.11% 100%
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
Nanchang Jiangling Investment Co., Ltd. Ford Motor Company
41.03% 32%
Jiangling Motors Co., Ltd.
Actual controlling parties control the Company by the way of trust or other assets
management
□Applicable □√Not Applicable
IV. Other legal person shareholder holding more than 10% of total equity of the
Company
□Applicable □√Not Applicable
34
V. Shareholding reducing restriction to controlling shareholders, actual controlling
parties, restructuring parties and other commitment-making entities
□Applicable □√Not Applicable
35
Chapter VII Preferred Shares
□Applicable □√Not Applicable
JMC had no preferred shares in the reporting period.
36
Chapter VIII Directors, Supervisors, Senior Management and
Employees
1. Changes of Shares held by Directors, Supervisors and Senior Management
Name Position Gender Age Term of Shares Share Shares
Office at the Change at the
period- in the period-
beginning reporting end
period
2017.06.29-
Qiu Tiangao Chairman Male 53 0 0 0
2020.06.28
2018.12.05-
Anning Chen Vice Chairman Male 58 0 0 0
2020.06.28
2017.09.23-
Wan Jianrong Director Male 54 0 0 0
2020.06.28
Thomas Peter 2019.09.23-
Director Male 42 0 0 0
Hilditch 2020.06.28
Director & 2019.06.28-
Manto Wong Male 57 0 0 0
President 2020.06.28
2019.06.28-
Jin Wenhui Director & EVP Male 52 0 0 0
2020.06.28
Independent 2017.06.29-
Lu Song Male 62 0 0 0
Director 2020.06.28
Independent 2017.06.29-
Wang Kun Female 43 0 0 0
Director 2020.06.28
Independent 2017.06.29-
Li Xianjun Male 52 0 0 0
Director 2020.06.28
Chief 2018.12.05-
Xiao Hu Male 51 0 0 0
supervisor 2020.06.28
2017.06.29-
Alvin Qing Liu Supervisor Male 62 0 0 0
2020.06.28
2017.06.29-
Zhang Jian Supervisor Male 50 40 0 40
2020.06.28
Ding 2017.06.28-
Supervisor Male 50 20 0 20
Zhaoyang 2020.06.28
2017.06.28-
Chen Guang Supervisor Male 46 0 0 0
2020.06.28
Xiong 2017.06.29-
EVP Female 55 1,200 0 1,200
Chunying 2020.06.28
2018.08.01-
Li Weihua CFO Female 42 0 0 0
2020.06.28
VP & Board 2017.06.29-
Wan Hong Male 58 0 0 0
Secretary 2020.06.28
2017.06.29-
Li Xiaojun VP Male 44 0 0 0
2020.06.28
2018.01.01-
Ding Wenmin VP Male 47 0 0 0
2020.06.28
2019.07.01-
Milton Wong VP Male 45 0 0 0
2020.06.28
2017.06.29-
Liu Shuying VP Female 57 0 0 0
2020.06.28
2017.06.29-
Mike Chang VP Male 53 0 0 0
2020.06.28
2017.06.29-
Wu Xiaojun VP Male 45 0 0 0
2020.06.28
Luo Xiaofang VP Female 41 2019.05.01- 0 0 0
37
2020.06.28
2019.10.16-
Yu Jianbin VP Male 51 0 0 0
2020.06.28
David 2017.06.29-
Ex-Director Male 49 0 0 0
Johnston 2019.09.06
Ex-Director & 2017.06.29-
Thomas Fann Male 57 0 0 0
President 2019.03.01
2017.06.29-
Yuan Mingxue Ex-Director Male 51 0 0 0
2019.09.06
Xiong 2017.06.29-
Ex-Director Female 55 1,200 0 1,200
Chunying 2019.03.29
2017.06.29-
Tim Slatter Ex-VP Male 45 0 0 0
2019.03.01
Christian 2017.06.29-
Ex-VP Male 47 0 0 0
Chen 2019.03.29
2019.04.01-
Andy Ball Ex-VP Male 54 0 0 0
2019.05.01
Total 1260 0 1260
2. Changes of Directors, Supervisors and Senior Management
Name Position Status Date Reason
David Johnston Director Leave 2019.09.06 Work rotation
Thomas Fann Director & President Leave 2019.03.01 Work rotation
Yuan Mingxue Director Leave 2019.09.06 Work rotation
Xiong Chunying Director Leave 2019.03.29 Work rotation
Tim Slatter VP Leave 2019.03.01 Work rotation
Christian Chen VP Leave 2019.03.29 Work rotation
Resign from the vice president
Andy Ball VP Leave 2019.05.01
position for the personal reasons
3. Particulars about working experience of Directors, Supervisors and senior
management
Directors:
Mr. Qiu Tiangao, born in 1966, holds a Bachelor Degree in Mechanical
Manufacturing and a Master Degree in Industrial Engineering from Huazhong
University of Science and Technology, and is the Chairman of JMCG, Chairman of
Nanchange Jiangling Investment Co., Ltd., and Chairman of JMC. Mr. Qiu
Tiangao held various positions including General Manager, Chairman of
Nanchang Gear Co., Ltd., Chairman of Jiangxi JMCG Gear Co., Ltd., Vice
President of Jiangling Motor Holdings Co., Ltd., and Director & General Manager
of JMCG.
Mr. Anning Chen, born in 1961, holds a Ph.D. in Engineering from the University
of Cincinnati, Ohio, U.S. and MBA from the University of Michigan Ross Business
School, Ann Arbor, Michigan, U.S., and is a Group Vice President and President
of Ford China for Ford Motor Company, President and CEO of Ford Motor (China)
Ltd., and Vice Chairman of JMC. Mr. Anning Chen first began his distinguished
career at Ford Motor Company in 1992, and during his seventeen years at Ford,
he held various executive management roles. Most recently, Mr. Anning Chen was
CEO of Chery Automobile LTD, China as well as Chairman of the Board of
Directors for Chery Jaguar Land Rover Automotive, China.
38
Mr. Wan Jianrong, born in 1965, holds a Bachelor’s Degree in Mechanical
Manufacturing from Central China Engineering College and a MBA from Jiangxi
University of Finance & Economics. He is Director and General Manager of JMCG,
Director of Nanchange Jiangling Investment Co., Ltd. and Director of JMC. Mr.
Wan Jianrong has held various positions including Deputy Manager and Manager
for Engineer Plant of JMC, Assistant to the President and Vice President of JMC,
Deputy General Manger of JMCG, and Executive Deputy General Manager and
General Manager of Jiangxi Isuzu Automobile Co., Ltd.
Mr. Thomas Peter Hilditch, born in 1977, holds a Bachelor’s Degree in Chemistry
from University of London and a Master’s Degree in Management Accounting from
the Chartered Institute of Management Accountants, and is Director and Chief
Financial Officer of Ford Motor (China) Ltd. and Director of JMC. Mr. Hilditch held
various positions including Controller of Ford Otosan, Purchasing Controller of
Ford Asia Pacific, Chief Financial Officer of Ford Sollers, and Chief Operating
Officer of Ford Sollers.
Mr. Manto Wong, born in 1962, holds a Bachelor’s Degree in Computer
Engineering and a Master’s Degree in Business Administration from the University
of Michigan, U.S.A., and is Director and President of JMC. Mr. Manto Wong held
various positions including Manger of U.S. Market Analysis Department of Ford,
Chief Financial Officer of JMC, Chief Financial Officer of Ford Japan operations,
Director of Business Strategy for Asia Pacific of Ford, Vice President and Chief
Financial Officer for Ford Motor (China) Ltd., and Vice President of Finance for
Changan Ford.
Mr. Jin Wenhui, born in 1967, senior engineer, holds a Bachelor’s Degree in
Mechanical Manufacturing, a Master’s Degree in Mechanical Engineering from
Huazhong University of Science and Technology and an EMBA Degree in China
Europe International Business School, and is Director & First Executive Vice
President of JMC, in charge of marketing sales & service, manufacturing, IT and
assist the President to manage the Company. Mr. Jin Wenhui held various
positions including Chief of Manufacturing Department, Assistant to the President,
Vice President of JMC, Director, General Manager of JMCG Jingma Motors Co.,
Ltd., and Executive Vice General Manager of Jiangxi-Isuzu Motors Co., Ltd., and
Executive Vice President of JMC.
Mr. Lu Song, born in 1957, professor and arbitrator, holds a Bachelor’s Degree in
Law from Peking University and a Master’s Degree in Law from China Foreign
Affairs University (“CFAU”) and Free University of Brussels respectively, and is a
professor of CFAU and the arbitrator of international arbitral institutions, Vice
President of the Chinese Society of Private International Law, Executive Council of
the Chinese Society of International Law, and an Independent Director of JMC. Mr.
Lu Song held various positions including Director of International Law Institute of
CFAU and Secretary General of the Chinese Society of International Law.
Ms. Wang Kun, born in 1976, associate professor, holds a Bachelor’s Degree in
Administration from Nankai University and a Doctor’s Degree in Accounting from
Hong Kong University of Science and Technology, and is the Assistant to Dean of
School of Economics and Management of Tsinghua University, Deputy Director of
Corporate Governance Center of Tsinghua University, and an Independent
39
Director of JMC. Ms. Wang Kun held position of lecturer in School of Economics
and Management of Tsinghua University.
Mr. Li Xianjun, born in 1967, holds a Bachelor’s Degree in Industrial Management
from Jilin University of Technology and a MBA, a Doctor’s Degree in Political
Economy from Jilin University, and is Head and Academic Director of School of
Automotive Engineering of Tsinghua University, and an Independent Director of
JMC. Mr. Li Xianjun has held various positions including Planner of Engine Plant
of FAW, Secretary of General Manager of Jilin Province Agricultural Machine
Corporation, General Manager of Planning Department of Jilin Province Feed
Company, and Lecturer of School of Business of Jilin University.
Supervisors:
Mr. Xiao Hu, born in 1968, holds a Bachelor’s Degree in Radio from Information
Science & Electronic Engineering Department of Zhejiang University, and is a
member of the Standing Committee of the CPC, the secretary of Discipline
Inspection Commission and Chairman of Supervisory Board for JMCG, and Chief
Supervisor of JMC. Mr. Xiao Hu has served as a cadre in the General Office of the
Nanchang Municipal People's Government, deputy director of the Office of the
Working Committee of the Nanchang Hi-tech Industrial Development Zone, deputy
director of the Software Industry Office of the Nanchang Hi-tech Industry
Development Zone Administrative Committee, deputy head of the Organization
Department of the Working Committee of Nanchang Hi-tech Industry Development
Zone, deputy director of the Personnel and Labor Bureau of the Nanchang Hi-tech
Industry Development Zone Administrative Committee, Head of the Organization
Department of the Working Committee of Nanchang Hi-tech Industry Development
Zone, and the Director of the Personnel Bureau of the Nanchang Hi-tech Industry
Development Zone Administrative Committee.
Mr. Alvin Qing Liu, born in 1957, holds a Master’s Degree in International
Economics and a Jurisprudence Doctor’s Degree from Marquette University,
U.S.A, and is a Director of Ford Motor (China) Ltd, and a Supervisor of JMC. Mr.
Liu was a practicing attorney at Ruder, Ware and Michler Law Firm, U.S.A.,
counsel of Asia Pacific Region, Chrysler Corporation, U.S.A., counsel of Mergers
and Acquisitions Group and Northeast Asia Operations, Daimler-Chrysler A.G.,
Germany, an International Counsel in the Office of General Counsel, Ford Motor
Company, and Vice President & General Counsel of Ford Motor (China), Ltd.
Mr. Zhang Jian, born in 1969, holds a College Degree in Secretarial Professional
from North China University of Technology, and is Chairman of JMCG Labor
Union, Chairman of Supervisor Board of Nanchang Jiangling Investment Co., Ltd.,
and a Supervisor of JMC. Mr. Zhang Jian held various positions including
Secretary of Chairman and Deputy Director of Office for JMC, Director of Office,
Director of Communist Party Office, Chief of Publicity Department for JMCG,
Assistant to General Manger of JMCG, and Senior Vice Chairman of JMCG Labor
Union.
Mr. Ding Zhaoyang, born in 1969, holds a MBA Degree from Université de Poitiers,
France, and is a Supervisor of JMC and Chief of Public & legal Affair Department
for JMC. Mr. Ding Zhaoyang held various positions including Deputy Chief, Chief
of Public Relationship Department of JMC.
40
Mr. Chen Guang, born in 1973, holds a Bachelor’s Degree in Automobile
Engineering from Hunan University, and is a Supervisor of JMC and a Vice
General Manager of JMC Heavy Duty Vehicle Co., Ltd. Mr. Chen Guang held
various positions including Deputy Chief of Quality Management Department,
Deputy Plant Manager of Assembly Plant for Jiangling-Isuzu Motors Company
Limited, and Plant Manager of Assembly Plant for JMC.
Senior management:
Mr. Manto Wong, please refer to the part of Directors for his resume.
Mr. Jin Wenhui, please refer to the part of Directors for his resume.
Ms. Xiong Chunying, born in 1964, senior engineer, holds a Bachelor Degree in
Automobile Engineering from Jiangsu Engineering College, a Master Degree in
Industrial Economics from Jiangxi University of Finance and Economics and an
EMBA Degree from China Europe International Business School, and is Executive
Vice President of JMC, in charge of the Company's product research and
development. Ms. Xiong Chunying held various positions including Chief of
Quality Management Department, Assistant to the President, Vice President, and
a Director for JMC.
Ms. Li Weihua, born in 1977, holds a Bachelor’s Degree in International Economic
Law from Shanghai University of Finance and Economics and a MBA from
Canada York University Schulich School of Business, and is the CFO of JMC, in
charge of the Company’s financial management. Ms. Li Weihua has held various
positions including Finance Analyst of Ford China, Finance Analyst, and Finance
Manager of Ford Motor Research & Engineering (Nanjing) Co., Ltd., MFG Finance
Manager, PD Finance Manager, MFG Finance Controller, and PD Finance
Controller for C and C SUV of Ford AP, and CFO of Ford Lioho.
Mr. Wan Hong, born in 1961, holds a Master of Business Administration Degree
from Jiangxi University of Finance & Economics, and is the Vice President &
Board Secretary of JMC, in charge of the Company’s human resources and
relevant duties of Board Secretary. Mr. Wan Hong held various positions including
Chief of Labour and Personnel Department, and Assistant to the President for
JMC.
Mr. Li Xiaojun, born in 1975, senior engineer, holds a Bachelor’s Degree in
Mechanical Design & Manufacturing from Jiangxi University of Science and
Technology and a Master’s Degree in Industrial Engineering from Huazhong
University of Science and Technology, and is a Vice President of JMC, in charge
of the Company’s quality, manufacturing management and strategic planning. Mr.
Li Xiaojun held various positions including Chief of JMC Quality Management
Department, Plant Manager of Assembly Plant and Assistant to the President for
JMC.
Mr. Ding Wenming, born in 1972, holds a Bachelor’s Degree in Automobile
Exertion from Wuhan University of Technology, and is a Vice President of JMC, in
charge of the Company's product research and development. Mr. Ding Wenming
held various positions including Deputy Chief of Product Development Center,
41
Chief of Product Planning & Program Management Department, and Assistant to
the President for JMC.
Mr. Milton Wong, born in 1974, holds a Bachelor’s Degree in Mechanical
Engineering from Massachusetts Institute of Technology, a Master’s Degree in
Automotive Engineering from University of Michigan and a Master of Business
Administration from Harvard University, USA, and is a Vice President of JMC, in
charge of the Company's product research and development. Mr. Milton Wong
has held various positions in Ford including Global Program Supervisor, Assistant
Chief Project Engineer, Chief Project Engineer for multiple product projects, and
Lincoln Segment Chief Project Engineer of Ford AP.
Ms. Liu Shuying, born in 1962, senior engineer, holds a Bachelor’s Degree in
Mechanical Manufacturing from Jiangxi University of Technology, and is a Vice
President of JMC, in charge of the Company's product research and development.
Ms. Liu Shuying held various positions including Chief of Quality & Supervision
Department of Jiangling-Isuzu Motors Company Limited, Director of Product
Development Center and Assistant to the President of JMC.
Mr. Mike Chang, born in 1966, holds a Bachelor Degree in Naval Architecture
Engineering from National Taiwan University, China Taiwan and a Master Degree
in Manufacturing Engineering from University of California, Los Angeles, U.S.A.,
and is a Vice President of JMC, in charge of Xiaolan Plant and Engine Plant. Mr.
Mike Chang held various positions including Paint Area Manger, Final Assembly
Plant Area Manager, Manufacturing Director, Board member of Ford Lio Ho, Vice
General Manager of BinXin Paper Company for Ting Hsin International Group,
Manufacturing Director of Nam Chow Foods Co., China, General Manager of
Tianjin Chuan Shun Foods Co., LTD, Tianjin Ting Fung Starch Development Co.,
LTD, and Hangzhou StarPro Starch Co., LTD for Ting Hsin International Group,
and General Manager of Changan Ford Automobile Co., Ltd. Harbin Branch.
Mr. Wu Xiaojun, born in 1974, holds a Bachelor’s Degree from Wuhan University
of Technology and a MBA from Jiangxi University of Finance and Economics, and
is a Vice President of JMC and General Manager of JMC Heavy Duty Vehicle Co.,
Ltd., in charge of the Company’s heavy duty truck business. Mr. Wu Xiaojun held
various positions including Chief of Quality Department, Assistant to the President
for JMC, and Executive Deputy General Manager of JMC Heavy Duty Vehicle Co.,
Ltd.
Ms. Luo Xiaofang, born in 1978, holds a Bachelor’s Degree in Economics from
Central South University, China and a MBA from Maastricht University,
Netherlands, and is a Vice President of JMC, in charge of the Company’s
purchasing business. Ms. Luo Xiaofang held various positions including Raw
Materials Purchasing Supervisor for Irving Schweizer Asia, and Senior Purchasing
Manager for Ford AP.
Mr. Yu Jianbin, born in 1968, holds a Bachelor’s Degree in Forging from Xi’an
Jiaotong University, and is a Vice President of JMC, in charge of the Company’s
Safety and Environmental Protection Department, Logistics Department and
Qingyunpu Plant. Yu Jianbin has held various positions including Manager for the
Engineering Department, Manager for the Manufacturing & Logistics Department
42
for Jiangling Motor Holdings Co., Ltd., Assistant to General Manager of Jiangxi
Fire-fighting Vehicle Plant, Deputy General Manager of Jiangxi-Isuzu Motors Co.,
Ltd., and Deputy General Manager of JMCG Jingma Motors Co., Ltd.
Positions at the shareholder entities
□√Applicable □Not Applicable
Name Shareholder Title Term of Compensation Paid
Entity Office by Shareholder
Entity (Y/N)
Qiu Tiangao JIC Chairman 2019.05.28- N
Group Vice President and 2018.10.24- Y
Anning Chen Ford
President, Ford China
Wan Jianrong JIC Director 2019.05.28- N
Thomas Peter 2019.08.01- Y
Ford CFO, Ford China
Hilditch
Zhang Jian JIC Chairman of Supervisor 2019.05.28- N
Board
Particulars about positions and concurrent positions in other entities other than
shareholder entities
□√Applicable □Not Applicable
Compensation
Name Entity Title Paid by Other
Entities (Y/N)
JMCG Chairman Y
Jiangling Motor Holdings Co., Ltd. Vice Chairman N
JMCG Jingma Motors Co., Ltd. Chairman N
Jiangling Dingsheng Investment Co., Ltd. Chairman N
Qiu Tiangao
JMCG New Energy Vehicle Co., Ltd. Chairman N
Jiangxi ISUZU Co., Ltd. Chairman N
GETRAG (Jiangxi) Transmission Company Director N
JMC Heavy Duty Vehicle Co., Ltd. Chairman N
Ford Motor (China) Ltd. President & CEO N
Anning Chen Changan Ford Automobile Co., Ltd. Vice Chairman N
Fordshuttle Trading (Shanghai) Co., Ltd. Chairman N
JMCG Director Y
Jiangling Motor Holdings Co., Ltd. Director N
Jiangxi ISUZU Co., Ltd. Director N
Wan JMCG New Energy Vehicle Co., Ltd. Director N
Jianrong JMCG Jingma Motors Co. Director N
Jiangling Dingsheng Investment Co., Ltd. Director N
Jiangxi Yizhizhingxing Automobile N
Chairman
Operation Service co. LTD
Ford Motor (China) Ltd. Director N
Thomas
Peter Hilditch Changan Ford Automobile Co., Ltd. Director N
Fordshuttle Trading (Shanghai) Co., Ltd. Director N
Manto Wong JMC Heavy Duty Vehicle Co., Ltd. Director N
Jiangxi Jiangling Group Special Vehicle N
Chairman
Co., Ltd.
Jiangxi Jiangling Special Purpose Vehicle N
Director
Co., Ltd.
Jin Wenhui
Legal N
Representative &
Jiangling Motor Sales Co., Ltd.
Executive
Director
43
JMC Heavy Duty Vehicle Co., Ltd. Director N
Hanon Systems (Nanchang) Co., Ltd. Director N
Shenzhen Fujiang New Energy Automobile Legal N
Sales Co., Ltd. Representative
Legal N
Guangzhou Fujiang New Energy Representative &
Automobile Sales Co., Ltd. Executive
Director
Lu Song China Foreign Affairs University Professor Y
Assistant to Dean Y
of School of
Economics and
Management &
Wang Kun Tsinghua University
Deputy Director
of Corporate
Governance
Center
Head and Y
Academic
Li Xianjun Tsinghua University Director of School
of Automotive
Engineering
JMCG Chief supervisor Y
JMCG Jingma Motors Co., Ltd. Supervisor N
Jiangling Dingsheng Investment Co., Ltd. Supervisor N
Xiao Hu Jiangxi Jiangling Real Estate Co., Ltd. Chief supervisor N
Jiangxi Jiangling Chassis Co., Ltd. Supervisor N
Jiangxi Jiangling Group Special Vehicle N
Supervisor
Co., Ltd.
Ford Motor (China) Ltd. Director N
Changan Ford Automobile Co., Ltd. Director N
Alvin Qing Ford Motor Research (Nanjing) Co., Ltd. Supervisor N
Liu Ford Motor Research Test (Nanjing) Co., N
Supervisor
Ltd.
Fordshuttle Trading (Shanghai) Co., Ltd. Supervisor N
Chairman of the Y
JMCG
Labor Union
Jiangling Motor Holdings Co., Ltd. Chief supervisor N
JMCG New Energy Automobile Co. Ltd. Supervisor N
Jiangxi Jiangling Special Purpose Vehicle N
Supervisor
Co., Ltd.
Jiangxi JMCG Specialty Vehicles Co., Ltd. Supervisor N
Nanchang Gear Co., Ltd. Chief supervisor N
Zhang Jian
JMCG Finance Co., Ltd. Chief supervisor N
Jiangxi Lingrui Renewable Resources N
Supervisor
Development Co., Ltd.
Jiangxi Jiangling Real Estate Co.,Ltd Supervisor N
Jiangxi Jiangling Motors Imp. & Exp. Co., N
Chief supervisor
Ltd.
Jiangxi Yizhizhixing Automobile Operation N
Chief supervisor
Service Co., Ltd.
Xiong N
JMC Heavy Duty Vehicle Co., Ltd. Director
Chunying
Jiangling Motors Sales Co., Ltd. Supervisor N
JMC Heavy Duty Vehicle Co., Ltd. Director N
Li Weihua
Hanon Systems (Nanchang) Co., Ltd. Director N
Shenzhen Fujiang New Energy Automobile Supervisor N
44
Sales Co., Ltd.
Guangzhou Fujiang New Energy N
Supervisor
Automobile Sales Co., Ltd.
Independent Y
Wan Hong Jiangxi Hongdu Aviation Industry Co., Ltd.
Director
Jiangxi Jiangling Motors Imp. & Exp. Co., N
Li Xiaojun Director
Ltd.
Ding N
JMC Heavy Duty Vehicle Co., Ltd. Director
Wenming
Director & N
Wu Xiaojun JMC Heavy Duty Vehicle Co., Ltd.
General Manager
Vice General Y
Chen Guang JMC Heavy Duty Vehicle Co., Ltd.
Manager
Penalties from securities regulator to the present and resigned Directors,
Supervisors and senior executives in the recently three years
□Applicable □√Not Applicable
4. Compensation of Directors, Supervisors and Senior Executives
Decision-making procedure, determination of basis, and actual payment regarding
the compensation of the Directors, Supervisors and senior executives
Directors and Supervisors who did not concurrently hold other management
positions in JMC were not paid by JMC. Director Qiu Tiangao, Wan Jianrong,
Supervisors Xiao Hu and Zhang Jian were paid by JMCG. Directors Anning Chen,
Thomas Peter Hilditch and Supervisor Alvin Qing Liu were paid by Ford.
(1) In accordance with JMC Executive Compensation Scheme approved by the
Board of Directors, the compensation for the Chinese-side senior management
consists of base salary and floating bonus. The base salary level is determined
according the grade of the senior executives, and the floating bones shall be paid
according to the operating performance. 70% of the bonus will be distributed in
this year, and the rest 30% will be distributed in the next three years. In 2019, the
Company paid annual compensation before tax of approximately RMB 1,570
thousand to EVP Jin Wenhui, paid approximately RMB 1,640 thousand to EVP
Xiong Chunying, paid approximately RMB 1,190 thousand per person to VP &
Board Secretary Wan Hong, VP Liu Shuying, paid approximately RMB 1,180
thousand to VP Li Xiaojun, paid approximately RMB 1,170 thousand to VP Ding
Wenming, paid approximately RMB 1,370 thousand to VP Wu Xiaojun, paid
approximately RMB 170 thousand to VP Yu Jianbin. Two employee-representative
supervisors, Mr. Ding Zhaoyang and Mr. Chen Guang, were paid annual
compensation before tax of about RMB 520 thousand and RMB 660 thousand
respectively. The total compensation before tax paid by JMC for the aforesaid
persons was about RMB 10.66 million in the reporting period, including the long-
term incentive of RMB 0.84 million deferred from the previous years.
(2) JMC pays annual compensation for Ford-seconded senior management
personnel to Ford in accordance with the Personnel Secondment Agreement
signed between JMC and Ford & Ford Affiliates. In 2019, JMC should pay US$ 90
thousand to Ford for Ex Director & President Thomas Fann, pay RMB 250
thousand for Ex VP Christian Chen, pay US$ 60 thousand for Ex VP Tim Slatter,
45
pay US$ 125 thousand for Ex VP Andy Ball, pay US$ 325 thousand for President
Manto Wong, pay RMB 786 thousand for CFO Li Weihua, pay US$ 200 thousand
for VP Milton Wong, pay US$ 376 thousand for VP Mike Chang, pay RMB 530
thousand for VP Luo Xiaofang. These payments made by JMC to Ford do not
reflect the actual salaries earned by Ford-seconded senior management.
(3) Pursuant to the resolutions of JMC 2011 Annual Shareholder’s Meeting, the
annual compensation for the JMC Independent Directors is RMB 100 thousand
per person, and JMC bears their travel-related expenses associated with JMC’s
business.
Table on compensation of the Directors, Supervisors and senior executives in the
reporting period
Unit: RMB’ 000
Compensation Compensation
Present
Name Position Gender Age Before Tax Paid Paid by Related
(Y/N)
by JMC Party (Y/N)
Qiu Tiangao Chairman Male 53 Y 0 Y
Anning Chen Vice Chairman Male 58 Y 0 Y
Wan Jianrong Director Male 54 Y 0 Y
Thomas Peter
Director Male 42 Y 0 Y
Hilditch
Director &
Manto Wong Male 57 Y * Y
President
Jin Wenhui Director & EVP Male 52 Y 1,570 N
Independent
Lu Song Male 62 Y 100 N
Director
Independent
Wang Kun Female 43 Y 100 N
Director
Independent
Li Xianjun Male 52 Y 100 N
Director
Xiao Hu Chief supervisor Male 51 Y 0 Y
Alvin Qing Liu Supervisor Male 62 Y 0 Y
Zhang Jian Supervisor Male 50 Y 0 Y
Ding Zhaoyang Supervisor Male 50 Y 520 N
Chen Guang Supervisor Male 46 Y 660 N
Xiong Chunying EVP Female 55 Y 1,640 N
Li Weihua CFO Female 42 Y * Y
VP & Board
Wan Hong Male 58 Y 1,190 N
Secretary
Li Xiaojun VP Male 44 Y 1,180 N
Ding Wenmin VP Male 47 Y 1,170 N
Milton Wong VP Male 45 Y * Y
Liu Shuying VP Female 57 Y 1,190 N
Mike Chang VP Male 53 Y * Y
Wu Xiaojun VP Male 45 Y 1,370 N
Luo Xiaofang VP Female 41 Y * Y
Yu Jianbin VP Male 51 Y 170 N
David Johnston Ex Director Male 49 N 0 Y
Yuan Mingxue Ex Director Male 51 N 0 Y
Ex Director &
Thomas Fann Male 57 N * Y
President
Tim Slatter Ex-VP Male 45 N * Y
Christian Chen Ex-VP Male 47 N * Y
Andy Ball Ex-VP Male 54 N * Y
46
Total -- -- ---- -- 10,960 --
* Please refer to the relevant statement in the Article 4 Compensation of Directors,
Supervisors and Senior Executives of this Chapter.
Granted equity incentive to the Directors, Supervisors and senior executives in the
reporting period
□Applicable □√Not Applicable
5. Employees
i. Employees, Professional Structure and Educational Level
Employees in parent company (persons) 13,492
Employees in subsidiaries (persons) 1,296
Total employees (persons) 14,788
Total employees paid compensation (persons) 15,654
Retired employees bore retirement benefits in parent company and its subsidiaries 754
Professional Structure
Type Employees (Persons)
Production Worker 9,467
Sales Personnel 646
Technical Personnel 3,600
Finance Personnel 201
Administrative Staff 874
Total 14,788
Educational Level
Type Employees (Persons)
Master degree and higher 1,066
Bachelor degree 3,793
Polytechnic school degree 2,308
Below polytechnic school degree 7,621
Total 14,788
ii. Compensation Policy
The Company strictly complies with the relevant requirements of national labor
laws and regulations, provides a safe and environmentally friendly workplace, and
continuously establishes and improves the salary management mechanism that
matches the employees’ income with the Company’s performance, position value,
employees’ individual ability and performance, and effectively link organizational
performance and individual performance, strengthen the incentive guiding role of
compensation, and precisely motivate high-performing backbone talents. At the
same time, the employees’ welfare policies are constantly improved to meet the
diverse personal needs of employees and to enhance employees’ experience and
satisfaction.
iii. Training
In the current new normal of the industry, closely follow the Company's strategy
and business needs, strengthen the training and construction of the talent team,
and consolidate the training system to establish an "online + offline" diversified
learning method, to provide employees’ career development with a steady stream
of knowledge support and diverse learning options. With HR vision and mission as
the goal, it provides talent retention and training solutions for the Company's
business goals and strategic transformation.
47
Continue to optimize the career development channels for employees, build and
improve a management and professional dual-channel career development
system starting from the comprehensive development of new employees, so that
employees with different specialties and career development have more
professional choice and growth opportunities. Please refer to 2019 JMC
Corporation Social Responsibility Report for more details on 2019 training plan
implementation.
iv. Labour outsourcing
□Applicable □√Not Applicable
48
Chapter IX Corporate Governance Structure
1. Status of the Corporate Governance in JMC
Difference between actual situation of corporate governance in JMC and that of
requirements of listed company corporate governance promulgated by CSRC
□Applicable □√Not Applicable
During the reporting period, the Company strictly abided by the Company Law, the
Securities Law, the Code of Corporate Governance for Listed Companies in China,
the Rules Governing Listing of Stock on Shenzhen Stock Exchange, as well as
relevant laws and regulations, to carry out corporate governance activities and
continued to improve its corporate governance.
2. Separation between JMC and the Controlling Shareholders in respect of
Personnel, Assets and Finance, and Independence concerning Organization and
Business:
(1) With respect to personnel matters, the positions of chairman and president are
held by different individuals; JMC’s senior management do not hold positions other
than director positions with its controlling shareholders; JMC senior management
personnel are paid by JMC; labor, personnel matters and compensation
management of JMC are completely independent.
(2) With respect to assets, JMC assets are complete. The assets utilized by JMC,
including production system, supporting production system and peripheral facilities,
and non-patent technology, are owned and/or controlled by JMC.
(3) With respect to finance, JMC has an independent finance department and
independent accounting system, and has a uniform and independent accounting
system and financial control system for its branches and subsidiaries. JMC has its
own bank accounts, and there are no bank accounts jointly owned by JMC and its
controlling shareholders. JMC pays taxes independently in accordance with
relevant laws.
(4) With respect to organization, JMC’s organization is independent, complete and
scientifically established with a sound and efficient operating mechanism. The
establishment and the operation of JMC’s corporate governance are strictly
carried out per the Articles of Association of JMC. Production and administrative
management are independent from the controlling shareholders. JMC has
established an organization structure that meets the need for ongoing
development.
(5) With respect to business, JMC has independent purchasing, production and
sales systems. The purchasing, production and sales of main materials and
products are carried out through its own purchasing, production & sales functions.
JMC is independent from the controlling shareholders in respect to its business,
and has independent and complete business and self-sufficient operating
capability.
3. Horizontal Competition
49
□Applicable □√Not Applicable
4. Introduction to the Shareholders’ Meeting
I. Index to the Shareholders’ Meeting in the reporting period
Investor
Convening Disclosure
Meeting Meeting Type Participation Index
Date Date
Ratio
The announcement
2019 First Special Special (No: 2019-007) was
Shareholders’ Shareholders’ 77.45% 2019.02.20 2019.02.21 published in the
Meeting Meeting website
www.cninfo.com.cn.
The announcement
2018 Annual Annual (No: 2019-032) was
Shareholders’ Shareholders’ 76.86% 2019.06.28 2019.06.29 published in the
Meeting Meeting website
www.cninfo.com.cn.
The announcement
2019 Second
Special (No: 2019-049) was
Special
Shareholders’ 76.68% 2019.09.23 2019.09.24 published in the
Shareholders’
Meeting website
Meeting
www.cninfo.com.cn.
II. Special Shareholders’ Meeting convened by preferred shareholders whose
voting rights were restored
□Applicable □√Not Applicable
5. Independent Directors’ Performance of Duty
I. Particulars about the directors’ attendance to the Board meeting and the
Shareholders’ Meeting
Not to Presence at
present in the
Presence
Required person in Shareholders’
Presence in Form Presence
Name Board Absence two Meeting
in Person of Paper by Proxy
Attendance consecutive
Meeting
meetings
(Y/N)
Lu Song 20 3 16 1 0 N 1
Wang Kun 20 3 16 1 0 N 0
Li Xianjun 20 2 16 2 0 N 0
II. Dissent from Independent Directors
□Yes □√No
The Independent Directors of the Company had no dissent to the relevant
proposal of the Company in the reporting period.
III. Other introduction to Independent Directors’ Performance of Duty
□√Yes □No
JMC has appointed three Independent Directors so far. The Independent Directors
exercised their fiduciary duties on routine work and major decision-making of the
Board of Directors. They studied every proposal reviewed by the Board of
Directors thoroughly and raised their opinions, inquired about major events which
required opinions from the Independent Directors and issued their written opinions,
and actively engaged in the affairs of the Compensation Committee and the Audit
50
Committee in the reporting period, to protect the interests of the Company and all
the shareholders.
6. 2019 Diligence Report of the Committees under the Board of Directors
I. Work of the Audit Committee
A. Work Summary Report of the Audit Committee
According to its Working Rules, the Audit Committee diligently executed its duties
and delivered guiding opinions. The primary tasks completed during the reporting
period were as follows.
i. The Audit Committee reviewed the Company’s internal control work plan and
internal control implementation results regularly.
ii. The Audit Committee reviewed the Assets Impairment Provisions and Write-off
proposal and submitted it to the Board for review and approval.
iii. The Audit Committee reviewed the independent auditor’s audit plan, letter of
engagement and risks and controls.
iv. The Audit Committee has coordinated with the independent auditor to allow the
audit and associated financial report can be submitted within the appointed
period.
v. The Audit Committee reviewed the financial statements before the certified
auditor’s on-site audit, after receiving the certified auditor’s initial and final audit
opinions. The Committee communicated with auditors face to face over
important events and major accounting estimations, audit adjustment items and
important accounting policies which potentially affect the financial statements,
and believes that the financial statements are truthful, accurate and fully reflect
the Company’s actual status.
vi. The Audit Committee has submitted the 2019 Independent Auditor Summary
Report to the Board for review.
vii. The Audit Committee reviewed the Internal Control Self-assessment Report
and agreed to submit this to the Board for approval.
B. Written Opinions on JMC Financial Statements
The Audit Committee reviewed the unaudited financial statements prepared by the
Company and issued its written opinions as follows on January 15, 2020: the Audit
Committee reviewed the financial statements compiled by JMC and believes that
the financial statements have in all material aspects reflected the actual status of
the Company. The Audit Committee would continue to keep in close contact with
the external auditor. After receiving the auditor’s initial audit comments, the
committee would review the financial statements once again.
The Audit Committee reviewed the financial statements prepared by JMC after the
external auditor issued its initial audit opinions and issued written opinions as
follows on February 21, 2020: the financial statements have been prepared
according to China GAAP and the Company’s financial policies; and, the financial
statements reported gives a true, accurate and fair view of the financial position of
the Company as at December 31, 2019, and of its financial performance and its
cash flows for the year then ended, in all material respects.
The Audit Committee made resolutions on the audited 2019 financial statements
as follows on March 5, 2020: the Audit Committee reviewed the financial
statements after the certified public auditor issued its final audit opinion, and the
Audit Committee believed that the financial statements reported, including the
51
Balance Sheet, Income Statement and Cash Flow, give a true, accurate and fair
view of the financial position of the Company as at December 31, 2019, and of its
financial performance and its cash flows for the year then ended, in all material
respects. The Audit Committee concurred to submit for Board approval.
C. 2019 Independent Audit Work Summary Report
The Audit Committee reviewed the 2019 Audit Work Plan submitted by the
independent auditing firm PwC Zhong Tian via communications with the PwC
Zhong Tian leading auditor. Agreement was achieved regarding timing and
content and both parties believe that the plan ensures a comprehensive
completion of the 2019 audit tasks.
The independent auditor thoroughly communicated with the management and the
Audit Committee Members regarding: accounting policies implementation,
revenue recognition, significant accounting estimates related to accrued expenses,
accounting treatment for eight Provisions, Impairment of long term assets, and
research and development expenses, related party transaction recognition and
fairness and information disclosure. They have also discussed about issues
identified and the corrective actions. As a result, all parties have a more in-depth
understanding of the business status, financial status and internal control.
Therefore, a solid foundation was laid for a fair audit conclusion issued by the
independent auditor.
The Audit Committee believed that the external certified auditor had executed the
audit work consistently with the requirements of China Certified Auditor
Independent Audit Principles. The audit period was adequate and the allocation of
personnel resources was sufficient to deliver an audit report which accurately
reflects the Company’s financial position as at December 31, 2019, and the
financial performance and cash flows for the year then ended. The audit
conclusion fairly reflects the Company’s actual status.
II. 2019 Diligence Report of the Compensation Committee
In the reporting period, the Compensation Committee exercised its duties as
follows:
i. reviewed and approved the Proposal on 2018 Year-end Bonus for the
Company’s senior executives;
ii. Reviewed and approved the adjustment of the annual total cash income target
of the Company’s senior executives in 2019;
iii. Reviewed and approved the 2019 Due Diligence Report of the Compensation
Committee;
iv. Reviewed and approved the KPIs for the Company’s senior executives in 2019.
The Compensation Committee’s opinions on the annual compensation of the
Directors, Supervisors and senior management disclosed in this Report are as
follows:
The 2019 annual compensation for the Chinese-side senior management was
paid upon the principles promulgated in the JMC Executive Compensation
Scheme. The 2019 annual compensation for Ford-seconded senior management
personnel was paid in accordance with the Personnel Secondment Agreement
signed between JMC and Ford & Ford Affiliates. The annual compensation for the
52
Director and Supervisor that the Company paid abided by JMC salary
management system.
In the reporting period, the annual compensation of the Directors, Supervisors and
senior executives disclosed in this Report was complied with JMC salary
management system, and there was neither breach nor inconsistency of this
system.
7. Works of Supervisory Board
Risks found by the Supervisory Board in the reporting period
□Yes □√No
The Supervisory Board had no dissent on inspection items in the reporting period.
8. Compensation & Incentive Mechanism for Senior Management in the Reporting
Period
The Compensation Committee of the Company approved the 2019 year-end
bonus plan for the senior executive based on the actual performance of the key
performance indicators for the senior executives, which is set out in JMC
Executive Compensation Scheme approved by the Board of Directors of the
Company, and approved the KPIs for the Company’s senior executives in 2020
and to adjust the Year 2020 total income target of the senior executives based on
market conditions. These plans are applicable only to the Chinese-side senior
management.
9. Internal Control
I. Major defect of internal control in the reporting period
□Yes □√No
II. Internal Control Self-assessment Report
Issuance date March 26, 2020
Index www.cninfo.com.cn
Total value of assets of the entities in scope counts as % of that disclosed in the
100.00%
consolidated financial statements
Total value of operating revenue of the entities in scope counts as % of that
100.00%
disclosed in the consolidated financial statements
Deficiency Determination Criteria
Type Financial Report Non-financial Report
Material Weakness: An error that Material Weakness: Unscientific
changes the trend of results, changes decision making process such as
profit to loss or loss to profit Ineffective incorrect decisions that result in
anti-fraud process or any fraud unsuccessful mergers and
involving senior acquisitions; Major regulatory
management Ineffective control over compliance issues; Frequent media
accounting policies Ineffective oversight reports harmful to the Company’s
Qualitative Criteria
by the Audit Committee Significant reputation; A lack of control within key
Deficiency; Errors in management business processes or systematic
reporting systems or Corporate breakdown of control policies
accounting records that could lead to
incorrect management decisions; Material weakness identified in the
Actions inconsistent with Company self-assessment without any action
values, policies and other Corporate plan implemented Significant
53
guidelines that are likely to significantly Deficiency; control deficiency, or
impact cost, quality, customer combination of control deficiencies,
satisfaction, reputation, or competitive that does not meet the criteria for
advantage; Control issues in IT material weakness but deserves the
infrastructure or applications that may concerns of the Audit Committee and
lead to impairment of Company the Board of Directors. Minor
operations. Any actions indicating fraud Deficiency Any control deficiencies that
or theft that is significant in value Minor do not meet the criteria for material or
Deficiency; Any control deficiencies that significant.
do not meet the criteria for material or
significant.
Material Weakness Misstatement in the
Income Statement is more than 5% of
the annual profit before taxation;
Misclassification in the Income
Statement is more than 0.4% of the
annual sales revenue
Adjustment of net assets in the Balance
Sheet is more than 1% of the
shareholders' equity Adjustment of
asset or liability in the Balance Sheet is
more than 0.6% of the total assets;
Adjustment in the Cash Flow
Statement is more than 3% of the total
net cash flow in the operating activities.
Please refer to internal control
Significant Deficiency deficiency over financial reporting for
Quantitative Criteria
Misstatement in the Income Statement is the criteria for non-financial reporting
internal control.
more than 2.5% of the annual profit
before taxation; Misclassification in the
Income Statement is more than 0.2% of
the annual sales revenue; Adjustment of
net assets in the Balance Sheet is more
than 0.5% of the Shareholders’ equity;
Adjustment of asset or liability in the
Balance Sheet is more than 0.3% of the
Total assets; Adjustment in the Cash
Flow Statement is more than 1.5% of
the total net cash flow from the operating
activities. Minor Deficiency All the
deficiencies that do not meet the
quantitative criteria for significant.
Number of Material
Weakness in 0
financial report
Number of Material
Weakness in non- 0
financial report
Number of Significant 0
54
Deficiency in financial
report
Number of Significant
Deficiency in non- 0
financial report
10. Internal Control Audit Report
□√Applicable □Not Applicable
Opinions in the Internal Control Audit Report
Internal Control Audit Report Disclosed or not Disclosed
Issuance Date March 26, 2020
Index www.cninfo.com.cn
Type of Opinion Standard and unqualified opinions
Major Defect Regarding Non-financial Report or no No
Abnormal opinion issued by the accounting firm
□Yes □√No
Opinion issued by the accounting firm keeps the same with that of self-assessment
report made by the Board
□√Yes □No
55
Chapter X Corporate Bond
Whether the Company owns the corporate bond that it lists in the securities
exchange and is undue or is not paid in full although it’s due
No.
Chapter XI Financial Statements
Type of Audit Report Standard and Unqualified Opinion
Signature date March 24, 2020
Name of Auditor PricewaterhouseCoopers Zhong Tian LLP
Document No. of Audit Report 2020/SH-0178
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2020/SH-0178
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Independent Auditor’s Report
To the Shareholders of Jiangling Motors Corporation, Ltd.
(incorporated in the People's Republic of China with limited liability)
Opinion
What we have audited
The consolidated financial statements of Jiangling Motors Corporation, Ltd. (the “Company”) and its
subsidiaries (the “Group”) set out on pages 62 to 140, which comprise:
the consolidated statement of financial position as at 31 December 2019;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant
accounting policies.
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 December 2019, and its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the Code of Ethics for Professional Accountants
of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our
other ethical responsibilities in accordance with the CICPA Code
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
Research and development expenditures
Impairment of long term assets
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2020/SH-0178
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Key Audit Matter How our audit addressed the Key Audit Matter
Research and development We obtained a breakdown, by value, of all individual
expenditures research and development projects and reconciled this to
the amounts of research and development expenses and
Refer to note 15 to the capitalised research and development projects, which were
consolidated financial recorded in the general ledger, identifying no reconciling
statements. differences.
We focussed on this area due to We tested the projects where research and development
the incurred amount of research expenses were in excess of RMB23,000,000, together with
and development expenditures a sample of randomly selected immaterial projects from the
(RMB1,937,078,000 in 2019), the remaining population, as follows:
amount of the development costs We obtained the lists of expenses by nature on selected
capitalised (RMB160,757,000 in projects and inspected contracts and underlying invoices
2019), and the fact that there is which were directly related to those projects. We also
management’s judgement checked the reasonableness of the indirect expenses
involved in assessing whether the attributable to relevant projects, including employment
criteria set out in the accounting costs and depreciation expenses, by understanding the
policies (note 2.10(2)) required allocating method and inspecting the supporting for the
for capitalisation of such assembling and allocating process of those indirect
development costs had been met, expenses.
particularly: We also checked the recorded research and development
The technical feasibility of the costs of those projects with budgeted amounts and
project. discuss with project manager regarding to the status of
The likelihood of the project selected projects.
generating sufficient future
economic benefits. We found no material issues arising from the above
The timing to start procedures.
capitalisation.
We obtained the lists of capitalised projects and tested those
We had particular regard to the projects with the capitalised amounts over
fact that the Group has continued RMB21,000,000. We obtained explanations from
to invest in the technical management of why those projects were considered to be
improvements for its automobile capital in nature, in terms of how the specific requirements
products, and therefore we of the relevant accounting standards, most notably of IAS
focussed on the accuracy and 38 were met. We also conducted interviews with individual
completeness of recorded project managers responsible for those projects selected to
research and development corroborate these explanations, which enabled us to
expenditures and whether the independently assess whether the projects met all the
economic benefits of the projects criteria for capitalisation set out in accounting standards. In
under development supported addition, we reviewed the selected projects’ inspection
the amounts capitalised. reports at different phases including the reports which
indicated that the subject projects entered into
As part of our work we also developmental stage and related management and board
focused on management’s meeting minutes. We found the information we gathered
judgements regarding whether from those documents to be consistent with explanations
capitalised costs were of a obtained from individual project managers and to be in line
development stage rather than with management’s assessment that the costs met the
research stage (which would result relevant capitalisation criteria. We considered
in the costs being expensed rather management’s judgements on whether those selected
than capitalised), and whether projects should be capitalised were appropriate.
costs, including employment
(payroll) costs, were directly
attributable to relevant projects.
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Key Audit Matter How our audit addressed the Key Audit Matter
Impairment of long term We evaluated management’s impairment calculations
assets assessing the future cash flow forecasts used in the models,
and the process by which they were drawn up, including
Refer to note 2.11, note 4.1(2) comparing them to the latest Board approved budgets, and
and note 12 to the consolidated testing the underlying calculations. We found that
financial statements. management had followed their clearly documented process
for drawing up future cash flow forecasts, which was subject
We focused on this area because to timely oversight and challenge by the directors and which
JMC Heavy Duty Vehicle Co., was consistent with the Board’s approved budgets.
Ltd. (“JMCH”), the subsidiary
of the Group has incurred We challenged:
accumulated losses of the key assumptions for revenue growth rate, sales growth
RMB1,495,092,000 as at 31 rate, discount rate and long-term growth rate in the
December 2019, which forecasts by comparing them to historical results, and
indicates there may be economic and industry forecasts;
impairment on its long term the discount rate by assessing the cost of capital for the
assets, mainly including CGU and comparable organisations.
property, plant and equipment We considered the key assumptions used were reasonably
with the amount of set in place.
RMB1,524,790,000. The
determination of whether or not We discussed the action plans in place and evaluated the
an impairment charge for long reasonableness of those plans, by comparing those action
term assets for JMCH is plans with the performance in prior years, automobile
necessary to involve significant industry developing trends and existing market player’s
judgements of management performance. We considered those action plans were
about the future results of the reasonably set in place.
business and assessment of
future plans of the JMCH’s We also tested whether the required CGU performance
operations. improvement had ever been attained by the relevant CGU
historically. We compared the current year actual results
Management considers JMCH with the prior year forecast to evaluate whether the
to be a cash generating unit assumptions used in the prior year forecast were over
(“CGU”) and has calculated the optimistic. We found that the comparison analysis made by
fair value less costs of disposal management between the actual results and forecasted
as the recoverable amount of figures were reasonable.
this CGU. The fair value less
costs of disposal is based on We challenged management on the adequacy of their
discounted future cash flow sensitivity calculations over the recoverable amount of the
forecasts over which the CGU. We determined that the calculations were most
management make judgements sensitive to assumptions for revenue growth rate, sales price
on certain key inputs including growth rate, discount rate and long term growth rate. We
revenue growth rate, sales price calculated the degree to which these assumptions would
growth rate, discount rate and need to move before an impairment conclusion was
long term growth rate. triggered. We discussed the likelihood of such a movement
with management and agreed with their conclusion that it
was unlikely.
Based on the procedures we performed, management’s
judgements and assessments relating to the impairment of
long term assets are supported by the evidence we gathered.
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2020/SH-0178
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Other Information
Management of the Company is responsible for the other information. The other information
comprises all of the information included in the annual report other than the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the
Consolidated Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with IFRSs, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body,
and for no other purpose. We do not assume responsibility towards or accept liability to any other
person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
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Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Lei Fang.
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
24 March 2020
61
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF THE AUDITORS
31 DECEMBER 2019
62
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31DECEMBER 2019
(All amounts in thousands of RMB unless otherwise stated)
Notes 2019 2018
Revenue from contracts with customers 5 29,173,636 28,249,340
Taxes and surcharges (744,695) (687,133)
Cost of sales 6 (24,597,898) (24,463,198)
Gross profit 3,831,043 3,099,009
Distribution costs 6 (1,525,883) (1,202,382)
Administrative expenses 6 (2,731,887) (2,460,259)
Net impairment losses on financial assets 3.1(2) (131,701) (1,089)
Net impairment losses on non-financial assets (25,355) (7,143)
Other income 8 492,301 426,678
Operating loss (91,482) (145,186)
Finance income 9 203,950 188,436
Finance costs 9 (8,306) (5,849)
Finance income-net 9 195,644 182,587
Share of profit of investments accounted for using the
equity method 17b 823 2,238
Profit before income tax 104,985 39,639
Income tax credit 10 42,827 52,194
Profit for the period 147,812 91,833
Profit attributable to:
Shareholders of the Company 147,812 91,833
Other comprehensive income/(loss)
Item that will not be reclassified to profit or loss
- Remeasurements of retirement benefits obligations (1,623) (4,590)
- Income tax relating to remeasurements of retirement
benefit obligations 406 1,148
Other comprehensive loss for the period, net of tax (1,217) (3,442)
Total comprehensive income for the period 146,595 88,391
Total comprehensive income attributable to:
Shareholders of the Company 146,595 88,391
Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.17 0.11
The notes on pages 68 to 140 are an integral part of these consolidated financial statements.
- 63 -
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF FINANCIAL POSITION
AS AT 31DECEMBER 2019
(All amounts in thousands of RMB unless otherwise stated)
Notes 2019 2018
ASSETS
Non-current assets
Property, plant and equipment 12 7,212,614 6,941,292
Right-of-use assets 14 36,040 —
Lease prepayment 13 719,695 601,260
Intangible assets 15 354,203 246,026
Deferred income tax assets 18 860,607 743,096
Investments accounted for using the equity method 17b 40,935 40,112
Total non-current assets 9,224,094 8,571,786
Current assets
Inventories 19 1,946,869 2,522,354
Trade and other receivables and prepayments 20 3,900,585 4,678,284
Derivative financial instruments 3.3 - 979
Financial assets at fair value through other
comprehensive income 3.3 289,044 6,246
Cash and cash equivalents 21 8,937,937 7,616,880
Total current assets 15,074,435 14,824,743
Total assets 24,298,529 23,396,529
- 64 -
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF FINANCIAL POSITION (continued)
AS AT 31DECEMBER 2019
(All amounts in thousands of RMB unless otherwise stated)
Notes 2019 2018
EQUITY
Share capital 22 863,214 863,214
Share premium 816,609 816,609
Other reserves 23 446,255 447,472
Retained earnings 8,370,486 8,257,203
Total equity 10,496,564 10,384,498
LIABILITIES
Non-current liabilities
Contract liabilities 5 61,714 38,382
Borrowings 24 3,198 3,595
Leaseliabilities 14 22,592 —
Deferred income tax liabilities 18 25,340 26,024
Retirement benefit obligations 25 63,685 63,425
Provisions for statutory warranty 26 166,687 151,492
Other non-current liabilities 34,470 60,160
Total non-current liabilities 377,686 343,078
Current liabilities
Trade and other payables 27 12,826,996 12,195,966
Contract liabilities 5 268,170 266,702
Current income tax liabilities 75,019 179
Borrowings 24 457 449
Lease liabilities 14 13,387 —
Derivative financial instruments 3.3 546 -
Retirement benefit obligations 25 4,756 4,595
Provisions for statutory warranty 26 234,948 201,062
Total current liabilities 13,424,279 12,668,953
Total liabilities 13,801,965 13,012,031
Total equity and liabilities 24,298,529 23,396,529
The notes on pages 68 to 140 are an integral part of these consolidated financial statements.
- 65 -
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
(All amounts in thousands of RMB unless otherwise stated)
Share Share Other Retained
Notes capital premium reserves earnings Total
Balance at 1 January 2018 863,214 816,609 450,914 10,441,665 12,572,402
Profit for the period - - - 91,833 91,833
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of
tax - - (3,442) - (3,442)
Dividends relating to 2017 - - - (2,276,295) (2,276,295)
Balance at 31 December 2018 863,214 816,609 447,472 8,257,203 10,384,498
Balance at 1 January 2019 863,214 816,609 447,472 8,257,203 10,384,498
Profit for the period - - - 147,812 147,812
Other comprehensive income - - - - -
- Remeasurements of retirement
benefit obligations, net of
tax - - (1,217) - (1,217)
Dividends relating to 2018 28 - - - (34,529) (34,529)
Balance at 31 December 2019 863,214 816,609 446,255 8,370,486 10,496,564
The notes on pages 68 to 140 are an integral part of these consolidated financial statements.
- 66 -
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
(All amounts in thousands of RMB unless otherwise stated)
Notes 2019 2018
Cash flows from operating activities
Cash generated from operations 29 2,737,046 (4,180)
Interest paid (2,904) (218)
Income tax paid (179) (97,410)
Net cash inflow/(outflow) from operating activities 2,733,963 (101,808)
Cash flows from investing activities
Payment for property, plant and equipment (“PPE”) (1,616,841) (1,385,315)
Purchase of financial assets at fair value through profit
or loss (9,200,000) (10,353,000)
Other cash paid relating to investing activities (12,942) (16,321)
Proceeds from disposal of PPE 3,888 2,773
Proceeds from disposal of financial assets at fair value
through profit or loss 9,200,000 10,353,000
Investment income from financial assets at fair value
through profit or loss 47,386 18,191
Interest received 209,561 232,627
Other cash received from investing activities 3,855 9,121
Net cash outflow from investing activities (1,365,093) (1,138,924)
Cash flows from financing activities
Proceeds from borrowings 200,000 -
Repayments of borrowings (200,454) (434)
Principal elements of lease payments (12,831) —
Dividends paid to shareholders of the Company (34,509) (2,278,417)
Other cash paid relating to financing activities (19) (1,260)
Net cash outflow from financing activities (47,813) (2,280,111)
Net increase/(decrease) in cash and cash equivalents 1,321,057 (3,520,843)
Cash and cash equivalents at beginning of year 7,616,880 11,137,723
Cash and cash equivalents at end of year 21 8,937,937 7,616,880
The notes on pages 68 to 140 are an integral part of these consolidated financial statements.
- 67 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in the People’s Republic
of China (the “PRC”) under the Company Law of the PRC and according to the approval of
Hongban (1992) No. 005 of Nangchang Revolution and Authorisation Group of Company’s
Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of
the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was
owned by Jiangling Motors Group Co., Ltd (“JMCG”). The legal representative’s operating
license of the Company is No.913600006124469438.
The address of the Company’s registered office is No.509, Northern Yingbin Avenue,
Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”).
In addition, the Company issued 25,214,000 A shares as bonus shares to the existing
shareholders in 1994. The bonus shares were issued by utilisation of the Company’s retained
earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and
the Company issued 170,000,000 additional B shares in 1998.
As at 31 December 2019, the total number of issued shares of the Company is 863,214,000
shares, which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These consolidated financial statements were authorised for issue by the Board of Directors
24 March 2020.
2 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of
these consolidated financial statements. These policies have been consistently applied to all
the years presented, unless otherwise stated. The financial statements are for the Group
consisting the Company and its subsidiaries.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all
applicable International Financial Reporting Standards (“IFRS”). The consolidated financial
statements have been prepared on a historical cost basis, except for certain financial assets
and liabilities (including derivative instruments and financial assets at FVOCI) are measured at
fair value.
- 68 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.1 Basis of preparation (continued)
(1) New and amended standards adopted by the Group
The Group has applied the IFRS 16 Leases for the first time for their annual reporting period
commencing 1 January 2019. The Group had to change its accounting policies as a result of
adopting IFRS 16. There is no retrospective adjustment recognised in prior periods. The
impact of adopting the following standards are disclosed in Note 2.2.
(2) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not
mandatory for reporting period ended 31 December 2019 and have not been early adopted by
the Group. These standards are not expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
2.2 Changes in accounting policies
This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial
statements.
As indicated in note 2.1 above, the Group has adopted IFRS 16 Leases from 1 January 2019,
but has not restated comparatives for the 2018 reporting period, as permitted under the
specific transition provisions in the standard. No cumulative effect of the initial adoption need
to be recognised in retained earnings on 1 January 2019. While the reclassifications arising
from the new leasing rules are recognised in the opening balance sheet on 1 January 2019.
The new accounting policies are disclosed in note 2.28.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had
previously been classified as ‘operating leases’ under the principles of IAS 17 Leases.These
liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average
lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was
4.8%.
For leases previously classified as finance leases the entity should recognise the carrying
amount of the lease asset and lease liability immediately before transition as the carrying
amount of the right of use asset and the lease liability at the date of initial application. The
measurement principles of IFRS 16 are only applied after that date. The Group has no finance
lease arrangement.
(i) Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients
permitted by the standard:
applying a single discount rate to a portfolio of leases with reasonably similar
characteristics, and
accounting for operating leases with a remaining lease term of less than 12 months as at 1
January 2019 as short-term leases.
The Group has also elected not to reassess whether a contract is, or contains a lease at the
date of initial application. Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and Interpretation 4 Determining
whether an Arrangement contains a Lease.
- 69 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.2 Changes in accounting policies (continued)
(ii) Measurement of lease liabilities
2019
RMB’000
Operating lease liabilities as at 31 December 2018 30,662
Discounted using the lessee’s incremental borrowing rate of at the date of initial application 27,326
(Less): short-term leases not recognised as a liability (4,176)
Lease liability recognised as at 1 January 2019 23,150
Of which are:
Current lease liabilities 3,913
Non-current lease liabilities 19,237
23,150
(iii) Measurement of right-of-use assets
Right-of use assets were measured at the amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating to that lease recognised in the
balance sheet as at 31 December 2018.
(iv) Adjustments recognised in the balance sheet on 1 January 2019
The change in accounting policy affected the following items in the balance sheet on 1
January 2019:
Right-of-use assets – increase by RMB23,150,000
Lease liabilities – increase by RMB23,150,000
No impact on retained earnings on 1 January 2019.
(v) Lessor accounting
The Group did not need to make any adjustments to the accounting for assets held as lessor
under operating leases as a result of the adoption of IFRS 16.
- 70 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.3 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the
Group.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
2.4 Associates
An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting, after
initially being recognised at cost.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share
of post-acquisition movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the carrying amount of the
investment. Dividends received or receivable from associates are recognised as a reduction in
the carrying amount of the investment. When the Group's share of losses in an associate
equals or exceeds its interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to ‘share of profit of investments
accounted for using equity method’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
- 71 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.5 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct
attributable costs of investment. The results of subsidiaries are accounted for by the Company
on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend
from these investments if the dividend exceeds the total comprehensive income of the
subsidiary in the period the dividend is declared or if the carrying amount of the investment in
the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.
2.6 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.7 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is
the Company’s functional and the Group’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within other
income/(expense)-net.
Non-monetary items that are measured at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value was determined. Translation differences on
assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For
example, translation differences on non-monetary assets and liabilities such as equities held
at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss and translation differences on non-monetary assets such as equities classified as fair
value through other comprehensive income are recognised in other comprehensive income.
- 72 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and
any impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition or construction of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Buildings 35-40 years
Plant and machinery 10-15 years
Motor automobiles 6-10 years
Moulds 5 years
Electronic and other equipment 5-7 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 2.11).
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.
2.9 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.
- 73 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the
identified net assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit
from the synergies of the combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes
in circumstances indicate a potential impairment. The carrying value of the CGU containing the
goodwill is compared to the recoverable amount, which is the higher of value in use and the fair
value less costs of disposal. Any impairment is recognised immediately as an expense and is
not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on
development projects (relating to the design and testing of new or improved products) are
recognised as intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or
sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic
benefits;
(e) adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably
measured.
The development cost of an internally generated intangible asset is the sum of the expenditure
incurred from the date the asset meets the recognition criteria above to the date when it is
available for use. The development costs capitalised in connection with the intangible asset
include costs of materials and services used or consumed and employee costs incurred in the
creation of the asset.
Capitalised development costs are recorded as intangible assets and amortised from the point
at which the asset is ready for use on a straight-line basis over its useful life.
Other development expenditures that do not meet these criteria are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an
asset in a subsequent period.
- 74 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful
lives of 5 years.
(4) Non-patent technology
Non-patent technology is capitalised from the development cost. These costs are amortised over
their estimated useful lives of 5 years.
2.11 Impairment of non-financial assets
Goodwill is not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the impairment at the end of each reporting
period.
2.12 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered highly probable. They are
measured at the lower of their carrying amount and fair value less costs to sell, except for
assets such as deferred tax assets, assets arising from employee benefits, financial assets
and investment property that are carried at fair value and contractual rights under insurance
contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair
value less costs to sell. A gain is recognised for any subsequent increases in fair value less
costs to sell of an asset, but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held
for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as
held for sale are presented separately from the other assets in the statement of financial
position.
- 75 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Investments and other financial assets
(1) Classification
The Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through OCI or through profit or
loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets
and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or
OCI. For investments in equity instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through other comprehensive income
(“FVOCI”).
The Group reclassifies debt investments when and only when its business model for
managing those assets changes.
(2) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date
on which the Group commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
(3) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortised
cost. Interest income from these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on derecognition is recognised
directly in profit or loss and presented in other income/(expense)-net together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the
statement of profit or loss.
- 76 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Investments and other financial assets (continued)
(3) Measurement (continued)
FVOCI: Assets that are held for collection of contractual cash flows and for selling the
financial assets, where the assets’ cash flows represent solely payments of principal and
interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest income and foreign
exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other income/(expense)-net. Interest income from
these financial assets is included in finance income using the effective interest rate method.
Foreign exchange gains and losses are presented in other income/(expense)-net and
impairment expenses are presented as separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at
FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is
recognised in profit or loss and presented net within other income/(expense)-net in the
period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s
management has elected to present fair value gains and losses on equity investments in OCI,
there is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other income/(expense)-
net in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other
changes in fair value.
(4) Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its
debt instruments carried at amortised cost and FVOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk. For trade receivables,
the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables, see Note 3.1 for further details.
- 77 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.14 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position where the Group currently has a legally enforceable right to offset the
recognised amounts, and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously. The Group has also entered into arrangements that do not
meet the criteria for offsetting but still allow for the related amounts to be set off in certain
circumstances, such as bankruptcy or the termination of a contract.
2.15 Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The
accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. No
derivative is designated as a hedging instrument by the Group, changes in the fair value of
derivatives are recognised immediately in profit or loss and included in other income/(expense)-
net.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value. The cost of finished goods and
work in progress comprises raw materials, direct labour, other direct costs and related production
overheads, the latter being allocated on the basis of normal operating capacity. Cost excludes
borrowing costs. Costs are assigned to individual items of inventory on the basis of weighted
average costs. Costs of purchased inventory are determined after deducting rebates and
discounts. Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the sale.
2.17 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of business. If collection of trade and other receivables is expected in one
year or less (or in the normal operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less allowance for impairment. See Note 3.1
for further information about the Group’s accounting for trade receivables and a description of
the Group’s impairment policies.
- 78 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.18 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with banks and other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the statement of financial position.
2.19 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Where any group company purchases the Company’s equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to owners of the Company until the shares are cancelled or
reissued. Where such shares are subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included in
equity attributable to the Company’s shareholders.
2.20 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of financial year which are unpaid. The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as current liabilities unless payment
is not due within 12 months after the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
2.21 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
- 79 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Borrowings (continued)
Borrowings are removed from the statement of financial position when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or
loss as other income/(expense)-net or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
2.22 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Borrowing costs include interest expense, finance charges in respect of finance lease and
exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs. The exchange gains and losses that are an
adjustment to interest costs include the interest rate differential between borrowing costs that
would be incurred if the entity had borrowed funds in its functional currency, and the borrowing
costs actually incurred on foreign currency borrowings. Such amounts are estimated based on
interest rates on similar borrowings in the entity’s functional currency.
When the construction of the qualifying assets takes more than one accounting period, the
amount of foreign exchange differences eligible for capitalisation is determined for each annual
period and are limited to the difference between the hypothetical interest amount for the
functional currency borrowings and the actual interest incurred for foreign currency borrowings.
Foreign exchange differences that did not meet the criteria for capitalisation in previous years
should not be capitalised in subsequent years.
2.23 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the countries where the company and its
subsidiaries and associates operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
- 80 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 Current and deferred income tax (continued)
(2) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
2.24 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in
exchange for service rendered by employees or for termination of employment relationship,
which include short-term employee benefits, post-employment benefits, termination benefits and
other long-term employee benefits.
(1) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff
welfare, premiums or contributions on medical insurance, work injury insurance and maternity
insurance, housing funds, union running costs and employee education costs, short-term paid
absences and etc. The short-term employee benefits actually occurred are recognised as a
liability in the accounting period in which the service is rendered by the employees, with a
corresponding charge to the profit or loss for the current period or the cost of relevant assets.
Non-monetary benefits are measured at fair value.
- 81 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Employee benefits (continued)
(2) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans. Defined contribution plans are post-employment benefit plans under
which the Group pays fixed contributions into a separate fund and will have no obligation to
pay further contributions; and defined benefit plans are post-employment benefit plans other
than defined contribution plans. During the reporting period, the premiums or contributions on
basic pensions and unemployment insurance belong to defined contribution plans; the
premiums or contributions on supplementary retirement benefits belong to defined benefit
plans.
(i) Defined contribution plans
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local
authorities of Ministry of Human Resource and Social Security. Monthly payments of
premiums on the basic pensions are calculated according to the bases and percentage
prescribed by the relevant local authorities. When employees retire, the relevant local
authorities are obliged to pay the basic pensions to them. The amounts based on the above
calculations are recognised as liabilities in the accounting period in which the service has been
rendered by the employees, with a corresponding charge to the profit or loss for the current
period or the cost of relevant assets.
(ii) Defined benefit plans
The Group provides employees with some supplementary retirement benefits belong to
defined benefit plans in addition to the social security policy prescribed by the State. The
liability recognised in the statement of financial position in respect of defined benefit pension
plans is the present value of the defined benefit obligation at the end of the reporting period
less the fair value of plan assets. The defined benefit obligation is calculated annually by
independent actuaries using the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of national debt that are denominated in the currency in which the benefits will
be paid, and that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the
defined benefit obligation and the fair value of plan assets. This cost is included in employee
benefit expense in the statement of profit or loss.
Remeasurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they occur, directly in other
comprehensive income. They are included in retained earnings in the statement of changes in
equity and in the statement of financial position.
Changes in the present value of the defined benefit obligation resulting from plan amendments
or curtailments are recognised immediately in profit or loss as past service costs.
- 82 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Employee benefits (continued)
(3) Termination benefits
The Group provides compensation for terminating the employment relationship with
employees before the end of the employment contracts or as an offer to encourage employees
to accept voluntary redundancy before the end of the employment contracts. The Group
recognises a liability arising from compensation for termination of the employment relationship
with employees, with a corresponding charge to profit or loss for the current period at the
earlier of the following dates: 1) when the Group cannot unilaterally withdraw an employment
termination plan or a curtailment proposal; 2)when the Group recognises costs or expenses
for a restructuring that involves the payment of termination benefits.
(4) Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement
arrangements. The early retirement benefits refer to the salaries and social security
contributions to be paid to and for the employees who accept voluntary retirement before the
normal retirement date prescribed by the State, as approved by the management. The Group
pays early retirement benefits to those early retired employees from the early retirement date
until the normal retirement date. The Group accounts for the early retirement benefits in
accordance with the treatment for termination benefits, in which the salaries and social
security contributions to be paid to and for the early retired employees from the off-duty date to
the normal retirement date are recognised as liabilities with a corresponding charge to the
profit or loss for the current period. The differences arising from the changes in the respective
actuarial assumptions of the early retirement benefits and the adjustments of benefit standards
are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date
are classified as current liabilities.
2.25 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.
- 83 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.26 Revenue recognition
The Group manufactures and sells a range of automobiles and automobile parts to dealers and
ending customers. Besides, the Group also provides automobile maintenance and additional
warranty services. The Group recognises revenue when the customer obtains control of the
goods and services. The revenue is recognised based on the consideration to which the Group
expects to be entitled in exchange for transferring promised goods or services to customers.
(1) Sales of goods – Automobile and automobile parts
The Group manufactures and sells a range of automobiles and automobile parts to dealers and
ending customers. Sales are recognised when control of the products has transferred, being
when the customer has the ability to direct the use of and obtain substantially all of the
remaining benefits from the products. Control of automobiles is transferred when automobiles
are delivered out of warehouse, being when customer has accepted the products. Control of
automobile parts is transferred when the products out of warehouse or shipped to designated
destination, being when customer has accepted the products.
When the contracts include two performance obligations, selling automobiles and providing
shipping services, the transaction price will be allocated to each performance obligation based
on the stand-alone selling prices. Where these are not directly observable, they are estimated
considering market information, expected cost plus margin.
No element of financing is deemed present as the sales are made with a credit term within one
year, which is consistent with market practice. The Group’s obligation to repair or replace faulty
products under the statutory warranty terms prescribed by the industry law and regulations is
recognised as a provision, see Note 2.25. For additional warranty, it is considered as a separate
performance obligation under IFRS 15, see Note 2.26(2).
Revenue from these sales is recognised based on the price specified in the contract, net of the
estimated discounts. Accumulated experience is used to estimate and provide for the discounts,
using the expected value method, and revenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur.
(2) Rendering of services
The Group provides service of automobile maintenance and additional warranty. Revenue is
recognised on the basis of inputs to the satisfaction of the performance obligation relative to the
total expected inputs to the satisfaction of that performance obligation.
Trade receivables are recognised when the Group recognised revenue according to the
completion process and has an unconditional right to consideration. Contract assets are
recognised when the Group satisfies a performance obligation but does not have an
unconditional right to consideration. The provision of trade receivables and contract assets are
subject to expected credit loss model. Contract liabilities are recognised when the consideration
received before the Group satisfies the performance obligation. The contract assets and
liabilities are presented on a net basis for the some contract.
- 84 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.27 Earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated by dividing: the profit attributable to owners of the
company, excluding any costs of servicing equity other than ordinary shares by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
(2) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
2.28 Leases
As explained in note 2.2 above, the Group has changed its accounting policy for leases where
the Group is the lessee. The new policy is described below and the impact of the change in note
2.2.
Until 31 December 2018, leases in which a significant portion of the risks and rewards of
ownership were not transferred to the Group as lessee were classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) were
charged to profit or loss on a straight-line basis over the period of the lease. The Group has
no financial leases arrangements.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives
receivable;
variable lease payment that are based on an index or a rate, initially measured using the
index or rate as at the commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that
option, and
payments of penalties for terminating the lease, if the lease term reflects the Group
exercising that option.
Lease payments to be made under reasonably certain extension options are also included in
the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate
cannot be readily determined, which is generally the case for leases in the Group, the lessee’s
incremental borrowing rate is used, being the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and conditions.
- 85 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.28 Leases (continued)
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by the individual lessee as a
starting point, adjusted to reflect changes in financing conditions since third party
financing was received;
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for
leases held by the Group, which does not have recent third party financing, and
makes adjustments specific to the lease, eg term, country, currency and security.
There is no variable lease payments based on the lease contracts.
Lease payments are allocated between principal and finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives
received
any initial direct costs, and
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and
the lease term on a straight-line basis. There is no purchase option included in the lease
contracts.
Payments associated with short-term leases of equipment and vehicles and all leases of low-
value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less. Low-value assets comprise IT
equipment and small items of office furniture.
Lease income from operating leases where the Group is a lessor is recognised in income on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating
lease are added to the carrying amount of the underlying asset and recognised as expense
over the lease term on the same basis as lease income. The respective leased assets are
included in the balance sheet based on their nature. The Group did not need to make any
adjustments to the accounting for assets held as lessor as a result of adopting the new
leasing standard.
2.29 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.
- 86 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.30 Government grants
Government grants refer to the monetary or non-monetary assets obtained by the Group from
the government, including tax return, financial subsidy and etc.
Government grants are recognised when the grants can be received and the Group can
comply with all attached conditions. If a government grant is a monetary asset, it will be
measured at the amount received or receivable. If a government grant is a non-monetary
asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be
measured at its nominal amount.
Government grants related to assets refer to government grants which are obtained by the
Group for the purposes of purchase, construction or acquisition of the long-term assets.
Government grants related to income refer to the government grants other than those related
to assets.
Government grants related to assets will be recorded as deferred income and recognised
evenly in profit or loss over the useful lives of the related assets.
Government grants related to income will be recorded as deferred income and recognised in
profit or loss in the period in which the related expenses are recognised if the grants are
intended to compensate for future expenses or losses, and otherwise recognised in profit or
loss for the current period if the grants are used to compensate for expenses or losses that
have been incurred.
2.31 Interest income
Interest income from financial assets at FVPL is included in other income/(expense)-net, see
Note 8 below.
Interest income on financial assets at amortised cost and financial assets at FVOCI calculated
using the effective interest method is recognised in the statement of profit or loss as part of
finance income. Interest income is presented as finance income where it is earned from
financial assets that are held for cash management purposes, see Note 9 below. Any other
interest income is included in other income/(expense)-net.
Interest income is calculated by applying the effective interest rate to the gross carrying
amount of a financial asset except for financial assets that subsequently become credit-
impaired. For credit-impaired financial assets the effective interest rate is applied to the net
carrying amount of the financial asset (after deduction of the loss allowance).
- 87 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
3 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance.
The Group’s risk management is predominantly controlled by Finance Department under
policies approved by the Board of Directors. Group Finance Department identifies, evaluates
and hedges financial risks in close co-operation with the Group’s operating units. The board
provides written principles for overall risk management, as well as policies covering specific
areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative
financial instruments and non-derivative financial instruments, and investment of excess
liquidity.
3.1 Financial risk factors
(1) Market risk
(i) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to other payables dominated in US dollar (“USD”)
and Euro.
Management has set up a policy to require the Group to manage their foreign exchange risk
against their functional currency, including the use of foreign currency forwards. 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.
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in
RMB, was as follows:
31 December 2019 31 December 2018
Other Other
USD EUR currency USD EUR currency
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Derivative financial instruments
Foreign exchange forwards (546) - - 979 - -
Trade and other receivables - 30 - - 265 -
Borrowings (3,655) - - (4,044) - -
Trade and other payables (260,962) (42,659) (5,574) (164,599) (100,450) (4,045)
(265,163) (42,629) (5,574) (167,664) (100,185) (4,045)
- 88 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(1) Market risk (continued)
(i) Foreign exchange risk (continued)
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/RMB and
Euro/RMB exchange rates. The Group’s exposure to other foreign exchange movements is
not material.
As at 31 December 2019, if RMB had strengthened/weakened by 10% against USD with all
other variable held constant, the Group’s net profit for the year then ended would have been
approximately RMB22,553,000 (2018: RMB14,187,000) higher/lower.
As at 31 December 2019, if RMB had strengthened/weakened by 10% against Euro with all
other variable held constant, the Group’s net profit for the year then ended would have been
approximately RMB4,000,000 (2018: RMB8,626,000) higher/lower.
(ii) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 31 December 2019, a large portion of its bank deposits were at
variable rates and all of its borrowings were at fixed rate. The Group has not used any interest
rate swaps to hedge its exposure to interest rate risk.
As at 31 December 2019, if the interest rate of the Group’s bank deposits had been
increased/decreased by 10% and all other variables were held constant, the Group’s net profit
for the year then ended would have been increased/decreased by approximately RMB16,235 ,
000(2018: RMB14,174,000 ).
As at 31 December 2019, the difference between the fair value and book value of the Group’s
borrowings with fixed rate is immaterial.
- 89 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk
Credit risk arises from cash and cash equivalents, contractual cash flows of other financial
instruments at fair value through comprehensive income and at fair value through profit or
loss, favourable derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposures to customers, including outstanding receivables.
(i) Risk management
Credit risk is managed on a group basis. Risk control assesses the credit quality of the
customer, taking into account its financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set
by the board. The compliance with credit limits by customers is regularly monitored by line
management.
(ii) Impairment of financial assets
The Group has four types of financial assets that are subject to the expected credit loss
model:
trade receivables for sales of inventory and from the provision of services, and
notes receivables carried at FVOCI
other financial assets at amortised cost
cash and cash equivalents.
Trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all trade receivables. If the credit losses of a signal
trade receivable can be assessed at a reasonable cost, the credit losses of those trade
receivables are assessed separately. If not, to measure the expected credit losses, trade
receivables have been grouped based on shared credit risk characteristics and the days past
due.
The expected loss rates are based on the payment profiles of sales over a period of 24 month
before 31 December 2019 or 1 January 2019 respectively and the corresponding historical
credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. The Group has identified the GDP and the unemployment
rate of China in which it sells its goods and services to be the most relevant factors, and
accordingly adjusts the historical loss rates based on expected changes in these factors.
On that basis, the loss allowance as at 31 December 2019 and 31 December 2018 was
determined as follows for trade receivables:
- 90 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(a) As at 31 December 2019 and 31 December 2018,receivables with amounts are subject to
separate assessment for impairment as below:
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2019 Current past due past due past due past due Total
Expected loss rate 100% - - - 100%
Gross carrying amount – trade
receivables from the sales of
automobiles i) 81,020 - - - 8,633 89,653
Gross carrying amount – trade
receivables from the
government subsidy of new
energy vehicles ii) 20,411 - - - - 20,411
Loss allowance (101,431) - - - (8,633) (110,064)
i) As the above debtors involved in several lawsuits, the Group does not expect to collect the
amount under the original terms, a full provision were made to those trade receivables.
ii) As the above new energy vehicles cannot meet the mileage required within two years for the
receiving of government subsidy, the Group does not expected to receive the amount under the
original terms, a full provision were made to those government subsidy for the sales of new
energy vehicles.
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate - - - - 100%
Gross carrying amount – trade
receivables i) - - - - 8,633 8,633
Loss allowance - - - - (8,633) (8,633)
i) As the above debtors involved in several lawsuits, the Group does not expected to collect the
amount under the original terms, a full provision were made to those trade receivables.
- 91 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(b) As at 31 December 2019 and 31 December 2018, trade receivables have been grouped onthe
basis of shared credit risk characteristics and the days past due for the measurement of
expected credit losses:
i) Notes receivables group
As at 31 December 2019, all the notes receivables are bank acceptance bills of
RMB85,816,000(2018: RMB626,509,000), which will be accepted mainly by large state-owned
banks or national commercial banks. The Group believes that there is no significant credit
losses due to the bank default.
ii) General group of automobiles
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2019 Current past due past due past due past due Total
Expected loss rate 0.05% 0.05% 1.20% 1.97% 4.63%
Gross carrying amount –
trade receivables 1,152,288 15,981 2,840 323 31,805 1,203,237
Loss allowance (558) (8) (34) (6) (1,473) (2,079)
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.38% 0.38% 10.59% 10.78% 10.93%
Gross carrying amount –
trade receivables 1,202,896 28,827 10,253 420 16,305 1,258,701
Loss allowance (4,574) (110) (1,085) (45) (1,782) (7,596)
- 92 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(b) As at 31 December 2019 and 31 December 2018, trade receivables have been grouped on
the basis of shared credit risk characteristics and the days past due for the measurement of
expected credit losses (continued):
iii) Group of new energy vehicles
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2019 Current past due past due past due past due Total
Expected loss rate 5.53% - - - -
Gross carrying amount –
trade receivables 476,963 - - - - 476,963
Loss allowance (26,383) - - - - (26,383)
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.43% - - - -
Gross carrying amount –
trade receivables 728,555 - - - - 728,555
Loss allowance (3,125) - - - - (3,125)
iv) Group of other automobiles
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2019 Current past due past due past due past due Total
Expected loss rate 5.88% 6.49% 26.08% 28.14% 30.07%
Gross carrying amount –
trade receivables 40,410 17,873 5,836 1,202 28,183 93,504
Loss allowance (2,377) (1,161) (1,522) (338) (8,474) (13,872)
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.50% 0.50% - - -
Gross carrying amount –
trade receivables 334,154 51,253 - - - 385,407
Loss allowance (1,671) (256) - - - (1,927)
- 93 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(b) As at 31 December 2019 and 31 December 2018, trade receivables have been grouped on
the basis of shared credit risk characteristics and the days past due for the measurement of
expected credit losses (continued):
v) Group of automobiles parts
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2019 Current past due past due past due past due Total
Expected loss rate 0.30% 0.30% 0.50% 0.60% 5.00%
Gross carrying amount –
trade receivables 437,011 29,418 4,208 2,823 5,083 478,543
Loss allowance (1,297) (88) (21) (17) (254) (1,677)
More than More than More than
1-30 days 30 days 60 days 90 days
31 December 2018 Current past due past due past due past due Total
Expected loss rate 0.30% 0.30% 0.50% 0.60% 5.00%
Gross carrying amount –
trade receivables 313,028 614 484 485 1,021 315,632
Loss allowance (939) (2) (2) (3) (51) (997)
- 94 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(b) As at 31 December 2019 and 31 December 2018, trade receivables have been grouped on the
basis of shared credit risk characteristics and the days past due for the measurement of
expected credit losses (continued):
The loss allowances for trade receivables and contract assets as at 31 December reconcile to
the opening loss allowances as follows:
Trade receivables
2019 2018
RMB’000 RMB’000
Opening loss allowance at 1 January 22,278 21,016
Increase in loss allowance recognised in profit or loss
during the year 131,797 2,052
Receivables written off during the year as uncollectible - (42)
Unused amount reversed - (748)
Closing loss allowance at 31 December 154,075 22,278
Trade receivables are written off when there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments.
Impairment losses on trade receivables are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited against
the same line item.
- 95 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
Financial assets at fair value through other comprehensive income
Notes receivables carried at FVOCI are considered to have low credit risk, and the loss
allowance recognised during the period was therefore limited to 12 months expected losses.
Management considers ‘low credit risk’ for the instruments that the issuer has a strong
capacity to meet its contractual cash flow obligations in the near term. The notes receivables
held by the Group for endorsement are presented as FVOCI at the statement of financial
position. All the notes receivables are bank acceptable bills and considered as low credit risk
financial instruments without significant credit risk because the banks have a strong capacity to
meet its contractual cash flow obligations in the near term.
Other financial assets at amortised cost
Other financial assets at amortised cost include bank interest receivables and other
receivables. The loss allowances for other financial assets at amortised cost as at 31
December reconciles to the opening loss allowances as follows:
Bank interest Other
receivables receivable Total
RMB’000 RMB’000 RMB’000
Closing loss allowance as at 1 January 2018 - 658 658
Increase in the allowance recognised in profit or loss
during the period - 113 113
Reverse of the allowance recognised in profit or loss
during the period - (328) (328)
Closing loss allowance as at 31 December 2018 - 443 443
Increase in the allowance recognised in profit or loss
during the period - 20 20
Reverse of the allowance recognised in profit or loss
during the period - (116) (116)
Closing loss allowance as at 31 December 2019 - 347 347
All the bank interest receivables are considered as low credit risk financial instruments without
significant credit risk because the banks have a strong capacity to meet its contractual cash
flow obligations in the near term.
- 96 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management(continued)
3.1 Financial risk factors(continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
Net impairment losses on financial assets recognised in profit or loss
During the year, the following losses were recognised in profit or loss in relation to impaired
financial assets:
2019 2018
RMB’000 RMB’000
Impairment losses
- movement in loss allowance for trade receivables (131,797) (2,052)
Impairment losses on other financial assets (20) (113)
Reversal of previous impairment losses 116 1,076
Net impairment losses on financial and contract assets (131,701) (1,089)
Cash and cash equivalents
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9,
the identified impairment loss was immaterial.
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group and aggregated by
Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities (Note 24) at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities.
The tables below analyse the Group’s financial liabilities into relevant maturity groupings
based on their contractual maturities for:
(a) all non-derivative financial liabilities, and
(b) net settled derivative financial instruments.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances
due within 12 months equal their carrying balances as the impact of discounting is not
significant.
- 97 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management(continued)
3.1 Financial risk factors(continued)
(3) Liquidity risk (continued)
Contractual maturities of financial Less than Between 1 Between 2 Over
liabilities 1 year and 2 years and 5 years 5 years
RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2019
Bank borrowings
- Principals 457 458 1,370 1,370
- Interests 53 46 98 36
Trade and other payables
(exclude payroll and welfare payables,
other tax payables related) 12,292,836 - - -
Lease liabilities 13,387 6,987 15,605 -
Derivative financial instruments 546 - - -
12,307,279 7,491 17,073 1,406
At 31 December 2018
Bank borrowings
- Principals 449 449 1,348 1,798
- Interests 59 52 116 61
Trade and other payables
(exclude payroll and welfare payables,
other tax payables related) 11,658,259 - - -
11,658,767 501 1,464 1,859
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets
to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as borrowings divided by total capital. Total capital is calculated
as equity, as shown in the consolidated statement of financial position, plus borrowings. The
Group aims to maintain the gearing ratio at a reasonable level.
The gearing ratios at 31 December 2019 and 2018 were as follows:
31 December 2019 31 December 2018
Total borrowings 3,655 4,044
Total equity 10,496,564 10,384,498
Total capital 10,500,219 10,388,542
Gearing ratio 0.03% 0.04%
- 98 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation
(1) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the
financial instruments that are recognised and measured at fair value in the financial
statements. The Group has classified its financial instruments into the three levels prescribed
under the accounting standards:
As at 31 December 2019 Level 1 Level 2 Level 3 Total
Financial assets
Financial assets at FVOCI
Notes receivables - - 289,044 289,044
Total financial assets - - 289,044 289,044
Financial liabilities
Derivatives
Foreign exchange forwards - 546 - 546
Total financial liabilities - 546 - 546
As at 31 December 2018 Level 1 Level 2 Level 3 Total
Financial assets
Derivatives
Foreign exchange forwards - 979 - 979
Financial assets at FVOCI
Notes receivables - - 6,246 6,246
Total financial assets - 979 6,246 7,225
There were no transfers between levels 1 and 2 for recurring fair value measurements during
the year.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels
as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and equity securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financial assets held by the Group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) is determined using valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3. This is the case for unlisted equity securities.
- 99 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
(2) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
for foreign currency forwards - the present value of future cash flows based on forward
exchange rates at the balance sheet date
for other financial instruments - discounted cash flow analysis.
(3) Fair value measurements using significant unobservable inputs (level 3)3)
The following table presents the changes in level 3 items for the periods ended 31 December
2019 and 31 December 2018:
Financial assets Financial assets Financial assets
at FVPL- at FVPL- at FVOCI-notes Total
monetary fund Structured deposit receivables
Opening balance
1 January 2018 - - - -
Acquisitions 10,353,000 - 102,802 10,455,802
Disposals (10,353,000) - (96,556) (10,449,556)
Closing balance
31 December 2018 - - 6,246 6,246
Opening balance
1 January 2019 - - 6,246 6,246
Acquisitions 3,300,000 5,900,000 1,654,757 10,854,757
Disposals (3,300,000) (5,900,000) (1,371,959) (10,571,959)
Closing balance
31 December 2019 - - 289,044 289,044
There is no unrealised gains or losses recognised in profit or loss attributable to balances held
at the end of the reporting period. The gains or losses arising from the holding of the financial
assets measured at fair value during the financial period are recognised in other
income/(expense)-net.
- 100 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
4.1 Critical accounting estimates
(1) Measurement of expected credit losses
The Group calculates expected credit losses according to the default risk exposure and
expected credit loss rate, and determines the expected credit loss rate based on default
probability and default loss rate. In determining the expected credit loss rate, the Group uses
data such as internal historical credit loss experience, etc., and adjusts historical data based
on current conditions and forward-looking information. When considering forward-looking
information, the indicators used by the Group include the risk of economic downturn, the
expected increase in unemployment rate, the external market environment, the technological
environment and changes in customer conditions. The Group regularly monitors and reviews
assumptions related to the calculation of expected credit losses. In 2019, there was no
significant change in the above estimation techniques and key assumptions.
(2) Impairment of long term assets
The Group assesses whether there are indicators that the long term assets except for financial
assets are impaired at each balance sheet date. When there are indicators that the carrying
amounts of those long term assets are unrecoverable, an impairment test will be performed.
When the carrying amount of the long term assets except for financial assets or the cash
generating unit (“CGU”) is higher than its recoverable amount, which is the higher of an
asset’s or CGU’s fair value less costs of disposal and its value in use, the impairment
occurred.
The Group determines the fair value less costs of disposal based on discounted future cash
flow forecasts. The Group use the medium and long-term budgets of the business
development plan approved by the management as a starting point when applying the present
value technique, adjusting for market conditions.
Key judgements are made on revenue growth rate, sales price growth rate, discount rate and
long term growth rate when estimate the discounted future cash flow forecasts. The Group
uses relevant accessible information, including the production and sales volumn, relevant
market information which are based on the reasonable and supportable assumptions, to
estimate the recoverable amount of those long term assets.
- 101 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates (continued)
(3) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added
tax and consumption tax. Significant judgement is required in determining the provision for
these taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from amounts that were initial
recorded, such differences will impact the tax provisions in the period of final tax outcome.
Deferred income tax assets relating to certain temporary differences are recognised as
management considers it is probable that future taxable profit will be available against which
the temporary differences can be utilised. Where the expectation is different from the original
estimate, such differences will impact the recognition of deferred tax assets and tax in the
periods in which such estimate is changed.
As at 31 December 2019, the Group recorded deferred tax assets of approximately
RMB860,607,000. To the extent that it is probable that taxable profit will be available against
which the deductible temporary differences will be utilised, deferred tax assets are recognised
mainly for temporary differences arising from accrued expenses and retirement benefit
obligations.
(4) Provisions
The Group provides statutory warranties on automobile and undertakes to repair or replace
items that fail to perform satisfactorily based on certain pre-determined conditions.
Management estimates the related warranty claims based on historical warranty claim
information including level of repairs and returns as well as recent trends that might suggest
that past cost information may differ from future claims.
Factors that could impact the estimated claim information include the success of the Group’s
productivity and quality controls, as well as parts and labour costs. Any increase or decrease
in the provision would affect profit or loss in future years.
(5) Write-down of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The net
realisable value is estimated sales price less estimated cost to finish goods, estimated
distribution expenses and related taxes in the daily operation.
If management revises estimated sales price, estimated cost to finish goods, distribution
expenses and related taxes, and revised sales price is lower than current sales price, or
revised cost to finish goods, distribution expenses and related taxes are higher than those
current estimation, the Group needs to consider increasing the write-down provision of the
inventories.
If the actual sales price, the cost to finish goods, distribution expenses and related taxes are
higher or lower than the estimation of management, the Group will recognise the relevant
influence in profit or loss in the relevant accounting period.
- 102 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements
(1) Classification of financial assets
Significant judgements made by the Group in the classification of financial assets include
business model and analysis on contractual cash flow characteristics.
The Group determines the business model for financial assets management on the group
basis, and factors to be considered include the methods for evaluating of the financial assets
performance and reporting the financial assets performance to key management personnel,
the risks relating to the financial assets performance and corresponding management
methods, the ways in which related business management personnel are remunerated, etc.
When assessing whether contractual cash flow characteristics of financial assets are
consistent with basic lending arrangement, key judgements made by the Group include: the
possibility of changes in time schedule or amount of the principal during the lifetime due to
reasons such as repayment in advance; whether interest only include time value of money,
credit risks, other basic lending risks and considerations for costs and profits; whether the
repayment in advance reflects the principal outstanding and corresponding interest and
reasonable compensation paid for early termination of the contract.
(2) Judgement on significant increase in credit risk
Judgement made by the Group for significant increase in credit risk is mainly based on
whether the overdue days exceed 30 days, or whether one or more of the following indicators
change significantly: business environment of the debtor, internal and external credit rating,
significant changes in actual or expected operating results, significant decrease in value of
collateral or credit rate of guarantor, etc.
Judgement made by the Group for the occurrence of credit impairment is mainly based on
whether the overdue days exceed 90 days (i.e., a default has occurred), or whether one or
more of the following conditions is/are satisfied: the debtor is suffering significant financial
difficulties, the debtor is undergoing other debt restructuring, or the debtor probably goes
bankrupt, etc.
(3) Capitalisation of development costs
Development costs are capitalised when the criteria in Note 2.10(2) are fulfilled. The
assessments on whether the criteria for capitalisation of development have been met
involves the judgements of the Group, including the technical feasibility of the project, the
likelihood of the project generating sufficient future economic benefits and the timing to start
capitalisation particularly. The Group makes the judgements on the capitalisation of
development costs and recorded the process in meeting minutes based on feasibility analysis
and regular review on the development project phase etc.
- 103 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements (continued)
(4) Timing of revenue recognition
The Group sells automobiles and automobile parts to distributors and ending customers. As
prescribed in the contract, control of automobiles is transferred to the customers when the
good are out of the warehouse, while control of automobile parts is transferred when the
parts are out of the warehouse or shipped to the designate destination based on the contract
terms. The distributors and ending customers sign the delivery documents after they accept
the products. Thereafter, the distributors or ending customers control the products and have
the right to set the price, bear the risks of any obsolescence and loss of the products. The
distributors and ending customers have obtained the control of the products after accepting
the products. Therefore, the Group recognises the sales revenue of the products at the time
when the delivery documents have been signed.
(5) Sales with product warranties
The Group provides statutory warranty for automobiles and automobile parts, and the period
and terms of such warranty comply with the requirements of laws and regulations related to
the products. The Group does not provide any significant additional service for this purpose,
thus this kind of warranty does not identified as a separate performance obligation. In
addition, the Group also offers additional warranty other than the requirements of laws and
regulations, which identified as a separate performance obligation. The Group recognises the
revenue of the additional warranty over time during the period when services are rendered.
- 104 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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.
The revenue by product of the whole business as follows:
2019
Automobiles Automobile Maintenance Materials Total
parts services and others
Main business income 26,252,632 2,351,979 103,583 - 28,708,194
-Recognition at a
point in time 26,252,632 2,351,979 - - 28,604,611
-Recognition over
time - - 103,583 - 103,583
Other business income - - - 465,442 465,442
26,252,632 2,351,979 103,583 465,442 29,173,636
2018
Automobiles Automobile Maintenance Materials Total
parts services and others
Main business income 25,178,860 2,696,240 71,799 - 27,946,899
-Recognition at a
point in time 25,178,860 2,696,240 - - 27,875,100
-Recognition over
time - - 71,799 - 71,799
Other business income - - - 302,441 302,441
25,178,860 2,696,240 71,799 302,441 28,249,340
As at 31 December 2019, the expected revenue of unsatisfied performance obligations from
signed contract is RMB102,110,000. The Group will recognise the revenue from 2020 to 2025.
- 105 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
5 Revenue and segment information (continued)
The Group has recognised the following assets and liabilities related to contracts with customers:
31 December 2019 31 December 2018
Contract liabilities
Automobiles and automobile parts 227,774 212,246
Maintenance services and additional warranty 102,110 92,838
Total contract liabilities 329,884 305,084
Less: non-current liabilities (61,714) (38,382)
Total current contract liabilities 268,170 266,702
During 2019, the amount of the Group's contract liabilities which was recorded at the opening
balance and have been recognised as revenue was RMB257,892,000 (2018: RMB135,928,000),
in which RMB212,246,000 (2018: RMB110,470,000) from automobiles and automobile parts, and
RMB45,646,000 (2018: RMB25,458,000) from maintenance services have been recognised in
revenue in 2019.
6 Expenses by nature
2019 2018
Changes in inventories of finished goods and
work in progress 185,846 (197,140)
Raw materials and consumables used 21,393,300 21,532,654
Employee benefit expense (Note 7) 2,333,270 2,233,351
Depreciation of PPE (Note 12, 29) 969,479 925,888
Repairs and maintenance expenditure on PPE 149,051 160,692
Transportation expenses 699,933 656,297
Amortisation of lease prepayment (Note 13, 29) 16,250 15,574
Amortisation of intangible assets (Note 15, 29) 73,930 55,737
Amortisation of right-of-use assets (Note 14, 29) 12,770 —
Provision of statutory warranty (Note 26) 383,568 291,471
Design fees 578,196 469,174
Sales promotion expenses 276,225 326,215
Advertising and new product planning expenses 404,920 194,932
Provision for inventories write-down (Note 19) 67,041 53,651
Others 1,311,889 1,407,343
Total cost of sales, distribution expenses and
administrative expenses 28,855,668 28,125,839
- 106 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
2019 2018
Wages and salaries 1,665,646 1,577,058
Social security costs 240,658 225,163
Pension costs defined contribution plans 247,078 267,737
Pension costs defined benefit plans (Note 25) 3,400 9,200
Others 176,488 154,193
2,333,270 2,233,351
The employees of the Group participated in a retirement benefit plan organised by the
municipal and provincial governments under which the Group was required to make defined
contributions monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In
accordance with the Group’s early retirement programs, the Group was also committed to
make periodic benefit payments to certain early-retired employees until they reach their legal
retirement ages.
8 Other income
2019 2018
Government grants (a) 466,818 398,427
Net fair value (losses)/ gains on derivative
financial instruments (1,525) 9,472
Net loss on disposal of derivative financial
instruments (9,087) (7,200)
Others 36,095 25,979
492,301 426,678
(a) In 2019, the Group received grants of approximately RMB466,818,000 mainly from
Economic Development District Administrative Commission of Xiaolan and the Finance
Bureau of Economic, Transformation and Comprehensive Reform Demonstration Zone
Administrative Commission of Shanxi. Those grants were income related government grants
to support the Group’s operation.
9 Finance income and expenses
2019 2018
(a) Finance income
Interest income on bank deposits 193,072 169,036
Interest income on credit sales 10,878 19,400
203,950 188,436
(b) Finance expenses
Interest expense on bank loans (947) (217)
Interest for lease liabilities (1,957) —
Bank charges and others (5,402) (5,632)
(8,306) (5,849)
Net finance income 195,644 182,587
- 107 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation
(1) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2018, the Company is entitled to a preferential CIT rate of 15% from 2018
to2020 (2018: 15%). The CIT rates of JMCH, Jiangling Motor Sales Co., Ltd. (“JMCS”),
Shenzhen Fujiang New Energy Automobile Sales Co., Ltd. (“SZFJ”), Guangzhou Fujiang New
Energy Automobile Sales Co., Ltd. (“GZFJ”)and Xiamen Fujiang New Energy Automobile
Sales Co., Ltd. (“XMFJ”), the subsidiaries of the Company, are 25%.
The amounts of income tax expense charged to profit or loss represented:
2019 2018
Current tax 74,962 213
Deferred tax (Note 18) (117,789) (52,407)
(42,827) (52,194)
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:
2019 2018
Profit before tax 104,985 39,639
Tax calculated at tax rates applicable to profits in
the respective companies (18,226) (29,654)
Tax concessions (9) (69)
Expenses not deductible for tax purposes 588 561
R&D costs deduction (151,181) (151,581)
Income not subject to tax (984) (336)
Effect of different tax rates applied for the periods in
which the temporary differences are expected to
reverse 37,703 32,929
Utilisation of previously temporary differences for
which no deferred income tax asset was recognised (17,341) -
Temporary differences for which no deferred income
tax asset was recognised - 29,948
Tax losses for which no deferred income tax asset
was recognised 106,623 66,008
Tax credit (42,827) (52,194)
The tax credit relating to other comprehensive income is as follows:
2019 2018
Before Tax After Before Tax After
tax credit tax tax credit tax
Actuarial loss on retirement
benefit obligations (1,623) 406 (1,217) (4,590) 1,148 (3,442)
Other comprehensive income (1,623) 406 (1,217) (4,590) 1,148 (3,442)
Current tax - -
Deferred tax (Note 18) 406 1,148
- 108 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(2) Value-added tax (“VAT”)
Pursuant to the “Notice on policies about deepening the VAT reformation” (Cai Shui [2019]
39) jointly issued by the Ministry of Finance, the State Administration of Taxation and General
Administration of Customs, the Group's taxable products sales income applicable VAT rate is
13% from 1 April 2019, while the VAT rate was 16% before then. The VAT rate applicable to
the Group's transportation business is 9% from 1 April 2019, while the VAT rate was 10%
before then.
(3) Consumption Tax (“CT”)
The Group’s automobile sale is subject to CT at 3%, 5% or 9% on the selling price of goods.
11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the
Company by the weighted average number of ordinary shares in issue during the year.
2019 2018
Profit attributable to shareholders of the
Company 147,812 91,833
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 0.17 0.11
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the year ended 31 December 2019.
- 109 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Automobiles Moulds other equipment constructions Total
At 1 January 2018
Cost 2,084,217 3,954,028 280,071 2,411,080 3,137,100 678,684 12,545,180
Accumulated depreciation and impairment (414,792) (1,935,093) (144,009) (1,608,649) (1,727,441) (1,108) (5,831,092)
Net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
Year ended 31December 2018
Opening net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
Additions - - - - - 1,214,241 1,214,241
Transfers 101,202 97,601 21,936 176,549 199,671 (596,959) -
Disposals (56) (1,164) (1,188) (5,986) (688) (7) (9,089)
Reclassification 2,965 (143,415) 29,462 3,871 107,117 - -
Other deductions - (10,119) - - (2,647) (32,151) (44,917)
Impairment charge(Note29) - (2,832) (478) - (3,478) (355) (7,143)
Depreciation charge (Note 6,29) (51,781) (246,570) (37,514) (252,144) (337,879) - (925,888)
Closing net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
At 31 December 2018
Cost 2,188,306 3,837,053 326,799 2,556,744 3,376,670 1,263,392 13,548,964
Accumulated depreciation and impairment (466,551) (2,124,617) (178,519) (1,832,023) (2,004,915) (1,047) (6,607,672)
Net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
Year ended 31December 2019
Opening net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292
Additions - - - - - 1,438,059 1,438,059
Transfers 108,106 76,241 35,369 495,716 327,340 (1,042,772) -
Disposals (902) (5,091) (2,555) - (638) (10) (9,196)
Other deductions - (6,387) - - (285) (159,497) (166,169)
Impairment charge(Note29) - (19,164) (114) - (2,615) - (21,893)
Depreciation charge (Note 6,29) (54,239) (241,534) (35,027) (287,690) (350,989) - (969,479)
Closing net book amount 1,774,720 1,516,501 145,953 932,747 1,344,568 1,498,125 7,212,614
At 31 December 2019
Cost 2,294,038 3,820,738 350,351 3,030,591 3,672,244 1,498,816 14,666,778
Accumulated depreciation and impairment (519,318) (2,304,237) (204,398) (2,097,844) (2,327,676) (691) (7,454,164)
Net book amount 1,774,720 1,516,501 145,953 932,747 1,344,568 1,498,125 7,212,614
- 110 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the year ended 31 December 2019, depreciation expense of approximately
RMB790,993,000 (2018: RMB761,189,000) has been charged in cost of sales, RMB3,260,000
(2018: RMB3,099,000) in distribution costs and RMB175,226,000 (2018: RMB161,600,000) in
administrative expenses.
(i) Temporarily idle property, plant and equipment
As at 31 December 2019, property, plant and equipment with book value of approximately
RMB6,377,000 (cost of RMB155,508,000) (31 December 2018: book value of approximately
RMB2,497,000 (cost of RMB56,727,000)) were temporarily idle due to product process
adjustment. The specific analysis is as follows:
Accumulated Net
Cost depreciation Impairment book amount
Plant and Machinery 122,154 - (102,459) - (15,052) - 4,643
Motor Automobiles 2,658 - (2,171) - (120) - 367
Electronic and other equipment 30,696 - (26,676) - (2,653) - 1,367
155,508 - (131,306) - (17,825) - 6,377
(ii) Property, plant and equipment not yet obtained proper certificate
Net book amount Reasons for not completing proper certificate
Buildings 961,428 Procedure not yet completed
(iii) Impairment assessment on the cash generating unit ("CGU”)
The subsidiary of the Company JMCH has incurred accumulated losses which indicates there
may be impairment on the long term assets. The management considers JMCH as a CGU to
perform the impairment testing. Please refer to note 15 for the testing method and key
assumptions. Based on the testing result, no impairment recognised on the property, plant and
equipment of JMCH.
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:
31 December 2019 31 December 2018
Opening net book amount 601,260 616,834
Additions 134,685 -
Amortisation charge (Note 6,29) (16,250) (15,574)
Closing net book amount 719,695 601,260
Cost 886,310 751,626
Accumulated amortisation (166,615) (150,366)
Net book amount 719,695 601,260
Amortisation expense was charged in administrative expenses.
- 111 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Leases
This note provides information for leases where the group is a lessee.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
31 December 2019 1 January 2019
Right-of-use assets
Buildings 36,040 23,150
Lease liabilities
Current 13,387 3,913
Non-current 22,592 19,237
35,979 23,150
The Group has land lease arrangement with Chinese government as disclosed in Note 13.
Additions to the right-of-use assets during the 2019 financial year were RMB25,660,000.
(ii) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Notes 2019 2018
Depreciation charge of right-of-use assets
Buildings 12,770 —
Interest expense (included in finance cost) 9 1,957 —
Expense relating to short-term and low-value
assets leases (included in cost of goods sold and
distribution expenses) 6,093 —
The total cash outflow for leases in 2019 was RMB20,881,000.
(iii) The Group’s leasing activities and how these are accounted for
The Group leases various offices, warehouses and apartments. Rental contracts are typically
made for fixed periods of 12 months to 5 years without extension or termination options. Lease
terms are negotiated on an individual basis. The lease agreements do not impose any
covenants in relation to security interests in the leased assets that are held by the lessor.
Leased assets are not used as security for borrowing purposes. The Group did not provide any
residual value guarantees in relation to lease assets.
- 112 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15 Intangible assets
Non-patent After-sale
technology Software Goodwill management model Other Total
Year ended 31December 2018
Opening net book amount 146,556 47,842 3,462 - - 197,860
Addition 71,814 32,152 - - - 103,966
Disposals - (63) - - - (63)
Amortisation charge (Note 6, 29) (38,952) (16,785) - - - (55,737)
Closing net book amount 179,418 63,146 3,462 - - 246,026
At 31 December 2018
Cost 254,412 152,014 89,028 36,978 1,649 534,081
Accumulated amortisation and impairment (74,994) (88,868) (85,566) (36,978) (1,649) (288,055)
Net book amount 179,418 63,146 3,462 - - 246,026
Year ended 31December 2019
Opening net book amount 179,418 63,146 3,462 - - 246,026
Addition 160,757 24,812 - - - 185,569
Impairment charge - - (3,462) - - (3,462)
Amortisation charge (Note 6, 29) (53,500) (20,430) - - - (73,930)
Closing net book amount 286,675 67,528 - - - 354,203
At 31 December 2019
Cost 415,169 176,542 89,028 36,978 1,649 719,366
Accumulated amortisation and impairment (128,494) (109,014) (89,028) (36,978) (1,649) (365,163)
Net book amount 286,675 67,528 - - - 354,203
- 113 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15 Intangible assets (continued)
(i) For the year ended 31 December 2019, amortisation expense of approximately
RMB73,088,000 (2018: RMB54,860,000) was charged in administrative expenses,
RMB502,000 (2018: RMB537,000) in cost of sales and RMB340,000 (2018: RMB340,000) in
distribution costs.
(ii) Development cost of approximately RMB160,757,000(2018: RMB71,814,000) were capitalised
by the Group during the year ended 31 December 2019.
(iii) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the
cash generating unit level. The goodwill is allocated to the CGU:
31 December 2018 Addition Impairment 31 December 2019
JMCH 3,462 - (3,462) -
The recoverable amount of the CGU is determined based on fair value less costs of disposal.
These calculations use after-tax cash flow projections based on financial budgets approved by
management covering a seven-year period according to the medium and long-term budgets for
the business development plan approved by the management. Adjustments for market
conditions are also considered for the forecast. Cash flows beyond the seven-year period are
extrapolated using the estimated long term growth rate stated below. The long term growth rate
does not exceed the average growth rate for the heavy duty automobile business in which the
CGU operates.
The key assumptions used for calculations in 2019 are as follows:
Item JMCH
Revenue growth rate 61%
Sales price growth rate 0%
Long term growth rate 3%
Discount rate 16.50%
The key assumptions used for calculations in 2018 were as follows :
Item JMCH
Revenue growth rate 84%
Sales price growth rate 0%
Long term growth rate 3%
Discount rate 19.10%
The key assumptions used and forecast period are consistent with the heavy duty automobile
industry.
The discount rates used are after-tax and reflect specific risks relating to the relevant operating
subsidiary.
The fair value measurement is categorised in level 3 of the fair value hierarchy.
- 114 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Financial instruments by category
The Group holds the following financial instruments:
Financial assets Notes 31 December 2019 31 December 2018
Financial assets at amortised cost
Trade receivables 20 2,208,236 2,674,650
Notes receivables 20 85,816 626,509
Other receivables 20 83,890 84,588
Interest receivables 20 32,093 37,923
Cash and cash equivalents 21 8,937,937 7,616,880
Financial assets at fair value through
other comprehensive income
Notes receivables 289,044 6,246
Financial assets at fair value through
profit or loss
Derivative financial instruments - 979
11,637,016 11,047,775
Financial liabilities Notes 31 December 2019 31 December 2018
Liabilities at amortised cost
Trade and other payables(exclude
payroll and welfare payables, other
tax payables related) 27 12,292,836 11,658,259
Borrowings 24 3,655 4,044
Lease liabilities 14 35,979 —
Financial liabilities at fair value through
profit or loss
Derivative financial instruments 546 -
12,333,016 11,662,303
The Group’s exposure to various risks associated with the financial instruments is discussed in
Note 3. The maximum exposure to credit risk at the end of the reporting period is the carrying
amount of each class of financial assets mentioned above.
- 115 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date of Percentage of
Entity incorporation equity interest held Principal activities
JMCH Taiyuan, PRC Manufacture and sale of
/8 January 2013 100% automobiles and spare parts
JMCS Nanchang, PRC Sale of automobiles and
/11 October 2013 100% spare parts
SZFJ Shenzhen, PRC Sale of automobiles and
/3 May 2018 100% spare parts
GZFJ Guangzhou, PRC Sale of automobiles and
/15 June 2018 100% spare parts
XMFJ Xiamen, PRC Sale of automobiles and
/20 June 2018 100% spare parts
In October 2019, the Group has closed XMFJ according to the Board Meeting on 15 October
2019.
17b Investments accounted for using the equity method
(i) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow:
31 December 2019 31 December 2018
Associate 40,935 40,112
The amount recognised in the consolidated statement of comprehensive income was as follow:
2019 2018
Share of profit 823 2,238
The Company holds 19.15% interest of Hanon Systems (Nanchang) Co., Ltd. (“Hanon
Systems”) and the investment is accounted for using the equity method of accounting.
(ii) Reconciliation of summarised financial information of the associate
2019 2018
At beginning of the year 209,460 197,774
Profit for the year 4,298 11,686
At end of the year 213,758 209,460
Interest in associate 19.15% 19.15%
Carrying value 40,935 40,112
- 116 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Deferred income tax
31 December 2019 31 December 2018
Deferred tax assets 1,128,122 926,630
Deferred tax liabilities-can be offset (267,515) (183,534)
Deferred tax liabilities-cannot be offset (25,340) (26,024)
Deferred tax assets-net 860,607 743,096
Deferred tax liabilities-net (25,340) (26,024)
The gross movement on the deferred income tax account is as follows:
31 December 2019 31 December 2018
At beginning of the year 717,072 663,517
Credited to profit or loss(Note 10(i)) 117,789 52,407
Credited to other comprehensive income
(Note 10(i)) 406 1,148
At end of the year 835,267 717,072
The movement in deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Accrued
expenses
and Amortization
Provision for Retirement provision of non-
impairment of benefits for statutory patented Tax
Deferred tax assets assets obligation warranty technology losses Others Total
At 1 January 2018 12,149 13,543 723,387 4,505 - 4,293 757,877
Credited/(charged) to
profit or loss 4,549 1,405 (18,816) 4,869 178,791 (3,193) 167,605
Credited to other
comprehensive income - 1,148 - - - - 1,148
At 31 December 2018 16,698 16,096 704,571 9,374 178,791 1,100 926,630
Credited to profit or loss 22,770 135 98,327 6,688 59,704 13,462 201,086
Credited to other
comprehensive income - 406 - - - - 406
At 31 December 2019 39,468 16,637 802,898 16,062 238,495 14,562 1,128,122
Amortisation
of intangible PPE Fair value
Deferred tax liabilities assets depreciation gains Others Total
At 1January2018 (3,545) (64,079) (26,736) - (94,360)
Credited/(charged)to
profit or loss (841) (114,922) 712 (147) (115,198)
At 31 December 2018 (4,386) (179,001) (26,024) (147) (209,558)
(Charged)/credited to
profit or loss (2,582) (81,406) 684 7 (83,297)
At 31 December 2019 (6,968) (260,407) (25,340) (140) (292,855)
- 117 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Deferred income tax (continued)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
31 December 2019 31 December 2018
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 272,129 203,802
–Deferred tax asset to be recovered
within 12 months 855,993 722,828
1,128,122 926,630
31 December 2019 31 December 2018
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (245,492) (182,373)
–Deferred tax liabilities to be recovered
within 12 months (47,363) (27,185)
(292,855) (209,558)
Deductible temporary differences and tax losses which no deferred income tax assets were
recognised were as follows:
31 December 2019 31 December 2018
Deductible temporary differences 165,068 234,433
Tax losses 1,006,172 603,033
1,171,240 837,466
The expiry years of the tax losses are as follows:
31 December 2019 31 December 2018
2020 72,470 72,470
2021 115,820 115,820
2022 150,713 150,713
2023 240,678 264,030
2024 426,491 -
1,006,172 603,033
- 118 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Inventories
31 December 2019 31 December 2018
Raw materials 1,164,301 1,553,135
Work in progress 158,083 211,490
Finished goods 624,485 757,729
1,946,869 2,522,354
For the year ended 31 December 2019, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB21,579,146,000 (2018:
RMB21,121,474,000).
Movement on the provision for inventories write-down is as follows:
31 December 2019 31 December 2018
At beginning of the year (76,815) (45,130)
Provision for inventories write-down (Note
29) (67,041) (53,651)
Inventories written off during the year as
uncollectible 60,533 21,966
At end of the year (83,323) (76,815)
20 Trade and other receivables and prepayments
31 December 2019 31 December 2018
Trade receivables 2,362,311 2,696,928
Less: Provision for impairment of trade
receivables (154,075) (22,278)
Trade receivables – net 2,208,236 2,674,650
Notes receivables 85,816 626,509
Other receivables 84,237 85,031
Less: Provision for impairment of other
receivables (347) (443)
Other receivables – net 83,890 84,588
Prepayments 1,311,667 1,158,303
-Material payment in advance 517,124 525,777
-Advance payment of taxes and surcharges 794,543 632,048
-Others - 478
Deductible VAT input tax 178,883 96,311
Interest receivables 32,093 37,923
3,900,585 4,678,284
Refer to Note 32 for details of receivables from related parties.
The carrying amounts of trade and other receivables approximate their fair values.
- 119 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
20 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2019 31 December 2018
At beginning of the year (22,721) (21,674)
Net Provision for receivables impairment
(Note 29) (131,701) (1,089)
Receivables written off during the year as
uncollectible - 42
At end of the year (154,422) (22,721)
For the year ended 31 December 2019, the creation of provision for impaired receivables was
included in ‘Net expected credit losses on financial assets’ (2018: ‘Net expected credit losses
on financial assets’) in profit or loss.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of
receivable mentioned above. The Group does not hold any collateral as security.
21 Cash and cash equivalents
31 December 2019 31 December 2018
Cash at bank and in hand 6,887,937 2,016,859
Short-term bank deposits (a) 2,050,000 5,600,021
8,937,937 7,616,880
As at 31 December 2019 and 31 December 2018, all bank deposits arein RMB.
As at 31 December 2019, the Group had cash of approximately RMB967,750,000 (2018:
RMB833,617,000) deposited in Jiangling Motor Group Finance Company (“JMCF”) (Note 32
(ix)). The interest rates range from 0.455%-3.30% per annum (2018: 0.455%-2.25%). JMCF, a
non-bank financial institution, is a subsidiary of JMCG.
(a) Short-term bank deposits can be withdrawn at the discretion of the Group without any
restriction.
- 120 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Share capital
Number of Tradable shares
shares “A” shares “B” shares Total
(thousands) Restricted Non-restricted
Year ended 31 December 2018
Balance at 1 January 2018 863,214 907 518,307 344,000 863,214
Transfer - (120) 120 - -
Balance at 31 December 2018 863,214 787 518,427 344,000 863,214
Year ended 31 December 2019
Balance at 1 January 2019 863,214 787 518,427 344,000 863,214
Transfer - (36) 36 - -
Balance at 31 December 2019 863,214 751 518,463 344,000 863,214
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, 751,000 shares
were still restricted as at 31 December 2019.
- 121 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
At 1 January 2018 431,607 18,627 680 450,914
Other comprehensive income
-Remeasurements of retirement
benefit obligation , net of tax - - (3,442) (3,442)
At 31 December 2018 431,607 18,627 (2,762) 447,472
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,217) (1,217)
At 31 December 2019 431,607 18,627 (3,979) 446,255
(a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of
the Company, it is required to appropriate 10% of its annual net profit, after offsetting any prior
years’ losses as determined under the Accounting Standards for Business Enterprises in the
PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance
of the statutory surplus reserve fund reaches 50% of the Company’s share capital, any further
appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be
used to offset prior years’ losses, if any, and may be converted into share capital by issuing
new shares to shareholders in proportion to their existing shareholding or by increasing the par
value of the shares currently held by them. The fund is non-distributable except for liquidation.
As the balance of the statutory surplus reserve fund has reached 50% of the Company’s share
capital, no further appropriations to the statutory surplus reserve fund were provided for the
years ended 31 December 2018 and 2019.
24 Borrowings
31 December 2019 31 December 2018
Current
Bank borrowings - guaranteed (a) 457 449
Non-current
Bank borrowings - guaranteed (a) 3,198 3,595
Total borrowings 3,655 4,044
(a) Bank borrowings of USD524,000 (equivalent to approximately RMB3,655,000 (2018:
USD589,000 (equivalent to approximately RMB4,044,000)) were guaranteed by JMCF (Note
32 (iii)).
The interest rate of bank borrowings is 1.50% per annum (2018: 1.50%).
The fair value of borrowings approximates their carrying values.
- 122 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2019 31 December 2018
Between 1 and 2 years 458 449
Between 2 and 5 years 1,370 1,348
Over 5 years 1,370 1,798
3,198 3,595
The Group has the following undrawn borrowing facilities:
31 December 2019 31 December 2018
Fixed rate
- Expiring within one year 1,989,507 2,270,784
25 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the
consolidated statement of financial position is as follows:
31 December 2019 31 December 2018
Present value of defined benefits obligations 68,441 68,020
The movement of early retirement and supplemental benefit obligations for the year ended31
December 2019 is as follows:
31 December2019 31 December2018
At beginning of the year 68,020 59,184
For the year
-Current service cost 1,203 1,315
-Interest cost 2,300 2,410
-Payment (4,602) (4,954)
-Past service cost from the change of plan (1,523) 2,386
-Actuarial loss 3,043 7,679
At end of the year 68,441 68,020
Current 4,756 4,595
Non-current 63,685 63,425
68,441 68,020
The material actuarial assumptions used in valuing these obligations are as follows:
(i) Discount rate adopted: 3.5% (2018: 3.5%)
(ii) Inflation rate adopted: 2.0% (2018: 2.0%)
(iii) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post:0% to 6% (2018: 0% to 6% )
- 123 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
25 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2019, a
provision of RMB68,441,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB68,441,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,756,000 (2018:
RMB4,595,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Change in assumption Impact on overall liability
Discount rate Increase/decrease by 0.5% Decrease/increase by 5.6%/6.3%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 2.4%/2.1%
For the year ended 31 December 2019, approximately RMB3,400,000 (2018: RMB9,200,000)
were charged in ‘administrative expenses’ and RMB1,623,000 (2018: RMB4,590,000) were
charged in other comprehensive income.
26 Provisions for statutory warranty
The movement on the statutory warranty provisions and other liabilities is as follows:
31 December 2019 31 December 2018
At beginning of the year 352,554 374,981
Charged for the year (Note 6) 383,568 291,471
Utilised during the year (334,487) (313,898)
At end of the year 401,635 352,554
Analysis of total provisions:
31 December 2019 31 December 2018
Non-current 166,687 151,492
Current 234,948 201,062
401,635 352,554
The above represents
thestatutorywarrantyprotectingcustomerfromfaultsthatariseaftertheproducthasbeentransferredtoth
ecustomer. The statutory warranty is estimated based on prior years’ experience on the
occurrence of such cost.
- 124 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
27 Trade and other payables
31 December 2019 31 December 2018
Notes payables(i) 31,400 -
Trade payables 8,116,170 7,824,908
Payroll and welfare payables 380,791 304,322
Dividend payables 6,790 6,790
Other tax payables related 153,369 233,385
Payables of sales rebates 1,848,584 1,714,485
Payables of R&D expenses 1,016,588 828,807
Others 1,273,304 1,283,269
12,826,996 12,195,966
(i) A book value of RMB31,400,000 bank notes payables was pledged by a book value of
RBM34,197,000 bank notes received.
Refer to Note 32 for details of amount due to related parties.
28 Dividends
A final dividend for 2018 of RMB34,528,560 (RMB0.04 per share) was paid in 2019.
29 Cash generated from operations
2019 2018
Profit before tax 104,985 39,639
Depreciation of PPE (Note 6, 12) 969,479 925,888
Amortisation of lease prepayment (Note 6, 13) 16,250 15,574
Amortisation of intangible assets (Note 6, 15) 73,930 55,737
Amortisation of right-of-use asset 12,770 —
Impairment charges of PPE (Note 12) 21,893 7,143
Impairment charges of goodwill (Note 15) 3,462 -
Net provision for receivables impairment (Note 20) 131,701 1,089
Provision of inventories (Note 19) 67,041 53,651
Loss/(gain)on disposals of PPE 4,213 (26,953)
Finance expenses (Note 9) 7,420 5,111
Finance income (Note 9) (203,950) (188,436)
Net foreign exchange transaction loss 6,138 18,921
Share of profit from investment accounted for using
equity method (Note 17b) (823) (2,238)
Investment gain of finance asset investment (47,386) (18,191)
Investment loss of forwards exchange contracts 9,087 7,200
Changes on fair value of forwards exchange
contracts 1,525 (9,472)
Net provisions for statutory warranty 49,081 (22,427)
Changes in working capital:
- Decrease/(Increase) in inventories 464,079 (289,820)
- Decrease/(Increase) in trade and other receivables 226,027 (233,475)
- Increase/(decrease) in trade and other payables 821,326 (347,367)
- (Decrease)/increase in pensions and other
retirement benefits (1,202) 4,246
Cash generated from operations 2,737,046 (4,180)
- 125 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
30 Contingencies
At 31 December 2019, the Group did not have any significant contingent liabilities.
31 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
31 December 2019 31 December 2018
Contracted but not provided for:
Purchases of buildings, plant and machinery 701,817 1,095,333
- 126 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
In 2019, Jiangling Motor Holdings Co., Ltd. (hereinafter referred to as “JMH”), one of the major
shareholders of the Company, divided into two companies, Nanchang Jiangling Investment
Co., Ltd. (hereinafter referred to as “JIC”) and Jiangling Motor Holdings Co., Ltd. (JMH as the
existing company). After the division, JMH transferred all the shares of the Company to JIC,
JIC became the new shareholder of the Company and owns 41.03% of the Company’s shares.
JIC, 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 31
December 2019. The shareholders of JIC are Chongqing Changan Automobile Corporation
Ltd. and JMCG, and both of them hold 50% equity interest of JIC, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, JMCG and its subsidiaries, JIC and its subsidiaries and joint venture, Ford and its
subsidiaries and joint venture in the ordinary course of business during the year ended 31
December 2019.
For the year ended 31 December 2019, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JIC
Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Associate of JMCG
Ltd.
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd. Associate of JMCG
JMH Associate of JMCG
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Co., Ltd. Associate of JMCG
Nanchang Hengou Industry Co., Ltd. Associate of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Associate of JMCG
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Associate of JMCG
Jiangxi Jiangling Overseas Automobile Sales and Service Associate of JMCG
Co., Ltd.
Jiangxi Lingyun Automobile Industry Technology Co.,Ltd Associate of JMCG
Jiangxi JMCG Motorhome Co., Ltd. Associate of JMCG
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. Joint venture of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd. Joint venture of JMCG
Nanchang Unistar Electric & Electronics Co., Ltd. Joint venture of JMCG
Nanchang Yinlun Heat-exchanger Co., Ltd. Joint venture of JMCG
Jiangxi ISUZU Engine Co., Ltd. Joint venture of JMCG
Jiangxi ISUZU Co., Ltd. Joint venture of JMCG
Dali Wanfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
Yunan Wanfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
Beijing Beifang Changfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
China Changan Group Hefei Investing Co., Ltd. Subsidiary of JIC’s shareholder
Chongqing Anfu Vehicle Marketing Co., Ltd. Subsidiary of JIC’s shareholder
Guizhou Wanfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
- 127 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
Chengdu Wanxing Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
Chongqing Anbo Vehicle Sales Co., Ltd. Subsidiary of JIC’s shareholder
Beijing Baiwang Changfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
Honghe Wanfu Vehicle Sales & Service Co., Ltd. Subsidiary of JIC’s shareholder
China Changan Group Tianjin Sales Co., Ltd. Subsidiary of JIC’s shareholder
Chengdu Wanyou Vehicle Trade & Service Co., Ltd. Subsidiary of JIC’s shareholder
Chongqing Wanyoulongrui Vehicle Sales & Service Co., Subsidiary of JIC’s shareholder
Ltd.
Changan Ford Automobile Co., Ltd. Joint venture of Ford
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Jiangling Material Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Jiangxi Lingrui Recycling Resources Development Subsidiary of JMCG
Corporation
JMCG Property Management Co. Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG
JMCF Subsidiary of JMCG
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Jiangling Aowei Automobile Spare Part Co., Ltd. Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Boya brake system Co., Ltd Subsidiary of JMCG
NC.Gear Forging Factory Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Frame Co., Ltd Subsidiary of JMCG
Jiangling Motor Electricity Vehicle Sales Co.,Ltd Subsidiary of JMCG
Jiujiang Fuwantong Vehicle Co., Ltd. Subsidiary of JMCG
Jiangxi Fuxiang Vehicle Co., Ltd. Subsidiary of JMCG
Yichun Xinfu Vehicle Co., Ltd. Subsidiary of JMCG
Ji'an Qingyuan District Yongfuda Vehicle Co., Ltd. Subsidiary of JMCG
Ford Global Technologies,LLC Subsidiary of Ford
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Otomotiv Sanayi A.S. Subsidiary of Ford
Auto Alliance (Thailand) Co., Ltd. Subsidiary of Ford
Ford Vietnam Limited Subsidiary of Ford
- 128 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services
Purchase of goods 2019 2018
Nanchang Baojiang Steel Processing Distribution Co., Ltd. 809,328 922,454
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. 751,248 515,419
Jiangxi Jiangling Chassis Co., Ltd. 719,675 864,932
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 712,789 782,403
GETRAG (Jiangxi) Transmission Company 707,209 791,365
Jiangxi Jiangling Lear Interior System Co., Ltd. 525,146 454,604
Ford 485,394 623,631
Nanchang JMCG Liancheng Auto Component Co., Ltd. 372,578 418,722
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. 313,890 195,453
Nanchang Unistar Electric & Electronics Co., Ltd. 245,138 298,128
Nanchang JMCG Shishun Logistics Co., Ltd. 236,929 10,097
Hanon Systems 188,064 250,486
JMCG 112,289 110,093
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd. 98,454 91,976
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. 67,682 63,649
Nanchang Lianda Machinery Co., Ltd. 64,025 69,827
Nanchang Yinlun Heat-exchanger Co., Ltd. 63,097 53,976
JMH 46,379 12,484
Ford Otomotiv Sanayi A.S. 28,954 128,341
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 27,249 42,967
Jiangling Material Co., Ltd. 27,155 30,399
Jiangxi JMCG Specialty Vehicles Co., Ltd. 26,778 192,509
Jiangling Aowei Automobile Spare Part Co., Ltd. 23,172 26,464
Jiangxi JMCG Industry Co., Ltd. 22,175 17,581
Auto Alliance (Thailand) Co., Ltd. 22,015 106,035
- 129 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of goods (continued) 2019 2018
Nanchang JMCG Xinchen Auto Component Co., Ltd. 16,109 18,297
Jiangxi Lingyun Automobile Industry Technology Co.,Ltd 13,910 -
Jiangxi ISUZU Engine Co., Ltd. 13,362 49,911
Nanchang Gear Co., Ltd. 12,368 15,420
Jiangxi Lingrui Recycling Resources Development Corporation 8,692 4,378
Jiangxi Biaohong Engine Tappet Co., Ltd. 6,483 6,649
Jiangxi JMCG Boya brake system Co., Ltd 6,005 -
Changan Ford Automobile Co., Ltd. 5,574 10,993
NC.Gear Forging Factory 3,296 13,240
Jiangxi JMCG Shangrao Industrial Co., Ltd. 3,083 4,235
Nanchang JMCG Skyman Auto Component Co., Ltd. (a) - 50,852
Others 150 211
6,785,844 7,248,181
(a) In December 2018, JMH absorbed Nanchang JMCG Skyman Auto Component Co.,Ltd.
The Group purchased goods from related parties classified as two types: import parts and
home-made parts.
Purchase import parts from Ford or Ford’s suppliers, based on agreed price;
Purchase home-made parts from other related parts, based on quotation, cost accounting
and negotiation.
- 130 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction 2019 2018
Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 277,648 247,762
Ford Global Technologies,LLC Royalty fee 239,856 186,454
Ford Engineering service and design 217,224 183,983
Changan Ford Automobile Co., Ltd. Channel fee/Design fee/Labor costs 114,469 16,509
Ford Otomotiv Sanayi A.S. Engineering service and design 49,341 42,734
Jiangxi JMCG Industry Co., Ltd. Accommodation fee/dinning fee 29,240 35,249
Ford Secondments costs 29,161 36,965
Ford Otomotiv Sanayi A.S. Royalty fee 17,862 24,868
Nanchang Hengou Industry Co., Ltd. Packing/Truckage 11,649 47,407
Ford Motor (China) Co., Ltd. Regional personnel costs 8,271 9,572
JMH Secondments costs/Labor fee 8,248 2,054
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Regional personnel costs 7,906 3,508
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business/software cost 7,683 4,431
Ford Otomotiv Sanayi A.S. Secondments costs 5,829 13,396
JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 4,683 16,830
JMCG Property Management Co. Property management 2,413 2,100
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Promotion 2,278 -
GETRAG (Jiangxi) Transmission Company Design fee/Experimental costs 753 9,546
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Promotion - 6,968
- 131 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services (continued) Natures of transaction 2019 2018
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Design fee - 3,256
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Promotion - 2,304
Jiangxi JMCG Motorhome Co., Ltd. Promotion - 1,855
Others 4,413 2,667
1,038,927 900,418
The Group purchased the service from related parties based on agreement price.
- 132 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Sales of goods 2019 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,093,234 1,228,471
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 142,293 94,214
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. 133,144 155,313
Jiangxi Lingrui Recycling Resources Development Corporation 81,514 69,005
Jiangxi JMCG Specialty Vehicles Co., Ltd. 75,666 102,068
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 60,985 85,326
Jiangxi Jiangling Chassis Co., Ltd. 51,280 74,362
Dali Wanfu Vehicle Sales & Service Co., Ltd. 50,109 -
JMCG Jingma Motors Co., Ltd. 49,619 66,197
Nanchang JMCG Liancheng Auto Component Co., Ltd. 38,951 51,945
Yunan Wanfu Vehicle Sales & Service Co., Ltd. 26,020 -
Beijing Beifang Changfu Vehicle Sales & Service Co., Ltd. 25,576 -
China Changan Group Hefei Investing Co., Ltd. 24,232 -
Nanchang JMCG Shishun Logistics Co., Ltd. 23,967 671
Chongqing Anfu Vehicle Marketing Co., Ltd. 20,914 -
Guizhou Wanfu Vehicle Sales & Service Co., Ltd. 18,766 -
Chengdu Wanxing Vehicle Sales & Service Co., Ltd. 16,965 -
Jiujiang Fuwantong Vehicle Co., Ltd. 16,960 -
Chongqing Anbo Vehicle Sales Co., Ltd. 16,564 -
Beijing Baiwang Changfu Vehicle Sales & Service Co., Ltd. 9,564 -
Jiangxi Jiangling Overseas Automobile Sales and Service Co., Ltd. 9,235 912
Nanchang Hengou Industry Co., Ltd. 8,984 28,878
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. 7,689 14,071
Jiangxi JMCG Yichehang Second-hand Motors Sales Co.,Ltd. (a) 7,640 9,487
Honghe Wanfu Vehicle Sales & Service Co., Ltd. 6,723 -
China Changan Group Tianjin Sales Co., Ltd. 5,758 -
Nanchang JMCG Frame Co., Ltd 4,933 -
Jiangxi JMCG Industry Co., Ltd. 4,386 5,537
Jiangxi Jiangling Lear Interior System Co., Ltd. 4,276 5,516
Jiangxi Fuxiang Vehicle Co., Ltd. 4,176 -
Yichun Xinfu Vehicle Co., Ltd. 3,806 -
Chengdu Wanyou Vehicle Trade & Service Co., Ltd. 3,516 -
Chongqing Wanyoulongrui Vehicle Sales & Service Co., Ltd. 3,228 -
Ji'an Qingyuan District Yongfuda Vehicle Co., Ltd. 3,067 -
Jiangxi ISUZU Co., Ltd. 1,768 1,806
Nanchang Lianda Machinery Co., Ltd. 1,429 1,157
JMH 732 35,107
JMCG Property Management Co. 203 6,470
JMCG Jiangxi Engineering Construction Co., Ltd. - 1,974
Jiang ling Motor Electricity Vehicle Sales Co.,Ltd - 5,139
Others 1,205 789
2,059,077 2,044,415
(a) In July 2019, the Jiangxi JMCG Yichehang Second-hand Motors Sales Co.,Ltd. has not been
the Group’s related party
The Group sold goods to related parties, based on agreement price.
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JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ii) Rental
Rental income
Lessee Category Rental income of Rental income of
2019 2018
Jiangling Material Co., Ltd. Building 121 120
Jiangxi ISUZU Co., Ltd. Building 53 -
GETRAG (Jiangxi) Transmission
Company Building 8 3
JMH Building 3 3
185 126
Right of use asset recognized as lessee
Lessor Category 2019 2018
Jiangxi Jiangling Motors Imp. &
Exp. Co.,Ltd. Building 5,803 —
JMCG Building 3,201 —
9,004 —
Interest expense amortised from lease liability as lessee
Lessor Category 2019 2018
JMCG Building 736 —
Jiangxi Jiangling Motors Imp. &
Exp. Co.,Ltd. Building 177 —
913 —
(iii) Guarantee
As at 31 December 2019, bank loans of USD524,000 (equivalent to approximately
RMB3,655,000) (2018: USD589,000 (equivalent to approximately RMB4,044,000)) were
guaranteed by JMCF (Note 24).
(iv) Sales ofPPE
2019 2018
Nanchang JMCG Shishun Logistics Co., Ltd. 299 -
Jiangxi JMCG Industrial Co., Ltd. 1 1
300 1
- 134 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(v) Purchase of PPE
2019 2018
Nanchang Jiangling HuaXiang Auto Components Co.,
Ltd. 28,497 5,548
Hanon Systems 3,821
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 1,200 6,424
Jiangxi JMCG Specialty Vehicles Co., Ltd. 435 -
Nanchang JMCG Liancheng Auto Component Co., Ltd. - 677
JMH - 534
33,953 13,183
(vi) Provide technique sharing
2019 2018
Ford 72,282 -
Ford Vietnam Limitied 40,034 10,780
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 17,990 -
JMH - 3,606
130,306 14,386
(vii) Payment for fuel consumption credits
2019 2018
JMH 8,747 5,911
(viii) 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 year
ended 31 December 2019, the total remuneration of the key management was approximately
RMB10,962,000 (2018: RMB11,591,000).
- 135 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Interest received from cash deposit in related parties
31 December 2019 31 December 2018
JMCF 12,883 17,323
In 2019, the interest rates range from 0.455% to 3.30%per annum (2018: 0.455% to 2.25%).
(x) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 272,986 251,236
Jiangxi JMCG Specialty Vehicles Co., Ltd. 58,148 237
Ford 21,554 -
Jiangxi JMCG Specialty Vehicles Sales 19,329 32,940
Corporation, Ltd.
Jiangxi Jiangling Chassis Co., Ltd. 13,054 9,803
Nanchang JMCG Liancheng Auto Component 12,767 -
Co., Ltd.
Ford Motor Research & Engineering (Nanjing) 9,529 -
Co., Ltd.
Nanchang JMCG Shishun Logistics Co., Ltd. 6,279 -
Ford Vietnam Limited 5,980 5,104
Jiang ling Motor Electricity Vehicle Sales Co.,Ltd 5,961 5,961
Nanchang JMCG Frame Co., Ltd 5,574 -
JMCG Jingma Motors Co., Ltd. 5,563 6,162
Jiangxi Jiangling Special Purpose Vehicle Co., 2,132 -
Ltd.
Nanchang Jiangling HuaXiang Auto Components 2,128 1,899
Co., Ltd.
Jiangxi Jiangling Lear Interior System Co., Ltd. 1,083 -
Jiangxi Jiangling Group Special Vehicle Co., Ltd. - 5,727
Others 1,359 121
443,426 319,190
Other receivables from related parties 31 December 2019 31 December 2018
Jiangxi Jiangling Motors Imp. & Exp. Co.,Ltd. 35,208 35,027
Others. 42 11
35,250 35,038
- 136 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 31 December 2019 31 December 2018
Nanchang Baojiang Steel Processing Distribution
Co.,Ltd. 492,605 496,146
Notes receivables from related parties 31December2019 31December2018
JMCG Jingma Motors Co.,Ltd. - 41,418
Financial assets at fair value other 31 December 2019 31 December 2018
comprehensive income
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 32,000 —
JMCG Jingma Motors Co., Ltd. 17,148 —
49,148 —
Prepayments for construction in progress 31 December 2019 31 December 2018
Jiangxi JMCG Specialty Vehicles Co., Ltd. - 500
Prepayments for mould lease 31 December 2019 31 December 2018
Changan Ford Automobile Co., Ltd. - 478
Cash deposit in related parties 31 December 2019 31 December 2018
JMCF (Note 21) 967,750 833,617
- 137 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 31 December 2019 31 December 2018
Nanchang Jiangling HuaXiang Auto Components
Co., Ltd. 468,878 316,174
Jiangxi Jiangling Lear Interior System Co., Ltd. 275,328 214,139
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 269,635 336,126
Jiangxi Jiangling Chassis Co., Ltd. 247,904 333,431
GETRAG (Jiangxi) Transmission Company 241,934 275,275
Ford 145,686 151,749
Nanchang JMCG Shishun Logistics Co., Ltd. 135,344 10,113
Nanchang JMCG Liancheng Auto Component
Co., Ltd. 133,716 148,483
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 127,516 58,966
Hanon Systems 86,209 91,656
Nanchang Unistar Electric & Electronics Co., Ltd. 81,835 96,905
Changan Ford Automobile Co., Ltd. 57,563 67,622
JMCG 41,122 68,159
Nanchang JMCG Mekra-Lang Vehicle Mirror
Co., Ltd. 38,644 48,200
JMH 23,805 26,349
Nanchang Yinlun Heat-exchanger Co., Ltd. 23,002 24,756
Jiangxi Lingge Non-ferrous Metal Die-casting
Co., Ltd. 22,459 19,850
Jiangxi JMCG Specialty Vehicles Co., Ltd. 20,671 138,209
Nanchang Lianda Machinery Co., Ltd. 20,460 28,325
Jiangling Aowei Automobile Spare Part Co., Ltd. 14,675 14,533
Jiangxi JMCG Industry Co., Ltd. 9,408 7,830
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 8,984 28,944
Jiangxi ISUZU Engine Co., Ltd. 5,958 9,956
Ford Otomotiv Sanayi A.S. 5,716 1,031
Jiangxi Lingrui Recycling Resources
Development Corporation 5,038 1,736
Jiangxi Lingyun Automobile Industry Technology
Co.,Ltd 5,019 -
Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 3,207 6,355
Jiangxi JMCG Boya brake system Co., Ltd 2,918 -
Nanchang Gear Co., Ltd. 2,601 6,179
Jiangxi Biaohong Engine Tappet Co., Ltd. 1,983 2,037
Jiangling Material Co., Ltd. 1,505 1,372
Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,139 1,693
Auto Alliance (Thailand) Company Limited 797 2,151
NC.Gear Forging Factory 12 4,173
Others - 16
2,530,671 2,542,493
- 138 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2019 31 December 2018
Ford 188,390 92,310
Ford Global Technologies, LLC 67,275 41,203
Ford Otomotiv Sanayi A.S. 47,912 115,254
Changan Ford Automobile Co., Ltd. 26,537 9,776
Jiangxi JMCG Specialty Vehicles Sales
Corporation, Ltd. 25,677 31,946
Nanchang Jiangling HuaXiang Auto Components
Co., Ltd. 22,080 7,222
GETRAG (Jiangxi) Transmission Company 13,132 14,216
JMCG Jiangxi Engineering Construction Co., Ltd. 10,408 30,166
Faurecia Emissions Control Technologies
(Nanchang) Co., Ltd. 7,617 13,584
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 6,984 6,921
Nanchang JMCG Shishun Logistics Co., Ltd. 6,916 7,736
Hanon Systems 4,362 45
Jiangxi Jiangling Special Purpose Vehicle Co.,
Ltd. 4,064 1,403
Ford Motor (China) Co., Ltd. 3,326 4,803
Ford Motor Research & Engineering (Nanjing)
Co., Ltd. 2,519 607
Jiangxi JMCG Industry Co., Ltd. 2,503 3,504
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 2,087 187
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,779 -
Nanchang Unistar Electric & Electronics Co., Ltd. 1,327 -
Jiangxi Jiangling Lear Interior System Co., Ltd. 1,207 4,612
Nanchang JMCG Mekra-Lang Vehicle Mirror
Co., Ltd. 1,062 881
Jiangxi JMCG Motorhome Co., Ltd. 481 1,905
JMH - 15,641
Nanchang Hengou Industry Co., Ltd. - 10,211
Others 2,115 2,344
449,760 416,477
Contract liability 31 December 2019 31 December 2018
Jiangxi Jiangling Group Special Vehicle Co.,
Ltd. 2,682 -
Yunan Wanfu Vehicle Sales & Service Co.,
Ltd. 1,213
Others 919 536
4,814 536
Lease liability 31 December 2019 31 December 2018
JMCG 12,673 —
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 2,343 —
15,016 —
- 139 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
32 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Capital commitments 31 December 2019 31 December 2018
JMCG Jiangxi Engineering Construction Co.,
Ltd. 23,175 29,456
33 Events after the balance sheet date
(i) Description of profit distribution
According to the resolution of the Board of Directors as at 24 March 2020, the board of directors
proposed that the Company distribute cash dividends to all shareholders at RMB0.07 per share.
Based on the issued shares of 863,214,000, totalled amount of proposed dividend is
RMB60,425,000.
(ii) The assessment of the impact of the Coronavirus Disease 2019
Since the outbreak of Coronavirus Disease 2019 (“COVID-19”) in January 2020, the prevention
and control of the COVID-19 has been going on throughout the country. The Group will continue
to earnestly implement the requirements on the sufficient of key medical supplies for the
supporting of the epidemic prevention and control.
The COVID-19 has certain impacts on the business operation and overall economy in some
areas or industries, including in Hubei Province. This may affect the risk of financial instruments
and the operation performance of the Group in a degree, and the degree of the impact depends
on the situation of the epidemic preventive measures, the duration of the epidemic and the
implementation of regulatory policies.
The Group will keep continuous attention on the situation of the COVID-19, assess and react
actively to its impacts on the financial position and operating results of the Group. As at the date
on which this set of financial statements were authorised for issue, the Group was not aware of
any material adverse effects on the financial statements as a result of the COVID-19 outbreak.
- 140 -
Chapter XII Catalog on Documents for Reference
1. Originals of 2019 financial statements signed by legal representative and Chief
Financial Officer.
2. Originals of the Independent Auditor’s Reports signed by Independent
accountants and stamped by the accounting firm.
3. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in 2019.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 24, 2020
- 141 -
