Jiangling Motors Corporation, Ltd.
2017 Annual Report
March 2018
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 Gong Yuanyuan and Chief of Finance Department,
Xie Wanzhao, 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 2017 profit distribution proposal approved by the Board of Directors is as
follows:
A cash dividend of RMB 3.2 (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.
Contents
Chapter I Important Notes, Contents and Abbreviations .............................. 2
Chapter II Brief Introduction and Operating Highlight .................................... 4
Chapter III Operating Overview ...................................................................... 6
Chapter IV Management Discussion and Analysis ......................................... 7
Chapter V Major Events............................................................................... 16
Chapter VI Share Capital Changes & Shareholders .................................... 26
Chapter VII Preferred Shares ........................................................................ 30
Chapter VIII Directors, Supervisors, Senior Management and Employees .... 30
Chapter IX Corporate Governance Structure ............................................... 40
Chapter X Corporate Bond .......................................................................... 47
Chapter XI Financial Statements.................................................................. 47
Chapter XII Catalog on Documents for Reference ........................................ 48
Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
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
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
Securities Affairs
Board Secretary
Representative
Name Wan Hong Quan Shi
No. 509, Northern Yingbin No. 509, Northern Yingbin
Address Avenue, Nanchang City, Avenue, Nanchang City,
Jiangxi Province, P.R.C Jiangxi Province, 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.
4. Changes of Registration
Organization Code
On December 1, 1993, JMC A shares were listed on
Shenzhen Stock Exchange, while JMCG, the founder-
Changes of Controlling
member, was the controlling shareholder of the Company.
Shareholders
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 JMH.
Presently, JMH 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’)
11th Floor, PricewaterhouseCoopers Center, 202 Hu Bin Road,
Headquarters address
Shanghai City, P.R.C.
Names of Signed
Lei Fang, Shen Jie
Accountants
6. Main accounting data and financial ratios
Unit: RMB ‘000
2017 2016 Change (%)
Revenue 31,345,747 26,633,949 17.69% 24,527,893
Profit Attributable to the
Equity Holders of the 690,938 1,318,016 -47.58% 2,222,061
Company
Net Cash Generated
674,588 4,593,000 -85.31% 1,924,474
From Operating Activities
Basic Earnings Per Share
0.8 1.53 -47.58% 2.57
(RMB)
Diluted Earnings Per
0.8 1.53 -47.58% 2.57
Share (RMB)
Weighted Average Return
5.51% 10.74% -5.23% 19.56%
on Equity Ratio
End of Year End of Year End of Year
Change (%)
2017 2016
Total Assets 26,383,761 24,493,789 7.72% 21,050,726
Shareholders’ Equity
Attributable to the Equity 12,572,402 12,409,236 1.31% 11,981,142
Holders of the Company
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
Main accounting data quarterly
Unit: RMB’000
Q1 Q2 Q3 Q4
Revenue 8,155,676 7,510,800 6,768,706 8,910,565
Profit Attributable to the
Equity Holders of the 228,608 324,295 90,628 47,407
Company
Net Cash Generated
From Operating -879,487 -19,914 -485,747 2,059,736
Activities
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 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 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. Series of Ford new products such as Ford brand MPV Tourneo, Ford
new Transit AT, JMC Teshun, brand new Yuhu pickup and heavy truck Weilong
launched further improved JMC’s competence on R&D and manufacturing. The
first JMC heavy truck Jiangling Weilong is awarded 2018 China Truck of the Year
and The Most Potential Heavy Truck. The self-developed Kai Rui 800 and Yu
Sheng S350 won the first prize of the Jiang Xi provincial Science and Technology
Progress Award and Jiang Xi provincial Patent Award, which fully showed JMC’s
leading technology in light commercial vehicle field and self innovation capability.
High standard Xiaolan 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 plant, 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. Participation of global smart
driving competition, exploration of ADAS mass production plan and autonomous
driving Demo scheme, reached strategic partnership with internet city freight
platform and cold chain technology companies to discover new business model
and analysis and application of internet and big data. These explorations will lay
the foundation for JMC’s transformation into the strategic vision of to be the best
partner for mobility and smart logistic solutions.
Chapter IV Management Discussion and Analysis
1. Summary
In 2017, benefited from the stable economic growth in China, its automotive
market maintains soften growth. Total sales volume was 28.88 million units,
increased 3.04% 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 2017, JMC achieved sales
volume of 310,028 units, increased 10.32% compared with last year, achieved
revenue of RMB 31.35 billion, increased 17.69% compared with last year,
achieved net profit of RMB 0.69 billion, decreased 47.58% compared with last
year. It mainly reflects: I. More R&D and exploration expense on new product,
technology and business to improve product core competitiveness in order to
conform the auto trend of intelligence, netlink, electrification and sharing; II.
Marketing expense increased and sales structure changed to compete in the very
challenging market brought by the new entrants of auto industry and price
strategy of traditional competitors.
2. Core Business Analysis
I. Summary
In 2017, JMC sales volume achieved 310,028 units, increased 10.32% compared
with last year, including 108,953 units truck, 72,205 units pickup, 39,119 units
SUV, 58,601 units Transit CV and 31,150 units JMC light bus.
2017 total production volume was 311,180 units, increased 10.56% compared
with last year, including 109,155 units truck, 72,929 units pickup, 37,744 units
SUV, 58,635 units Transit CV and 32,717 units light bus.
JMC total sales revenue in 2017 was RMB 31.35 billion, increased 17.69%
compared with last year.
II. Revenue and Cost
(a) Composition of Sales Revenue
Unit: RMB
2017 FY 2016 FY
YOY
Proportion Proportion change
Amount Amount (%)
(%) (%)
Revenue 31,345,746,762 100% 26,633,948,551 100% 17.69%
By Industry
Automobile 31,345,746,762 100% 26,633,948,551 100.00% 17.69%
Industry
By Products
Vehicle 28,390,845,975 90.58% 23,876,058,142 89.64% 18.91%
Components 2,624,216,802 8.37% 2,369,645,586 8.90% 10.74%
Material
330,683,985 1.05% 388,244,823 1.46% -14.83%
& Others
By region
China 31,345,746,762 100% 26,633,948,551 100.00% 17.69%
(b) Reach to 10% of Revenue or Profit by Industry, Product or Region
□√Applicable □Not Applicable
Unit: RMB
Y-O-Y
Y-O-Y Y-O-Y
gross
Gross turnover Cost
Turnover Cost margin
Margin change Change
change
(%) (%)
(points)
By Industry
Automobile 31,345,746,762 25,045,089,962 20.10% 17.69% 21.50% -2.51%
Industry
By Products
Vehicle 28,390,845,975 22,847,921,018 19.52% 18.91% 22.66% -2.47%
By Region
China 31,345,746,762 25,045,089,962 20.10% 17.69% 21.50% -2.51%
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 2017 2016 Change (%)
Sales volume unit 310,028 281,019 10.32%
Automobile Production
unit 311,180 281,463 10.56%
volume
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
2017 FY 2016 FY
YOY
Product Proportion Proportion change
Cost Cost （%）
(%) (%)
Vehicle 22,847,921,018 91.23% 18,626,319,979 90.36% 22.66%
Components 1,892,879,763 7.56% 1,718,540,492 8.34% 10.14%
Material
304,289,181 1.21% 267,862,469 1.30% 13.60%
& Others
(f) Whether Consolidated Scope was Changed During the Reporting Period
□Yes □√No
(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） 3,417,252,406
Accounted for the proportion of JMC’s total
10.90%
annual turnover
Included related party transaction accounted for
3.34%
the proportion of JMC’s total annual turnover
Percentage of
Sales Value
No. Name of the Customer JMC’s Total
(RMB)
Turnover (%)
Zhejiang Jiangling Motors Sales
1 1,075,680,767 3.43%
Company
2 JMCG Import & Export Co., Ltd. 1,047,618,050 3.34%
Hunan Transit Jiangling Motors
3 481,531,654 1.54%
Sales Company
Shanghai Keda Zhoupu Auto
4 446,417,280 1.42%
Sales Company
Henan Province Fushun
5 366,004,655 1.17%
Jiangling Motors Sales Company
Total 3,417,252,406 10.90%
Other introduction to main customers
□√Applicable □Not Applicable
JMIE is a related party of the Company. EVP Xiong Chunying hold the position of
director of JMIE.
Top 5 Suppliers:
Total purchase value from top 5 suppliers（RMB） 4,248,790,687
Accounted for the proportion of JMC’s total annual
18.19%
purchase amount
Included related party transaction accounted for the
14.88%
proportion of JMC’s total annual purchase amount
Percentage of
Purchase JMC’s Total
No. Name of the Supplier
Value (RMB) Annual Purchase
Amount (%)
Nanchang Bao-jiang Steel
1 943,608,096 4.04%
Processing & Distribution Co., Ltd.
Jiangxi Jiangling Chassis
2 888,703,227 3.80%
Company
3 Ford Motor Company 830,602,559 3.56%
GETRAG (Jiangxi) Transmission
4 813,925,560 3.48%
Company
Bosch Auto Diesel System
5 771,951,245 3.31%
Company
Total 4,248,790,687 18.19%
Other introduction to main suppliers
□√Applicable □Not Applicable
Except Bosch Auto Diesel System Company, the other four suppliers are related
parties of the Company.
III. Expense Analysis
Unit: RMB’000
YOY
2017 2016 Major Changes Explanation
Change
The Company carried out a variety
of promotional activities to cope
with the competitive environment
where the domestic automobile
Distribution
2,694,779 1,961,535 37.38% market situation changed and
Expenses
competition intensified in 2017; the
Company’s variable marketing
expenses increased due to higher
sales volume.
Administrative
2,744,600 2,498,485 9.85%
Expenses
Finance
-239,221 -219,635 -8.92%
Income-net
IV. Research & Development
In 2017, 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, etc., 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 2017 was 2,055 million, representing 16.34% of net assets, or 6.56% of
revenue.
R&D
2017 2016 Change (%)
R&D Staff (person) 2,417 2,225 8.63%
R&D Staff as % of total
13.94% 13.19% 0.75%
employees
R&D Investment (RMB) 2,054,740,061 1,937,312,797 6.06%
R&D Investment as % of
6.56% 7.27% -0.71%
revenue
Capitalization of R&D
58,010,234 124,586,552 -53.44%
investment (RMB)
Capitalization of R&D
investment as % of R&D 2.82% 6.43% -3.61%
Investment
Major change of R&D Investment as % of revenue
□Applicable □√Not Applicable
Major change of capitalization of R&D investment
□√Applicable □Not Applicable
See the note 14 (b) to Financial Statements for major change of capitalization of
R&D investment.
V. Cash Flow Analysis
Unit: RMB’000
YOY
Item 2017 2016
Change
Net cash generated from operating activities 674,588 4,593,000 -85.31%
Net cash used in investing activities -669,656 -875,148 23.48%
Net cash used in financing activities -533,431 -899,670 40.71%
Net (decrease)/increase cash and cash
-528,499 2,818,182 -118.75%
equivalents
Explanation on the major factors regarding major change of related data
□√Applicable □Not Applicable
Net cash generated from operating activities decreased by RMB 3,918 million,
down 85.31% vs. 2016, mainly reflecting the increase of receivable generated
from higher sales volume and fleet sales and payable to suppliers.
Cash flows from financing activities decreased by RMB 366 million, down 40.71%
vs. 2016, mainly reflecting the decrease of dividend paid to the shareholders of
the company.
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
Sustainability
Item Amount Proportion Explanation
（Y/N）
Non-operating Government subsidies to support
637,346,229 83.66% Y
Revenue company development
4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB’000
YOY
December 31, 2017 December 31, 2016 Major
Asset item Proportion Changes
change Explanation
Amount Proportion Amount Proportion (Points)
Property, plant
6,714,088 25.45% 6,688,530 27.31% -1.86%
and equipment
Inventories 2,339,304 8.87% 1,934,092 7.90% 0.97%
Trade, other Due to higher
receivables and 4,555,934 17.27% 2,625,808 10.72% 6.55% sales volume
prepayments and fleet sales
Cash and cash
11,137,723 42.21% 11,666,222 47.63% -5.42%
equivalents
Trade and Due to the
13,222,540 50.12% 11,605,178 47.38% 2.74%
other payables increase of
material
purchasing
according to
the increase of
sales volume
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
Investment Fixed Spending in Investment
Project
Method/ Assets 2017 Committed Progress Index
Name
source (Y/N) (RMB mils) (RMB mils)
Announcement of this
Xiaolan Self- project (No:2010-017) was
Y 3 1,922 90%
Plant funded published in the website
Http://www.cninfo.com.cn
Announcement of this
Fushan Self- project (No:2017-044) was
Y - - -
Plant funded published in the website
Http://www.cninfo.com.cn
Total 3 1,922 -- --
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
7. Operating Results of Main Subsidiaries and Joint-Stock Companies whose
impact on JMC’s net profit more than 10%
Unit: RMB
Name of Type of Main Registered Operating
Assets Net Assets Turnover Net Profit
Companies Companies Business Capital Profit
Jiangling Sales
Motors Sales vehicle,
Subsidiary 50,000,000 4,086,813,808 251,625,936 27,594,937,861 27,213,880 20,202,244
Corporation, service
Ltd parts
Product
heavy
commercial
JMC Heavy
vehicle ,
Duty Vehicle Subsidiary 281,793,174 2,061,645,065 -327,366,351 239,078,740 -303,330,024 -219,831,981
engine,
Co., Ltd
component,
and related
service
Acquisition and disposal of the subsidiary
□Applicable □√Not Applicable
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,
the fundamentals of its long-term economy remain unchanged. Steady domestic
demand, encouraged innovation and further deepening of the combination of
internet and industrial will continue to benefit China’s economy toward steady and
improvement. The infrastructure construction and logistic industry in China will
also continue to develop which will be good to the stability and development of
commercial vehicle segment. 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 2018,
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
Company takes to become the best partner for smart mobility and logistics
solutions as vision and integrity, innovation and win-win as core value, adopts
aggressive strategic actions in smart logistics of commercial vehicles to
strengthen its leading position; proactively participates in mobility of passenger
vehicle and tries different business model to build new core competitiveness
through new technology application and new business model. JMC will continue
to deliver SUV and crossover vehicles with high cost performance and high quality
new energy vehicles with smart, environmental, safe and economic; participate in
smart mobility and logistics service by cutting-edge technology and innovative
business model to develop new core competitiveness in auto ecosystem.
III. Business Plan
The Company is targeting 2018 sales volume level at 340 thousand units and
revenue level at RMB 33.5 billion, increases of 9.67% and 6.87% vs. 2017
respectively. To enhance profitability, the company is committed to the following
plans in 2018:
(1) Achieve volume and market share targets by enhancing the sales network and
sales/marketing activities, especially pushing the third – fifth class city dealer
network construction;
(2) Well prepared the new products launch plan for Pickup MCA, electric light
truck and part of Yusheng upgrade to Stage VI;
(3) Continue to improve product quality, pursue cost reduction opportunities,
improve manufacturing and operating efficiency to achieve profit and cost
targets;
(4) Continue to research, develop and apply new energy, autonomous driving and
smart mobility;
(5) Continue to promote the new fuel economy and emission compliance program
to satisfy regulatory requirements;.
(6) Work with technical partners to execute future product development and R&D
ability improvement;
(7) Expand finished vehicle exports and OEM components sales business.
IV. Potential Challenges and Solutions
In 2017, the Company will continue to face fiercer competition, more stringent
regulatory requirements, intensifying cost pressures and a slowdown in China’s
economic growth. To achieve steady growth, the Company will continue to focus
on the following aspects in 2017:
(1) Optimizing company’s production system to improve efficiency and product
quality;
(2) Optimizing dealer network and marketing spending to improve market share;
(3) Improve suppliers’ capability and parts quality; continue to reduce parts
purchasing cost;
(4) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms;
(5) Sustaining the expense management and control to optimize the business
structure; and
(6) Execute company’s growth strategies to pursue sustainable and healthy
growth.
The Company will continue to optimize cost structure, improve production
efficiency, mitigate management cost as well as focus on new product
development to deliver the launch quality and cost target. With the support from
technical partner, the Company continues to promote new products development
and R&D ability improvement, to accelerate the progress of launching new
competitive and profitable products to the market and speed up the exploration
and development of heavy truck to enhance the company’s influence on
commercial vehicles. Meanwhile, the Company will devote to strengthening dealer
network, expanding overseas market and parts business.
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
Date Communication Type of Information Discussed
Method Object and Materials offered
February 9, On-the-spot Institution JMC Operating highlights
2017 research
February On-the-spot Institution JMC Operating highlights
23, 2017 research
May 11, On-the-spot Institution JMC Operating highlights
2017 research
November On-the-spot Institution JMC Operating highlights
1, 2017 research
Reception times
Visiting institution number
Visiting person number
Other objects
Whether to disclose, reveal or divulge the No
undisclosed material information
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 resolution of the Y
Shareholders’ Meeting (Y/N)
Whether the standards and proportion of dividends Y
on profit distribution are clear (Y/N)
Whether the procedures are valid and legal (Y/N) Y
Whether the Independent Director fulfil their duties
Y
(Y/N)
Whether middle and small shareholders have
opportunities to claim their appeals and their legal Y
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 2017 Year Profit Distribution
Details on the profit available for appropriation of the Company in 2017 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, 2016 10,280,496 10,277,287
2017 net profit 690,938 690,938
Allocation of dividend for 2016 526,560 526,560
Retained earnings at Dec. 31, 2017 10,444,874 10,441,665
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, 2017 were RMB 10,441,665
thousand.
The Board approved to submit to the 2017 Annual Shareholders’ Meeting the
following proposal on year 2017 profit distribution:
(i). to appropriate for the dividend distribution from the profit available for
distribution, which shall be equal to RMB 0.32 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.
Profit distribution proposal: a cash dividend of RMB 3.2 (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, 2017, total cash dividend distribution
amounts shall be RMB 276,228,480.
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) 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.
(3) 2016 Year Profit Distribution Plan
A cash dividend of RMB 6.1 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of December 31,
2016, the total cash dividend distribution amounts were RMB 526,560,540.
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) 2015 Year Profit Distribution Plan
A cash dividend of RMB 10.3 (including tax) was distributed for every 10 shares
held. Based on the total share capital of 863,214,000 shares as of December 31,
2015, the total cash dividend distribution amounts were RMB 889,110,420.
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
Unit: RMB’000
Dividends Cash dividend
Profit attributable to
(including tax) Cash as % of profit
the equity holders of
for every 10 dividends attributable to the
the Company in that
shares (RMB) (including tax) equity holders of
year
the Company
2017
3.2 276,228 690,938 39.98%
(proposal)
2017
23.17 2,000,067 N/A N/A
Interim
2016 6.1 526,561 1,318,016 39.95%
2015 10.3 889,110 2,222,061 40.01%
2. Proposal on 2017 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
There was no change of accounting policy, accounting estimates, estimation
method during the reporting period.
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.
8. Explanation on consolidated scope change compared with that of last year
□Applicable □√Not Applicable
There was no change on consolidated scope in the reporting period.
9. Appointment or Dismissal of Accounting Firm
Current accounting firm
Name PricewaterhouseCoopers Zhong Tian LLP
Compensation (RMB’000) 1,900
Consecutive years offering audit
services
Names of signed accountants Lei Fang, Shen Jie
Dismissal of accounting firm
□Applicable □√Not Applicable
Appointment of C-SOX auditor, financial consultant or sponsor
Upon the approval of 2014 Annual Shareholders’ Meeting, JMC agreed to appoint
PwC Zhong Tian as JMC’s 2016 to 2018 C-SOX auditor. In 2017, JMC paid RMB
550 thousand to PwC Zhong Tian 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
□√Applicable □Not Applicable
As % of
Pricing Settlement Amount Total
Transaction Parties Content Relationship
Principle Method (RMB’000) Purchases/
Revenue
Controlling
Parts and shareholder of
Ford and Contracted
components JMC and D/P & T/T 1,259,123 5.39%
subsidiaries of Ford price
purchase subsidiaries of
Ford
Nanchang Bao-jiang Raw Associate of
Contracted
Steel Processing materials JMCG Prepayment 943,608 4.04%
price
Distribution Co., Ltd. purchase
Parts and Subsidiary of 60 days after
Jiangxi Jiangling Contracted
components JMCG delivery and 888,703 3.80%
Chassis Co., Ltd. price
purchase invoicing
GETRAG (Jiangxi) Parts and Associate of 60 days after
Contracted
Transmission components JMCG delivery and 813,926 3.48%
price
Company purchase invoicing
Jiangxi Jiangling Parts and Subsidiary of 30 days after
Contracted
Special Purpose components JMCG delivery and 764,437 3.27%
price
Vehicle Co., Ltd. purchase invoicing
Jiangxi Jiangling Parts and Joint venture of 60 days after
Contracted
Lear Interior System components JMCG delivery and 550,290 2.36%
price
Co., Ltd. purchase invoicing
40% of
prepayment
Jiangxi Jiangling
Associate of Contracted and the
Motors Imp. & Exp. Sales 1,047,618 3.34%
JMCG price remains paid
Co., Ltd.
during 30 days
after delivery
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 balance amount of bank deposit of the Company in JMCG Finance Company
as of the end of the year 2017 was RMB 1,120,806 thousand. The Board of
Directors reviewed and approved JMCG Finance Company Continious Risk
Assessment Report. Please refer to the website www.cninfo.com.cn for the
original of the report which was published on March 24, 2018.
17. Major Contracts and Execution
i. Entrustment, contract or lease
a. Entrustment
□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
See the note 31 (b) to financial statements for lease of related parties.
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 2017 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 2017
The Company regards the realization of precision poverty relief as the basic
strategy of precision poverty alleviation. In 2017, there are 4 families or 20
persons in Xianting Village get rid of poverty.
c. Status of Year 2017 targeted measures in poverty alleviation
Item Unit Amount/Progress
I. Brief Introduction —— ——
including：1. Funding RMB (‘000) 176.76
2. Sum converted from the materials RMB (‘000) 2.76
3. Persons get rid of poverty Persons
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
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) 5.36
4.2 Poor students in aid Persons
4.3 Investments on the improvement of
RMB (‘000)
educational source in poverty-stricken area
5. Health Anti-poverty —— ——
Including: 5.1 Investments on medical and health services
RMB (‘000)
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)
women and elderly
7.2 Number of stay-at-home children, women
Persons
and elderly in aid
7.3 Investments on poor & disable people RMB (‘000) 4.36
7.4 Number of poor & disable people in aid Persons
8. Social anti-poverty —— ——
including：8.1 Investments on cooperation between West
RMB (‘000)
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) 169.8
9. Other —— ——
including：9.1.Project Number
9.2.Investment amount RMB (‘000)
9.3. Persons getting rid of poverty Persons
III. Awards —— ——
d. On-going plan regarding targeted measures in poverty alleviation
In 2018, with the help of JMCG and instruction from the government, JMC will lift
2 people from 2 families in Xianting Village out of poverty, pay visit and adopt
targeted poverty-alleviation measures to 22 registered poor families. JMC will fund
poverty alleviation through education by providing a sound learning environment
to students from Xianting Village.
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: COD≤721.
\"COD:183mg/L Discharge Meet
(COD, NH-N) discharge 6 1 in Cast Plant
NH-N:12mg/L\" Standard”(GB
210.72t; NH- 82t; NH-
Standard
and 1 in Axle N: 3.148t N≤17.038t
8978-1996)
Plant
Exhaust gas 53 in Mainsite, SO2: 36mg/m3; \"The Emission
(SO2,NOx,sm 34 in Xiaolan NOx : 89mg/m3; Standard of Air SO2≤87.8t;
continuous SO2: 0.48t; Meet
oke,toluol, 125 Site, 33 in Cast smoke: Pollutants”,” NOx≤35.53
discharge NOx : 28.29t Standard
dimethylbenz Plant and 5 in 83.9mg/m3; Emission t
ene, Axle Plant toluol :0.016mg/ Standard of Air
NMHC） m3; Pollutants for
dimethylbenzene Boiler”（GB
:0.090mg/m3; 13271-2014）
NMHC:
22.6mg/m3\"
The construction and operation of pollutant preventive and control facilities
Since 2006, JMC has invested more than RMB 30 million to construct seven
wastewater treatment stations (including the wastewater treatment station in the
east plant area and Xiaolan wastewater treatment station), with the treatment
capacity as high as 9,000t/d. The treated wastewater reached the national
discharge standard.
For up-to-standard emission of waste gases, JMC has taken new control
measures over the years. In 2012, the Company invested RMB 10 million to
reconstruct the cupola furnace in the casting plant. In 2013, Xiaolan Branch
invested RMB 14 million to install a TNV waste gas incinerator. In 2014, JMC
invested RMB 14.6 million to construct the boiler coal-gas-switch project in the
south district. In 2017, the casting plant reconstructed the ventilation & dust
removal system for the smelting furnace in the large-size and middle & small-
sized parts workshop, and installed efficient environmental-friendly dust removal
equipment, effectively reducing the environmental pollution by dust.
For noise reduction, JMC took different measures to reduce the environmental
impact, such as increase of protective sound-proof doors & windows,
establishment of noise enclosure for air blower, installation of muffler and
transformation of sound-proof doors & windows. All these measures can make
sure up-to-standard discharge of noise at the plant boundary.
In the process of waste management, JMC managed from the source, and divided
the generation of wastes. JMC established a temporary storage yard for solid
wastes. Warning graphic symbols have been posted at the temporary storage site
of hazardous wastes. Besides, signboards have been provided as well, so as to
remind the passerby of probable hazards in the storage process of hazardous
wastes.
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.
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
(such as emergency plan on environmental pollution accidents, emergency plan
on hazardous gases and emergency plan on paint thinner), so as to formulate
corresponding control methods for potential accidents and emergences occurred
or that may probably occur. JMC organized emergency drills every year to ensure
the efficiency of emergency plan.
Environmental self-monitoring scheme
In 2017, JMC’s Qingyunpu Main Plant Area (the “Plant Area”) was listed as a key
pollutant discharging organization of wastewater/hazardous wastes. The Plant
Area 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”. Xiaolan plant area and other plant areas finished self-
monitoring according to the EIA requirements.
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
JMC received government incentives of approximate RMB 640 million
appropriated by Nanchang City, Nanchang County Xiaolan Economy
Development Zone, Nanchang City Qingyupu District, Shanxi Province and
Taiyuan Economic & Technological Development Zone in 2017, which is to
support JMC’s development.
20. Major event of JMC subsidiary
□Applicable □√Not Applicable
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 converte Others Subtotal Shares of total
Shares
shares (%) s d shares shares (%)
I. Limited tradable
1,725,900 0.20% - - - -819,045 -819,045 906,855 0.10%
A shares
1. Other domestic
1,725,900 0.20% - - - -819,045 -819,045 906,855 0.10%
shares
Including:
Domestic legal
835,140 0.10% - - - -49,200 -49,200 785,940 0.09%
person shares
Domestic natural
890,760 0.10% - - - -769,845 -769,845 120,915 0.01%
person shares
II. Unlimited
861,488,100 99.80% - - - 819,045 819,045 862,307,145 99.90%
tradable shares
1. A shares 517,488,100 59.95% - - - 819,045 819,045 518,307,145 60.05%
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, 2017. JMC’s total shares remained unchanged in 2017, and the
change in shareholding structure was caused by
a. Limited A shares of 49,200 shares, formerly held by Shenzhen Airport
Terminal Building Co., Ltd., were transferred to nature person shareholders;
b. The trading restriction on the limited A shares held by 202 natural persons
were relieved on October 31, 2017.
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
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 JMC had 30,482 shareholders, including 24,963 A-share holders, and 5,519 B-share holders,
as of the end of the as of December 31, 2017.
reporting period
Total shareholders JMC had 34,733 shareholders, including 29,136 A-share holders, and 5,597 B-share holders,
as of the last month- as of February 28, 2018.
end prior to the
disclosure date of the
Report
Top ten shareholders
Shares due
Shareholding Shares at Shares with
Shareholder Change to
Shareholder Name Percentage the End of Trading
Type (+,-) mortgage
(%) Year Restriction
or frozen
Jiangling Motor State-owned
41.03 354,176,000 0 0
Holding Co., Ltd. legal person
Ford Motor Company Foreign legal
32 276,228,394 0 0
person
China Securities
Other 2.63 22,743,584 -2,200 0
Corporation Limited
Shanghai Automotive State-owned
1.51 13,019,610 0 0
Co., Ltd. Legal person
Central Huijin State-owned
0.83 7,186,600 0 0
Investment Ltd. legal person
JPMBLSA RE FTIF
Foreign legal
TEMPLETON CHINA 0.68 5,848,450 -24,000 0
person
FUND GTI 5497
GAOLING Foreign legal
0.63 5,439,086 0 0
FUND,L.P. person
INVESCO FUNDS Foreign legal
0.58 5,035,746 663,116 0
SICAV person
TEMPLETON
Foreign legal
DRAGON 0.56 4,836,708 -80,000 0
person
FUND,INC.
TEMPLETON GBL
INVSTMT TRST-
Foreign legal
TMPLTN EMGNG 0.46 3,948,718 0 0
person
MKTS SMALL CAP
FD
Top ten shareholders holding unlimited tradable shares
Shareholder Name Shares without Trading Restriction Share Type
Jiangling Motor Holding Co., Ltd. 354,176,000 A share
Ford Motor Company 276,228,394 B share
China Securities Corporation Limited 22,745,784 A share
Shanghai Automotive Co., Ltd. 13,019,610 A share
Central Huijin Investment Ltd. 7,186,600 A share
JPMBLSA RE FTIF TEMPLETON
5,848,450 B share
CHINA FUND GTI 5497
GAOLING FUND,L.P. 5,439,086 B share
INVESCO FUNDS SICAV 5,035,746 B share
TEMPLETON DRAGON FUND,INC. 4,836,708 B share
TEMPLETON GBL INVSTMT TRST-
TMPLTN EMGNG MKTS SMALL CAP 3,948,718 B share
FD
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 Established Organization
Name Main scope of business
representative Date code
manufacturing of automobiles,
engines, chassis, and automotive
components and parts, sales of self-
produced products, as well as
related after-sales services;
industrial investment; management
Jiangling Motor November 913601007670 & agent for merchandise and
Mr. Zhang Baolin
Holding Co., Ltd. 1, 2004 323079 technology export & import; property
management; sales of household
articles, mechanical & electronic
equipment, artistic handicrafts,
agricultural by-products and steel;
consulting business in enterprise
management.
to design, manufacture, market, and
service a full line of Ford cars,
trucks, sport utility vehicles (“SUVs”),
electrified vehicles, and Lincoln
luxury vehicles, provide financial
Ford Motor Company William Clay Ford 1903
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
There was no change of controlling shareholders in the reporting period.
III. Actual Controlling Parties
Nature of controlling shareholders: Central/Local State-owned Assets Supervision
and Administration
Type: Legal person
Legal Established Organization
Name Main scope of business
representative Date code
JMCG Qiu Tiangao July 27, 913600001582 manufacturing of automobiles, engines, chassis,
1991 63759R specialty vehicle, transmission, other products,
automotive quality testing, sales of self-produced
products and raw materials, equipment,
electronic products, parts and others, as well as
related after-sales services and maintenance
services; development of products derived from
JMC brand light vehicle; oversea auto project-
contracting, export equipment, material and
related labor services.
development, manufacturing, sales, import &
Chongqing
export business of auto (including sedan),
Changan December 915000002028
Zhang Baolin 6320X6
engine, automotive components, die, tools,
Automobile 31, 1996
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
41.82% 100%
Chongqing Changan Automobile Co., JMCG
Ltd. 50% 50%
JMH Ford
41.03% 32%
JMC
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
V. Shareholding reducing restriction to controlling shareholders, actual controlling
parties, restructuring parties and other commitment-making entities
□Applicable □√Not Applicable
Chapter VII Preferred Shares
□Applicable □√Not Applicable
JMC had no preferred shares in the reporting period.
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 at Share Shares at
Office the period- Change in the period-
beginning the reporting end
period
2017.06.29-
Qiu Tiangao Chairman Male 51 0 0
2020.06.28
2017.06.29-
Peter Fleet Vice Chairman Male 50 0 0
2020.06.28
2017.06.29-
David Johnston Director Male 47 0 0
2020.06.28
2017.06.29-
Thomas Fann Director & President Male 55 0 0
2020.06.28
2017.06.29-
Xiong Chunying Director & EVP Female 53 1,200 0 1,200
2020.06.28
2017.06.29-
Yuan Mingxue Director Male 49 0 0
2020.06.28
Independent 2017.06.29-
Lu Song Male 60 0 0
Director 2020.06.28
Independent 2017.06.29-
Wang Kun Female 41 0 0
Director 2020.06.28
Independent 2017.06.29-
Li Xianjun Male 50 0 0
Director 2020.06.28
2016.08.12-
David Schoch Ex-Vice Chairman Male 67 0 0
2017.06.29
2016.04.28-
Mark Kosman Ex-Director Male 53 0 0
2017.06.29
2017.06.29-
Zhu Yi Chief supervisor Male 47 0 0
2020.06.28
2017.06.29-
Alvin Qing Liu Supervisor Male 60 0 0
2020.06.28
2017.06.29-
Zhang Jian Supervisor Male 48 40 0
2020.06.28
2017.06.28-
Ding Zhaoyang Supervisor Male 48 20 0
2020.06.28
2017.06.28-
Chen Guang Supervisor Male 44 0 0
2020.06.28
2014.06.27-
Liu Niansheng Ex-Supervisor Male 51 0 0
2017.06.27
2014.06.27-
Xu Lanfeng Ex-Supervisor Female 49 0 0
2017.06.27
2017.06.29-
Jin Wenhui EVP Male 50 0 0
2020.06.28
Gong CFO Female 44 2017.06.29- 0 0
Yuanyuan 2020.06.28
VP & Board 2017.06.29-
Wan Hong Male 56 0 0
Secretary 2020.06.28
2017.06.29-
Tim Slatter VP Male 43 0 0
2020.06.28
2017.06.29-
Li Xiaojun VP Male 42 0 0
2020.06.28
2017.06.29-
Zhu Shuixing VP Male 52 100 0
2020.06.28
2017.06.29-
Liu Shuying VP Female 55 0 0
2020.06.28
2017.06.29-
Mike Chang VP Male 51 0 0
2020.06.28
2017.06.29-
Christian Chen VP Male 45 0 0
2020.06.28
2017.06.29-
Wu Xiaojun VP Male 43 0 0
2020.06.28
2018.01.01-
Ding Wenmin VP Male 46 0 0
2020.06.28
2014.06.27-
Liao Zanping Ex-VP Male 55 0 0
2017.01.31
2015.07.01-
Arturo Mendoza Ex-VP Male 63 0 0
2017.06.29
2017.06.29-
Li Qing Ex-VP Male 53 0 0
2017.12.31
Total 1,360 20 1,360
2. Changes of Directors, Supervisors and Senior Management
Name Position Status Date Reason
David Schoch Vice Chairman Leave 2017.06.27 Re-election of the Board
Mark Kosman Director Leave 2017.06.27 Re-election of the Board
Liu Re-election of the Supervisory
Supervisor Leave 2017.06.27
Niansheng Board
Re-election of the Supervisory
Xu Lanfeng Supervisor Leave 2017.06.27
Board
Liao Zanping VP Leave 2017.01.31 Work rotation
Arturo
VP Leave 2017.06.27 Work rotation
Mendoza
Li Qing VP Leave 2017.12.31 Work rotation
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, Vice
Chairman of Jiangling Motor Holding Co., Ltd., 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 Holding Co., Ltd., and Director & General Manager of JMCG.
Mr. Peter Fleet, born in 1967, holds a Bachelor’s Degree in Politics and
International Relations from the University of Southampton, United Kingdom, and
is Group Vice President of Ford and President of Ford Asia & Pacific, Chairman
and CEO of Ford China, and Vice Chairman of JMC. Mr. Peter Fleet held various
positions including including Marketing Director of Ford Britain, Commercial
Vehicles Director for Marketing, Sales and Service of Ford Europe, Regional
Director for European Sales Operations, President of Ford ASEAN, Vice
President for Sales of Ford Europe, Vice President for Marketing, Sales and
Service of Ford Asia Pacific.
Mr. David Johnston, born in 1970, holds a Bachelor Degree in Economics, Master
Degree in Economics and Manufacturing Leadership from Cambridge University,
United Kingdom, and is currently holding the position of Ford Asia Pacific CFO
and Director of JMC. Mr. David Johnston held various positions including
Controller and Finance Manager of PAG, Volvo China CFO, Ford ASEAN CFO,
Manufacturing Controller of Ford Europe, PD Controller of Ford Europe, PD
Vehicle Controller of Ford Global Finance.
Mr. Thomas Fann, born in 1962, holds a Bachelor Degree in Mechanical
Engineering from National Cheng Kung University, China Taiwai, a Master
Degree in Mechanical Engineering from National Tsing Hua University, China
Taiwan, and a Doctor Degree in Mechanical Engineering from University of
Michigan, U.S.A. , and is Director and President of JMC. Mr. Thomas Fann held
various positions including Local Content Strategy Manager, Purchasing Strategy
Planning Manager of Ford Lio Ho, Commodity Supervisor of Ford Europe,
Controller, Technical Operations & ACSG of Ford Lio Ho, Finance Analysis
Manager of Mazda Motor Europe, Operations Controller of Changan Ford
Automobile Co., Ltd., Vice President Business of Changan Ford Mazda Engine
Company, Finance Director, President of Ford Lio Ho.
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. She is now a
Director of JMCG and a Director & First Executive Vice President of JMC, in
charge of the Company's product development and assists the President to
support the overall operation of the Company. Ms. Xiong Chunying held various
positions including Chief of Quality Management Department, Assistant to the
President, Vice President of JMC.
Mr. Yuan Mingxue, born in 1968, senior engineer, holds a Bachelor’s Degree in
Auto Engineering from Beijing Institute of Technology and an EMBA from China
Europe International Business School, and is a Vice President of Chongqing
Changan Automobile Company Limited (“Changan Automobile”), a Director of
JMC. Mr. Yuan Mingxue has held various positions including Chief of Quality
Department, Manager of Engine Plant for Changan Company, General Manager
of Nanjing Changan Auto Co., Ltd., Assistant to the President of Changan
Automobile and Executive Vice President of Jiangling Motor Holdings Co., Ltd.,
Assistant to the President, Chief of Strategy Planning Department for Changan
Automobile, Assistant to the President and General Manager of Overseas
Business Development Department for Changan Automobile.
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, 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 and Deputy
Director of Corporate Governance Center of Tsinghua University, an Independent
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, 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 Jinlin Province Feed
Company, Lecturer of School of Business of Jilin University.
Supervisors:
Mr. Zhu Yi, born in 1970, senior accountant, holds a Bachelor’s Degree in
Business Management and a MBA from Jiangxi University of Finance &
Economics, and is a Director & Vice General Manager of JMCG and a Director of
Jiangling Motor Holdings Co., Ltd, Chief Supervisor of JMC. Mr. Zhu Yi held
various positions including Vice Manager of Jiangling Auto Maintenance Service
Limited, Deputy Chief and Chief of JMCG Asset & Finance Department, Assistant
to General Manager, Vice General Manager of JMCG.
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 Vice President and General Counsel of Ford Asia Pacific. He is
now Vice President and General Counsel of Ford Asia Pacific, Director & Vice
Chairman of Ford Motor (China) Ltd, 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, Chief Supervisor of Jiangling Motor Holding Co., Ltd, 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, Chief of Public & legal Affair
Department for JMC. Mr. Ding Zhaoyang held various positions including Deputy
Chief, Chief of Public Relationship Department of JMC.
Mr. Chen Guang, born in 1973, holds a Bachelor’s Degree in Automobile
Engineering from Hunan University, and is a Supervisor of JMC, 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. Thomas Fann, please refer to the part of Directors.
Ms. Xiong Chunying, please refer to the part of Directors.
Mr. Jin Wenhui, born in 1967, senior engineer, and holds a Bachelor’s Degree in
Mechanical Manufacturing and a Master’s Degree in Mechanical Engineering from
Huazhong University of Science and Technology, and an EMBA Degree in China
Europe International Business School. He is now an Executive Vice President of
JMC, in charge of sales and manufacturing management. 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., Executive Vice General Manager of Jiangxi-Isuzu Motors Co.,
Ltd.
Ms. Gong Yuanyuan, born in 1973, holds a Bachelor Degree in Finance from
Shanghai Jiao Tong University and a MBA from City University, United Kingdom.
She is now the CFO of JMC, in charge of finance management. Ms. Gong
Yuanyuan held various positions including Controller of Fudian Electronics, Profit
Analysis Manager of Visteon Asia Pacific, Controller of Ford China Sourcing
Office, Controller of Ford China Operations, Controller of CFMA Nanjing
Assembly Plant, Controller of MFG and MP&L of Ford China, and PD Controller of
Lincoln and Mustang of Ford U.S.
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 human resources and
relevant duties of Board Secretary. Mr. Wan Hong held various positions including
Chief of Labour and Personnel Department, Assistant to the President, Vice
President for JMC.
Mr. Tim Slatter, born in 1974, holds a Bachelor’s Degree in Automotive
Engineering and Design from Coventry University, U.K. He is now a Vice
President of JMC, in charge of the Company’s product development. Mr. Tim
Slatter held various positions including Manufacturing Process Development
Engineer of Renault Company, Engineer, Gasoline/Diesel Powertrain Control
System Integration Supervisor, Powertrain Installation Manager, Global Exhaust
Engineering Manager of Ford Europe, Powertrain Programs and Integration Chief
Engineer of Ford AP.
Mr. Li Xiaojun, born in 1975, is a senior engineer and 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. He is now a Vice President of JMC, in
charge of quality and manufacturing management. 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. Zhu Shuixing, born in 1965, holds a Master’s Degree in Pressure Processing
from Northwestern Polytechnical University and a MBA from Jinan University. He
is now a Vice President of JMC, in charge of the Company level strategic planning
and parts business. Mr. Zhu Shuixing held various positions including Deputy
Director of Engineering Department of JMC, Deputy Dean of No.5 Institute of
Project Planning & Research of Machinery Industry, Jiangling Sub-branch, Project
Manager, Manager of Quality Control Department of Hilti China Ltd., Manager of
Purchasing Department, Manager of Industrial Support Department,
Manufacturing Manager of Philips Electronics (Zhuhai) Co., Ltd., Plant Manager of
International Paper (Guangzhou) Packaging Co., Ltd., Operation Officer of
Amphenol East Asia Electronic Technology (Shenzhen) Limited, and Assistant to
the President of JMC.
Ms. Liu Shuying, born in 1962, is a senior engineer and holds a Bachelor’s
Degree in Mechanical Manufacturing from Jiangxi University of Technology. She
is now a Vice President of JMC, in charge of product 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.
He is now a Vice President of JMC, in charge of Xiaolan Branch 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, General Manager of Changan Ford Automobile Co., Ltd.
Harbin Branch.
Mr. Christian Chen, born in 1972, is a semi-senior engineer and holds a
Bachelor’s Degree in Automotive Engineering from Wuhan University of
Technology and a MBA from Wuhan University. He is a Vice President of JMC, in
charge of purchasing business. Mr. Christian Chen held various positions
including Product Development Manager of Dongfeng-Citroen, Quality Project
Engineer of TUV, STA, Buyer, Purchasing Manager and Senior Purchasing
Manager of Ford Motor Company.
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. He
is a Vice President of JMC and General Manager of JMC Heavy Duty Vehicle Co.,
Ltd., in charge of heavy duty truck business. Mr. Wu Xiaojun held various
positions including Chief of Quality Department, Assistant to the President for
JMC, Executive Deputy General Manager of JMC Heavy Duty Vehicle Co., Ltd.
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 product planning and project management. Mr. Ding Wenming held
various positions including Deputy Chief of Product Development Center, Chief of
Product Planning & Program Management Department, and Assistant to the
President for JMC.
Positions at the shareholder entities
□√Applicable □Not Applicable
Name Shareholder Title Term of Compensation
Entity Office Paid by
Shareholder
Entity (Y/N)
Qiu Tiangao JMH Vice Chairman 2016.3— N
Ford Group Vice President 2017.7— Y
Peter Fleet and President, Ford
Asia Pacific
Ford CFO, Ford Asia 2017.7— Y
David Johnston
Pacific
Yuan Mingxue JMH Director 2015.7— N
Zhu Yi JMH Director 2004.11— N
Alvin Qing Liu Ford Vice President and 2009.1— Y
General Counsel,
Ford Asia Pacific
Particulars about positions and concurrent positions in other entities other than
shareholder entities
□√Applicable □Not Applicable
Name Entity Title
JMCG Chairman
JMCG Jingma Motors Co., Ltd. Chairman
Jiangling Dingsheng Investment
Chairman
Qiu Tiangao Co., Ltd.
JMEV Chairman
Jiangxi-Isuzu Motors Co., Ltd. Chairman
JMC Heavy Duty Vehicle Co., Ltd. Chairman
Ford Motor (China) Ltd. Chairman and CEO
Peter Fleet
Changan Ford Automobile Co., Ltd. Vice Chairman
Ford Motor (China) Ltd. Director
David Johnston
Changan Ford Automobile Co., Ltd. Director
Thomas Fann JMC Heavy Duty Vehicle Co., Ltd. Director
Chongqing Changan Automobile
Yuan Mingxue Vice President
Co., Ltd.
Lu Song CAFU Professor
Assistant to Dean
of School of
Economics and
Wang Kun Tsinghua University Management and
Deputy Director of
Corporate
Governance Center
Head and
Academic Director
Li Xianjun Tsinghua University of School of
Automotive
Engineering
Director & Vice
Zhu Yi JMCG
General Manager
Changan Ford Mazda Engine Co.,
Vice Chairman
Ltd.
Director & Vice
Ford Motor (China) Ltd.
Chairman
Alvin Qing Liu Changan Ford Automobile Co., Ltd. Director
Ford Motor Research(Nanjing) Co.,
Supervisor
Ltd.
Ford Motor Research Test(Nanjing)
Supervisor
Co., Ltd.
JMCG Director
Xiong Chunying
JMC Heavy Duty Vehicle Co., Ltd. Director
JMCG Director
Legal
Jin Wenhui Jiangling Motor Sales Co., Ltd.
Representative
JMC Heavy Duty Vehicle Co., Ltd. Director
JMC Heavy Duty Vehicle Co., Ltd. Director
Gong Yuanyuan
Jiangling Motors Sales Co., Ltd. Supervisor
Jiangxi Hongdu Aviation Industry Independent
Co., Ltd. Director
Wan Hong
JMC Heavy Duty Vehicle Co., Ltd. Director
Director & General
Wu Xiaojun JMC Heavy Duty Vehicle Co., Ltd.
Manager,
Vice General
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, Supervisors Zhu Yi
and Zhang Jian were paid by JMCG. Directors Peter Fleet, David Johnston and
Supervisor Alvin Qing Liu were paid by Ford. Director Yuan Mingxue was paid by
Chongqing Changan Automobile Co., Ltd.
(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 2017, the
Company paid annual compensation before tax of approximately RMB 1,910
thousand to EVP Xiong Chunying, paid approximately RMB 1,610 thousand to
EVP Jin Wenhui, paid approximately RMB 1,330 thousand per person to VP &
Board Secretary Wan Hong, Ex-VP Li Qing, VP Zhu Shuixing and VP Liu Shuying,
paid VP Li Xiaojun approximately RMB 1,300 thousand, paid VP Wu Xiaojun
approximately RMB 1,690 thousand, paid Ex-VP Liao Zanping approximately
RMB 130 thousand. Two employee-representative supervisors, Mr. Ding
Zhaoyang and Mr. Chen Guang, were paid annual compensation before tax of
about RMB 420 thousand and RMB 400 thousand respectively. Two Ex
employee-representative supervisors, Mr. Liu Niansheng and Ms Xu Lanfeng,
were paid annual compensation before tax of about RMB 1000 thousand and
RMB 680 thousand respectively. The total compensation before tax paid by JMC
for the aforesaid persons was about RMB 14.46 million in the reporting period,
including the long-term incentive of RMB 1.66 million deferred from the previous
years.
(2) JMC pays annual compensation for Ford-seconded senior management
personnel to Ford in accordance with the revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. In 2017, JMC
should pay US$ 375 thousand per person to Ford for Director & President
Thomas Fann and VP Tim Slatter, pay US$ 187.5 thousand for VP Mike Chang,
pay RMB 750 thousand per person for CFO Gong Yuanyuan and VP Christian
Chen, pay US$ 187.5 thousand for ex-VP Arturo Mendoza. 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 Paid
Present
Name Position Gender Age Before Tax Paid by Related Party
(Y/N)
by JMC (Y/N)
Qiu Tiangao Chairman Male 51 Y 0 Y
Peter Fleet Vice Chairman Male 50 Y 0 Y
David Johnston Director Male 47 Y 0 Y
Director & Y N
Thomas Fann Male 55 *
President
Xiong Chunying Director & EVP Female 53 Y 1,910 N
Yuan Mingxue Director Male 49 Y 0 Y
Independent Y
Lu Song Male 60 100 N
Director
Independent Y
Wang Kun Female 41 100 N
Director
Independent Y
Li Xianjun Male 50 100 N
Director
Zhu Yi Chief supervisor Male 47 Y 0 Y
Alvin Qing Liu Supervisor Male 60 Y 0 Y
Zhang Jian Supervisor Male 48 Y 0 Y
Ding Zhaoyang Supervisor Male 48 Y 420 N
Chen Guang Supervisor Male 44 Y 400 N
Liu Niansheng Supervisor Male 50 N 1,000 N
Xu Lanfeng Supervisor Female 48 N 680 N
Jin Wenhui EVP Male 50 Y 1,610 N
Gong Yuanyuan CFO Female 44 Y * N
VP & Board Y
Wan Hong Male 56 1,330 N
Secretary
Tim Slatter VP Male 43 Y * N
Li Xiaojun VP Male 42 Y 1,300 N
Zhu Shuixing VP Male 52 Y 1,330 N
Liu Shuying VP Female 55 Y 1,330 N
Christian Chen VP Male 45 Y * N
Mike Chang VP Male 51 Y * N
Wu Xiaojun VP Male 43 Y 1,690 N
Li Qing VP Male 53 N 1,330 N
Arturo Mendoza VP Male 63 N * N
Liao Zanping VP Male 55 N 130 N
* Please refer to the Article 4 (2) of the 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) 15,396
Employees in subsidiaries (persons) 1,945
Total employees (persons) 17,341
Total employees paid compensation (persons) 18,246
Retired employees bore retirement benefits in parent company and its subsidiaries
Professional Structure
Type Employees (Persons)
Production Worker 12,058
Sales Personnel
Technical Personnel 3,374
Finance Personnel
Administrative Staff
Total 17,341
Educational Level
Type Employees (Persons)
Master degree and higher
Bachelor degree 3,820
Polytechnic school degree 2,424
Below polytechnic school degree 10,156
Total 17,341
ii. Compensation Policy
The Company strictly complies with the relevant requirements of national labor
laws and regulations, adheres to the principle of \"equal pay for equal work,
equality between men and women, and ethnic equality\", provides a safe and
standardized workplace, and respects the diversity of employees, to provide
employees with competitive salary and welfare benefits. According to the 3P pay
concept, employees’ compensation is determined based on employee position,
power, and performance to stimulate the initiative of the staff on improving their
work ability and fully mobilize the enthusiasm of the staff.
The company pays Five Social Insurance and One Housing Fund of social
insurance and welfare to employees according to laws and provides employees
with statutory leave.
The company establishes the management personnel channel, the technical
personnel channel and the worker development channel, and lets employees
have a perfect development prospect in different positions. The Company unifies
the employee's ability enhancement and the performance of the work to promote
the employee's personal rank and technical level, so as to realizes the employee's
career development.
iii. Training
In 2017, JMC’s training expense was RMB 18,560 thousand, and training person-
time were 94,321 with training stratification of 96.90%. Please refer to the Chapter
IV of 2017 JMC Corporation Social Responsibility Report for more details on 2017
training plan implementation.
iv. Labour outsourcing
□Applicable □√Not Applicable
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
□Applicable □√Not Applicable
4. Introduction to the Shareholders’ Meeting
I. Index to the Shareholders’ Meeting in the reporting period
Meeting Meeting Type Convening Date Disclosure Date Index
Announcement of this
2017 First Special Special Special Shareholders’
Shareholders’ Shareholders’ 2017.05.18 2017.05.19 Meeting (No: 2017-018) was
Meeting Meeting published in the website
Http://www.cninfo.com.cn.
2016 Annual Annual Announcement of this Annual
Shareholders’ Shareholders’ 207.06.29 207.06.30 Shareholders’ Meeting (No:
Meeting Meeting 2017-025) was published in
the website
Http://www.cninfo.com.cn.
Announcement of this
2017 Second Special Special Special Shareholders’
Shareholders’ Shareholders’ 2017.12.01 2017.12.01 Meeting (No: 2017-046) was
Meeting Meeting published in the website
Http://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 18 4 14 0 0 N
Wang Kun 18 2 14 2 0 N
Li Xianjun 18 2 14 2 0 N
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 Committee in the reporting period, to protect the
interests of the Company and all the shareholders.
6. 2017 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 Eight Accounting Provisions and Write-off
proposal and submitted it to the Board for approval.
iii. The Audit Committee reviewed the proposal on Implementing New Revenue
Recognition Standard and submitted it to the Board for approval.
iv. The Audit Committee reviewed the independent auditor’s audit plan, letter of
engagement and risks and controls.
v. The Audit Committee has coordinated with the independent auditor to allow the
audit and associated financial report can be submitted within the appointed
period.
vi. 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.
vii. The Audit Committee submitted the Summary Work Report of the Independent
Auditor for 2017 to Board for review.
viii. 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 17, 2018: 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 25, 2018: 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, 2017, 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 2017 financial statements
as follows on March 8, 2018: 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
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, 2017, 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. 2017 Independent Audit Work Summary Report
The Audit Committee reviewed the 2017 Audit Work Plan submitted by the
independent auditing firm PwC via communications with the PwC leading auditor.
Agreement was achieved regarding timing and content and both parties believe
that the plan ensures a comprehensive completion of the 2017 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 8 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, 2017, and the
financial performance and cash flows for the year then ended. The audit
conclusion fairly reflects the Company’s actual status.
II. 2017 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 2016 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 2017;
iii. reviewed and approved the KPIs for the Company’s senior executives in 2017,
and;
iv. reviewed and approved the 2016 Due Diligence Report of the Compensation
Committee.
The Compensation Committee’s opinions on the annual compensation of the
Directors, Supervisors and senior management disclosed in this Report are as
follows:
The 2017 annual compensation for the Chinese-side senior management was
paid upon the principles promulgated in the JMC Executive Compensation
Scheme. The 2017 annual compensation for Ford-seconded senior management
personnel was paid in accordance with revised Personnel Secondment
Agreement signed between JMC and Ford and Ford Affiliates. The annual
compensation for the 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 2017 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 to adjust the Year 2018 total income target of the senior
executives. 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 24, 2018
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
changes the trend of results, changes
profit to loss or loss to profit
Material Weakness: Unscientific decision
Ineffective anti-fraud process or any
making process such as incorrect
fraud involving senior management
decisions that result in unsuccessful
Ineffective control over accounting
mergers and acquisitions; Major
policies Ineffective oversight by the
regulatory compliance issues; Frequent
Audit Committee Significant
media reports harmful to the Company’s
Deficiency; Errors in management
reputation; A lack of control within key
reporting systems or Corporate
business processes or systematic
accounting records that could lead to
breakdown of control policies
incorrect management decisions;
Material weakness identified in the self-
Qualitative Criteria Actions inconsistent with Company
assessment without any action plan
values, policies and other Corporate
implemented Significant Deficiency;
guidelines that are likely to
control deficiency, or combination of
significantly impact cost, quality,
control deficiencies, that does not meet
customer satisfaction, reputation, or
the criteria for material weakness but
competitive advantage; Control
deserves the concerns of the Audit
issues in IT infrastructure or
Committee and the Board of Directors.
applications that may lead to
Minor Deficiency Any control deficiencies
impairment of Company operations.
that do not meet the criteria for material
Any actions indicating fraud or theft
or significant.
that is significant in value Minor
Deficiency; Any control deficiencies
that 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 deficiency
Significant Deficiency
Quantitative Criteria over financial reporting for the criteria for
Misstatement in the Income Statement is 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
financial report
Number of Material
Weakness in non-
financial report
Number of Significant
Deficiency in financial
report
Number of Significant
Deficiency in non-
financial report
7. Internal Control Audit Report
□√Applicable □Not Applicable
Opinions in the Internal Control Audit Report
The opinions in the Internal Control Audit Report issued by Pwc Zhong Tian are as follows:
As of December 31, 2017, JMC maintained adequate control over financial statements in all the material
aspects according to the Basic Standard for Enterprise Internal Control and other relevant rules.
Internal Control Audit Report
Disclosed
Disclosed or not
Issuance date March 24, 2018
Index Http://www.cninfo.com.cn
Type of Opinion Standard and unqualified opinions
Major Defect regarding non-
No
financial report or 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
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 22, 2018
Name of Auditor PricewaterhouseCoopers Zhong Tian
LLP
Document No. of Audit Report 2018/SH-0106
Independent Auditor’s Report
2018/SH-0106
(Page 1 of 5)
To the Shareholders of Jiangling Motors Corporation, Ltd.
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 54 to 110, which comprise:
the consolidated statement of financial position as at 31 December 2017;
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
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 2017, and of 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 judgment, 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
2018/SH-0106
(Page 2 of 5)
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 14 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 RMB48,000,000, together with
and development a sample of randomly selected immaterial projects from the
expenditures(RMB2,054,740,000 remaining population, as follows:
in 2017), the amount of the We obtained the lists of expenses by nature on selected
development costs projects and inspected contracts and underlying invoices
capitalised(RMB58,010,000 in which were directly related to those projects. We also
2017), and the fact that there is checked the reasonableness of the indirect expenses
management’s judgement attributable to relevant projects, including employment
involved in assessing whether the costs and depreciation expenses, by understanding the
criteria set out in the accounting allocating method and inspecting the supporting for the
assembling and allocating process of those indirect
policies (note 2.8(2)) required for
expenses.
capitalisation of such
We also checked the recorded research and development
development costs had been met, costs of those projects with budgeted amounts and
particularly: discuss with project manager regarding to the status of
The technical feasibility of the selected projects.
project.
The likelihood of the project We found no material issues arising from the above
generating sufficient future procedures.
economic benefits.
The timing to start We obtained the lists of capitalised projects and tested those
capitalisation.
projects with the capitalised amounts over
RMB38,000,000.We obtained explanations from
We had particular regard to the
management of why those projects were considered to be
fact that the Group has continued
capital in nature, in terms of how the specific requirements
to invest in the technical
of the relevant accounting standards, most notably of IAS
improvements for its automobile
38 were met. We also conducted interviews with individual
products, and therefore we
project managers responsible for those projects selected to
focussed on the accuracy and
corroborate these explanations, which enabled us to
completeness of recorded
independently assess whether the projects met all the
research and development
criteria for capitalisation set out in accounting standards. In
expenditures and whether the
addition, were viewed the selected projects’ inspection
economic benefits of the projects
reports at different phases including the reports which
under development supported the
indicated that the subject projects entered into
amounts capitalised.
developmental stage and related management and board
meeting minutes. We found the information we gathered
As part of our work we also
from those documents to be consistent with explanations
focused on management’s
obtained from individual project managers and to be in line
judgements regarding whether
with management’s assessment that the costs met the
capitalised costs were of a
relevant capitalisation criteria. We considered
development stage rather than
management’s judgments on whether those selected
research stage(which would result
projects should be capitalised were appropriate.
in the costs being expensed rather
than capitalised), and whether
costs, including
employment(payroll) costs, were
directly attributable to relevant
projects.
2018/SH-0106
(Page 3 of 5)
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 12 to the comparing them to the latest Board approved budgets, and
consolidated financial testing the underlying calculations. We found that
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 long-term growth rates in the
RMB842,256,000 as at 31 forecasts by comparing them to historical results, and
December 2017, which indicates economic and industry forecasts;
there may be impairment on its the discount rate by assessing the cost of capital for the
long term assets, mainly CGU and comparable organisations.
including property, plant and We considered the long-term growth rates and cost of
equipment with the amount of capital were reasonably set in place.
RMB1,184,641,000.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 profitability
operations. improvement had ever been attained by the relevant CGU
historically. We compared the current year actual results
Management considers JMCH with the figures included in the prior year forecast to
to be a cash generating unit consider whether any forecasts included assumptions that,
(“CGU”) and has calculated the with hindsight, had been optimistic. We found the actual
recoverable amount of this CGU results and forecasted figures were consistent.
as the higher of an asset’s or
cash-generating unit’s fair value We challenged management on the adequacy of their
less costs of disposal and its sensitivity calculations over the CGU. We determined that
value in use. The value in use is the calculations were most sensitive to assumptions for
based on discounted future cash revenue growth rates and discount rates. We calculated the
flow forecasts over which the degree to which these assumptions would need to move
management make judgements before an impairment conclusion was triggered. We
on certain key inputs including, discussed the likelihood of such a movement with
for example, discount rates and management and agreed with their conclusion that it was
long term growth rates. unlikely.
2018/SH-0106
(Page 4 of 5)
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 Audit Committee for the
Consolidated Financial Statements
Management of the Company is responsible for the preparation and fair presentation of the
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 have 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. 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 judgment and maintain
professional scepticism throughout the audit. We also:
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.
2018/SH-0106
(Page 5 of 5)
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 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 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 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
22March 2018
JIANGLING MOTORSCORPORATION, LTD.
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF THE AUDITORS
31 DECEMBER 2017
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in thousands of RMB unless otherwise stated)
Year ended 31 December
Note 2017
Revenue 5 31,345,747 26,633,949
Taxes and surcharges (967,011) (823,494)
Cost of sales 6 (25,045,090) (20,612,723)
Gross profit 5,333,646 5,197,732
Distribution expenses 6 (2,694,779) (1,961,535)
Administrative expenses 6 (2,744,600) (2,498,485)
Impairment charge of non-current assets (11,850) (2,795)
Other income 8 632,036 514,415
Operating profit 514,453 1,249,332
Finance income 9 244,300 223,517
Finance expenses 9 (5,079) (3,882)
Finance income-net 9 239,221 219,635
Share of profit of investments accounted for using the
equity method 15b 8,149 12,624
Profit before income tax 761,823 1,481,591
Income tax expense 10 (70,885) (163,575)
Profit for the year 690,938 1,318,016
Profit attributable to:
Owners of the Company 690,938 1,318,016
Other comprehensive income
Item that will not be reclassified subsequently to profit or
loss
- Remeasurements of retirement benefits obligations (1,616) (1,083)
- Income tax relating to remeasurements of retirement
benefit obligations 404
Other comprehensive income for the year, net of tax (1,212) (812)
Total comprehensive income for the year 689,726 1,317,204
Total comprehensive income attributable to:
Owners of the Company 689,726 1,317,204
Earnings per share for profit attributable to the
shareholders of the Company for the year
(expressed in RMB per share)
- Basic and diluted 11 0.80 1.53
The notes on pages 59 to 110 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
(All amounts in thousands of RMB unless otherwise stated)
As at 31 December
Note 2017
Assets
Non-current assets
Property, plant and equipment 12 6,714,088 6,688,530
Lease prepayment 13 616,834 632,408
Intangible assets 14 197,860 158,160
Investments accounted for using the equity method 15b 37,874 39,893
Other non-current assets 478 97,549
Deferred income tax assets 16 690,253 554,488
Total non-current assets 8,257,387 8,171,028
Current assets
Financial assets at fair value through profit or loss - 8,539
Inventories 17 2,339,304 1,934,092
Trade and other receivables and prepayments 18 4,555,934 2,625,808
Cash and cash equivalents 19 11,137,723 11,666,222
Restricted cash -
Assets classified as held for sale 20 93,413 87,637
Total current assets 18,126,374 16,322,761
Total assets 26,383,761 24,493,789
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATEDSTATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 DECEMBER 2017
(All amounts in thousands of RMB unless otherwise stated)
As at 31 December
Note 2017
EQUITY
Share capital 21 863,214 863,214
Share premium 816,609 816,609
Other reserves 22 450,914 452,126
Retained earnings 10,441,665 10,277,287
Total equity 12,572,402 12,409,236
LIABILITIES
Non-current liabilities
Borrowings 23 3,851 4,543
Deferred income tax liabilities 16 26,736 27,383
Retirement benefit obligations 24 54,764 53,627
Provisions for warranty and other liabilities 25 184,688 130,987
Other non-current liabilities 240
Total non-current liabilities 270,279 216,860
Current liabilities
Financial liabilities at fair value through profit or loss 8,493 -
Trade and other payables 26 13,222,540 11,605,178
Current income tax liabilities 114,906 98,860
Borrowings 23 428
Retirement benefit obligations 24 4,420 4,561
Provisions for warranty and other liabilities 25 190,293 153,640
Other current liabilities - 5,000
Total current liabilities 13,541,080 11,867,693
Total liabilities 13,811,359 12,084,553
Total equity and liabilities 26,383,761 24,493,789
The notes on pages 59 to 110 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in thousands of RMB unless otherwise stated)
Attributable to owners of the Company
Share Share Other Retained Total
Note capital premium reserves earnings equity
Balance at 1 January 2016 863,214 816,609 452,938 9,848,381 11,981,142
Profit for the year - - - 1,318,016 1,318,016
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of
tax - - (812) - (812)
Dividends relating to 2015 - - - (889,110) (889,110)
Balance at 31 December 2016 863,214 816,609 452,126 10,277,287 12,409,236
Balance at 1 January 2017 863,214 816,609 452,126 10,277,287 12,409,236
Profit for the year - - - 690,938 690,938
Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of
tax - - (1,212) - (1,212)
Dividends relating to 2016 27 - - - (526,560) (526,560)
Balance at 31 December 2017 863,214 816,609 450,914 10,441,665 12,572,402
The notes on pages 59 to 110 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in thousands of RMB unless otherwise stated)
Year ended 31 December
Note 2017
Cash flows from operating activities
Cash generated from operations 28 896,721 4,789,706
Interest paid (226) (393)
Income tax paid (221,907) (196,313)
Net cash generated from operating activities 674,588 4,593,000
Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (1,019,830) (1,144,340)
Other cash paid relating to investing activities (11,080) (1,138)
Proceeds from disposal of PPE and Lease prepayment 28 99,726 2,765
Interest received 240,338 248,605
Dividends received 10,168 13,724
Other cash received from investing activities 11,022 5,236
Net cash used in investing activities (669,656) (875,148)
Cash flows from financing activities
Repayments of borrowings (5,443) (433)
Dividends paid to shareholders of the Company (527,117) (897,770)
Other cash paid relating to financing activities (871) (1,467)
Net cash used in financing activities (533,431) (899,670)
Net (decrease)/increase in cash and cash equivalents (528,499) 2,818,182
Cash and cash equivalents at beginning of year 11,666,222 8,848,040
Effects of exchange rate changes - -
Cash and cash equivalents at end of year 19 11,137,723 11,666,222
The notes on pages 59 to 110 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
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 Corporation Group (“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 2017, the total number of issued shares of the Company
is863,214,000shares, which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development,
manufacturing and selling of automobiles, engines and automobile related parts, dies and
tools.
These consolidated financial statements were authorised for issue by the Board of Directors
on 22March2018.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all
applicable International Financial Reporting Standards (“IFRS”).The consolidated financial
statements have been prepared under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimations are significant to the
consolidated financial statements are disclosed in Note 4.
- 59 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
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)
2.1.1 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
Standards, amendments and interpretations which are effective for the financial year
beginning on 1 January 2017 are not material to the Group.
(b) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not
mandatory for 31 December 2017 reporting periods and have not been early adopted by the
Group. The Group’s assessment of the impact of these new standards and interpretations is
set out below.
IFRS 9 Financial instruments
Nature of change
IFRS 9 addresses the classification, measurement and recognition of financial assets
and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It
replaces the guidance in IAS 39 that relates to the classification and measurement of
financial instruments. IFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortised cost,
fair value through OCI and fair value through profit and loss. The basis of classification
depends on the entity's business model and the contractual cash flow characteristics of
the financial asset. Investments in equity instruments are required to be measured at fair
value through profit or loss with the irrevocable option at inception to present changes in
fair value in OCI not recycling. There is now a new expected credit losses model that
replaces the incurred loss impairment model used in IAS 39. For financial liabilities there
were no changes to classification and measurement except for the recognition of
changes in own credit risk in other comprehensive income, for liabilities designated at fair
value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by
replacing the bright line hedge effectiveness tests. It requires an economic relationship
between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the
same as the one management actually use for risk management purposes.
Impact
The Group has reviewed its financial assets and liabilities and is expecting no significant
impact from the adoption of the new standard on 1 January 2018. The financial
instruments of the Group that are currently classified as financial assets or liabilities at
fair value through profit and loss satisfied the conditions for classification as fair value
through profit and loss under IFRS 9. Hence there will be no significant change to the
accounting for these assets or liabilities.
Date of adoption by the Group
The standard is effective for accounting periods beginning on or after 1 January 2018.
Early adoption is permitted. The Group will apply the new rules from 1 January 2018.
- 60 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
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)
2.1.1 Changes in accounting policy and disclosures (continued)
(b) New standards and interpretations not yet adopted (continued)
IFRS 15 Revenue from contracts with customers
Nature of change
IFRS 15 deals with revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature, amount, timing and
uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
Revenue is recognised when a customer obtains control of a good or service and thus
has the ability to direct the use and obtain the benefits from the good or service. The
standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related
interpretations. The standard is effective for annual periods beginning on or after 1
January 2018 and earlier application is permitted. The standard permits either a full
retrospective or a modified retrospective approach for the adoption.
Impact
Management has assessed the effects of applying the new standard on the Group’s
financial statements and no significant impact has been identified except for the
reclassification from distribution expenses as a deduction of revenue when accounting
for the payment to customers under IFRS 15.
Date of adoption by the Group
Mandatory for financial years commencing on or after 1 January 2018. The Group
intends to adopt the standard using the modified retrospective approach which means
that the cumulative impact of the adoption will be recognised in retained earnings as of 1
January 2018 and that comparatives will not be restated.
IFRS 16 Leases
Nature of change
IFRS 16 will result in almost all leases being recognised on the balance sheet, as the
distinction between operating and finance leases is removed. Under the new standard,
an asset (the right to use the leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-value leases. The accounting for
lessors will not significantly change.
Impact
The Group only have operating leases and the leased assets and the lease arrangement
have no significant impact on financial statement.
Date of adoption by the Group
The new standard is mandatory for financial years commencing on or after 1 January
2019. At this stage, the Group does not intend to adopt the standard before its effective
date.
There are no other standards that are not yet effective that would be expected to have a
material impact on the Group in the current or future reporting periods and on foreseeable
future transactions.
- 61 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
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.
2.3 Associates
An associate is an entity over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the profit or loss of the investee
after the date of acquisition.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share
of post-acquisition movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred legal or constructive obligations or made payments on
behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to ‘share of profit of investments
accounted for using equity method’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
- 62 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the executive committee that makes strategic decisions.
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is
the Company’s functional and the Group’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within ‘other income/
(expense)-net’.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in amortised cost are recognised in profit or loss,
and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held
at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss. Translation differences on non-monetary financial assets, such as equities classified
as available-for-sale, are included in other comprehensive income.
- 63 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 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 vehicles 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 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognised within ‘other income/(expense)- net’ in profit or loss.
Assets under construction represent buildings under construction and plant and equipment
pending installation, and are stated at cost. Costs include construction and acquisition costs. No
provision for depreciation is made on assets under construction until such time as the relevant
assets are completed and ready for intended use. When the assets concerned are brought into
use, the costs are transferred to property, plant and equipment and depreciated in accordance
with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is
expensed in profit or loss on a straight-line basis over the period of the lease or when there is
impairment, the impairment is expensed in profit or loss.
- 64 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the fair value of the identified net
assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit
from the synergies of the combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in
circumstances indicate a potential impairment. The carrying value of 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) adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset are available; and
(e) 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 capitalized 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.
- 65 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets(continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful
lives of 5 years.
(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.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not
subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs 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 flows (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date.
2.10 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. The non-current
assets (except for certain assets as explained below), are stated at the lower of carrying amount
and fair value less costs to sell. Deferred tax assets and financial assets (other than investments
in subsidiaries and associates), which are classified as held for sale, would continue to be
measured in accordance with the policies set out elsewhere in Note 2.
2.11 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit
or loss, loans and receivables, and available-for-sale. The classification depends on the
purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A
financial asset is classified in this category if acquired principally for the purpose of selling in
the short term. Derivatives are also categorised as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets if expected to be settled
within 12 months; otherwise, they are classified as non-current.
- 66 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets(continued)
(1) Classification(continued)
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are included in current assets, except
for the amounts that are settled or expected to be settled more than 12 months after the end
of the reporting period. These are classified as non-current assets.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. They are included in non-current
assets unless the investment matures or management intends to dispose of it within 12
months of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date-the
date on which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets
are derecognised when the rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and receivables are subsequently carried
at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value
through profit or loss’ category are presented in profit or loss within ‘other income/(expense)-
net’ in the period in which they arise. Dividend income from financial assets at fair value
through profit or loss is recognised in profit or loss as part of other income when the Group’s
right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for-
sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments recognised in equity are included in profit or loss as ‘gains and losses from
investment securities’.
Interest on available-for-sale securities calculated using the effective interest method is
recognised in profit or loss as part of other income. Dividends on available-for-sale equity
instruments are recognised in profit or loss as part of other income when the Group’s right to
receive payments is established.
- 67 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.12 Financial liabilities at fair value through profit or loss and offsetting financial
instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A
financial liability is classified in this category if incurred principally for the purpose of selling in the
short term. A financial liability initially recognised at fair value, and transaction costs are
expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in
this category are classified as current liabilities if expected to be settled within 12 months;
otherwise, they are classified as non-current. A financial liability is derecognised when it is
extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and
must be enforceable in the normal course of business and in the event of default, insolvency
or bankruptcy of the Company or the counterparty.
2.13 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or group of financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganisation, and
where observable data indicate that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of
the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s fair value using an observable market
price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised (such as
an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
- 68 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies(continued)
2.13 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence
that a financial asset or a group of financial assets is impaired.
For debt securities, if any such evidence exists the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment loss
on that financial asset previously recognised in profit or loss – is reclassified from equity and
recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument
classified as available-for-sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed through profit or loss.
For equity investments, a significant or prolonged decline in the fair value of the security
below its cost is also evidence that the assets are impaired. If any such evidence exists the
cumulative loss – measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in profit or
loss – is reclassified from equity and recognised in profit or loss. Impairment losses
recognised in profit or loss on equity instruments are not reversed through profit or loss.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
weighted average method. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal
operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
prices in the ordinary course of business, less applicable variable distribution expenses.
2.15 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of business. If collection of trade and other receivables is expected in one
year or less (or in the normal operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less allowance for impairment. See Note
2.11(2) for further information about the Group’s accounting for trade receivables and Note
2.13 for a description of the Group’s impairment policies.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,
deposits held at call with banks and other short-term highly liquid investments with original
maturities of three months or less.
- 69 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
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.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in profit or loss over the period of the borrowings
using the effective interest method.
Borrowings are removed from the balance sheet 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 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.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
- 70 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Borrowing costs(continued)
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.
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the PRC. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
(2) Deferred income tax
Inside basis differences
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not recognised if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
- 71 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax (continued)
(2) Deferred income tax(continued)
Deferred income tax assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
Outside basis differences
Deferred income tax liabilities are provided on taxable temporary differences arising from
investments in subsidiaries, associates and joint arrangements, except for deferred income tax
liability where the timing of the reversal of the temporary difference is controlled by the Group
and it is probable that the temporary difference will not reverse in the foreseeable future.
Generally the Group is unable to control the reversal of the temporary difference for associates.
Only when there is an agreement in place that gives the Group the ability to control the reversal
of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable
temporary differences arising from the associate’s undistributed profits is not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from
investments in subsidiaries and associate only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient taxable profit available against which
the temporary difference can be utilised.
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes
assets and liabilities relate to income taxes levied by the same taxation authority on either the
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
2.22 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed
by the PRC government. The contribution to the scheme is charged to profit or loss as and
when incurred. The Group’s obligations are determined at a certain percentage of the salaries of
the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees.
Such supplementary pension subsidies are considered as under defined benefit plans. The
liability recognised in the statement of financial position in respect of these defined benefit plans
is the present value of the defined benefit obligation at the balance sheet date less the fair value
of plan assets, together with adjustments for recognised actuarial gains or losses and past
service cost. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows according to the terms of the
related pension liability.
- 72 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Employee benefits (continued)
(1) Pension obligations (continued)
The current service cost of the defined benefit plan, recognised in profit or loss in employee
benefit expense, except where included in the cost of an asset, reflects the increase in the
defined benefit obligation results from employee service in the current year, benefit changes,
curtailments and settlements.
Past-service costs are recognised immediately in profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in profit or loss.
Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period in
which they arise.
(2) Housing fund and other benefits
The Group’s full-time employees are entitled to participate in a state-sponsored housing fund.
The fund can be used by the employees for the purchase of apartment accommodation, or
may be withdrawn upon their retirement. The Group is required to make annual contributions
to the state-sponsored housing fund equivalent to a certain percentage of the employees’
salaries.
(3) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a
present legal or constructive obligation as a result of services rendered by employees and a
reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled
within twelve months and are measured at the amounts expected to be paid when they are
settled.
2.23 Provisions
Provisions, mainly warranty costs, are recognised when: the Group has a present legal or
constructive obligation as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount has been reliably estimated. Provisions are
not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in the provision due to
passage of time is recognised as interest expense.
- 73 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and
represents amounts receivable for goods supplied, stated net of discounts returns and value
added taxes. The Group recognises revenue when the amount of revenue can be reliably
measured; when it is probable that future economic benefits will flow to the entity; and when
specific criteria have been met for each of the Group’s activities, as described below. The Group
bases its estimates of return on historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
(1) Sales of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership
of the goods are transferred to the customer, the customer has accepted the products and
collectability of the related receivables is reasonably assured.
(2) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
(3) Rendering of services
The Group provides service of vehicle maintenance. The related revenue is recognised using
the percentage of completion method, with the stage of completion being determined based on
proportion of costs incurred to date to the estimated total costs.
2.25 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is
impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loan and receivables
are recognised using the original effective interest rate.
2.26 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor ) are charged to profit or loss on a straight-line basis over the
period of the lease.
2.27 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.
- 74 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.28 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. However, the government
grants measured at their nominal amounts will be directly recorded in profit and loss for the
current period.
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.
3 Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board
of Directors.
(1) Market risk
(a) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to other payables dominated in US dollar (“USD”)
and Euro.
Management has set up a policy to require the Group to manage their foreign exchange risk
against their functional currency. Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated in a currency that is not the
Company’s functional currency.
- 75 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
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)
(a) Foreign exchange risk (continued)
As at 31 December 2017, 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 RMB20,650,000 (2016:RMB35,091,000) higher/lower.
As at 31 December 2017, 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 RMB9,263,000 (2016: RMB5,269,000) higher/lower.
(b) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. As at 31 December 2017, a large portion of its bank deposits 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 2017, 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
RMB19,352,000 (2016: RMB17,570,000).
(2) Credit risk
The Group’s maximum exposure to credit risk in relation to financial assets is the carrying
amounts of cash and cash equivalents and trade and other receivables.
As at 31 December 2017, the Group had cash of approximately RMB1,120,806,000(2016:
RMB874,990,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a
non-bank financial institution and a subsidiary of JMCG (Note 19). The Group’s other bank
deposits are mainly deposited in state-owned banks or other listed banks. Management
believes all these financial institutions have high credit quality without significant credit risk.
All the Group’s trade and other receivable shave no collateral. However, the Group has
policies in place to ensure that sales are made to customers with appropriate credit history
and the Group performs periodic credit evaluations of its customers. The Group assesses the
credit quality of each customer by taking into account its financial position, past experience
and other factors. Credit limit and terms are reviewed on periodic basis, and the financial
department is responsible for such monitoring procedures. In determining whether provision
for impairment is required, the Group takes into consideration the aging status and the
likelihood of collection. In this regards, the directors of the Company are satisfied that the risks
is minimal as all customers are existing ones or related parties and have no default in the past
and adequate provision for impairment, if any, has been made in the financial statements after
assessing the collectability of individual debts. Further quantitative disclosures in respect of
the impairment of trade and other receivables are set out in Note 18.
- 76 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
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
Cash flow forecasting is performed in the operating entities of the Group in and aggregated by
Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities (Note 23)at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities.
The table below analyses the Group’s financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 Between 2 Over 5
year and 2 years and 5 years years
At 31 December2017
Bank borrowings
- Principals 428 428 1,284 2,139
- Interests 63 56 130
Financial liabilities at fair
value through profit or loss 8,493 - - -
Trade and other payables 12,636,400 - - -
12,645,384 484 1,414 2,227
At 31 December 2016
Bank borrowings
- Principals 454 454 1,363 2,726
- Interests 73 66 158
Trade and other payables 11,053,248 - - -
11,053,775 520 1,521 2,859
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.
- 77 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.2 Capital risk management (continued)
The gearing ratios at 31 December 2017and 2016were as follows:
31 December 2017 31 December 2016
Total borrowings 4,279 4,997
Total equity 12,572,402 12,409,236
Total capital 12,576,681 12,414,233
Gearing ratio 0.03% 0.04%
3.3 Fair value estimation
The inputs to valuation techniques used to measure fair value are categorised into three levels
within a fair value hierarchy as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)
(level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (level 3).
Financial assets and liabilities at fair value through profit or loss are forward exchange
contracts which are not traded in an active market. The fair value is determined by using
valuation techniques which maximised the use of observable market data where it is available
and rely as little as possible on entity specific estimates. Since all significant inputs required to
value forward exchange contracts are observable, the forward exchange contracts are
classified as level 2.
The carrying amounts of the Group’s financial assets including cash and cash equivalents,
trade and other receivables and financial liabilities including trade and other payables,
borrowing, approximate their fair values due to their short maturities. The book values less any
estimated credit adjustments for financial assets and liabilities with a maturity of less than one
year are assumed to approximate their fair values.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
- 78 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements(continued)
(1) 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.
To determine the fair value less costs of disposal, the Group take reference to the prices in
sales agreements in relevant asset transactions or the observable market prices, and the
incremental cost which could directly attributable to the assets disposal.
Key judgements are made on the outputs, sales prices, relevant operation costs and discount
rates when estimate the discounted future cash flow forecasts. The Group uses relevant
accessible information, including the assets outputs, sales prices, relevant operation costs
which are based on the reasonable and supportable assumptions, to estimate the recoverable
amount of those long term assets.
(2) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added
tax and consumption tax. Significant judgment is required in determining the provision for
these taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises
liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from amounts that were initial
recorded, such differences will impact the tax provisions in the period 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 2017, the Group recorded the deferred tax assets of approximately
RMB690,253,000.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.
- 79 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements(continued)
(3) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that
fail to perform satisfactorily based on certain pre-determined conditions. Management
estimates the related warranty claims based on historical warranty claim information including
level of repairs and returns as well as recent trends that might suggest that past cost
information may differ from future claims.
Factors that could impact the estimated claim information include the success of the Group’s
productivity and quality controls, as well as parts and labour costs. Any increase or decrease
in the provision would affect profit or loss in future years.
(4) 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 need 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 relevant accounting period.
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.
- 80 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
6 Expenses by nature
2017
Changes in inventories of finished goods and
work in progress (139,613) (73,156)
Raw materials and consumables used 22,457,906 18,390,006
Employee benefit expense (Note 7) 2,087,061 1,874,861
Depreciation of PPE (Note 12, 28) 794,470 684,383
Repairs and maintenance expenditure on PPE 175,690 153,193
Research and development expenditure 1,996,730 1,812,726
Amortisation of lease prepayment (Note 13, 28) 15,574 15,594
Amortisation of intangible assets (Note 14, 28) 11,566 10,057
Provision of warranty 313,289 261,430
Others 2,731,840 1,907,004
Total cost of sales, distribution expenses and
administrative expenses 30,444,513 25,036,098
For the year ended 31 December 2017, depreciation of PPE of approximately RMB50,630,000
(2016: RMB45,344,000) and amortisation of intangible assets of approximately RMB29,009,000
(2016: RMB10,465,000) were included in research and development expenditure.
Impairment charge for trade and other receivables of approximately RMB5,301,000 (2016:
RMB8,952,000) and impairment charge for inventories of approximately RMB34,655,000 (2016:
RMB27,693,000), which were included in administrative expenses, were not included in
expenses by nature.
7 Employee benefit expense
2017
Wages and salaries 1,463,528 1,330,140
Social security costs 204,839 175,862
Pension costs defined contribution plans 251,727 220,736
Pension costs defined benefit plans(Note 24) 4,251 5,026
Others 162,716 143,097
2,087,061 1,874,861
The employees of the Group participated in a retirement benefit plan organised by the municipal
and provincial governments under which the Group was required to make defined contributions
monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In
accordance with the Group’s early retirement programs, the Group was also committed to
making periodic benefit payments to certain early-retired employees until they reach their legal
retirement ages.
- 81 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
8 Other income
2017
Government grants (a) 640,577 517,797
Others (8,541) (3,382)
632,036 514,415
(a) In 2017, the Group received grants of approximately RMB640,577,000, mainly from Finance
Bureau of Nanchang, Finance Bureau of Nanchang Qingyunpu District, Economic
Development District Administrative Commission of Xiaolan, the Finance Department of
Shanxi Province and the Finance Bureau of Economic and Technological Development
District Administrative Commission of Taiyuan. These government grants were income
related to support the Group’s operation and were charged to profit or loss directly up
received.
9 Finance income and expenses
2017
(a) Finance income
Interest income on bank deposits 230,693 209,023
Interest income on credit sales 13,607 14,494
244,300 223,517
(b) Finance expenses
Interest expense on bank loans (225) (175)
Bank charges and others (4,854) (3,707)
(5,079) (3,882)
Net finance income 239,221 219,635
10 Taxation
(a) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax
authorities in 2015, the Company is entitled to a preferential CIT rate of 15% from 2015 to
2017 (2016: 15%). The CIT rates of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) and Jiangling
Motor Sales Co, Ltd. (“JMCS”), the subsidiaries of the Company, are 25%.
The amounts of income tax expense charged to profit or loss represented:
2017
Current tax 206,893 244,868
Deferred tax (Note 16) (136,008) (81,293)
70,885 163,575
- 82 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation(continued)
(a) Corporate income tax (“CIT”)(continued)
The tax on the Group’s profit before tax differs from the theoretical amount that would arise
using the weighted average tax rate applicable to profits of the consolidated entities as
follows:
2017
Profit before tax 761,823 1,481,591
Tax calculated at tax rates applicable to profits in
the respective companies 96,654 220,400
Tax concessions (28) (105)
Expenses not deductible for tax purposes 726
Income not subject to tax (80,267) (85,519)
Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse (2,714) 11,242
Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised - (14,614)
Temporary differences for which no deferred
income tax asset was recognised 18,615 -
Tax losses for which no deferred income tax
asset was recognised 37,899 31,506
Tax charge 70,885 163,575
The tax credit relating to other comprehensive income is as follows:
2017
Before Tax After Before Tax After
tax credit tax tax credit tax
Actuarial loss on retirement
benefit obligations (1,616) 404 (1,212) (1,083) 271 (812)
Other comprehensive income (1,616) 404 (1,212) (1,083) 271 (812)
Current tax - -
Deferred tax (Note 16) 404
404
- 83 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of 17% on the selling price of goods. Pursuant to the
“Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax”
(Cai Shui [2016] 36) jointly issued by the Ministry of Finance and the State Administration of
Taxation, the rental income and interest income are subject to VAT from 1 May 2016, and the
applicable tax rates are 11% and 6% respectively, while the business taxes were 5% before
then.
(c) 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.
2017
Profit attributable to shareholders of the
Company 690,938 1,318,016
Weighted average number of ordinary shares in
issue (‘000) 863,214 863,214
Basic earnings per share (RMB) 0.80 1.53
Diluted earnings per share equals to basic earnings per share as there were no dilutive
potential ordinary shares outstanding during the year ended31 December 2017.
- 84 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
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 Vehicles Moulds other equipment constructions Total
At 1 January 2016
Cost 1,802,523 3,193,284 219,587 1,591,116 2,384,260 1,637,474 10,828,244
Accumulated depreciation and impairment (327,994) (1,657,416) (106,346) (1,227,369) (1,184,881) (692) (4,504,698)
Net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546
Year ended 31December2016
Opening net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546
Additions - - - - - 1,138,940 1,138,940
Transfers 63,567 422,097 55,408 621,285 498,413 (1,660,770) -
Disposals (100) (774) (3,182) (736) (178) - (4,970)
Other deductions - (18,969) - - (2,712) (14,784) (36,465)
Impairment charge(Note28) - (1,717) (50) - (1,027) - (2,794)
Depreciation charge (Note 6,28) (45,595) (198,266) (26,648) (177,019) (282,199) - (729,727)
Closing net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
At 31 December 2016
Cost 1,865,850 3,526,187 262,667 2,206,895 2,862,436 1,100,860 11,824,895
Accumulated depreciation and impairment (373,449) (1,787,948) (123,898) (1,399,618) (1,450,760) (692) (5,136,365)
Net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
Year ended 31December2017
Opening net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
Additions - - - - - 921,700 921,700
Transfers 230,556 517,758 33,133 220,145 320,019 (1,321,611) -
Disposals (370) (351) (4,562) - (617) - (5,900)
Classified as held for sale (5,777) - - - - - (5,777)
Other deductions - (4,817) - - (433) (22,265) (27,515)
Impairment charge(Note28) - (8,061) (352) - (3,021) (416) (11,850)
Depreciation charge (Note 6,28) (47,385) (223,833) (30,926) (224,991) (317,965) - (845,100)
Closing net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088
At 31 December 2017
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
- 85 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
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 2017, depreciation expense of approximately
RMB738,069,000 (2016: RMB620,518,000) has been charged in cost of sales, RMB2,841,000
(2016: RMB2,865,000) in distribution costs and RMB104,190,000 (2016: RMB106,344,000) in
administrative expenses.
Lease rental expenses amounting to RMB8,962,000 (2016: RMB8,892,000) relating to the lease
of property are included in profit or loss.
13 Lease prepayment
Lease prepayment represents the Group’s interests in land which are held on leases of 50
years. The movement is as follows:
31 December 2017 31 December 2016
Opening net book amount 632,408 645,608
Additions - 2,394
Amortisation charge (Note 6,28) (15,574) (15,594)
Closing net book amount 616,834 632,408
Cost 751,626 751,626
Accumulated amortisation (134,792) (119,218)
Net book amount 616,834 632,408
Amortisation expense was charged in administrative expenses.
- 86 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets
Non-patent After-sale
technology Software Goodwill management model Other Total
Year ended 31December 2016
Opening net book amount - 38,225 3,462 - 18 41,705
Addition 124,587 12,390 - - - 136,977
Amortisation charge (Note 6, 28) (8,694) (11,818) - - (10) (20,522)
Closing net book amount 115,893 38,797 3,462 - 8 158,160
At 31 December 2016
Cost 124,587 98,017 89,028 36,978 1,649 350,259
Accumulated amortisation and impairment (8,694) (59,220) (85,566) (36,978) (1,641) (192,099)
Net book amount 115,893 38,797 3,462 - 8 158,160
Year ended 31December 2017
Opening net book amount 115,893 38,797 3,462 - 8 158,160
Addition 58,010 22,265 - - - 80,275
Amortisation charge (Note 6, 28) (27,347) (13,220) - - (8) (40,575)
Closing net book amount 146,556 47,842 3,462 - - 197,860
At 31 December 2017
Cost 182,597 120,282 89,028 36,978 1,649 430,534
Accumulated amortisation and impairment (36,041) (72,440) (85,566) (36,978) (1,649) (232,674)
Net book amount 146,556 47,842 3,462 - - 197,860
- 87 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(a) For the year ended 31 December 2017, amortisation expense of approximately
RMB39,614,000 (2016:RMB20,027,000) was charged in administrative expenses,
RMB621,000 (2016: RMB297,000) in cost of sales and RMB340,000 (2016: RMB198,000) in
distribution costs.
(b) Development costs of approximately RMB58,010,000 (2016: RMB124,587,000) were
capitalised as non-patent technology by the Group in 2017.
(c) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the
cash generating unit level. The goodwill is allocated to the following CGU:
31 December 2016 Addition Impairment 31 December 2017
JMCH 3,462 - - 3,462
The recoverable amount of the CGU is determined based on value in use calculations. These
calculations use after-tax cash flow projections based on financial budgets approved by
management covering a nine-year period. Cash flows beyond the five-year period are
extrapolated using the estimated growth rates stated below. The growth rate does not exceed
the long-term average growth rate for the heavy duty vehicle business in which the CGU
operates.
The key assumptions used for value in use calculations in 2017 were as follows:
Item JMCH
Compound annual volume growth rate 135%
Long term growth rate 3%
Discount rate 19.40%
The key assumptions used for value in use calculations in 2016were as follows:
Item JMCH
Compound annual volume growth rate 283%
Long term growth rate 3%
Discount rate 19.40%
The long term growth rates used are consistent with the forecasts included in industry reports.
The discount rates used are after-tax and reflect specific risks relating to the relevant operating
subsidiary.
- 88 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date Percentage of
Entity of incorporation equity interest held Principal activities
JMCH Taiyuan, PRC / 100% Manufacture and sale of
8January2013 automobiles and spare parts
JMCS Nanchang, PRC / 100% Sale of automobiles and
11 October 2013 spare parts
15b Investments accounted for using the equity method
(a) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow:
31 December 2017 31 December 2016
Associate 37,874 39,893
The amount recognised in the consolidated statement of comprehensive income was as follow:
2017
Share of profit 8,149 12,624
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.
(b) Reconciliation of summarised financial information for immaterial associates
2017
At beginning of the year 208,317 214,061
Profit for the year 42,555 65,920
Dividends distributed (53,098) (71,664)
At end of the year 197,774 208,317
Interest in associate 19.15% 19.15%
Carrying value 37,874 39,893
- 89 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax
31 December 2017 31 December 2016
Deferred tax assets 757,877 590,899
Deferred tax liabilities-can be offset (67,624) (36,411)
Deferred tax liabilities-cannot be offset (26,736) (27,383)
Deferred tax assets-net 690,253 554,488
Deferred tax liabilities-net (26,736) (27,383)
The gross movement on the deferred income tax account is as follows:
31 December 2017 31 December 2016
At beginning of the year 527,105 445,541
Credited to profit or loss(Note 10(a)) 136,008 81,293
Credited to other comprehensive income
(Note 10(a)) 404
At end of the year 663,517 527,105
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:
Amortization
Provision for Retirement of
impairment of benefits Accrued nonpatented
Deferred tax assets assets obligation expenses technology Others Total
At 1 January 2016 6,207 13,339 460,044 - 519 480,109
Credited to profit or loss 1,379 484 107,442 1,087 127 110,519
Credited to other
comprehensive income - 271 - - - 271
At 31 December 2016 7,586 14,094 567,486 1,087 646 590,899
Credited/(charged)to
profit or loss 4,563 (955) 155,901 3,418 3,647 166,574
Credited to other
comprehensive income - 404 - - - 404
At 31 December 2017 12,149 13,543 723,387 4,505 4,293 757,877
Amortisation Forward
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total
At 1January2016 (2,760) (3,404) (28,392) (12) (34,568)
(Charged)/credited to
profit or loss (1,936) (27,030) 1,009 (1,269) (29,226)
At 31 December 2016 (4,696) (30,434) (27,383) (1,281) (63,794)
Credited/(charged)to
profit or loss 1,151 (33,645) 647 1,281 (30,566)
At 31 December 2017 (3,545) (64,079) (26,736) - (94,360)
- 90 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax (continued)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
31 December 2017 31 December 2016
Deferred tax assets:
–Deferred tax asset to be recovered after
more than 12 months 17,453 14,493
–Deferred tax asset to be recovered
within 12 months 740,424 576,406
757,877 590,899
31 December 2017 31 December 2016
Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (90,097) (60,365)
–Deferred tax liabilities to be recovered
within 12 months (4,263) (3,429)
(94,360) (63,794)
Deductible temporary differences and tax losses which no deferred income tax assets were
recognised were as follows:
31 December 2017 31 December 2016
Deductible temporary differences 114,642 40,182
Tax losses 420,977 279,585
535,619 319,767
The expiry years of the tax losses are as follows:
31 December 2017 31 December 2016
2018 44,319 44,319
2019 36,772 36,772
2020 72,470 72,470
2021 115,820 126,024
2022 151,596 -
420,977 279,585
- 91 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Inventories
31 December 2017 31 December 2016
Raw materials 1,566,589 1,300,443
Work in progress 208,981 193,152
Finished goods 563,734 440,497
2,339,304 1,934,092
For the year ended 31 December 2017, the cost of inventories recognised as expenses and
included in cost of sales amounted to approximately RMB22,318,293,000 (2016:
RMB18,316,850,000).
A provision of approximately RMB45,130,000 (2016:RMB26,491,000) was made as at 31
December 2017. The Group reversed approximately RMB6,187,000 of a previous inventory
write-down in 2017. In 2017, the Group wrote-off inventories with provision of approximately
RMB16,016,000 made in prior years. The provision and reversal of the inventory write-down
have been included in administrative expenses in profit or loss.
As at 31 December 2017, no inventory was pledged as security for liabilities.
18 Trade and other receivables and prepayments
31 December 2017 31 December 2016
Trade receivables 2,328,135 1,188,088
Less: Provision for impairment of trade
receivables (21,016) (15,940)
Trade receivables – net 2,307,119 1,172,148
Notes receivables 654,335 498,875
Other receivables 131,617 86,581
Less: Provision for impairment of other
receivables (658) (433)
Other receivables – net 130,959 86,148
Prepayments 1,384,304 796,833
Interest receivables 79,217 71,804
4,555,934 2,625,808
Refer to Note 31 for details of receivables from related parties. The carrying amounts of the
Group’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables and prepayments approximate their fair
values.
- 92 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Trade and other receivables and prepayments(continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2017 31 December 2016
At beginning of the year (16,373) (7,611)
Provision for receivables impairment
(Note 28) (5,301) (8,952)
Receivables written off during the year as
uncollectible -
At end of the year (21,674) (16,373)
The creation of provision for impaired receivables was included in ‘administrative expense’ in
profit or loss.
As at 31 December 2017, trade receivables of approximately RMB106,141,000 (2016:
RMB71,342,000)were past due but not impaired. These balances related to a number of
independent customers for whom there was no recent history of default. The ageing analysis of
these trade receivables based on past due date is as below:
31 December 2017 31 December 2016
Up to 3 months 32,715 2,976
3 months to 6 months 50,022 25,787
Over 6 months 23,404 42,579
106,141 71,342
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.
- 93 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Cash and cash equivalents
31 December 2017 31 December 2016
Cash at bank and in hand 2,046,999 790,373
Short-term bank deposits (a) 9,090,724 10,875,849
11,137,723 11,666,222
As at 31 December 2017, the Group had cash of approximately RMB1,120,806,000 (2016:
RMB874,990,000)deposited in JMCF (Note 31 (i)).The interest rates range from 1.495%-
2.25% per annum (2016: 1.495% to 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.
20 Assets classified as held for sale
31 December 2017 31 December 2016
Lease prepayment and buildings of
Transit plant 93,413 87,637
As at 26 March 2015, under the authorisation from the Board of Directors, the Company signed
an agreement of “state-owned land reserves” with Nanchang Land Reserve Centre (the
“agreement”). According to the agreement, the Company will sell its land use right and
buildings of Transit plant, with a consideration of RMB135,000,000 to Nanchang Land Reserve
Centre.
As those aforementioned assets met the criteria of assets classified as held for sale, they were
reclassified as current assets and presented separately in the consolidated statement of
financial position.
- 94 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Number of Tradable shares Total
shares “A” shares “B” shares
(thousands) Restricted Non-restricted
Year ended 31 December 2016
Balance at 1 January 2016 863,214 1,726 517,488 344,000 863,214
Transfer - - - - -
Balance at 31 December 2016 863,214 1,726 517,488 344,000 863,214
Year ended 31 December 2017
Balance at 1 January 2017 863,214 1,726 517,488 344,000 863,214
Transfer - (819) 819 - -
Balance at 31 December 2017 863,214 907 518,307 344,000 863,214
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, 907,000shares
were still restricted as at 31 December 2017.
- 95 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total
At 1 January 2016 431,607 18,627 2,704 452,938
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (812) (812)
At 31 December 2016 431,607 18,627 1,892 452,126
Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,212) (1,212)
At 31 December 2017 431,607 18,627 680 450,914
(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 2016and 2017.
23 Borrowings
31 December 2017 31 December 2016
Current
Bank borrowings-guaranteed (a) 428
Non-current
Bank borrowings-guaranteed(a) 3,851 4,543
Total borrowings 4,279 4,997
(a) Bank borrowings of USD655,000 (equivalent to approximately RMB4,279,000) (2016:
USD720,000, equivalent to approximately RMB4,997,000) were guaranteed by JMCF (Note
31 (c)).
The interest rate of bank borrowings is 1.50% per annum (2016: 1.50%).
The fair value of borrowings approximates their carrying values.
- 96 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2017 31 December 2016
Between 1 and 2 years 428
Between 2 and 5 years 1,284 1,363
Over 5 years 2,139 2,726
3,851 4,543
The Group has the following undrawn borrowing facilities:
31 December 2017 31 December 2016
Fixed rate
- Expiring within one year 2,113,140 1,390,868
24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement
of financial position is as follows:
31 December 2017 31 December 2016
Present value of defined benefits obligations 59,184 58,188
The movement of early retirement and supplemental benefit obligations for the year ended31
December2017is as follows:
31 December2017 31 December2016
At beginning of the year 58,188 56,833
For the year
-Current service cost 1,804 1,325
-Interest cost 1,951 1,633
-Payment (4,871) (4,754)
-Past service cost from the change of plan 670 1,486
-Actuarial loss 1,442 1,665
At end of the year 59,184 58,188
Current 4,420 4,561
Non-current 54,764 53,627
59,184 58,188
The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted: 4.25% (2016: 3.50%).
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at
post: 0% to 6%(2016: 0% to 6%).
(3) Mortality: average life expectancy of residents in the PRC.
- 97 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2017, a
provision of approximately RMB59,184,000 is sufficient to cover all future retirement-related
obligations.
Obligation in respect of retirement benefits of RMB59,184,000 is the present value of the
unfunded obligations, of which the current portion amounting to RMB4,420,000 (2016:
RMB4,561,000) 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 5.4%/6.0%
Inflation rate Increase/decrease by 0.5% Increase/decrease by 2.5%/2.2%
Rate of mortality Increase/decrease by 1 year Decrease/increase by 0.6%/0.7%
For the year ended 31 December 2017,approximately RMB4,251,000 (2016: RMB5,026,000)
were charged in ‘administrative expenses’ and approximately RMB1,616,000 (2016:
RMB1,083,000) were charged in other comprehensive income.
25 Provisions for warranty and other liabilities
The movement on the warranty provisions and other liabilities is as follows:
31 December 2017 31 December 2016
At beginning of the year 284,627 214,722
Charged for the year (Note 6) 313,289 261,430
Utilised during the year (222,935) (191,525)
At end of the year 374,981 284,627
Analysis of total provisions:
31 December 2017 31 December 2016
Non-current 184,688 130,987
Current 190,293 153,640
374,981 284,627
The above represents the warranty costs for repairs and maintenance, which are estimated
based on present after-sale service policies and prior years’ experience on the occurrence of
such cost.
- 98 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
31 December 2017 31 December 2016
Trade payables 8,603,320 7,731,169
Payroll and welfare payable 273,666 289,283
Dividend payables 4,969 5,840
Other payables 4,340,585 3,578,886
13,222,540 11,605,178
For details of amount due to related parties, please refer to Note 31.
27 Dividends
A final dividend for 2016 of RMB526,560,000 (RMB0.61 per share) was paid in 2017.
A special interim dividend for 2017 of RMB2.317 per share, amounting to a total dividend of
RMB2,000,067,000 was proposed at the Board of Directors’ Meeting on 12 January 2018, and
such dividend was approved by the shareholders at 2018 First Extraordinary General Meeting on
6 February 2018.These financial statements do not reflect this dividend payable.
A final dividend for 2017 of RMB0.32 per share, amounting to a total dividend of
approximatelyRMB276,228,000 was proposed at the Board of Directors’ Meeting on 22 March
2018, and such dividend is to be approved by the shareholders at the Annual General Meeting.
These financial statements do not reflect this dividend payable.
28 Cash generated from operations
2017
Profit before tax 761,823 1,481,591
Depreciation of PPE (Note 6, 12) 845,100 729,727
Amortisation of lease prepayment (Note 6, 13) 15,574 15,594
Amortisation of intangible assets (Note 6, 14) 40,575 20,522
Impairment charges of PPE (Note 12) 11,850 2,794
Provision for receivables impairment (Note 18) 5,301 8,952
Provision of inventories (Note 17) 34,655 27,693
Loss on disposals of PPE 976 2,550
Finance expenses (Note 9) 4,386 3,325
Finance income (Note 9) (244,300) (223,517)
Net foreign exchange transaction (gain)/loss (4,423) 24,707
Share of profit from investment accounted for using
equity method (Note 15b) (8,149) (12,624)
Investment loss/(gain) of forward exchange contracts 58 (4,098)
Changes on fair value of forward exchange contracts 17,032 (8,462)
Changes in working capital:
- Increase in inventories (488,115) (260,023)
- (Increase)/decrease in trade and other receivables (1,804,557) 90,460
- Increase in provisions for warranty 90,354 69,905
- Increase in trade and other payables 1,619,201 2,820,338
- (Decrease)/increase in pensions and other
retirement benefits (620)
Cash generated from operations 896,721 4,789,706
- 99 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations(continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Year ended 31 December
2017
Net book amount 5,900 4,970
Loss on disposal of PPE (976) (2,550)
Offset with trade and other payables 94,802
Proceeds from disposal of PPE 99,726 2,765
(a) As at December 2017, The Company received the second phase disposal payment, RMB
94,500,000 of lease prepayment and buildings on the ground of Transit plant (Note 20).
29 Contingencies
At 31 December 2017, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial
statements are as follows:
31 December 2017 31 December 2016
Contracted but not provided for:
Purchases of buildings, plant and machinery 477,482 572,773
31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise
significant influence in making financial and operating decisions. Parties are also considered to
be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns 41.03% of the Company’s shares, and
Ford Motor Company (“Ford”), which owns 32% of the Company’s shares, are major
shareholders of the Company as at 31 December 2017. The shareholders of JMH are
Chongqing Changan Automobile Corporation Ltd. and JMCG, and both of them hold 50% equity
interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its
associates, JMCG and its subsidiaries, JMH 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 2017.
- 100 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the year ended 31 December 2017, related parties, other than the subsidiary, and their
relationship with the Group are as follows:
Name of related party Relationship
JMCG Shareholder of JMH
Nanchang JMCG Skyman Auto Component Co., Ltd. Subsidiary of JMH
Jiangling Material Co., Ltd. Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG
Jiangxi ISUZU Co., Ltd. Joint venture of JMCG
Jiangxi ISUZU Engine Co., Ltd. Joint venture of JMCG
Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd. Joint venture of JMCG
Jiangxi Jiangling Material Utilization Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG
Jiangxi JMCG Specialty VehiclesCo., Ltd. Associate of JMCG
JMCF Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG
JMCG Property Management Co. Subsidiary of JMCG
Nanchang Gear Co., Ltd. Subsidiary of JMCG
Nanchang Jiangling HuaXiang Auto Components Co., Ltd. Joint venture of JMCG
Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG
Nanchang Unistar Electric & Electronics Co., Ltd. Joint venture of JMCG
Auto Alliance (Thailand) Co., Ltd. Subsidiary of Ford
Ford Global Technologies, LLC Subsidiary of Ford
Ford Motor (China) Co., Ltd. Subsidiary of Ford
Ford Motor Company of Australia Limited Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd. Subsidiary of Ford
Ford Otomotiv Sanayi A.S. Subsidiary of Ford
Ford Vietnam Limited Subsidiary of Ford
Changan Ford Automobile Co., Ltd. Joint venture of Ford
GETRAG (Jiangxi) Transmission Company Associate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG
Jiangling Aowei Aotomobile Spare Part Co., Ltd. Associate of JMCG
Jiangxi Jiangling Group Special Vehicle Co., Ltd. Associate of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Associate of JMCG
JMCG Hequn Costume Co., Ltd. Associate of JMCG
Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG
Nanchang Hengou Industry Co., Ltd. Associate of JMCG
Nanchang Yinlun Heat-exchanger Co., Ltd. Joint venture of JMCG
- 101 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Purchase of goods 2017
Nanchang Baojiang Steel Processing Distribution Co.,Ltd. 943,608 690,097
Jiangxi Jiangling Chassis Co.,Ltd. 888,703 805,642
Ford 830,603 523,858
GETRAG (Jiangxi) Transmission Company 813,926 656,595
Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 764,437 700,309
Jiangxi Jiangling Lear Interior System Co.,Ltd. 550,290 569,823
Nanchang Jiangling HuaXiang Auto Components Co.,Ltd. 543,846 390,959
Nanchang JMCG Liancheng Auto Component Co.,Ltd. 479,447 329,198
Nanchang Unistar Electric & Electronics Co.,Ltd. 275,937 216,295
Hanon Systems 252,848 233,974
Faurecia Emissions Control Technologies (Nanchang)
Co.,Ltd. 221,553 95,192
Changan Ford Automobile Co.,Ltd. 191,815 208,819
Auto Alliance (Thailand) Co., Ltd. 188,931 86,082
Jiangxi JMCG Specialty VehiclesCo., Ltd. 178,147 186,315
JMCG 112,201 87,317
Nanchang JMCG Skyman Auto Component Co.,Ltd. 77,718 69,143
Nanchang Lianda Machinery Co.,Ltd. 66,691 69,312
Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 64,907 45,933
Nanchang Yinlun Heat-exchanger Co.,Ltd. 56,232 52,415
Ford Otomotiv Sanayi A.S. 47,775 15,676
Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 31,737 33,051
Jiangling Material Co.,Ltd. 29,441 25,503
Nanchang JMCG Xinchen Auto Component Co.,Ltd. 23,097 30,756
Nanchang Gear Co.,Ltd. 18,758 19,394
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 12,129 -
Jiangxi ISUZU Engine Co.,Ltd. 10,028 1,039
Jiangxi Biaohong Engine Tappet Co.,Ltd. 8,329 8,847
JMCG Hequn Costume Co.,Ltd. 6,885 6,016
Jiangxi JMCG Shangrao Industrial Co.,Ltd. 6,567 6,994
Jiangxi JMCG Industry Co.,Ltd. 5,683 1,612
Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd. 3,956 1,160
JMCG Jiangxi Engineering Construction Co., Ltd. 2,520 -
Jiangxi Jiangling Material Utilization Co.,Ltd. - 1,769
Others 3 8,548
7,708,748 6,177,643
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.
- 102 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services(continued)
Purchase of services Natures of transaction 2017 2016
Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 304,852 179,326
Ford Engineering service and design 286,361 287,301
Ford Global Technologies, LLC Royalty fee 250,088 143,109
Ford Otomotiv Sanayi A.S. Engineering service and design 74,245 252,248
JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 64,940 21,636
Nanchang Hengou Industry Co., Ltd. Packing/Truckage 53,218 61,692
Jiangxi JMCG Industry Co.,Ltd. Working meal 33,451 30,568
Ford Secondments costs 33,331 37,716
Ford Otomotiv Sanayi A.S. Secondments costs 30,773 31,996
JMH Royalty fee 29,434 -
Ford Otomotiv Sanayi A.S. Royalty fee 25,143 16,347
Changan Ford Automobile Co.,Ltd. Channel fee/Design fee 15,091 1,650
GETRAG (Jiangxi) Transmission Company Design fee 11,572 -
Ford Motor (China) Co., Ltd. Regional personnel costs 5,763 4,321
Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. Design fee 5,615 -
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. Agent business of importation 4,243 4,842
Jiangxi Jiangling Lear Interior System Co.,Ltd. Experimental manufacturing costs/Design fee 3,649 12,665
Ford Motor (China) Co., Ltd. Software fee 3,327 -
Hanon Systems Experimental manufacturing costs 2,263 2,479
- 103 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction 2017 2016
Jiangxi JMCG Specialty Vehicles Co., Ltd. Promotion 2,200 2,022
Ford Motor Research & Engineering (Nanjing) Co.,
Ltd. Regional personnel costs 2,107 2,908
JMCG Property Management Co. Property management 2,040 2,384
JMH Secondments costs 1,904 1,282
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. Experimental manufacturing costs 1,824 1,309
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Promotion/Repairment 972 1,619
JMCG Public relations costs 576 1,119
Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. Experimental manufacturing costs 331 2,158
Others Design fee/Labor fee 3,154 1,075
1,252,467 1,103,772
The Group purchased the service from related parties based on agreement price.
- 104 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services(continued)
Sales of goods 2017
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,047,618 1,184,310
JMH 148,459 3,428
Jiangxi JMCG Specialty Vehicles Co., Ltd. 95,331 152,519
Jiangxi Jiangling Chassis Co.,Ltd. 83,408 79,391
Nanchang Hengou Industry Co., Ltd. 79,976 4,272
JMCG Jingma Motors Co., Ltd. 79,196 80,192
Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 67,557 48,545
Nanchang JMCG Liancheng Auto Component Co.,Ltd. 62,507 53,764
Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd. 55,274 8,757
Nanchang JMCG Shishun Logistics Co.,Ltd. 25,408
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 23,259 18,868
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 22,006 6,942
Nanchang Jiangling HuaXiang Auto Components Co.,Ltd. 18,650 7,453
Jiangxi JMCG Industry Co.,Ltd. 7,563 8,557
Jiangxi Jiangling Lear Interior System Co.,Ltd. 7,467 13,567
JMCG Property Management Co. 7,129 7,228
Jiangxi ISUZU Co., Ltd. 1,896 1,885
Jiangxi Jiangling Material Utilization Co.,Ltd. - 30,047
Others 1,396 9,465
1,834,100 1,719,771
The Group sold goods to related parties, based on agreement price.
Provision of services 2017
Ford Motor Company of Australia Limited - 6,706
The Group provided the services to related parties, based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental
Rental cost
Lessor Category Rental cost of 2017 Rental cost of 2016
Jiangxi Jiangling Motors Imp. &Exp.
Co., Ltd. Building 4,400 4,400
JMCG Building 4,140 4,069
JMCG Property Management Co. Building 422
8,962 8,892
Rental income
Lessee Category Rental income of Rental income of
2017
Jiangling Material Co., Ltd. Building 132
JMH Building 55
GETRAG (Jiangxi) Transmission
Company Building 3
190
(c) Guarantee
As at 31 December 2017, bank loans of USD655,000(equivalent to approximately
RMB4,279,000) (2016:USD720,000, equivalent to approximately RMB4,997,000) were
guaranteed by JMCF (Note 23).
(d) Sales ofPPE
2017
Jiangxi JMCG Industrial Co., Ltd. 5
(e) Purchase of PPE
2017
Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. - 8,262
Jiangxi JMCG Specialty Vehicles Co., Ltd. 1,000 -
1,000 8,262
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(f) Provide technique sharing
2017
JMCG - 92,453
Ford Vietnam Limited - 1,149
- 93,602
(g) 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 2017, the total remuneration of the key management was approximately
RMB13,598,000(2016: RMB11,786,000).
(h) Interest received from cash deposit in related parties
31 December 2017 31 December 2016
JMCF 20,156 10,037
In 2017, the interest rates range from 1.495% to 2.25% per annum (2016: 1.495% to 2.25%).
(i) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2017 31 December 2016
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 171,475 230,848
JMH 170,853 1,664
Nanchang JMCG Shishun Logistics Co., Ltd. 14,731 -
JMCG Jingma Motors Co., Ltd. 8,543 10,530
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 5,913 -
Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. 3,765 3,304
Nanchang Hengou Industry Co., Ltd. 1,508 1,694
Jiangxi JMCG Industry Co.,Ltd. 260 2,036
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. - 1,360
Ford Vietnam Limited - 1,149
Others 289
377,337 252,720
Other receivables from related parties 31 December 2017 31 December 2016
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 42,356 30,338
Ford 5,158
GETRAG (Jiangxi) Transmission Company 2,770 -
Ford Otomotiv Sanayi A.S. - 1,225
Others 964
51,248 32,485
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 31 December 2017 31 December 2016
Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 457,613 410,220
Ford Otomotiv Sanayi A.S. 31,069 -
488,682 410,220
Notes receivables from related parties 31 December 2017 31 December 2016
JMCG Jingma Motors Co., Ltd. 48,491 44,827
Prepayments for construction in progress 31 December 2017 31 December 2016
JMCG Jiangxi Engineering Construction Co., Ltd. 2,231 8,106
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 572
Jiangxi JMCG Specialty Vehicles Co., Ltd. 500 -
3,303 8,379
Prepayments for mould lease 31 December 2017 31 December 2016
Changan Ford Automobile Co., Ltd. 11,990 32,528
Cash deposit in related parties 31 December 2017 31 December 2016
JMCF (Note 19) 1,120,806 874,990
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 31 December 2017 31 December 2016
Jiangxi Jiangling Lear Interior System Co.,Ltd. 352,627 381,357
Jiangxi Jiangling Chassis Co.,Ltd. 303,148 267,405
Jiangxi Jiangling Special Purpose Vehicle
Co.,Ltd. 262,946 255,916
GETRAG (Jiangxi) Transmission Company 251,080 180,956
Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. 243,796 210,407
Jiangxi JMCG Specialty Vehicles Co., Ltd. 209,228 286,710
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 153,529 144,608
Hanon Systems 135,846 87,404
Nanchang Unistar Electric & Electronics Co.,Ltd. 118,889 50,575
Ford 86,504 117,540
Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. 83,113 43,618
JMCG 74,918 73,518
Changan Ford Automobile Co.,Ltd. 68,221 113,485
Nanchang JMCG Skyman Auto Component
Co.,Ltd. 36,998 23,538
Jiangxi Lingge Non-ferrous Metal Die-casting
Co.,Ltd. 30,751 17,778
Ford Otomotiv Sanayi A.S. 29,711 2,687
Nanchang Yinlun Heat-exchanger Co.,Ltd. 25,151 20,612
Nanchang Lianda Machinery Co.,Ltd. 24,651 23,570
Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 17,142 13,475
Auto Alliance (Thailand) Co.,Ltd. 17,000 12,004
Jiangxi ISUZU Engine Co.,Ltd. 11,714
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 10,490 -
Nanchang Gear Co.,Ltd. 7,902 5,777
Nanchang JMCG Xinchen Auto Component
Co.,Ltd. 5,334 10,194
Jiangxi JMCG Shangrao Industrial Co.,Ltd. 4,009 2,137
Jiangxi Biaohong Engine Tappet Co.,Ltd. 2,891 2,362
Jiangxi JMCG Industry Co.,Ltd. 2,394
Jiangxi Jiangling Material Utilization Co.,Ltd. 1,712
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd. 1,007 3,654
Jiangling Material Co.,Ltd 1,002
Others 293 2,776
2,573,997 2,355,877
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31DECEMBER2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) IBalances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2017 31 December 2016
Ford Otomotiv Sanayi A.S. 134,059 232,672
Ford 104,814 176,871
Ford Global Technologies, LLC 62,410 58,517
JMCG Jiangxi Engineering Construction Co., Ltd. 36,818 12,511
JMH 30,000 1,303
Jiangxi Jiangling Lear Interior System Co.,Ltd. 11,455 16,154
Nanchang JMCG Shishun Logistics Co., Ltd. 10,751 3,944
Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. 8,521
GETRAG (Jiangxi) Transmission Company 6,309 1,550
Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 4,860 3,751
Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. 3,693 6,157
Nanchang Hengou Industry Co., Ltd. 3,498 11,378
Changan Ford Automobile Co.,Ltd. 2,765 -
Hanon Systems 2,520
JMCG Hequn Costume Co.,Ltd. 1,952 1,410
Jiangxi JMCG Industry Co.,Ltd. 1,922
Ford Motor (China) Co., Ltd. 1,755 1,199
JMCG 76 1,041
Others 4,155 5,756
432,333 535,049
Advance from related parties 31 December 2017 31 December 2016
Jiangxi JMCG Specialty Vehicles Co., Ltd. 294 4,294
Others 1,501
1,795 4,636
(j) I Related parties commitments
Capital commitments 31 December 2017 31 December 2016
JMCG Jiangxi Engineering Construction Co.,
Ltd. 35,178 40,334
Chapter XII Catalog on Documents for Reference
1. Originals of 2016 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 2016.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 22, 2017
