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江铃B:2020年半年度报告(英文版) 下载公告
公告日期:2020-08-28

Jiangling Motors Corporation, Ltd.

2020Half-year Report

2020-08

Chapter I Important Notes, Contents and Abbreviations

Important NoteThe 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 confirmthat the information disclosed herein does not contain any false statement,misrepresentation or major omission.

Chairman Qiu Tiangao, CFO Li Weihua and Chief of Finance Department, Ding Ni,confirm that the Financial Statements in this Half-year Report are truthful,accurate and complete.

All Directors were present at the Board meeting to review this Half-year Report.

Neither cash dividend nor stock dividend was distributed. The Board decided notto convert capital reserve to share capital this time.

The Half-year Report is prepared in Chinese and English. In case of discrepancy,the Chinese version will prevail.

Contents

Chapter I Important Notes, Contents and Abbreviations ...... 2

Chapter II Brief Introduction ...... 4

Chapter III Operating Overview ...... 6

Chapter IV Management Discussion and Analysis ...... 8

Chapter V Major Events ...... 14

Chapter VI Share Capital Changes & Shareholders ...... 20

Chapter VII Preferred Shares ...... 24

Chapter VIII Convertible Bond ...... 26

Chapter IX Directors, Supervisors and Senior Management ...... 26

Chapter X Company Bond ...... 27

Chapter XI Financial Statements ...... 28

Chapter XII Catalogue on Documents for Reference ...... 153

Abbreviations:

JMC, or the Company Jiangling Motors Corporation, Ltd.JIC Nanchang Jiangling Investment Co.,Ltd.Ford Ford Motor CompanyCSRC China Securities Regulatory CommissionJMCG Jiangling Motors Group Co., Ltd.JMCH JMC Heavy Duty Vehicle Co., Ltd.EVP Executive Vice PresidentCFO Chief Financial OfficerVP Vice President

Chapter II Brief Introduction

1. Company’s information

Share’s name

Share’s nameJiangling Motors, Jiangling BShare’s Code000550,200550
Place of listingShenzhen Stock Exchange
Company’s Chinese name江铃汽车股份有限公司
English nameJiangling Motors Corporation, Ltd.
AbbreviationJMC
Company legal representativeQiu Tiangao

2. Contact person and method

Board SecretarySecurities Affairs Representative
NameWan HongQuan Shi
AddressNo. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.CNo. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.C
Tel86-791-8526617886-791-85266178
Fax86-791-8523283986-791-85232839
E-mailrelations@jmc.com.cnrelations@jmc.com.cn

3. Other

I. Contact methodsChanges of registered address, headquarter address, postal code, website and e-mail in the reporting period

□Applicable √Not Applicable

There is no change of registered address, headquarter address, postal code,website and e-mail. Please refer to 2019 Annual Report for details.

II. Changes of newspapers for information disclosure, website for publication ofJMC’s half-year report and place for achieving half-year report in the reportingperiod

□Applicable √Not Applicable

There is no change of newspapers for information disclosure, website designatedby CSRC for publication of JMC’s Half-year Report and place for achieving Half-year Report. Please refer to 2019 Annual Report for details.

4. Main accounting data and financial ratios

Unit: RMB

Reporting period (2020 first half)Same period last yearChange (%)
Revenue14,073,417,87813,721,953,5022.56
Profit Attributable to the Equity Holders of the Company207,771,78258,861,816252.98
Net Cash Generated From Operating Activities734,283,6271,435,351,564-48.84
Basic Earnings Per Share (RMB)0.240.07252.98
Diluted Earnings Per Share (RMB)0.240.07252.98
Weighted Average Return on Equity Ratio1.96%0.57%Up 1.39 percentage points
At the end of reporting periodAt the end of the previous yearChange (%)
Total Assets26,114,866,96624,298,528,5937.48
Shareholders’ Equity Attributable to the Equity Holders of the Company10,643,910,58310,496,563,7811.40

5. Accounting data difference between domestic and foreign accounting standards

I. Differences in net profit and net assets disclosed respectively per IFRS andPRC GAAP.

□Applicable √Not Applicable

There is no difference between IFRS and PRC GAAP in net profit and net assets.

II. Differences in net profit and net assets disclosed respectively per GAAP andPRC GAAP.

□Applicable √Not Applicable

There is no difference between GAAP and PRC GAAP in net profit and net assets.

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 andrelated components. JMC’s major products include JMC series light truck, heavytruck, pickup and light bus; Yusheng SUV; Ford-brand light bus, MPV and SUV.The Company also produces and sells engines, castings and other componentsfor 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 andsales operations. With leading position and advanced technology of commercialvehicles, JMC is China auto industry pioneer providing excellent products andsolutions to smart logistics, which is certificated as a national high-tech enterprise,national innovative pilot enterprise, national enterprise technology centre, nationalindustrial design centre, national intellectual property demonstration enterprisesand national automobile export base; and had been ranked among the top 100most valuable global brands for consecutive years.

On traditional business, with the support from Ford's advanced technology andmanagement experience, JMC's influence over auto industry is improving steadily,making considerable progress both in new product development and technicalequipment. With the implementation of the national phase six emission standards,JMC as the "bellwether" of the commercial vehicle market, rapidly responds to thenational policy to upgrade the emission of vehicle products by virtue of itsadvanced product research and development technology and high-qualitymanufacturing capacity. Successively launched the JMC brand light truck EVI,Ford brand light bus EVI, Kaiyun blue whale and other series of products. Thenew Ford Territory SUVS, based on deep insights into Chinese consumers, notonly has leading space and size at the same level, but also takes the lead inintroducing domestic technologies such as the Miller cycle engine, 48V micro-hybrid power, and Feiyu Intelligent Voice Control System,On-board WeChat.Respond quickly to market demands, increase comfort, intelligent networkconnectivity and assisted driving, including 16 all-standard 28-class leadingconfigurations, which have been widely recognized by the market and customerssince launched. High standard Xiaolan manufacturing site continues to expandmodern plants of vehicle, engine and frame, which will further ensure JMC'sproduct production and quality improvement. With the construction of Fushan newenergy base, JMC will deliver more new energy vehicles in the future which willlay a solid foundation for JMC’s sustainable and healthy growth.

While continuous consolidating the traditional advantages, JMC has beendeveloping new business areas and innovative business models in response tothe new trend of overseas and domestic industries. In the new business field ofintelligent driving, as one of the first demonstration companies certified by thevehicle networking product of China's self-developed global satellite positioningsystem Beidou system, based on 5G and vehicle networking technologyapplication, the company has researched and developed the first domesticintelligent driving pure electric TeShun light bus product with autonomous drivingtechnology on the mass production model, achieve multiple functions such ashigh-speed automatic formation, automatic remove formation, automatic obstacleavoidance, automatic pull over, etc. Cooperated with Jiangxi provincialDepartment of Transportation, China mobile, Huawei and other leadingenterprises to complete the Changjiu intelligent high-speed formation autonomousdriving demonstration project, Yingtan international IoT conference collaborationand presentation project, 2019 World VR industry conference collaboration andpresentation project, etc. Based on the company's new energy light truck platform,cooperate with partners to build a full series of large-tonnage autonomous specialvehicles for environmental sanitation,the vehicles will be used in municipalenvironmental sanitation and other demonstration projects. Combining with theabove intelligent driving cooperation projects, the Company has become amember of National Science and Technology Major Project, joint National Scienceand Technology Major Project -- "Zhi Gan Xing" subject research. In the field ofnew energy technology, based on the commercial scenario, the Companyvigorously promotes the research and sales of pure electric vehicle, and developshydrogen fuel and methanol fuel vehicle technology with advantageous partners.In the new business ecology field, the Company participates in the construction ofthe automobile business ecosystem, and creates a new ecology of cross-industryintelligent service for commercial vehicles with domestic financial enterprises,communication enterprises, logistics enterprises and mobile travel operatingenterprises.

Chapter IV Management Discussion and Analysis

1. Summary

In the first half of 2020, due to the impact of the COVID-19, China’s economy hasdeclined slightly, and China’s auto market has slowed down. In the first half of2020 total sales volume was 10.25 million units, decreased 16.91% comparedwith the same period last year.

During the reporting period, to cope with more severe competition, more stringentregulatory requirement and intensifying cost pressures, the Company focused onquality improvement, new product development, operating cost control andproduction efficiency enhancement. Simultaneously, the Company introducedseries of sales policy to respond the market risk. In the first half of 2020, JMCachieved sales volume of 141,193 units, increased 3.33% compared with thesame period last year, achieved revenue of RMB 14.07 billion, increased 2.56%compared with the same period last year, achieved net profit of RMB 208 million,increased 252.98% compared with the same period last year. It mainly reflectssales volume increase and sales structure improvement, continuous promotion ofcost reduction and efficiency enhancement and strict control of expenses.

2. Core Business Analysis

Year-over-Year Changes of Main Financial Data

Unit: RMB

2020 1H2019 1HYOY change(%)Reason
Revenue14,073,417,87813,721,953,5022.56%
Cost of sales11,860,122,36511,678,659,3441.55%
Distribution costs592,187,320705,875,262-16.11%
Administrative expenses459,127,446437,154,6905.03%
Finance expense-66,731,813-89,690,60425.60%
Income tax expense14,137,157-46,302,374130.53%Due to profits rise
Researchand DevelopmentExpenditure823,946,960914,828,651-9.93%
Net cash generated from operating activities734,283,6271,435,351,564-48.84%Due to cash received from sales decrease
Net cash used in investing activities-3,076,090,849-684,404,814-349.45%Due to the purchase of structured deposits
Net cash used in financing activities1,276,424,368-369,956345,120.59%Due to the new added short-term loan
Net increase/(decrease) in cash and cash equivalents-1,065,382,854750,576,794-241.94%Due to the increase in cash paid for investments

Composition of Core Business

Unit: RMB

2020 1H2019 1HYOY change(%)
AmountProportion (%)AmountProportion (%)
Revenue14,073,417,878100%13,721,953,502100%2.56%
By Industry
Automobile Industry14,073,417,878100%13,721,953,502100%2.56%
By Products
Vehicle13,030,304,98692.59%12,327,573,06189.84%5.70%
Components809,320,4985.75%1,168,533,1298.52%-30.74%
Automobile Maintenance services37,965,3670.27%43,900,4420.32%-13.52%
Material & Others195,827,0271.39%181,946,8701.32%7.63%
By region
China14,073,417,878100%13,721,953,502100%2.56%

Reach to 10% of Revenue or Profit by Industry, Product or Region

√Applicable □Not Applicable

Unit: RMB

TurnoverCostGross MarginY-O-Yturnover change (%)Y-O-Y Cost Change(%)Y-O-Y gross margin change (points)
By Industry
Automobile Industry14,073,417,87811,860,122,36515.73%2.56%1.55%0.84%
By Products
Vehicle13,030,304,98611,046,531,02415.22%5.70%3.65%1.67%
By Region
China14,073,417,87811,860,122,36515.73%2.56%1.55%0.84%

Explanation on the above 30% year-on-year change of related data

√Applicable □Not Applicable

Affected by the epidemic situation, the sales of spare parts decreased.

3. Non- core business analysis

□Applicable √Not Applicable

4. Analysis of Assets and Liabilities

I. Major changes

Unit: RMB

Asset item

Asset itemJune 30, 2020December 31, 2019YOY
Proportion change
AmountProportionAmountProportion(Points)
Cash at bank and on hand7,922,272,40430.34%8,937,936,65836.78%-6.44%
Accounts receivables3,032,745,98011.61%2,208,236,6209.09%2.52%
Inventories1,694,426,1236.49%1,946,869,0928.01%-1.52%
Long-term equity investments37,910,0030.15%40,934,5570.17%-0.02%
Fixed assets5,230,779,44620.03%5,714,489,57723.52%-3.49%
Construction in progress1,667,129,4906.38%1,498,124,7786.17%0.21%
Short-term borrowings1,300,000,0004.98%00.00%4.98%
Long-term borrowings3,013,3680.01%3,197,8140.01%0.00%

II. The fair value of the assets and liabilities.

√Applicable □Not Applicable

Unit: RMB

ItemBeginning of the periodLoss/profit in faire value in the periodCumulative changes in fair value recorded into equityImpairment in the periodPurchase in the periodSell in the periondOther changesEnd of the peridod
financial assets
1.Trading financial assets (excluding derivative financial assets)07,990,65700.009,189,000,0006,471,000,00002,725,990,657
2. Receivables financing289,044,373000.00328,944,967347,037,5030270,951,837
Subtotal289,044,3737,990,65700.009,517,944,9676,818,037,50302,996,942,494
Financial liabilities00000000

Whether there is a significant change in the measurement attributes of theCompany's main assets during the reporting period

□Applicable √Not Applicable

III. Restriction on Assets Rights as of the End of the Reporting PeriodThere was no major restriction on assets rights as of the end of the reportingperiod.

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

Unit: RMB

ProjectName

Project NameInvestment Method/ sourceFixed Assets (Y/N)Spending in 2020 (RMB Mils)Investment Committed (RMB Mils)ProgressIndex
Fushan SiteSelf-fundedY28,203,000889,203,00043%Announcement of this project (NO:2017-044) was published in the website http://www.cninfo.com.cn
Total----28,203,000889,203,00043%--0.00

IV.Financial assets measured at fair value

√Applicable □Not Applicable

Unit: RMB

Category of AssetsInitial investment costLoss/profit in faire value in the periodCumulative changes in fair value recorded into equityPurchase in the reporting periodSell in the reporting periodAccumulated investment incomeEnd of the periodSource of funds
Others289,044,373.007,990,657.000.009,517,944,967.006,818,037,503.0032,619,541.002,996,942,494.00Self-funded
Total289,044,373.007,990,657.000.009,517,944,967.006,818,037,503.0032,619,541.002,996,942,494.00--

V. Financial Assets Investment(a) Stock Investment

□Applicable √Not Applicable

(b) Derivative Investment

□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 whoseimpact on JMC’s net profit more than 10%

Unit: RMB’000

Name ofCompanies

Name of CompaniesType of CompaniesMain BusinessRegistered CapitalAssetsNet AssetsTurnoverOperating ProfitNet Profit
Jiangling Motors Sales Co., Ltd.SubsidiarySale of vehicles, service parts50,0003,590,858222,59112,723,312-11,773-8,881
JMC Heavy Duty Vehicle Co., Ltd.SubsidiaryProduction and sale of heavy commercial vehicles, engines, components, and related service281,7932,677,165-1,239,673308,100-260,225-259,471

Acquisition and disposal of the subsidiary

□Applicable √Not Applicable

8. Structured Entities Controlled by JMC

□Applicable √Not Applicable

9.Business performance prediction of the first nine monthes of 2020Warning and explanations as to the situation that accumulated net profit duringthe period from year beginning to the end of next reporting period may benegative or, compared with the same period last year, may have a substantialchange

√ Applicable □ Not Applicable

Preliminary results: net profit was positive, with a year-on-year increase of morethan 50%Data type of performance forecast: Interval number

Beginning of year to end of next reporting periodSame period last yearChange
Profit Attributable to the Equity Holders of the Company(RMB)31,534--39,417.515,767up100.00%--150.00%
Basic earnings per share(RMB)0.36--0.450.18up100.00%--150.00%
Explanation on changes in performanceThe main reasons are: 1. the Company's operating conditions in the first half of 2020 were good, and the net profit in the first half of the year was 208 million, increased 252.98% compared with the same period last year; 2. the third quarter of 2020 is expected to continue the good operating conditions as in the first half of the year and steadily increase the Company's profits.

10. Potential Challenges and Solutions

Affected by the epidemic in 2020, the Company faces huge growth tests,increased industry competition, stricter regulatory requirements, rising costpressures, and slowing economic growth. To maintain steady growth, theCompany will continue to focus on the following areas:

(1)Based on the stable epidemic prevention and control, continue to steadilypromote the production and operation of the factory;

(2)Insight into customer needs design and release customer-oriented products,improve channel performance, and achieve customer-centric business growth;

(3)Accelerate product platform, redefine product portfolio, enrich pedigree andnetwork connection configuration to better meet customer needs; promote thedevelopment of modified vehicle business, and improve market performance andindustrial share in special modified vehicle fields such as medical rescue, logisticsand transportation;

(4)Implement capacity optimization projects and continue to optimize JMC's leanproduction, improve production efficiency and product quality level;

(5)Improve supplier capabilities and component quality, and continue to reducecomponent procurement costs;

(6)Strengthen corporate governance, strictly follow national laws and regulations,and improve risk assessment and control mechanisms;

(7)Continuous expense management and control to optimize business structure;

(8)Through the established process optimization team, create a lean and efficientorganization to respond flexibly to market changes;

The Company will focus on light commercial vehicle with the support of SUV,maximize its own advantage and fully take advantage of shareholders resource torealize sustainable profit. Strengthen channel coverage, improve financing serviceability; promote new products development and R&D ability improvement, toaccelerate the progress of launching new competitive products to the market;develop more proactive cost reduction plan to improve the Company’s profit ability.The Company will accelerate the development and cultivation of the heavy truckmarket and increase the company's influence in the field of commercial vehicles.Guided by the new strategy, the Company will continuously implement all thespecific initiatives to accelerate the strategic target achievement.

Chapter V Major Events

1. Annual and special shareholders’ meeting

I. Shareholders’ meeting during the reporting period

Meetiing

MeetiingType of meetingInvestors Attending Percentage (%)Convening DateAnnouncement DateAnnouncement Index
2019 Annual Shareholders’ MeetingAnnual Shareholders’ Meeting76.42%June 19, 2020June 19, 2020Number 2020-024, published on the website www.cninfo.com.cn.

II. Share holders who hold vote right restored preferred shares apply to hold aspecial shareholders’ meeting

□Applicable √Not Applicable

2. Proposal on profit distribution and converting capital reserve to share capital forthe reporting period

□Applicable √Not Applicable

The Company planned that neither cash dividend nor stock dividend wasdistributed, and not to convert capital reserve to share capital for the first half of2020.

3. Commitments of actual controlling parties, shareholders, related parties,acquirers and the Company finished in the reporting period or overdue unfinishedby the end of the reporting period

□Applicable √Not Applicable

There is no commitmentsof actual controlling parties, shareholders, related parties,acquirers and the Company finished in the reporting period or overdue unfinishedby the end of the reporting period.

4. Appointment or dismissal of accounting firm

Whether the 2020 half-year report is audited?

□Yes √No

JMC 2020 half-year report is not audited.

5. Explanation of the board of directors, the supervisory board to abnormalopinions from accounting firm for the reporting period

□Applicable √Not Applicable

6. Explanation of the board of directors to abnormal opinions from accounting firmin 2020 half-year report

□Applicable √Not Applicable

7. Related matters regarding bankruptcy

□Applicable √Not Applicable

The Company did not go bankrupt during the reporting period.

8. Litigation or arbitration

Significant litigation or arbitration

□Applicable √Not Applicable

There is no significant litigation or arbitration in the reporting period.

Other litigation

□Applicable √Not Applicable

9.Media questions

□Applicable √Not Applicable

There is no Media questions in the reporting period.

10. Punishment

□Applicable √Not Applicable

The Company have not been punished by regulatory authorities.

11. Honesty and credit of JMC and its controlling shareholder or actual controllingparty

□Applicable √Not Applicable

12. Implementation of equity incentive plan, employee stock ownership plan andother employee incentive method

□Applicable √Not Applicable

13. Major related transactions

I. Routine operation related party transactions

√Applicable □Not Applicable

Please refer to the note 7 “Related party Transactions” to the financial statementsfor details.

II. Major related party transaction concerning transfer of assets or equity

□Applicable √Not Applicable

There was no major related party transaction concerning transfer of assets orequity during the reporting period.

III.Related party transaction concerning outside co-investment

□Applicable √Not Applicable

There was no outside co-investment during 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 during the reportingperiod.

V. Other major related party transactions

√Applicable □Not Applicable

Please refer to the note 7 “Related party Transactions” to the financial statementsfor details.Index for the Announcement of Major related party transactions:

Announcement Title

Announcement TitleAnnouncement Disclosure DateWebsite for Disclosure
Jiangling Motors Corporation, Ltd. Public Announcement on Related Party TransactionsMarch 04, 2020http://www.cninfo.com.cn

Jiangling Motors Corporation, Ltd.Public Announcement on Forecast ofthe Routine Related Party Transactions in2020

Jiangling Motors Corporation, Ltd. Public Announcement on Forecast of the Routine Related Party Transactions in 2020March 26, 2020http://www.cninfo.com.cn
Jiangling Motors Corporation, Ltd. Public Announcement on Related Party TransactionsApril 08,2020http://www.cninfo.com.cn

14. Non-operating funding in the Company occupied by controlling shareholderand its affiliates

□Applicable √Not Applicable

There was no non-operating funding in the Company occupied by controllingshareholder and its affiliates during the reporting period.

15. Major contracts and execution

I. Entrustment, contract or leasea. Entrustment

□Applicable √Not Applicable

There was no entrustment during the reporting period.

b. Contract

□Applicable √Not Applicable

There was no contract during the reporting period.

c. Lease

√Applicable □Not Applicable

See the note 7(b) to financial statements for lease of related parties.

Project earns more than 10% of net profit.

□Applicable √Not Applicable

II Major Guarantee

□Applicable √Not Applicable

The Company had no outside guarantee during the reporting period.

III.Entrusted financial management

□Applicable √Not Applicable

IV. Other Major Contracts

□Applicable √Not Applicable

There was no other major contract in the reporting period.

16. Corporation social responsibilities

I. Environmental protectionWhether the Company and affiliates is the key pollution discharge unit publishedby environmental protection administration?

√Yes □No

Main PollutantsEmission WaysEmission OutletNumberEmission Outlet DistributionEmission ConcentrationEmission StandardEmission AmountEmission Standard AmountMeet Standard or Not

Wastewater(COD, NH-

N)

Wastewater (COD, NH-N)continuous discharge73 in Mainsite, 1 in Xiaolan Site, 1 in Cast Plant ,1 in Axle Plant and 1 in JMCH"COD:145.4mg/L NH-N:12.64mg/L"“Wastewater Discharge Standard”(GB 8978-1996)COD: 55.15t,NH-N: 1.66tCOD≤841.68t, NH-N≤83.1414tMeet Standard
Exhaust gas (SO2, NOx, smoke, toluol,dimethylbenzene,NMHC)continuous discharge14851 in Mainsite, 58 in Xiaolan Site, 33 in Cast Plant and 6 in Axle PlantSO2: 7mg/m3, NOx: 61mg/m3, solid: 20mg/m3, toluol: 0.419mg/m3, dimethylbenzene: 2.66mg/m3 , NMHC: 3.34mg/m3"The Emission Standard of Air Pollutants”,” Emission Standard of Air Pollutants for Boiler”(GB 13271-2014)SO2: 8.39t, NOx: 12.17tSO2≤37.69t, NMHC≤2533.54tMeet Standard

The construction and operation of environmental protection facilitiesSince 2006, JMC has invested more than RMB 30 million to construct sevenwastewater treatment stations (including the wastewater treatment station in theeast plant area and Xiaolan wastewater treatment station), with the treatmentcapacity as high as 9,000t/d. The treated wastewater reached the nationaldischarge standard. In 2019,the company built Jiangling Fushan factorywastewater station.In 2020, the company will build a 600 mu frame wastewatertreatment station, which is planned to be put into use early next year.

For up-to-standard emission of waste gases, JMC has taken new controlmeasures over the years. In 2012, the Company invested RMB 10 million toreconstruct the cupola furnace in the casting plant. In 2013, Xiaolan Branchinvested RMB 14 million to install a TNV waste gas incinerator. In 2014, JMCinvested RMB 14.6 million to construct the boiler coal-gas-switch project in thesouth district. In 2017, the casting plant reconstructed the ventilation & dustremoval system for the smelting furnace in the large-size and middle & small-sized parts workshop, and installed efficient environmental-friendly dust removalequipment, effectively reducing the environmental pollution by dust.In 2018, thecompany invested 3.6 million Yuan to upgrade and transform the dust remover ofthe foundry, added electric furnace dust removal equipment, removed the existingsupporting dust remover, and installed two sets of "forward flow" reverse blowingflat bag filter system, effectively reducing environmental pollution.In 2019, thecompany set up a set of zealot runner device + a set of regenerative thermaloxidizer system (RTO) in the coating workshop of Fushan factory. In 2020, theVOC online of finishing paint drying outlet of Xiaolan painting truck has beenonline.

For noise reduction, JMC took different measures to reduce the environmentalimpact, such as increase of protective sound-proof doors & windows,establishment of noise enclosure for air blower, installation of muffler andtransformation of sound-proof doors & windows. All these measures can makesure up-to-standard discharge of noise at the plant boundary.

In the process of waste management, JMC managed from the source, and dividedthe generation of wastes. JMC established a temporary storage yard for solidwastes. Warning graphic symbols have been posted at the temporary storage siteof hazardous wastes. Besides, signboards have been provided as well, so as toremind the passer-by of probable hazards in the storage process of hazardouswastes. In 2017, JMC extend Xiaolan storage yard for solid wastes. In 2018 JMChas renovated the engine plant garbage station. According to the requirements of

the law on the prevention and control of solid waste, solid waste should beprevented from leakage, spreading and loss, and should not be stored in the openair.After the transformation of anti pollution, anti-seepage and classified treatment,leakage and pollution can be avoided, which meets the requirements of laws andregulations.In 2019, the company will build the solid waste station of JanglingFushan factory, and expand the temporary storage of hazardous waste in Xiaolangasoline engine and cheqiao plant in 2020.

EIA on construction project and other administrative permits for environmentalprotectionThe Company strictly implements the construction project environmental impactassessment system. With respect to new construction, expansion andreconstruction, JMC comprehensively planned environmental protection andevaluated the “Three Simultaneities”. From the source of design, JMC carried outthe philosophy of energy saving and low carbon all the time. The Company carrieson 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 ofenvironmental pollution to the minimum. In 2020, the company obtained the EIAapproval of parts relocation optimization project, Xiaolan simulation collisionlaboratory and other construction projects, and obtained the pollution dischargepermit of the foundry factory.

Emergency plan on emergency environmental incidentsIn order to dilute or prevent environmental risks, JMC established an emergencypreparation and response procedure and specific environmental emergency planswhich were submitted to the Environmental Protection Bureau for the record,so asto formulate corresponding control methods for potential accidents andemergences occurred or that may probably occur. JMC organized emergencydrills every year to ensure the efficiency of emergency plan.

Environmental self-monitoring schemeIn 2020, the company obtained the EIA approval of parts relocation optimizationproject, Xiaolan simulation collision laboratory and other construction projects,and obtained the pollution discharge permit of the foundry factory.

Other information related to environmental protectionJMC paid high attention to environmental protection and pollution source control,taking resource saving and cost reduction as the primary task. Moreover, theCompany also took full advantage of 6sigma, and controlled from the source, soas to achieve the effect of environmental improvement. In the new expansion andreconstruction projects, JMC laid emphasis on improving the environmentalperformance, strictly implemented the system of “Three Simultaneities”,transacted the EIA procedure according to national standards, stipulated thepreventive and control measures for environmental pollution, and reported tocompetent administrative departments on environmental protection for approval.

II.One-to-one poverty alleviationa. Plan on one-to-one poverty alleviationThe Company joined the one-to-one poverty alleviation, depending on JMCG, inQianmo Village, Dai Jiapu Township, Suichuang County, Jiangxi Province andXianting Village, Songhu Town, Xinjian District, Nanchang City in accordance withthe working arrangement of Jiangxi Provincial Party Committee and Provincial

Government. The overall goal is: to help the registered poor households will belifted out of povertyand poor village to achieve a well-off standard of living before2020 by cooperating with the local government.

b. Summary of one-to-one poverty alleviation in the first halfThe Company regards the realization of precision poverty relief as the basicstrategy of precision poverty alleviation. The Company continued to consolidateefforts of one-to-one poverty alleviation in the first half of 2020.

c. Status of targeted measures in poverty alleviation

Item

ItemUnitAmount/Progress
I. Brief Introduction————
2. Sum converted from the materialsRMB (‘000)34.4
II. Investments————
1. Anti-poverty depending on industry development————
2. Anti-poverty depending on employment transfer————
3. Anti-poverty depending on relocation————
4. Anti-poverty depending on education————
including:4.1 Grants in aid to poor studentsRMB (‘000)2
4.2 Subsidize the number of poor studentsPeople12
5. Health Anti-poverty————
6. Ecological protection anti-poverty————
7. Miscellaneous provisions————
including:7.1 Investments on stay-at-home children, women and elderlyRMB (’000)32.4
7.2 Help the number of " stay-at-home"children, women and elderlyPeople34
8. Social anti-poverty————
9. Other————
III. Awards————

d. On-going plan regarding targeted measures in poverty alleviationThe year 2020 will be a decisive year in the fight against poverty, JMC willunswervingly implement the strategy of targeted poverty alleviation, strengthenthe combination of aiding the poor with wisdom, help all the registered poorhouseholds to stabilize poverty alleviation, consolidate and improve theeffectiveness of poverty alleviation, and resolutely win the battle against poverty.

17. Other major events

√Applicable □Not Applicable

JMC received government incentives about RMB 160 million appropriated byNanchang City, Nanchang Xiaolan Economic and Technological DevelopmentZone, Nanchang County and Shanxi Transformation and Comprehensive ReformDemonstration Zone during the reporting period, which is to support JMC’sdevelopment.

18. Major event of JMC subsidiary

√Applicable □Not Applicable

JMC Heavy Duty Vehicle Co., Ltd., a whole-owned subsidiary of JMC, wasseparated per vehicle and engine business into the surviving company “JMCHeavy Duty Vehicle Co., Ltd.” and the derived new company “Taiyuan Jiangling

Power Co., Ltd.” in August 2020. Before the separation, the registered capital ofJMC Heavy Duty Vehicle Co., Ltd. was RMB 281,793,174; after the separation,the registered capital of JMC Heavy Duty Vehicle Co., Ltd. is changed to RMB181,793,174, and the registered capital of Taiyuan Jiangling Power Co., Ltd. isRMB 100,000,000.

Chapter VIShare Capital Changes & Shareholders

1. Changes of Shareholding Structure

I. Changes of shareholding structure

Before the changeChange (+, -)After the change
SharesProportion of total shares (%)New sharesBonus SharesReserve- converted sharesOthersSubtotalSharesProportion of total shares (%)
I. Limited tradable A shares750,9150.09%-75-75750,8400.09%
1. Other domestic shares750,9150.09%-75-75750,8400.09%
Including:
Domestic legal person shares749,9400.09%749,9400.09%
Domestic natural person shares9750.00%-75-759000.00%
II. Unlimited tradable shares862,463,08599.91%7575862,463,16099.91%
1. A shares518,463,08560.06%7575518,463,16060.06%
2. B shares344,000,00039.85%344,000,00039.85%
III. Total863,214,000100.00%863,214,000100.00%

Causes of shareholding changes

√Applicable □Not Applicable

Former senior executive Zhu Shuixing left office for more than half a year, andhis shares were released on January 1, 2020.

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 fromshares changes

□Applicable √Not Applicable

Others to be disclosed necessarily or per the requirements of securitiesregulator

□Applicable √Not Applicable

II.Changes of limited tradable shares

√Applicable □Not Applicable

Name of shareholder

Name of shareholderNumber of restricted shares at the beginning of the periodNumber of shares released in the current periodIncrease of restricted shares in the current periodNumber of restricted shares at the end of the periodReasonsRelease date
Zhu Shuixing757500Senior executives leave for more than half a yearJanuary 1, 2020
total757500----

2. Securities issuance and listing

□Applicable √Not Applicable

3. Shareholders and shareholding status

Total shareholders (as of June 30, 2020)JMC had 30,427 shareholders, including 24,876 A-share holders, and 5,551 B-share holders.
Top ten shareholders
Shareholder NameShareholder TypeShareholding Percentage (%)Shares at the End of YearChange (+,-)Shares with Trading RestrictionShares due to Mortgage or Frozen
Nanchang Jiangling Investment Co., Ltd.State-owned legal person41.03%354,176,000000
Ford Motor CompanyForeign legal person32.00%276,228,394000
China Securities Corporation LimitedDomestic non-State-owned legal persons2.72%23,458,066000
Shanghai Automotive Co., Ltd.State-owned Legal person1.51%13,019,610000
Hong Kong Securities Clearing Company Ltd. (HKSCC)Foreign legal person0.99%8,514,4863,849,98400
Central Huijin Investment Ltd.State-owned Legal person0.83%7,186,600000
GAOLING FUND, L.P.Foreign legal person0.63%5,453,086000
INVESCO FUNDS SICAVForeign legal person0.56%4,841,889000
Yang WentingDomestic natural person0.44%3,827,9213,827,92100
LSV EMERGING MARKETS EQUITY FUND, L.P.Foreign legal person0.35%2,996,400000
Notes on association among above-mentioned shareholdersNone.
Top ten shareholders holding unlimited tradable shares
Shareholder NameShares without Trading RestrictionShare Type
Nanchang Jiangling Investment Co., Ltd.354,176,000A share
Ford Motor Company276,228,394B share
China Securities Corporation Limited23,458,066A share
Shanghai Automotive Co., Ltd.13,019,610A share
Hong Kong Securities Clearing Company Ltd. (HKSCC)8,514,486A share
Central Huijin Investment Ltd.7,186,600A share

GAOLING FUND, L.P.

GAOLING FUND, L.P.5,453,086B share
INVESCO FUNDS SICAV4,841,889B share
Yang Wenting3,827,921A share
LSV EMERGING MARKETS EQUITY FUND, L.P.2,996,400B share
Notes on association among above-mentioned shareholdersNone.

Stock buy-back by top ten shareholders or top ten shareholders holdingunlimited tradable shares in the reporting period

□Yes √No

There is no stock buy-back by top ten shareholders or top ten shareholdersholding unlimited tradable shares in the reporting period.

4. Change of controlling shareholders or actual controlling partiesChange of controlling shareholders

□Applicable √Not Applicable

There was no change of controlling shareholders during the reporting period.

Change of actual controlling parties

□Applicable √Not Applicable

There was no change of actual controlling parties during the reporting period.

Chapter VIIPreferred Shares

□Applicable √Not Applicable

JMC have no preferred shares during the reporting period.

Chapter VIII Convertible Bond

□Applicable √Not Applicable

JMC have no Convertible Bond during the reporting period.

Chapter IX Directors, Supervisors and Senior Management

1. Changes of shares held by directors, supervisors and senior management

□Applicable √Not Applicable

There was no change of shares held by Directors, Supervisors and seniormanagement in the reporting period. Please refer to 2018 annual report fordetails.

2. Changes of directors, supervisors and senior management

√Applicable □Not Applicable

Name

NamePositionStatusDateReason
Lu SongIndependent DirectorLeaveJune 19, 2020Term expired
Wang KunIndependent DirectorLeaveJune 19, 2020Term expired
Mike ChangVPLeaveAugust 01,2020Work rotation.
Jerry LinVPAppointedAugust 01,2020

Chapter X Company BondWhether the Company owns the corporate bond that is lists in the securitiesexchange and undue or is not paid in full although it’s due.

□Yes √No

Chapter XI Financial Statements

JIANGLING MOTORS CORPORATION, LTD.

FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30JUNE 2020

JIANGLING MOTORS CORPORATION, LTD.CONSOLIDATED AND COMPANY BALANCE SHEET AS AT 30 JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

Assets

AssetsNote30 June 2020 Consolidated*31 December 2019 Consolidated30 June 2020 Company*31 December 2019 Company
Current assets
Cash at bank and on hand4(1)7,922,272,4048,937,936,6587,165,034,1328,677,928,946
Transactional financial assets4(2)2,725,990,657-2,725,990,657-
Derivative financial assets4(3)1,475,752-1,475,752-
Notes receivables4(4)、14(1)42,368,30585,816,3114,90520,792,000
Accounts receivables4(5)3,032,745,9802,208,236,6201,083,663,550865,928,297
Receivables financing4(6)270,951,837289,044,373507,260,46852,811,157
Advances to suppliers4(7)553,294,163517,122,502542,256,373504,562,617
Other receivables4(8)、14(2)94,908,695115,983,1373,267,748,7393,118,317,705
Inventories4(9)1,694,426,1231,946,869,0921,339,814,2881,471,931,881
Other current assets4(10)807,965,374973,426,066634,657,841821,783,113
Total current assets17,146,399,29015,074,434,75917,267,906,70515,534,055,716
Non-current assets
Long-term equity investments4(11)、14(3)37,910,00340,934,557377,910,003380,934,557
Fixed assets4(12)5,230,779,4465,714,489,5774,039,863,2174,462,909,152
Construction in progress4(13)1,667,129,4901,498,124,7781,450,890,3331,244,963,653
Right-of-use asset4(14)28,814,06336,039,89127,363,32933,138,423
Intangible assets4(15)1,075,657,753948,755,845645,298,032513,529,416
Development costs4(15)69,583,416125,142,08046,386,709100,271,663
Deferred tax assets4(17)858,593,505860,607,106166,881,320182,248,610
Totalnon-current assets8,968,467,6769,224,093,8346,754,592,9436,917,995,474
Total assets26,114,866,96624,298,528,59324,022,499,64822,452,051,190

JIANGLING MOTORS CORPORATION, LTD.CONSOLIDATED AND COMPANY BALANCE SHEET AS AT 30 JUNE 2020 (continued)(All amounts in thousands of RMB unless otherwise stated)

Liabilities and owners' equity

Liabilities and owners' equityNote30 June 2020 Consolidated*31 December 2019 Consolidated30 June 2020 Company*31 December 2019 Company
Current liabilities
Short-term borrowings4(19)1,300,000,000-1,300,000,000-
Derivative financial liabilities4(3)-545,632-545,632
Notes payables4(20)71,901,50631,400,000--
Accounts payables4(21)8,735,960,4268,116,169,5898,456,366,4797,908,815,398
Contract liabilities4(22)149,157,003268,170,154156,055,83477,585,490
Employee benefits payable4(23)503,696,486385,547,290447,103,193312,170,895
Taxes payable4(24)44,504,735198,777,10436,995,015119,431,418
Other payables4(25)3,983,922,5764,145,266,8381,370,448,6742,227,351,456
Current portion of non-current liabilities4(26)10,578,87213,843,4069,391,43911,500,358
Other current liabilities4(27)273,213,888264,558,92325,389,60213,333,551
Total current liabilities15,072,935,49213,424,278,93611,801,750,23610,670,734,198
Non-current liabilities
Long-term borrowings4(28)3,013,3683,197,8143,013,3683,197,814
Lease liabilities4(29)19,139,51422,592,25219,139,51422,592,252
Provisions4(30)176,066,962166,687,460--
Deferred income4(31)34,693,36234,389,57834,693,36234,389,578
Long-term employee benefits payable4(32)61,276,48563,685,00060,976,48563,385,000
Deferred tax liabilities4(17)25,022,88725,339,981--
Other non-current liabilities4(33)78,808,31361,793,79168,780,83250,930,075
Total non-current liabilities398,020,891377,685,876186,603,561174,494,719
Total liabilities15,470,956,38313,801,964,81211,988,353,79710,845,228,917
Owners' equity
Share capital4(34)863,214,000863,214,000863,214,000863,214,000
Capital surplus4(35)839,442,490839,442,490839,442,490839,442,490
Other comprehensive income4(36)(11,395,500)(11,395,500)(11,616,750)(11,616,750)
Surplus reserve4(37)431,607,000431,607,000431,607,000431,607,000
Undistributed profits4(38)8,521,042,5938,373,695,7919,911,499,1119,484,175,533
Total equity attributable to equity owners of the Company10,643,910,58310,496,563,78112,034,145,85111,606,822,273
Minority interests----
Total owners' equity10,643,910,58310,496,563,78112,034,145,85111,606,822,273
Total Liabilities and owners' equity26,114,866,96624,298,528,59324,022,499,64822,452,051,190

note:* Unaudited financial indexesLegal representative:Qiu Tiangao CFO:Li Weihua Finance Department:Ding Ni

JIANGLING MOTORS CORPORATION, LTD.CONSOLIDATED AND COMPANY INCOME STATEMENTS FOR 2020 FIRSTHALF-YEAR(All amounts in RMB Yuan unless otherwise stated)

Item

ItemNote2020 First Half-year Consolidated*2019 First Half-year Consolidated*2020 First Half-year Company*2019 First Half-year Company*
Revenue4(39)、14(4)14,073,417,87813,721,953,50213,100,109,93312,974,537,618
Less: Cost of sales4(39)、4(45)、14(4)(11,860,122,365)(11,678,659,344)(11,197,514,026)(11,226,955,738)
Taxes and surcharges4(40)(386,579,142)(368,975,495)(374,566,719)(356,492,502)
Selling expenses4(41)、4(45)(592,187,320)(705,875,262)(106,442,789)(116,506,548)
General and administrative expenses4(42)、4(45)(459,127,446)(437,154,690)(358,155,678)(379,137,935)
Research and development expenses4(43)、4(45)(696,582,452)(837,430,636)(694,302,769)(761,825,538)
Financial expenses4(44)66,731,81389,690,60467,945,339111,649,983
Including: Interest expenses(19,061,965)(106,053)(16,322,688)(106,053)
Interest income94,240,51892,765,17391,873,400112,414,620
Add: Other income4(48)165,639,46772,562,205145,105,79212,562,205
Investment income4(49)、14(5)28,278,00013,840,64528,278,00013,840,645
Including: Share of profit of associates and joint ventures(3,024,554)333,625(3,024,554)333,625
Profit arising from changes in fair value4(50)10,012,041(3,556,991)10,012,041(3,556,991)
Credit impairment losses4(47)(66,242,811)1,056,124(61,963,003)1,397,263
Asset impairment losses4(46)(34,107,710)(8,435,244)(20,994,208)(7,931,633)
Gains on disposals of assets4(51)(581,955)(2,212,045)(1,145,364)(2,136,061)
Operating profit248,547,998(143,196,627)536,366,549259,444,768
Add: Non-operating income4(52)3,599,193158,387,2953,052,524150,453,025
Less: Non-operating expenses4(53)(30,238,252)(2,631,226)(30,104,671)(2,273,380)
Total profit221,908,93912,559,442509,314,402407,624,413
Less: Income tax expenses4(54)(14,137,157)46,302,374(21,565,844)(16,530,546)
Net profit207,771,78258,861,816487,748,558391,093,867
Classified by continuity of operations
Net profit from continuing operations207,771,78258,861,816487,748,558391,093,867
Net profit from discontinued operations----
Classified by ownership of the equity
Minority interests----
Attributable to equity owners of the Company207,771,78258,861,816487,748,558391,093,867
Other comprehensive income, net of tax----
Changes arising from remesurement of net liability or net asset of defined benefit plan4(36)
Total comprehensive income207,771,78258,861,816487,748,558391,093,867
Attributable to equity owners of the Company4(36)207,771,78258,861,816487,748,558391,093,867
Attributable to minority interests----
Earnings per share
Basic earnings per share(RMB Yuan)4(55)0.240.07————
Dilutedearnings per share(RMB Yuan)4(55)0.240.07————

note:* Unaudited financial indexesLegal representative:Qiu Tiangao CFO:Li Weihua Finance Department:Ding Ni

JIANGLING MOTORS CORPORATION, LTD.CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS FOR 2020 FIRSTHALF-YEAR(All amounts in thousands of RMB unless otherwise stated)

Item

ItemNote2020 First Half-year Consolidated*2019 First Half-year Consolidated*2020 First Half-year Company*2019 First Half-year Company*
Cash flows from operating activities
Cash received from sales of goods or rendering of services14,440,474,74415,268,525,17212,911,082,07914,492,403,355
Cash received relating to other operating activities4(56)245,920,384349,521,262187,369,975268,605,042
Sub-total of cash inflows14,686,395,12815,618,046,43413,098,452,05414,761,008,397
Cash paid for goods and services(10,617,165,843)(10,518,805,139)(10,193,382,381)(10,053,954,409)
Cash paid to and on behalf of employees(1,084,107,268)(1,205,849,910)(962,774,043)(1,072,966,988)
Payments of taxes and surcharges(1,021,043,215)(1,119,736,879)(838,116,455)(927,033,121)
Cash paid relating to other operating activities4(56)(1,229,795,175)(1,338,302,942)(768,797,800)(805,267,011)
Sub-total of cash outflows(13,952,111,501)(14,182,694,870)(12,763,070,679)(12,859,221,529)
Net cash flows from operating activities4(57)734,283,6271,435,351,564335,381,3751,901,786,868
Cash flows from investing activities
Cash received from disposal of investments6,471,000,0004,700,000,0009,238,976,1316,847,500,000
Cash received from returns on investments32,619,54118,446,86632,619,54118,446,866
Net cash received from disposal of fixed assets, intangible assets and other long-term assets7,983,5842,989,6957,062,5242,762,095
Cash received relating to other investing activities4(56)96,772,432103,216,428164,343,358159,332,398
Sub-total of cash inflows6,608,375,5574,824,652,9899,443,001,5547,028,041,359
Cash paid to acquire fixed assets, intangible assets and other long-term assets(493,537,475)(801,467,480)(480,691,940)(638,723,096)
Cash paid to acquire investments(9,189,000,000)(4,700,000,000)(12,088,976,131)(7,157,500,000)
Cash paid relating to other investing activities(1,928,931)(7,590,323)(1,928,931)(7,590,323)
Sub-total of cash outflows(9,684,466,406)(5,509,057,803)(12,571,597,002)(7,803,813,419)
Net cash flows from investing activities(3,076,090,849)(684,404,814)(3,128,595,448)(775,772,060)
Cash flows from financing activities
Cash received from borrowings1,800,000,000-1,800,000,000-
Sub-total of cash inflows1,800,000,000-1,800,000,000-
Cash repayments of borrowings(500,231,444)(219,935)(500,231,444)(219,935)
Cash payments for distribution of dividends, profits or interestexpenses(18,544,156)(150,021)(15,845,917)(150,021)
Cash payments relating to other financing activities4(56)(4,800,032)-(3,603,380)-
Sub-total of cash outflows(523,575,632)(369,956)(519,680,741)(369,956)
Net cash flows from financing activities1,276,424,368(369,956)1,280,319,259(369,956)
Effect of foreign exchange rate changes on cash and cash equivalents----
Net increase in cash and cash equivalents4(57)(1,065,382,854)750,576,794(1,512,894,814)1,125,644,852
Add: Cash and cash equivalents at beginning of year4(57)8,937,936,6587,616,879,9768,677,928,9466,244,682,576
Cash and cash equivalents at end of period4(57)7,872,553,8048,367,456,7707,165,034,1327,370,327,428

note:* Unaudited financial indexesLegal representative:Qiu Tiangao CFO:Li Weihua Finance Department:Ding Ni

JIANGLING MOTORS CORPORATION, LTD.CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2020(All amounts in thousands of RMB unless otherwise stated)

Item

ItemNoteAttributable to equity owners of the CompanyMinority interestsTotal owners' equity
SharecapitalCapital surplusOther comprehensive incomeSurplus reservesUndistributed profits
Balance at 1 January 2019863,214,000839,442,490(10,178,250)431,607,0008,260,412,273-10,384,497,513
Movements for the six months ended 30 June 2020*----24,333,256-24,333,256
Total comprehensive income
Net profit----58,861,816-58,861,816
Other comprehensive income-------
Total comprehensive income for the year----58,861,816-58,861,816
Profit distribution
Profit distribution to equity owners4(38)----(34,528,560)-(34,528,560)
Balance at 30 June 2020*863,214,000839,442,490(10,178,250)431,607,0008,284,745,529-10,408,830,769
Balance at 1 January 2020863,214,000839,442,490(11,395,500)431,607,0008,373,695,791-10,496,563,781
Movements for the six months ended 30 June 2020*----147,346,802-147,346,802
Total comprehensive income
Net profit----207,771,782-207,771,782
Other comprehensive income-------
Total comprehensive income for the year----207,771,782-207,771,782
Profit distribution
Profit distribution to equity owners4(38)----(60,424,980)-(60,424,980)
Balance at 30 June 2020*863,214,000839,442,490(11,395,500)431,607,0008,521,042,593-10,643,910,583

note:* Unaudited financial indexesLegal representative:Qiu Tiangao CFO:Li Weihua Finance Department:Ding Ni

JIANGLING MOTORS CORPORATION, LTD.COMPANY STATEMENT OF CHANGES IN OWNERS' EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2020(All amounts in thousands of RMB unless otherwise stated)

Item

ItemNoteShare capitalCapital surplusOther comprehensive incomeSurplus reservesUndistributed profitsTotal owners' equity
Balance at 1 January 2019863,214,000839,442,490(10,395,750)431,607,0009,040,459,45111,164,327,191
Movements for the six months ended 30 June 2020*----356,565,307356,565,307
Total comprehensive income
Net profit----391,093,867391,093,867
Other comprehensive income------
Total comprehensive income for the year----391,093,867391,093,867
Profit distribution
Profit distribution to equity owners4(38)----(34,528,560)(34,528,560)
Balance at 30 June 2020*863,214,000839,442,490(10,395,750)431,607,0009,397,024,75811,520,892,498
Balance at 1 January 2020863,214,000839,442,490(11,616,750)431,607,0009,484,175,53311,606,822,273
Movements for the six months ended 30 June 2020*----427,323,578427,323,578
Total comprehensive income
Net profit----487,748,558487,748,558
Other comprehensive income------
Total comprehensive income for the year----487,748,558487,748,558
Profit distribution
Profit distribution to equity owners4(38)----(60,424,980)(60,424,980)
Balance at 30 June 2020*863,214,000839,442,490(11,616,750)431,607,0009,911,499,11112,034,145,851

note:* Unaudited financial indexesLegal representative:Qiu Tiangao CFO:Li Weihua Finance Department:Ding Ni

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

1General information
Jiangling Motors Corporation, Ltd. (hereinafter “the Company”) is a Sino-foreign joint stock enterprise established under the approval of Hongban (1992) No. 005 of Nanchang Revolution and Authorisation Group of Company’s Joint Stock on the basis of Jiangxi Motors Manufacturing Factory on 16 June 1992. The registration number of the enterprise business license is No. 913600006124469438. The registered address of the Company and the address of its headquarters are both Nanchang City, Jiangxi Province of the People’s Republic of China (“the PRC”).
On 23 July 1993, with the approval of the China Securities Regulatory Commission (hereinafter “CSRC”) (Zheng Jian Fa Shen Zi [1993] No. 22) and (Zheng Jian Han Zi [1993] No. 86), the Company was listed on the Stock Exchange of Shenzhen on 1 December 1993, issuing 494,000,000 shares in total. On 8 April 1994, a total of 25,214,000 shares were distributed for the 1993 dividend distribution programme with the approval of the shareholders’ meeting and Jiangxi Securities Management Leading Group (Gan Securities [1994] No. 02). In 1995, with the approval of CSRC (Zheng Jian Fa Zi [1995] No. 144) and the Shenzhen Securities Management Office (Shenzhen Office Fu [1995] No. 92), the Company issued 174,000,000 ordinary shares (“B shares”). In 1998, with the approval of CSRC (Zheng Jian Fa Zi [1998] No. 19), the Company issued additional 170,000,000 B shares.
According to the resolution of the shareholders’ meeting regarding the split share structure reform on 11 January 2006, the Company implemented the Scheme on Split Share Structure Reform on 13 February 2006. After the implementation, the Company’s total paid-in capital remains the same. Related details are disclosed in Note 4(32).
As at 30 June 2020, the Company’s paid-in capital totalled RMB 863,214,000, with par value of RMB 1 per share.
The business scope of the Company and its subsidiaries (hereinafter “the Group”) includes production and sales of automobile assemblies such as automobiles, special (modified) vehicles, engines and chassis and other automobile parts, and provision of related after-sales services; retail and wholesale of imported E series automobiles of Ford Motor (China) Co., Ltd. (“FORD”) as the dealer; import and export of automobiles and parts; dealership of used cars; provision enterprise management and consulting services related to production and sales of automobiles.
Subsidiaries included in the consolidation scope for the current year are detailed in Note 5.
These financial statements were authorised for issue by the Company's Board of Directors on 26August 2020.
2Summary of significant accounting policies and accounting estimates
The Group determines specific accounting policies and estimates based on the features of its production and operation, which mainly comprise the measurement of expected credit losses (“ECLs”) on receivables (Note 2(8)), valuation of inventories (Note 2(9)), depreciation of fixed assets and amortisation of intangible assets (Note 2(11), (14)), criteria for capitalisation of development expenditures (Note 2(14)), recognition and measurement of revenue (Note 2(19)), etc. Key judgements applied by the Group on the determination of significant accounting policies are set out in Note 2(25).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(1)Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, specific accounting standards and relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereinafter collectively referred to as “the Accounting Standards for Business Enterprises” or “CASs”) and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 - General Rules on Financial Reporting issued by CSRC. The financial statements are prepared on a going concern basis.
(2)Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company For the Six Months Ended 30 June 2020 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the consolidated and company’s financial position of the Company as at 30 June 2020 and their financial performance, cash flows and other information for the year then ended.
(3)Accounting year
The Company’s accounting year starts on 1 January and ends on 31 December.
(4)Recording currency
The recording currency is Renminbi (“RMB”). The financial statements are presented in RMB.
(5)Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies or the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(5)Preparation of consolidated financial statements (Cont'd)
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of subsidiaries’ shareholders' equity and the portion of subsidiaries’ net profits and losses and comprehensive income for the period not attributable to the Company are recognised as minority interests, net profit attributed to minority interests and total comprehensive income attributed to minority interests, and presented separately in the consolidated financial statements under shareholders' equity, net profits and total comprehensive income respectively. Unrealised profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealised profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealised profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary. If the accounting treatment of a transaction is inconsistent in the financial statements at the Group level and at the Company or its subsidiary level, adjustment will be made from the perspective of the Group.
(6)Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(7)Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into recording currency using the exchange rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into recording currency using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A financial asset or a financial liability is recognised when the Group becomes a party to the contractual provisions of the instrument.
(a)Financial assets
(i)Classification and measurement
Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, financial assets are classified as: (1) financial assets at amortised cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets at fair value through profit or loss.
The financial assets are measured at fair value at initial recognition. Related transaction costs that are attributable to the acquisition of the financial assets are included in the initially recognised amounts, except for the financial assets at fair value through profit or loss, the related transaction costs of which are recognised directly in profit or loss for the current period. Accounts receivable or notes receivable arising from sales of products or rendering of services (excluding or without regard to significant financing components) are initially recognised at the consideration that is entitled to be charged by the Group as expected.
Debt instruments
The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the issuer, and are measured in the following three ways:
Measured at amortised cost:
The objective of the Group’s business model is to hold the financial assets to collect the contractual cash flows, and the contractual cash flow characteristics are consistent with a basic lending arrangement, which gives rise on specified dates to the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The interest income of such financial assets is recognised using the effective interest method. Such financial assets mainly include cash at bank and on hand, notes receivable, accounts receivable, other receivables, etc.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments (Cont'd)
(a)Financial assets (Cont’d)
(i)Classification and measurement (Cont’d)
Measured at fair value through other comprehensive income:
The objective of the Group’s business model is to hold the financial assets to both collect the contractual cash flows and sell such financial assets, and the contractual cash flow characteristics are consistent with a basic lending arrangement. Such financial assets are measured at fair value through other comprehensive income, except for the impairment gains or losses, foreign exchange gains and losses, and interest income calculated using the effective interest method which are recognised in profit or loss for the current period. Such financial assets mainly include receivables financing, etc.
Measured at fair value through profit or loss:
Debt instruments held by the Group that are not divided into those at amortised cost, or those measured at fair value through other comprehensive income, are measured at fair value through profit or loss and included in financial assets held for trading. At initial recognition, the Group does not designate a portion of financial assets as at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch. Financial assets that are due within one year (inclusive) as from the balance sheet date and are expected to be held over one year are included in other non-current financial assets.
Equity instruments
Investments in equity instruments, over which the Group has no control, joint control and significant influence, are measured at fair value through profit or loss under financial assets held for trading; investments in equity instruments expected to be held over one year as from the balance sheet date are included in other non-current financial assets. The Group had no related equity instruments. Investments in equity instruments not held for trading can be designated as financial assets at fair value through other comprehensive income, and included in other investments in equity instruments. The relevant dividend income of such financial assets is recognised in profit or loss for the current period. The Group had no related equity instruments not held for trading.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments (Cont'd)
(a)Financial assets (Cont’d)
(ii)Impairment
Loss provision for financial assets at amortised cost and investments in debt instruments at fair value through other comprehensive income is recognised on the basis of ECLs.
Giving consideration to reasonable and supportable information on past events, current conditions and forecasts of future economic conditions, as well as the default risk weight, the Group recognises the ECL as the probability-weighted amount of the present value of the difference between the cash flows receivable from the contract and the cash flows expected to collect.
As at each balance sheet date, the ECLs of financial instruments at different stages are measured respectively. 12-month ECL provision is recognised for financial instruments in Stage 1 that have not had a significant increase in credit risk since initial recognition; lifetime ECL provision is recognised for financial instruments in Stage 2 that have had a significant increase in credit risk yet without credit impairment since initial recognition; and lifetime ECL provision is recognised for financial instruments in Stage 3 that have had credit impairment since initial recognition.
For the financial instruments with lower credit risk on the balance sheet date, the Group assumes there is no significant increase in credit risk since initial recognition and recognises the 12-month ECL provision.
For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Group calculates the interest income by applying the effective interest rate to the gross carrying amount (before deduction of the impairment provision). For the financial instrument in Stage 3, the interest income is calculated by applying the effective interest rate to the amortised cost (after deduction of the impairment provision from the gross carrying amount).
For notes receivable, accounts receivable and receivables financing arising from sales of goods and rendering of services in the ordinary course of operating activities, the Group measures the lifetime ECL provision regardless of whether there is a significant financing component.
In case the ECLs of an individually assessed financial asset can be evaluated with reasonable cost, the Group determines the ECLs based on impairment assessment of an individual financial asset. In case the ECLs of an individually assessed financial asset cannot be evaluated with reasonable cost, the Group divides the receivables into certain groupings based on credit risk characteristics, and calculates the ECLs for the groupings. Basis for determining groupings and related provision method are as follows:

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments (Cont'd)
(a)Financial assets (Cont’d)
(ii)Impairment (Cont’d)
Bank acceptance notesState-owned banks and joint stock banks
General group of automobilesCustomers of general automobiles
Group of new energy automobilesCustomers of new energy automobiles
Group of other automobilesCustomers of other automobiles
Group of automobile partsCustomers of automobile parts
Group of interest from cash at bankAccrued interest on cash at bank
Group of operating advances and warrantiesOperating advances and warranties etc
For accounts receivable that are classified into the groups and notes receivables and receivables financing arising from sales of goods and rendering of services in the ordinary course of operating activities, the Group calculates the ECLs with reference to historical credit losses experience, current conditions and forecasts of future economic conditions, and based on the exposure at default and the lifetime ECL rate. For other notes receivable, receivables financing and other receivables classified into groupings, the Group calculates the ECLs with reference to the historical credit loss experience, current conditions and forecasts of future economic conditions, and based on the exposure at default and the 12-month or lifetime ECL rate.
The Group recognises the loss provision made or reversed into profit or loss for the current period. For debt instruments held at fair value through other comprehensive income, the Group adjusts other comprehensive income while the impairment loss or gain is recognised in profit or loss for the current period.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments (Cont'd)
(a)Financial assets (Cont’d)
(iii)Derecognition
A financial asset is derecognised when: (i) the contractual rights to the cash flows from the financial asset expire, (ii) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee, or (iii) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset. When a financial asset is derecognised, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that are previously recognised directly in other comprehensive income is recognised in profit or loss for the current period, except for those as investments in other equity instruments, the difference aforementioned is recognised in retained earnings instead.
(b)Financial liabilities
Financial liabilities are classified as financial liabilities at amortised cost and financial liabilities at fair value through profit or loss at initial recognition. Financial liabilities of the Group mainly comprise financial liabilities at amortised cost, including notes payable, accounts payable, other payables, borrowings, etc. Such financial liabilities are initially recognised at fair value, net of transaction costs incurred, and subsequently measured using the effective interest method. Financial liabilities that are due within one year (inclusive) are classified as current liabilities; those with maturities over one year but are due within one year (inclusive) as from the balance sheet date are classified as current portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognised or partly derecognised when the underlying present obligation is discharged or partly discharged. The difference between the carrying amount of the derecognised part of the financial liability and the consideration paid is recognised in profit or loss for the current period.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(8)Financial instruments (Cont'd)
(c)Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. In valuation, the Group adopts valuation techniques applicable in the current situation and supported by adequate available data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant transactions of assets or liabilities by market participants, and gives priority to the use of relevant observable inputs. When relevant observable inputs are not available or feasible, unobservable inputs are adopted.
(9)Inventories
(a)Classification
Inventories include raw materials, work in progress, finished goods, materials in transit, low value consumables, materials consigned for processing, etc., and are measured at the lower of cost and net realisable value.
(b)Costing of inventories
Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, direct labour and systematically allocated production overhead based on the normal production capacity.
(c)Basis for determining net realisable value of inventories and method for making provision for decline in the value of inventories
Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
(d)The Group adopts the perpetual inventory system.
(e)Amortisation methods of low value consumables
Low value consumables are amortised into expenses in full when issued for use.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(10)Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries and the Group’s long-term equity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the Group has significant influence on their financial and operating decisions.
Investments in subsidiaries are presented using the cost method in the Company’s financial statements, and adjusted to the equity method when preparing the consolidated financial statements. Investments in associates are accounted for using the equity method.
(a)Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at the combination date; for long-term equity investments acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost. For long-term equity investments acquired not through a business combination: for long-term equity investments acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.
(b)Subsequent measurement and recognition of profit or loss
Long-term equity investments accounted for using the cost method are measured at the initial investment cost. Cash dividend or profit distribution declared by an investee is recognised as investment income into profit or loss for the current period.
Where the initial investment cost exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the investment is initially measured at that cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is included in profit or loss for the current period and the cost of the long-term equity investment is adjusted upwards accordingly.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(10)Long-term equity investments (Cont’d)
(b)Subsequent measurement and recognition of profit or loss (Cont’d)
For long-term equity investments accounted for using the equity method, the Group recognises the investment income or losses according to its share of net profit or loss of the investee. The Group does not recognise further losses when the carrying amounts of the long-term equity investments together with any long-term interests that, in substance, form part of the Group’s net investment in investees are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions are satisfied, the Group continues recognising the investment losses and the provisions at the amount it expects to undertake. The Group’s share of the changes in investee’s owner's equity other than those arising from the net profit or loss, other comprehensive income and profit distribution is recognised in capital surplus with a corresponding adjustment to the carrying amounts of the long-term equity investment. The carrying amount of the investment is reduced by the Group’s share of the profit distribution or cash dividends declared by the investees. Unrealised gains or losses on transactions between the Group and its investees are eliminated to the extent of the Group’s equity interest in the investees, based on which the investment income or losses are recognised. Any losses resulting from transactions between the Group and its investees, which are attributable to asset impairment losses are not eliminated.
(c)Basis for determining existence of control and significant influence over investees
Control is the power over investees that can bring variable returns through involvement in related activities of investees and the ability to influence the returns by using such power over investees.
Significant influence is the power to participate in making decisions on financial and operating policies of investees, but is not control or joint control over making those policies.
(d)Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries and associates is reduced to the recoverable amounts when the recoverable amounts are below their carrying amount (Note 2(15)).
(11)Fixed assets
(a)Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles, moulds, and electronic and other equipment.
Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the time of acquisition. The fixed assets contributed by the state-owned shareholders upon the restructuring of the Company are recorded at the valued amount determined by the state-owned asset administration department.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(11)Fixed assets (Cont’d)
(a)Recognition and initial measurement of fixed assets (Cont’d)
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss for the period in which they are incurred.
(b)Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated net residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:
Estimated useful livesEstimated net residual valuesAnnual depreciation rates
Buildings35 to 40 years4%2.4% to 2.7%
Machinery and equipment10 to 15 years4%6.4% to 9.6%
Motor vehicles6 to 10 years4%9.6% to 16%
Moulds5 years-20%
Electronic and other equipment5 to 7 years4%13.7% to 19.2%
The estimated useful life and the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end.
(c)The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(15)).
(d)Disposal of fixed assets
A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(12)Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation is charged starting from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(15)).
(13)Borrowing costs
The borrowing costs that are directly attributable to acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of an asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
The capitalised amount of specific borrowings intended to be used for the acquisition or construction of qualifying assets is determined by the interest expenses incurred in the period less interest income of the unused borrowings deposited at bank or investment income from temporary investments.
The capitalised amount of general borrowings intended to be used for the acquisition or construction of qualifying assets is determined by the weighted average of the excess of accumulated capital expenditure over capital expenditure of the special borrowings multiplied by the weighted average effective interest rate of the utilised general borrowings. The effective interest rate is the rate at which the future cash flows of the borrowings over the expected lifetime or a shorter applicable period are discounted into the initial recognised amount of the borrowings.
(14)Intangible assets
Intangible assets include land use rights, software use fees, non-patent technologies and after-sales service management mode, and are measured at cost.
(a)Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of 50 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(14)Intangible assets (Cont’d)
(b)Software use fees
Software use fees are amortised on a straight-line basis over the estimated useful life of 5 years.
(c)Non-patent technologies
Non-patent technologies are amortised on the straight-line basis over the useful life of 5 years.
(d)Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.
(e)Research and development
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at the end of the project.
Expenditure on the research phase related to planned survey, evaluation and selection for research on manufacturing technique of automobile products is recognised in profit or loss in the period in which it is incurred. Prior to mass production, expenditure on the development phase related to the design and testing phase in regards to the final application of manufacturing technique of automobile products is capitalised only if all of the following conditions are satisfied: ? the development of manufacturing technique of automobile products has been fully demonstrated by technical team; ? management intends to complete the development of manufacturing technique of automobile products, and use or sell it; ? the research and analysis of preliminary market survey indicate that products manufactured with manufacturing technique of automobile products are marketable; ? adequate technical and financial supports are available for development of manufacturing techniques of automobile products and subsequent mass production; and, ? expenditure on development of manufacturing techniques of automobile products can be reliably collected.
Other expenditures on the development phase that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development expenditures previously recognised as profit or loss are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development expenditures in the balance sheet and transferred to intangible assets at the date when the asset is ready for its intended use.
(f)Impairment of intangible assets
The carrying amounts of intangible assets are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(15)).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(15)Impairment of long-term assets
Fixed assets, construction in progress, right-of-use assets, intangible assets with finite useful lives and long-term equity investments in subsidiaries and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets that are not yet available for their intended use are tested for impairment at least annually, irrespective of whether there is any indication of impairment. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying amount of goodwill is allocated to the related asset group or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or a group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset group or group of asset groups in proportion to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
(16)Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits.
(a)Short-term employee benefits
Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, short-term paid absences, etc. The short-term employee benefits actually occurred are recognised as a liability in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at fair value.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(16)Employee benefits (Cont'd)
(b)Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, premiums or contributions on basic pensions and unemployment insurance paid for employees belong to defined contribution plans; supplementary retirement benefits for employees are defined benefit plans.
(i)Defined contribution plans
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local authorities of the Ministry of Human Resources and Social Security. Monthly payments of premiums on the basic pensions are calculated according to the bases and percentage prescribed by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
(ii)Defined benefit plans
The Group also provides employees with supplementary retirement benefits outside the insurance system prescribed by the State. Such supplementary retirement benefits belong to defined benefit plans. The defined benefit liabilities recognised on the balance sheet represent the present value of defined benefit obligations less the fair value of the plan assets. The defined benefit obligations are calculated annually by an independent actuary using projected unit credit method at the interest rate of treasury bonds with similar obligation term and currency. Service costs related to supplementary retirement benefits (including current service costs, historical service costs and settled gains or losses) and net interest are recognised in profit or loss for the current period or the cost of related assets, and changes arising from remeasurement of net liabilities or net assets of defined benefit plans are recognised in other comprehensive income.
(c)Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss for the current period at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses for a restructuring that involves the payment of termination benefits.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(16)Employee benefits (Cont'd)
(c)Termination benefits (Cont’d)
Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement arrangements. The early retirement benefits refer to the salaries and social security contributions to be paid to and for the employees who accept voluntary retirement before the normal retirement date prescribed by the State, as approved by the management. The Group pays early retirement benefits to those early retired employees from the early retirement date until the normal retirement date. The Group accounts for the early retirement benefits in accordance with the treatment for termination benefits, in which the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised as liabilities with a corresponding charge to the profit or loss for the current period. The differences arising from the changes in the respective actuarial assumptions of the early retirement benefits and the adjustments of benefit standards are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be paid within one year since the balance sheet date are classified as employee benefits payable.
(17)Dividend distribution
Cash dividends are recognised as liabilities in the period in which the dividends are approved at the shareholders’ meeting.
(18)Provisions
Provisions for product warranties, onerous contracts, etc. are recognised when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(19)Revenue
The Group manufactures and sells a range of automobiles and automobile parts to dealers and ending customers. Besides, the Group also provides automobile maintenance and additional warranty services. The Group recognises revenue when the customer obtains control of the goods and services. The revenue is recognised based on the consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to customers.
(a)Selling automobiles and automobile parts to dealers and ending customers
The Group manufactures automobiles and automobile parts and sells such products to distributors and end customers. Sales of automobiles are recognised when automobiles are delivered out of warehouse as prescribed in the contract, being when the customers have accepted the products and the delivery documents have been signed by both parties. Sales of automobile parts are recognised when they are delivered to the designated location as prescribed in the contract, being when customers have accepted the products and the delivery documents have been signed by both parties. When the contracts include two performance obligations, selling automobiles and providing shipping services, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices on the commence date of the contract. Where these are not directly observable, they are estimated considering market information, expected cost plus margin ect. The credit periods granted by the Group to dealers and ending customers are generally within one year and no more than two years, which is consistent with the industry practice, and there is no significant financing component. The Group provides product warranties for automobiles and automobile parts as required by laws and regulations, and recognises the corresponding provisions (Note 2(18)). The Group provides dealers and end customers with sales discounts based on sales volume, and related revenue is recognised at contract consideration net of the discount amount estimated based on historical experience and using the expected value method.
(b)Rendering of services
The Group provides customers with automobile maintenance and additional quality warranty services. Revenue is recognised based on the progress of service provision within a certain period. The progress of obligation fulfilment is determined on the basis of inputs to the satisfaction of the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation.
When the Group recognises revenue based on the stage of completion, the amount with unconditional collection right obtained by the Group is recognised as accounts receivable, and the rest is recognised as contract assets. Meanwhile, loss provision for accounts receivable and contract assets are recognised on the basis of ECLs (Note 2(8)). If the contract consideration received or receivable exceeds the amount for the completed service, the excess portion will be recognised as contract liabilities. Contract assets and contract liabilities under the same contract are presented on a net basis.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(20)Government grants
Government grants refer to the monetary or non-monetary assets obtained by the Group from the government, including support funds for enterprise development, financial subsidies, 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 are recorded as deferred income and recognised in profit or loss on a reasonable and systemic basis over the useful lives of the assets. Government grants related to income that compensate future costs, expenses or losses are recorded as deferred income and recognised in profit or loss; government grants related to income that compensate incurred costs, expenses or losses are recognised in profit or loss directly for the current period.
The Group applies the presentation method consistently to the similar government grants in the financial statements.
Government grants related to ordinary activities are included in operating profit. Otherwise, they are recorded in non-operating income.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(21)Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible losses). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of reversal of such temporary differences, and it is probable that the temporary differences will not reverse in the foreseeable future. When it is probable that the deductible temporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the deductible temporary differences can be utilised, the corresponding deferred tax assets are recognised.
Deferred tax assets and deferred tax liabilities are offset when: ? the deferred tax assets and deferred tax liabilities are related to the same tax payer within the Group and the same taxation authority; and, ? that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(22)Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group as the lessee
At the commencement date, the Group shall recognise the right-of-use asset and measure the lease liabilities at the present value of the lease payments that are not paid at that date. Lease payments include fixed payments, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lessee exercises an option to terminate the lease. Variable lease payments in proportion to sales are excluded from lease payments and recognised in profit or loss as incurred. Lease liabilities that are due within one year (inclusive) as from the balance sheet date are included in the current portion of non-current liabilities.
The Group's right-of-use assets are leased buildings. Right-of-use assets are measured initially at cost which comprises the amount of the initial measurement of lease liabilities, any lease payments made at or before the commencement date and any initial direct costs, less any lease incentives received. If there is reasonable certainty that the Group will obtain ownership of the underlying asset by the end of the lease term, the asset is depreciated over its remaining useful life; otherwise the asset is depreciated over the shorter of the lease term and its remaining useful life. The carrying amounts of the right-of-use assets are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(15)).
For short-term leases with a term of 12 months or less and leases of an individual asset (when new) of low value, instead of recognising right-of-use assets and lease liabilities, the Group recognisedthe lease payments in the cost of the underlying assets or in profit or loss for the current period on a straight-line basis over the lease term.
The Group as the lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. An operating lease is a lease other than a finance lease.
As the lessor, the Group does not hold any finance lease. Where the Group leases out self-owned buildings under operating leases, rental income therefrom is recognised on a straight-line basis over the lease term.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(23)Held for sale
A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such non-current asset or disposal group; (2) the Group has entered a legally enforceable sales agreement with other parties and obtained relevant approval, and the sales transaction is expected to be completed within one year.
Non-current assets (except for financial assets, investment properties measured at fair value and deferred tax assets) that meet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value less costs to sell and the carrying amount, and the excess of the original carrying amount over the fair value less costs to sell is recognised as asset impairment loss.
Such non-current assets and assets and liabilities included in disposal groups classified as held for sale are classified as current assets and current liabilities respectively, and are separately presented in the balance sheet.
(24)Segment information
The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. Two or more operating segments that have similar economic characteristics and satisfy certain conditions can be aggregated into one single operating segment.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(25)Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
(a)Critical judgements in applying the accounting policies
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(i)Classification of financial assets
Significant judgements made by the Group in the classification of financial assets include business model and analysis on contractual cash flow characteristics.
The Group determines the business model for financial assets management on the group basis, and factors to be considered include the methods for evaluating the financial assets performance and reporting such performance to key management personnel, the risks relating to the financial assets performance and corresponding management methods, the ways in which related business management personnel are remunerated, etc.
When assessing whether contractual cash flow characteristics of financial assets are consistent with basic lending arrangement, key judgements made by the Group include: the possibility of changes in time schedule or amount of the principal during the lifetime due to reasons such as repayment in advance; whether interest only includes time value of money, credit risk, other basic lending risks and considerations for costs and profits For example, whether the repayment in advance reflects only the principal outstanding and corresponding interest and reasonable compensation paid for early termination of the contract.
(ii)Judgement on significant increase in credit risk
Judgement made by the Group for significant increase in credit risk is mainly based on whether the overdue days exceed 30 days, or whether one or more of the following indicators change significantly: business environment of the debtor, internal and external credit rating, significant changes in actual or expected operating results, significant decrease in value of collateral or credit rate of guarantor, etc.
Judgement made by the Group for the occurrence of credit impairment is mainly based on whether the overdue days exceed 90 days (i.e., a default has occurred), or whether one or more of the following conditions is/are satisfied: the debtor is suffering significant financial difficulties, the debtor is undergoing other debt restructuring, or the debtor probably goes bankrupt, etc.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(25)Critical accounting estimates and judgements (Cont’d)
(a)Critical judgements in applying the accounting policies (Cont’d)
(iii)Judgement on capitalisation of development expenditures
Development expenditures are capitalised when the criteria in Note 2(14)(e) are fulfilled. The assessments on whether the criteria for capitalisation of development expenditures have been met involve judgements of the Group, including the technical feasibility of the project, the likelihood of the project generating sufficient future economic benefits and the timing to start capitalisation particularly. The Group makes the judgements on the capitalisation of development expenditures and records the process in meeting minutes based on feasibility analysis, regular review on the development project phase, etc.
(iv)Timing of revenue recognition
The Group sells automobiles and automobile parts to distributors and ending customers. As prescribed in the contract, control of automobiles is transferred to the customers when the good are out of the warehouse, while control of automobile parts is transferred when the parts are out of the warehouse or shipped to the designate destination based on the contract terms. The distributors and ending customers sign the delivery documents after they accept the products. Thereafter, the distributors or ending customers control the products and have the right to set the price, bear the risks of any obsolescence and loss of the products. The distributors and ending customers have obtained the control of the products after accepting the products. Therefore, the Group recognises the sales revenue of the products at the time when the delivery documents have been signed.
(v)Sales with product warranties
The Group provides statutory warranty for automobiles and automobile parts, and the periods and terms of such warranty comply with the requirements of laws and regulations related to the products. The Group does not provide any significant additional service or additional warranty for this purpose, thus this kind of warranty cannot be identified as a separate performance obligation. In addition, the Group also offers additional warranty other than the requirements of laws and regulations, which is identified as a separate performance obligation. The Group recognises the revenue of the additional warranty over time during the period when services are rendered.
(b)Critical accounting estimates and key assumptions
(i)Measurement of ECL
The Group calculates ECLs through default risk exposure and ECL rate, and determines the ECL rate based on default probability and default loss rate. In determining the ECL rate, the Group uses data such as internal historical credit loss experience, etc., and adjusts historical data based on current conditions and forward-looking information. When considering forward-looking information, the indicators used by the Group include the risk of economic downturn, the expected increase in unemployment rate, the external market environment, the technological environment and changes in customer conditions. The Group regularly monitors and reviews assumptions related to the calculation of ECLs. In 2020, there was no significant change in the above estimation techniques and key assumptions.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(25)Critical accounting estimates and judgements (Cont’d)
(b)Critical accounting estimates and key assumptions (Cont’d)
(ii)Provision for impairment of long-term assets
The Group assesses whether there is any indication that non-current assets other than financial assets may be impaired at the balance sheet date. When there are indications showing the carrying amounts of such assets cannot be recovered, an impairment test will be performed.
When the carrying amount of non-current assets or asset groups other than financial assets is higher than the recoverable amount, which is the higher of an asset’s fair value less cost to sell and the present value of the future cash flows expected to be derived from the asset, such non-current assets or asset groups are impaired.
The net value of an asset’s fair value less disposal costs is determined on the basis of the present value of the future cash flows expected to be derived from the asset or asset group. The present value of estimated future cash flows is determined based on the medium or long-term business development budget plan approved by management and adjusted with reference to market conditions.
The estimation of the present value of future cash flows involves significant judgements on revenue growth rate, sales price growth rate, long-term growth rate of the asset or asset group and the discount rate used in calculating the present value. The Group estimates the recoverable amount based on all available materials, including the forecast of production and sales volume and market information based on reasonable and supportable assumptions.
(iii)Taxation
The Group is subject to various taxes in the PRC, including enterprise income tax, value-added tax (“VAT”) and consumption tax. Judgements are required for recognising the provision for such taxes. There are many transactions and events 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. When the final tax outcome of these events is different from amounts that are initially recorded, such differences will impact the tax provisions in the period of final tax outcome. Deferred tax assets are recognised as management considers it is probable that taxable income will be available against which the temporary differences can be utilised. When the final tax outcome of such events is different from the initial expectation, such differences will have impacts on income tax and deferred tax during the final determination period.
As at 30June 2020, the Group’s deferred tax assets calculated by management based on the expected income rate were RMB 858,593,505. Such deferred tax assets mainly arose from temporary differences such as provision for asset impairment, retirement benefits, provisions, etc., and losses. Deductible temporary differences and deductible losses that were not recognised as deferred tax assets amounted to RMB 1,420,399,732 (Note 4(17)).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

2Summary of significant accounting policies and accounting estimates (Cont’d)
(25)Critical accounting estimates and judgements (Cont’d)
(b)Critical accounting estimates and key assumptions (Cont’d)
(iv)Provisions
The Group undertakes after-sales repair or replacement obligations for sold automobiles based on the after-sales service agreement. Management estimates related provisions based on historical after-sales service data, including the repair and replacement provided as well as current trends. Factors that may impact the estimation of warranty costs include improvement of the Group’s productivity and production quality, as well as changes in related parts and labour costs. Any increase or decrease in provisions will have impact on profit or loss of the Group in future years.
(v)Provision for decline in the value of inventories
The Group's inventories are stated at the lower of cost and net realisable value. Net realisable value of inventories refers to the amount of the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sales and related taxes.
If management adjusts the estimated selling prices of inventories, the estimated costs to completion, estimated selling and distribution expenses and related taxes, and the adjusted estimated selling prices are lower than those currently in use, or the estimated costs to completion, estimated selling and distribution expenses and related taxes are higher than those currently in use, the Group shall increase the provision for decline in the value of inventories.
If the actual selling prices, costs to completion, selling and distribution expenses and related taxes are higher or lower than management’s estimates, the Group shall recognise the relevant differences in the consolidated income statement during the corresponding accounting period.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

3Taxation
(1)The main categories and rates of taxes applicable to the Group are set out below:
CategoryTaxation basisTax rate
Enterprise income tax (a)Taxable income15% and 25%
VAT (b)Taxable value-added amount (Tax payable is calculated using the taxable sales amount multiplied by the applicable tax rate less deductible input VAT of the current period)13%, 9% and 6%
Consumption taxTaxable sales amount3%, 5% and 9%
City maintenance and construction tax (c)The payment amount of VAT and consumption tax5% and 7%
(a)Pursuant to the Circular on Enterprise Income Tax Policy Concerning Deductions for Equipment and Appliances (Cai Shui [2018] No. 54) and relevant regulations issued by the State Administration of Taxation, during the period from 1 January 2018 to 31 December 2020, the cost of newly purchased equipment with the original cost less than RMB 5 million can be fully deducted against taxable profit in the next month after the asset is put into use, instead of being depreciated annually for tax filing. Pursuant to the Circular on Increasing the Pre-tax Deduction for Research and Development Expenses (Cai Shui [2018] No. 99) issued by the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology and relevant regulations, during the period from 1 January 2018 to 31 December 2020, the Groups’ actual research and development expenses that are not recognised as intangible assets but included in profit or loss are allowed to 75% pre-tax additional deduction; those expenses recognised as intangible assets can be amortised before tax at 175% of the costs of intangible assets.
(b)Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax Reform (Announcement [2019] No. 39) and relevant regulations jointly issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the Group’s taxable products sales revenue is subject to the VAT at the rate of 13% from 1 April 2019; the applicable VAT rate for the Group’s transportation business is 9%from 1 April 2019. The interest income from its wholly-owned subsidiaries is subject to VAT at the rate of 6%.
(c)Pursuant to the Circular of the State Council on Unifying the Collection of City Construction and Maintenance Tax and Educational Surcharge on Domestic and Foreign-Owned Enterprises and Individuals (Guo Fa [2010] No. 35) issued by the State Council, the Group is subject to city construction and maintenance tax at the rates of 5% and 7%.
(2)Tax preference
Pursuant to the Circular of Jiangxi High-Tech Enterprise Certification Leading Group on the Announcement of the First Batch of High-Tech Enterprises of Jiangxi Province for the year 2018 (Gan Gao Qi Ren Fa [2018] No. 3), the Company is certified as a high-tech enterprise, and the valid term is three years. During the period from 1 January 2018 to 31 December 2020, the Company is subject to enterprise income tax at the rate of 15%.
In 2020, the Company’s wholly-owned companies, including JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”), Jiangling Motor Sales Co., Ltd. (“JMCS”), Shenzhen Fujiang New Energy Automobile Sales Co., Ltd. (“SZFJ”), Guangzhou Fujiang New Energy Automobile Sales Co., Ltd. (“GZFJ”), were subject to the enterprise income tax at the rate of 25%.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements
(1)Cash at bank and on hand
30June 202031 December 2019
Cash at bank (a)7,872,553,8048,937,936,658
Other cash(b)49,718,600-
7,922,272,4048,937,936,658
(a)As at 30 June 2020, cash at bank of the Group deposited with Jiangling Motor Group Finance Company (“JMCF”) was RMB 618,877,485 (31 December 2019: RMB 967,750,294) (Note 7(6)), and interest was calculated at 1.725% (2019: 0.455% to 3.30%) per annum, which was the interest rate applied to deposits with the same term. JMCF, a holding subsidiary of Jiangling Motors Group Co., Ltd (“JMCG”), is a non-banking financial institution. JMCG holds 50% equity capital of Nanchang Jiangling Investment Co., Ltd. (“JIC”), a main shareholder of the Company.
(b)As at 30 June 2020, the restricted cashamount of RMB 49,718,600(31 December 2019: Nil) was restricted for the issuance of acceptance bill.
(2)Transactional financial assets
30June 202031 December 2019
Structural deposits2,725,990,657-
(3)Derivative financial assets and derivative financial liabilities
30June 202031 December 2019
Derivative financial assets -
Forward exchange contracts1,475,752-
Derivative financial liabilities -
Forward exchange contracts-545,632
As at 30June 2020 and 31 December 2019, derivative financial assets and derivative financial liabilities mainly represented forward exchange contracts
(4)Notes receivable
30June 202031 December 2019
Bank acceptance notes i)42,368,30585,816,311
(a)As at 30June 2020, the Group had no pledged notes receivable.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(4)Notes receivable (Cont'd)
(b)
i) In the six months ended 30June 2020, certain bank acceptance notes receivable of the Group were held to maturity for the purpose of daily treasury management, and were classified as financial assets measured at amortised cost. Meanwhile, certain bank acceptance notes of the Group were endorsed for the purpose of daily treasury management, and were therefore classified as financial assets at fair value through other comprehensive income and recognised as receivables financing (Note 4(6)).
(c)Provision for bad debts
For notes receivable arising from sales of goods and rendering of services in the ordinary course of operating activities, the Group measures the loss provision based on the lifetime ECL regardless of whether there is a significant financing component.
As 30June 2020 and 31 December 2019, the acceptors of the Groups’ notes receivable were mainly four major state-owned banks or national joint stock banks. Therefore, the Group expected there was no significant loss on related notes receivable arising from non-performance by these banks.
(5)Accounts receivable
30June 202031 December 2019
Accounts receivable3,253,139,0242,362,312,151
Less: Provision for bad debts(220,393,044)(154,075,531)
3,032,745,9802,208,236,620

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(5)Accounts receivable (Cont’d)
(a)The aging of accounts receivable is analysed as follows:
30June 202031 December 2019
Within 1 year2,718,317,7701,761,105,893
1 to 2 years516,202,759584,836,934
2 to 3 years9,907,0037,736,444
Over 3 years8,711,4928,632,880
3,253,139,0242,362,312,151
(b)As at 30June 2020, the five largest accounts receivable were analysed by debtor as follows:
BalanceAmount of provision for bad debts% of total balance
Company 1485,135,536(1,090,986)14.91%
Company 2195,467,552(254,926)6.01%
Company 3166,407,359(314,427)5.12%
Company 4100,168,520(6,290,583)3.08%
Company 590,571,702(123,722)2.78%
1,037,750,669(8,074,644)31.90%
(c)Provision for bad debts
For accounts receivable, the Group measures the loss provision based on the lifetime ECL regardless of whether there is a significant financing component.
(i)Accounts receivable for which provision for bad debts is made on the individual basis are analysed as follows:
30June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Receivables for automobiles i)89,652,880100%(89,652,880)
New energy subsidies receivable ii)103,180,418100%(103,180,418)
192,833,298(192,833,298)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(5)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(i)Accounts receivable for which provision for bad debts is made on the individual basis are analysed as follows (Cont’d):
i) As at 30June 2020, since aforesaid companies in debts had difficulties in operation and were involved in several legal proceedings, the Group considered that it was difficult to recover such receivables, so related provision for bad debts was made in full amount.
ii) As at 30June 2020, government subsidies receivable for new energy automobiles amounted to RMB 103,180,418. Since the estimated mileage of such new energy automobiles may not meet the target within two years, the Group considered it was difficult to recover such subsidies, so related provision for bad debts was made in full amount.
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Receivables for automobiles i)89,652,880100%(89,652,880)
New energy subsidies receivable ii)20,410,500100%(20,410,500)
110,063,380(110,063,380)
i) As at 31 December 2019, since these companies in debts were involved in several legal proceedings, the Group considered that it was difficult to recover such receivables, so related provision for bad debts was made in full amount. ii) As at 31 December 2019, government subsidies receivable for new energy automobiles amounted to RMB 20,410,500. Since the estimated mileage of such new energy automobiles may not meet the target within two years, the Group considered it was difficult to recover such subsidies, so related provision for bad debts was made in full amount.
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows:
Grouping - Sales of general automobiles:
30June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue2,299,299,7040.13%(3,010,933)
Overdue for 1 to 30 days17,580,6520.13%(23,022)
Overdue for 31 to 60 days11,000,7504.02%(441,768)
Overdue for 61 to 90 days1,530,6985.49%(83,964)
Overdue over 90 days7,143,7979.01%(643,403)
2,336,555,601(4,203,090)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(5)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows (Cont’d):
Grouping - Sales of general automobiles (Cont’d):
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue1,152,290,7710.05%(557,709)
Overdue for 1 to 30 days15,981,1200.05%(7,735)
Overdue for 31 to 60 days2,840,0001.20%(34,020)
Overdue for 61 to 90 days322,5001.97%(6,361)
Overdue over 90 days31,805,0444.63%(1,473,940)
1,203,239,435(2,079,765)
Grouping - Sales of new energy automobiles:
30June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue345,079,5516.05%(20,868,674)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue476,963,5895.53%(26,383,009)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(5)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows (Cont’d):
Grouping - Sales of other automobiles:
30June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue9,968,0000.21%(20,830)
Overdue for 1 to 30 days---
Overdue for 31 to 60 days---
Overdue for 61 to 90 days218,0005.71%(12,458)
Overdue over 90 days9,217,0876.74%(621,171)
19,403,087(654,459)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue40,409,6885.88%(2,377,114)
Overdue for 1 to 30 days17,872,9476.49%(1,160,830)
Overdue for 31 to 60 days5,835,61626.08%(1,521,779)
Overdue for 61 to 90 days1,202,06228.14%(338,307)
Overdue over 90 days28,182,68230.07%(8,474,046)
93,502,995(13,872,076)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(5)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows (Cont’d):
Grouping - automobile parts:
30June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue242,226,4420.30%(746,318)
Overdue for 1 to 30 days79,865,4260.30%(241,457)
Overdue for 31 to 60 days18,899,5550.50%(94,498)
Overdue for 61 to 90 days3,694,3740.60%(22,166)
Overdue over 90 days14,581,6905.00%(729,084)
359,267,487(1,833,523)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue437,010,9720.30%(1,296,939)
Overdue for 1 to 30 days29,418,4070.30%(88,255)
Overdue for 31 to 60 days4,207,9710.50%(21,040)
Overdue for 61 to 90 days2,822,8140.60%(16,937)
Overdue over 90 days5,082,5885.00%(254,130)
478,542,752(1,677,301)
(iii)For the six months ended 30June 2020,the provision for bad debts for the year amounted to RMB 82,769,918 and the provision for bad debts reversed amounted to RMB16,452,405.
(d)For the six months ended 30June 2020,none of accounts receivable has been written off during the year.
(e)As at 30June 2020 and 31 December 2019, there were no accounts receivable pledged.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(6)Receivables financing
30June 202031 December 2019
Receivables financing270,951,837289,044,373
The Group endorses some of the bank acceptance notes as required by daily fund management, which also met the criteria for derecognition, and therefore classifies these bank acceptance notes as financial assets at fair value through other comprehensive income.
The Group had no bank acceptance notes for which the provision for impairment loss was made on individual basis, and measured provision for bad debts based on the lifetime ECL. As 30June 2020 and 31 December 2019, the acceptors of the Groups’ notes receivable mainly comprised four major state-owned banks or national joint stock banks. Therefore, the Group expected there was no significant loss on related notes receivable from non-performance by these banks.
As 30June 2020, receivables financing with a carrying amount of RMB 22,182,906(31 December 2019: RMB 34,196,500) were pledged as collateral for the notes payable.(Note 4(20)).
As at 30June 2020, the Group's notes receivable, presented in receivables financing, that have been endorsed or discounted but not yet matured were as follows:
DerecognisedNot derecognised
Bank acceptance notes222,142,685-

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(7)Advances to suppliers
(a)The aging of advances to suppliers is analysed as follows:
30June 202031 December 2019
Amount% of total balanceAmount% of total balance
Within 1 year553,294,163100%517,122,502100%
(b)As at 30June 2020, the five largest advances to suppliers are analysed by debtors as follows:
Amount% of total advances to suppliers
Company 1503,623,19891.02%
Company 230,109,5535.44%
Company 311,313,3632.04%
Company 44,001,6530.72%
Company 51,839,8380.33%
550,887,60599.55%
(8)Other receivables
30June 202031 December 2019
Import working capital advances35,000,00035,000,000
Interest receivable from cash at bank31,645,31732,092,621
Advances for gas fee9,778,95013,208,651
Deposits receivable5,497,1007,280,273
Advances for research and development projects4,580,1346,141,895
Reserves receivable832,2361,530,488
Others7,847,07221,076,025
95,180,809116,329,953
Less: Provision for bad debts(272,114)(346,816)
94,908,695115,983,137

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(8)Other receivables (Cont’d)
(a)The aging of other receivables is analysed as follows:
30June 202031 December 2019
Within 1 year91,579,450113,830,378
1 to 2 years2,381,912786,581
2 to 3 years343,570429,695
Over 3 years875,8771,283,299
95,180,809116,329,953
(b)Provision for losses and changes in book balance statement:
Stage 1Stage 3
12-month ECL (grouping)Lifetime ECL (credit-impaired)Total
Book balanceProvision for bad debtsBook balanceProvision for bad debtsProvision for bad debts
31 December 2019114,128,008(246,106)2,201,945(100,710)(346,816)
Increase in the current period---
Reversal in the current period59,39915,30374,702
Write-off in the current period---
Including: Charge-off in the current period---
Derecognition---
30June 202093,880,964(186,707)1,299,845(85,407)(272,114)
The Group had no other receivables transferred from Stage 1 to Stage 3, and no other receivables reversed from Stage 3 to Stage 1.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(8)Other receivables (Cont’d)
(b)Provision for losses and changes in book balance statement (Cont’d):
As at 30June 2020 and 31 December 2019, the Group did not have any other receivables at Stage 2. Other receivables at Stage 1 and Stage 3 were analysed below:
(i)As at 30June 2020 and 31 December 2019, the Group had no other receivables with provision for bad debts on individual basis.
(ii)As at 30June 2020 and 31 December 2019, the Group’s other receivables with provision for bad debts on grouping basis were analysed below:
Other receivables with provision on the grouping basis at Stage 1:
30June 202031 December 2019
Book balanceProvision for lossesBook balanceProvision for losses
AmountProvision ratioAmountAmountProvision ratioAmount
Grouping of interest from cash at bank i):
Within 1 year31,645,317--32,092,621--
Grouping of operating advances and guarantees:
Within 1 year59,934,1330.30%(179,802)81,737,7570.30%(245,213)
Over 1 year2,301,5140.30%(6,905)297,6300.30%(893)
93,880,964(186,707)114,128,008(246,106)
i) As at 30June 2020 and 31 December 2019, the Group’s interest receivable from cash at bank mainly came from four major state-owned banks or national joint stock banks. Therefore, the Group expected there was no significant loss on related interest receivable from non-performance by these banks.
Other receivables with provision on the grouping basis at Stage 3:
30June 202031 December 2019
Book balanceProvision for lossesBook balanceProvision for losses
AmountProvision ratioAmountAmountProvision ratioAmount
Grouping of operating advances and guarantees:
Over 1 year1,299,8456.57%(85,407)2,201,9454.57%(100,710)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(8)Other receivables (Cont’d)
(c)The provision for bad debts in the current period amounted to RMB 74,702. The reversal in the current period is due to the actual receipt of other receivables relating to the provision for bad debts made in the prior period.
(d)No other receivables have been written off in the current period.
(e)As at 30June 2020, other receivables from top five debtors in respect of outstanding balance are analysed as follows:
NatureBalanceAging% of total other receivablesProvision for bad debts
Company 1Advances classified as expenses35,029,720Within 1 year36.80%(106,189)
Company 2Advances classified as expenses6,291,984Within 1 year6.61%(18,876)
Company 3Advances classified as expenses4,480,000Within 1 year4.71%(13,440)
Company 4Advances classified as expenses3,486,966Within 1 year3.66%(10,461)
Company 5Advances classified as expenses1,520,227Within 2 year1.60%(6,081)
50,808,89753.38%(155,047)
(9)Inventories
(a)Inventories are summarised by categories as follows:
30June 202031 December 2019
Book balanceProvision for decline in the value of inventoriesCarrying amountBook balanceProvision for decline in the value of inventoriesCarrying amount
Raw materials1,027,476,599(68,360,967)959,115,632928,829,697(73,152,658)855,677,039
Work in progress188,468,341(581,113)187,887,228158,440,370(357,692)158,082,678
Finished goods309,661,919(7,522,633)302,139,286624,485,048-624,485,048
Materials in transit76,702,488-76,702,48892,258,083-92,258,083
Low value consumables150,758,686(10,522,966)140,235,720168,917,445(9,812,965)159,104,480
Materials processed on commission28,345,769-28,345,76957,261,764-57,261,764
1,781,413,802(86,987,679)1,694,426,1232,030,192,407(83,323,315)1,946,869,092

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(9)Inventories (Cont'd)
(b)Provision for decline in the value of inventories is analysed as follows:
31 DecemberIncrease in the current periodDecrease in the current period30 June
2019ProvisionReversalWrite-off2020
Raw materials(73,152,658)(10,359,424)2,658,46512,492,650(68,360,967)
Work in progress(357,692)(365,220)15,797126,002(581,113)
Finished goods-(12,588,225)-5,065,592(7,522,633)
Low value consumables(9,812,965)(3,287,005)69,0162,507,988(10,522,966)
(83,323,315)(26,599,874)2,743,27820,192,232(86,987,679)
(c)Provision for decline in the value of inventories is as follows:
Specific basis for determining net realisable valueReason for current period reversal or write-off of provision for decline in the value of inventories
Raw materials/ work in progress/ Finished goods/ low value consumablesBased on the estimated selling price, less the estimated costs to completion, estimated selling and distribution expenses and related taxesIncrease in the net realisable value of the inventories of which a provision for decline in the value had been made in prior years or sales realised
(10)Other current assets
30 June 202031 December 2019
Taxs to be deducted and prepaid807,965,374961,430,941
Input VAT to be verified-11,995,125
807,965,374973,426,066

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(11)Long-term equity investments
30 June 202031 December 2019
Associate
- Hanon Systems (Nanchang) Co., Ltd. (Hanon Systems)37,910,00340,934,557
Less: Provision for impairment of long-term equity investments--
37,910,00340,934,557
Associate
Movements for the current period
31 December 2019Increase or decrease in investmentShare of net profit/(loss) under equity methodCash dividends declared by joint venturesProvision Provision for impairment loss30 June 2020Shareholding (%)Voting rights (%)Ending balance of provision for impairment
Hanon Systems40,934,557-(3,024,554)--37,910,00319.15%33.33%-

Related information of equity in associates is set forth in Note 5(2).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(12)Fixed assets
30 June 202031 December 2019
Fixed assets (a)5,226,203,2865,714,483,873
Fixed assets pending for disposal (b)4,576,1605,704
5,230,779,4465,714,489,577
(a)Fixed assets
.BuildingsMachinery and equipmentMotor vehiclesMouldsElectronic and other equipmentTotal
Cost
31 December 20192,294,038,2133,820,737,800350,288,1093,030,590,9463,671,943,74213,167,598,810
Increase in the current period
Transfers from construction in progress9,358,7623,299,5532,711,93534,956,76729,698,12280,025,139
Decrease in the current period
Disposal or retirement(25,492,641)(37,882,770)(5,689,816)(31,675,863)(65,877,225)(166,618,315)
Other decrease----(47,379)(47,379)
30 June 20202,277,904,3343,786,154,583347,310,2283,033,871,8503,635,717,26013,080,958,255
Accumulated depreciation
31 December 2019(519,318,152)(2,278,813,606)(204,218,309)(2,085,299,039)(2,324,170,685)(7,411,819,791)
Increase in the current period
Provision(28,738,819)(118,790,978)(17,472,582)(171,636,650)(180,999,521)(517,638,550)
Decrease in the current period
Disposal or retirement2,960,55429,019,7125,091,50525,200,08649,664,559111,936,416
Other decrease----132,670132,670
30 June 2020(545,096,417)(2,368,584,872)(216,599,386)(2,231,735,603)(2,455,372,977)(7,817,389,255)
Provision for impairment loss
31 December 2019-(25,422,141)(120,218)(12,544,916)(3,207,871)(41,295,146)
Increase in the current period
Provision-(2,518,345)(4,254)(6,368,056)(1,360,459)(10,251,114)
Decrease in the current period
Disposal or retirement-6,817,78281,7955,820,3871,460,58214,180,546
30 June 2020-(21,122,704)(42,677)(13,092,585)(3,107,748)(37,365,714)
Carrying amount
30 June 20201,732,807,9171,396,447,007130,668,165789,043,6621,177,236,5355,226,203,286
31 December 20191,774,720,0611,516,502,053145,949,582932,746,9911,344,565,1865,714,483,873
For the six months ended 30June 2020, depreciation charged to fixed assets amounted to RMB 517,638,550 (the six months ended 30June 2019: RMB 475,243,004), of which the amounts charged to cost of sales, selling expenses, general and administrative expenses, and research and development expenses were RMB 398,894,781 (the six months ended 30 June 2019: RMB 407,307,847), RMB 1,516,970 (the six months ended 30 June 2019: RMB 1,639,280), RMB 81,887,718 (the six months ended 30 June 2019: RMB 37,469,266) and RMB 35,339,081 (the six months ended 30 June 2019: RMB 28,826,611) respectively.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(12)Fixed assets (Cont’d)
(a)Fixed assets (Cont’d)
The cost of fixed assets transferred from construction in progress amounted to RMB 80,025,139 (the six months ended 30 June 2019: RMB 251,536,427).
(i)Temporarily idle fixed assets
As at 30 June 2020, the fixed assets with a carrying amount of RMB 13,364,123 (a cost of RMB 170,300,819) (31 December 2019: a carrying amount of RMB 6,376,873 and a cost of RMB 155,507,908) were temporarily idle due to product process adjustment and other reasons. The analysis is as follows:
CostAccumulated depreciationProvision for impairment lossCarrying amount
Buildings10,477,140(4,429,208)-6,047,932
Machinery and equipment130,920,989(105,330,006)(21,122,704)4,468,279
Motor vehicles3,481,663(1,839,356)(42,677)1,599,630
Moulds4,016,618(3,359,520)(547,669)109,429
Electronic and other equipment21,404,409(17,157,808)(3,107,748)1,138,853
170,300,819(132,115,898)(24,820,798)13,364,123
(ii)Fixed assets with pending certificates of ownership:
Carrying amountReasons for not obtaining certificates of ownership
Buildings953,427,141Pending procedures
(iii)Assessment on impairment of asset groups
The Company's subsidiary, JMCH, has shown signs of impairment of long-term assets due to accumulated losses. Management tested the entire assets of JMCH as an asset group for impairment. The method and key assumptions of impairment test of JMCH asset group are set out in Note 4(16). After testing, no impairment provision was made for fixed assets and construction in progress in JMCH asset group in the current period.
(b)Fixed assets pending for disposal
30 June 202031 December 2019
Electronic and other equipment3,997,6333,208
Motor vehicles4,1682,496
Moulds382,500-
Machinery and equipment191,859-
4,576,1605,704

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(13)Construction in progress
30 June 202031 December 2019
Book balanceProvision for impairment lossCarrying amountBook balanceProvision for impairment lossCarrying amount
Fushan new plant investment project867,470,733-867,470,733843,501,521-843,501,521
JMC capacity optimization125,207,148125,207,148---
Engine construction project113,435,977-113,435,977132,731,701-132,731,701
Gasoline engine processing capacity expansion project107,210,357-107,210,35796,957,862-96,957,862
CX756 project72,363,052-72,363,05257,798,588-57,798,588
Vehicles capacity investment project68,110,689-68,110,68972,757,444-72,757,444
N356 project67,065,496-67,065,49656,765,898-56,765,898
Construction of Xiaolan 600 mu Phase 3 plan50,897,386-50,897,38635,720,297-35,720,297
Collision Simulation Laboratory32,697,323-32,697,32327,073,143-27,073,143
JF8/CX743 project14,828,370-14,828,37021,392,593-21,392,593
V348 conversion project13,189,975-13,189,9755,168,412-5,168,412
Independently developed gasoline engine project12,678,592-12,678,59212,192,019-12,192,019
Stamping/frame capacity improvement project11,078,149-11,078,14914,273,769-14,273,769
Technology research institute project9,896,039-9,896,03919,292,516-19,292,516
Xiaolan gasoline engine assembly Phase 2 project4,122,311-4,122,3114,122,311-4,122,311
N806 project599,007-599,0071,837,618-1,837,618
J09 project441,190-441,190---
New energy laboratory project164,517-164,517164,517-164,517
J28 project---1,049,999-1,049,999
Other miscellaneous and pending installation projects96,364,825(691,646)95,673,17996,016,216(691,646)95,324,570
1,667,821,136(691,646)1,667,129,4901,498,816,424(691,646)1,498,124,778

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(13)Construction in progress (Cont’d)
(i)Movements of significant projects of construction in progress
Project nameBudget (in RMB 0’000)31 December 2019Increase in the current periodTransfer to fixed assetsDecrease of other30 June 2020% of project investment in budgetProgress of projectAccumulated capitalised borrowing costsIncluding: Capitalised borrowing costs in the current periodSource of fund
Fushan new plant investment project205,200843,501,52124,786,063(816,851)-867,470,73342%42%--Self-owned funds
JMC capacity optimization179,462-125,207,148--125,207,1487%7%--Self-owned funds
Engine construction project67,000132,731,701-(8,381,138)(10,914,586)113,435,97766%66%--Self-owned funds
Gasoline engine processing capacity expansion project16,44596,957,86210,252,495--107,210,35765%65%--Self-owned funds
CX756 project21,68857,798,58815,724,931(1,160,467)-72,363,05234%34%--Self-owned funds
Vehicles capacity investment project100,20072,757,4442,863,302(7,510,057)-68,110,68993%93%--Self-owned funds
N356 project11,26956,765,89818,651,593(8,351,995)-67,065,49680%80%--Self-owned funds
Construction of Xiaolan 600 mu Phase 3 plan20,97735,720,29715,249,417(72,328)-50,897,38624%24%--Self-owned funds
Collision Simulation Laboratory9,65127,073,1435,624,180--32,697,32334%34%--Self-owned funds
JF8/CX743 project14,00021,392,5931,023,620(7,587,843)-14,828,37090%90%--Self-owned funds
V348 major transformation project6,0375,168,4128,282,351(260,788)-13,189,97523%23%--Self-owned funds
Independently developed gasoline engine project43,20012,192,019486,573--12,678,59292%92%--Self-owned funds
Stamping/frame capacity improvement project56,77814,273,7692,811,547(6,007,167)-11,078,14981%81%--Self-owned funds
Technology research institute project97,00019,292,51648,078(9,444,555)-9,896,03920%20%--Self-owned funds
Xiaolan gasoline engine assembly Phase 2 project3,6124,122,311---4,122,31192%92%--Self-owned funds
N806 project2,8601,837,618730,695(1,969,306)-599,00799%99%--Self-owned funds

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(13)Construction in progress (Cont’d)
(i)Movements of significant projects of construction in progress (Cont’d)
Project nameBudget (in RMB 0’000)31 December 2019Increase in the current periodTransfer to fixed assetsDecrease of other30 June 2020% of project investment in budgetProgress of projectAccumulated capitalised borrowing costsIncluding: Capitalised borrowing costs in the current periodSource of fund
J09 project61,800-966,790(525,600)-441,19093%93%--Self-owned funds
New energy laboratory project7,049164,517---164,51778%78%--Self-owned funds
J28 project6,2241,049,99942,334(1,092,333)--83%83%--Self-owned funds
Other miscellaneous and pending installation projects96,016,21629,397,569(26,844,711)(2,204,249)96,364,825292,897-Self-owned funds and borrowings
1,498,816,424262,148,686(80,025,139)(13,118,835)1,667,821,136
(ii)Provision for impairment of construction in progress
31 December 2019Increase in the current periodDecrease in the current period30 June 2020Reason for provision
Other miscellaneous and pending installation projects(691,646)--(691,646)The recoverable amount is below the carrying amount

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(14)Right-of-use assets
Buildings
Cost
31 December 201948,809,592
Increase in the current period
New lease contracts-
30 June 202048,809,592
Accumulated depreciation
31 December 2019(12,769,701)
Increase in the current period
Provision(7,225,828)
30 June 2020(19,995,529)
Provision for impairment loss
31 December 2019-
Increase in the current period
Provision-
30 June 2020-
Carrying amount
30 June 202028,814,063
31 December 201936,039,891
For the six months ended 30June 2020, depreciation of right-of-use assets amounted to RMB 7,225,828, of which RMB 5,775,094 and RMB 1,450,734 were included in cost of sales and selling expenses.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(15)Intangible assets
Land use rightsSoftware use feesNon-patent technologiesAfter-sales services management modelOthersTotal
Cost
31 December 2019886,309,822176,542,395290,025,95436,979,1841,648,1711,391,505,526
Increase in the current period
Transfers from construction in progress-2,204,249---2,204,249
Internal research and development--182,923,172--182,923,172
Decrease in the current period
Disposal------
30 June 2020886,309,822178,746,644472,949,12636,979,1841,648,1711,576,632,947
Accumulated amortisation
31 December 2019(166,614,748)(109,014,815)(128,492,763)(36,979,184)(1,648,171)(442,749,681)
Increase in the current period
Provision(9,138,270)(10,938,489)(38,148,754)--(58,225,513)
Decrease in the current period
Disposal------
30 June 2020(175,753,018)(119,953,304)(166,641,517)(36,979,184)(1,648,171)(500,975,194)
Provision for impairment loss
31 December 2019------
Increase in the current period
Provision------
Decrease in the current period
Disposal------
30 June 2020------
Carrying amount
30 June 2020710,556,80458,793,340306,307,609--1,075,657,753
31 December 2019719,695,07467,527,580161,533,191--948,755,845
For the six months ended 30June 2020, amortisation charged to intangible assets amounted to RMB 58,225,513 (the six months ended 30June 2019: RMB 42,950,608), of which the amounts charged to cost of sales, selling expenses, general and administrative expenses, and research and development expenses were RMB 273,069, RMB 179,314, RMB 18,893,016 and RMB 38,880,114 respectively. (the six months ended 30 June 2019: RMB 248,998, RMB 169,811, RMB 17,156,357 and RMB 25,375,442).
The Group's development expenditures are set out below:
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Charged to profit or lossRecognised as intangible assets
Automobile products development project125,142,080127,364,508-(182,923,172)69,583,416

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(15)Intangible assets (Cont’d)
Expenditures on research and development of the Group incurred in the six months ended 30June 2020 amounted to RMB 823,946,960 (the six months ended 30June 2019: RMB 914,828,651) in total, of which RMB 696,582,452 (the six months ended 30June2019: RMB 837,430,636) was recognised in profit or loss for the current period, RMB 86,341,229 (the six months ended 30June 2019: RMB 4,781,497) was recognised as intangible assets for the current period and RMB 41,023,279 (the six months ended 30June2019: RMB 72,616,518) was included in the ending balance of development expenditures. As at 30 June 2020, the intangible assets developed by the Group accounted for 28.5% (31 December 2019: 17.0%) of the carrying amount of intangible assets.
(16)Goodwill
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Goodwill -
JMCH89,028,412--89,028,412
Less: Provision for impairment (a) -
JMCH(89,028,412)--(89,028,412)
----
(a)Impairment
Management tested the entire assets of JMCH as an asset group for impairment. The recoverable amount of the asset group is based on a seven-year budget plan approved by management for medium- and long-term business development, adjusted for market conditions, using future cash flow forecast to calculate the net value of the fair value less disposal costs. Cash flows beyond the seven-year period are extrapolated using the estimated long-term growth rate. The long-term growth rate does not exceed the average growth rate for the heavy duty automobile business in which the asset group operates.
The key assumptions used by management and forecast period are consistent with the heavy duty automobile industry. Management determines budgeted gross margins based on industrial and past experience and forecast on future market development. The discount rates used by management are the after-tax interest rates that are able to reflect the risks specific to the asset groups. The fair value measurement is categorised within level 3 of the fair value hierarchy.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(17)Deferred tax assets and deferred tax liabilities
(a)Deferred tax assets before offsetting
30 June 202031 December 2019
Deductible temporary differences and deductible lossesDeferred tax assetsDeductible temporary differences and deductible lossesDeferred tax assets
Accrued expenses and provisions3,564,341,232806,804,1513,561,590,960802,898,159
Recoverable losses1,589,944,713238,526,4201,589,820,677238,495,412
Provision for asset impairments322,989,94152,708,810246,399,75739,468,025
Retirement benefits plan66,032,48516,275,87368,441,00016,637,150
Non-patent technologies83,320,75920,830,19064,246,38216,061,596
Deferred income34,693,3625,204,00434,389,5785,158,437
Employee education funds unpaid32,982,0265,123,84520,980,0663,248,820
Others39,673,0286,821,55036,034,8386,154,413
5,733,977,5461,152,294,8435,621,903,2581,128,122,012
Including:
Expected to be recovered within one year (inclusive)876,639,535855,992,754
Expected to be recovered after one year275,655,308272,129,258
1,152,294,8431,128,122,012
(b)Deferred tax liabilities before offsetting
30 June 202031 December 2019
Taxable temporary differencesDeferred tax liabilitiesTaxable temporary differencesDeferred tax liabilities
Depreciation of fixed assets1,200,337,561283,859,2481,161,290,511260,407,296
Differences between the fair value of the identifiable net assets and book value arising from business combinations not under common control100,091,54825,022,887101,359,92425,339,981
Amortisation of intangible assets35,603,1918,341,34632,088,8256,968,005
Others9,789,5421,500,744558,420139,605
1,345,821,842318,724,2251,295,297,680292,854,887
Including:
Expected to be recovered within one year (inclusive)64,715,84347,363,058
Expected to be recovered after one year254,008,382245,491,829
318,724,225292,854,887

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(17)Deferred tax assets and deferred tax liabilities (Cont’d)
(c)Deductible temporary differences and deductible losses that are not recognised as deferred tax assets are analysed as follows:
30 June 202031 December 2019
Deductible temporary differences152,732,113165,067,939
Deductible losses1,267,667,6191,006,172,312
1,420,399,7321,171,240,251
(d)Deductible losses that are not recognised as deferred tax assets will be expired in following years:
30 June 202031 December 2019
202072,469,64272,469,642
2021115,819,543115,819,543
2022150,713,078150,713,078
2023240,678,736240,678,736
2024351,896,252426,491,313
2025336,090,368-
1,267,667,6191,006,172,312
(e)The net balances of deferred tax assets and liabilities after offsetting are as follows:
30 June 202031 December 2019
Offsetting amountBalance after offsettingOffsetting amountBalance after offsetting
Deferred tax assets(293,701,338)858,593,505(267,514,906)860,607,106
Deferred tax liabilities(293,701,338)25,022,887(267,514,906)25,339,981

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(18)Provision for asset impairment and losses
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
ReversalWrite-off
Provision for bad debts of accounts receivable154,075,53182,769,918(16,452,405)-220,393,044
Including: Provision for bad debts on individual basis110,063,38082,769,918--192,833,298
Provision for bad debts on grouping basis44,012,151-(16,452,405)-27,559,746
Provision for bad debts of other receivables346,816-(74,702)-272,114
Sub-total154,422,34782,769,918(16,527,107)-220,665,158
Provision for decline in the value of inventories83,323,31526,599,874(2,743,278)(20,192,232)86,987,679
Provision for impairment of fixed assets41,295,14610,251,114-(14,180,546)37,365,714
Provision for impairment of construction in progress691,646---691,646
Provision for impairment of goodwill89,028,412---89,028,412
Sub-total214,338,51936,850,988(2,743,278)(34,372,778)214,073,451
368,760,866119,620,906(19,270,385)(34,372,778)434,738,609

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(19)Short-term borrowings
30 June 202031 December 2019
Bank credit loan1,300,000,000-
As at 30 June 2020,the weighted average interest rate ofShort-term borrowings is 2.79%
(20)Notes payable
30 June 202031 December 2019
Bank acceptance notes71,901,50631,400,000
As at 30 June 2020, the subsidiary of the Group, JMCH’s notes receivable of RMB 71,901,506 (31 December 2019: 31,400,000) were secured by its receivables financing with a carrying amount of RMB 22,182,906 (31 December 2019: RMB 34,196,500) (Note 4(6)) and other cash amount of RMB49,718,600 (31 December 2019: Nil) (Note 4(1)).
(21)Accounts payable
30 June 202031 December 2019
Payable for spare parts8,460,559,6007,874,660,108
Payable for raw and auxiliary materials275,400,826241,509,481
8,735,960,4268,116,169,589
As at 30 June 2020, accounts payable with aging over 1 year amounted to RMB 444,858,938 (31 December 2019: RMB 329,574,913), which mainly represented materials payable for which a settlement price has not yet been determined, and such payables had not been finally settled yet.
(22)Contract liabilities
30 June 202031 December 2019
Advances for automobiles and automobile parts112,774,231227,774,183
Advances for maintenance and warranty services115,151,087102,109,762
227,925,318329,883,945
Less: Contract liabilities expected to be included in revenue after one year (Note 4(33))(78,768,315)(61,713,791)
149,157,003268,170,154

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(23)Employee benefits payable
30 June 202031 December 2019
Short-term employee benefits payable (a)440,143,879379,453,114
Defined contribution plans payable (b)57,458,431-
Defined benefit plans payable (c)3,430,0003,430,000
Termination benefits payable (d)2,664,1762,664,176
503,696,486385,547,290
(a)Short-term employee benefits
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Wages and salaries, bonus, allowances and subsidies333,252,396920,923,479(876,752,571)377,423,304
Staff welfare20,408,09341,153,420(39,493,221)22,068,292
Social security contributions-39,015,571(37,269,269)1,746,302
Including: Medical insurance-34,229,353(34,229,353)-
Work injury insurance-2,268,425(522,123)1,746,302
Maternity insurance-2,517,793(2,517,793)-
Housing funds-66,580,205(66,580,205)-
Labour union funds and employee education funds25,792,62530,544,972(18,328,240)38,009,357
Other short-term employee benefits-2,598,126(1,701,502)896,624
379,453,1141,100,815,773(1,040,125,008)440,143,879
(b)Defined contribution plans
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Basic pensions-75,334,835(19,627,370)55,707,465
Supplementary pensions-10,400,000(10,400,000)-
Unemployment insurance-2,454,439(703,473)1,750,966
-88,189,274(30,730,843)57,458,431
(c)Defined benefit plans
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Post-retirement benefits payable (Note 4(32))3,430,0001,821,577(1,821,577)3,430,000

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(23)Employee benefits payable (Cont'd)
(d)Termination benefits payable
30 June 202031 December 2019
Early retirement benefits payable (Note 4(32))1,326,0001,326,000
Other termination benefits (i)1,338,1761,338,176
2,664,1762,664,176
(i) For the Six Months Ended 30 June 2020, other termination benefits paid by the Group for termination of the employment relationship is RMB 8,856,721.
(24)Taxes payable
30 June 202031 December 2019
Consumption tax payable12,426,52099,080,033
Enterprise income tax payable12,509,63375,018,772
Land use tax payable4,850,9045,399,750
Others14,717,67819,278,549
44,504,735198,777,104
(25)Other payables
30 June 202031 December 2019
Promotion expenses1,918,512,0871,848,583,722
Research and development project expenses856,944,9691,016,587,970
Construction expenses246,825,695372,865,433
Goods transportation expenses147,695,477231,965,841
Advertising and new product planning fees230,527,561208,380,148
Guarantees116,624,16495,201,388
Trademark management fees12,730,88318,127,537
Technological transformation project expenses17,943,75917,135,118
Ordinary share dividends payable66,863,5356,790,176
Consulting expenses22,628,0935,425,621
Others346,626,353324,203,884
3,983,922,5764,145,266,838

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(25)Other payables (Cont’d)
As at 30 June 2020, other payables with aging over 1 year of RMB 767,334,106 (31 December 2019: RMB 721,562,900) mainly comprised deposits collected from logistics companies, distributors and repair stations, payables for projects and payables for research and development expenses. Such payables had not been finally settled yet in view of the continuing business transactions with distributors, engineering projects and research and development projects that have not yet been accepted and completed.
(26)Current portion of non-current liabilities
30 June 202031 December 2019
Current portion of lease liabilities (Note 4(29))10,115,27713,386,576
Current portion of long-term borrowings (Note 4(28))463,595456,830
10,578,87213,843,406
(27)Other current liabilities
30 June 202031 December 2019
Provisions expected to be settled within one year (Note 4(30))258,553,238234,948,279
Others14,660,65029,610,644
273,213,888264,558,923
(28)Long-term borrowings
30 June 202031 December 2019
Secured borrowings3,476,9633,654,644
Less: Current portion of long-term borrowings(463,595)(456,830)
3,013,3683,197,814
The above secured borrowings were long-term borrowings amounting to USD 491,131 secured by Jiangling Motor Group Finance Company, borrowed from Industrial and Commercial Bank of China ("ICBC"), Nanchang Ganjiang Sub-branch with interest payable every 6 months and the principal due for payment in instalments between 10 December 2007 and 27 October 2027. In the six months ended 30June 2020, the interest rate of long-term borrowings was 1.5% (the six months ended 30June 2019: 1.5%).
Starting dateMaturity dateCurrencyInterest rate (%)30 June 202031 December 2019
Amount in foreign currencyRMB equivalentAmount in foreign currencyRMB equivalent
ICBC Nanchang Ganjiang Sub-branch27 February 199827 October 2027USD1.5%491,1313,476,963523,8733,654,644

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(29)Lease liabilities
30 June 202031 December 2019
Lease liabilities29,254,79135,978,828
Less: Current portion of non-current liabilities (Note 4(26))(10,115,277)(13,386,576)
19,139,51422,592,252
(30)Provisions
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Product warranties i)401,635,739155,588,778(122,604,317)434,620,200
Less: Provisions expected to be settled within one year (Note 4(27))(234,948,279)(258,553,238)
166,687,460176,066,962
i) Product warranties are expenses expected to be incurred during the warranty period from free after-sales services, product warranty and other services for the finished vehicles sold.
(31)Deferred income
31 December 2019Increase in the current periodDecrease in the current period30 June 2020Reason
Government grants (a)34,389,578800,000(496,216)34,693,362Subsidy for projects
(a)Government grants
31 December 2019Increase in the current periodDecrease in the current period30 June 2020Asset related/ Income related
Recognised in other income
Research and development -related subsidies34,065,060800,000(496,216)34,368,844Income related
Others324,518--324,518Income related
34,389,578800,000(496,216)34,693,362

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(32)Long-term employee benefits payable
30 June 202031 December 2019
Supplementary retirement benefits and early-retirement benefits eligible for recognition of provisions66,032,48568,441,000
Less: Payable within one year(4,756,000)(4,756,000)
61,276,48563,685,000
The retirement and early-retirement benefits payable within one year are included in employee benefits payable.
For retired and early-retired employees, the Group provides them with a certain amount of supplementary benefits during their retirement or early-retirement period. The amount of benefits depends on the employee's position, length of service and salary at the time of retirement or early-retirement, and is adjusted in accordance with inflation rate and other factors. The Group's obligations for supplementary retirement and early-retirement benefits as at the balance sheet date are calculated using projected unit credit method and are reviewed by an external independent actuary.
(a)Movements of retirement and early-retirement benefits of the Group are as follows:
Present value of the obligations of the defined benefit plan
30 June 202031 December 2019
Opening balance68,020,00068,020,000
Cost of defined benefit plan recognised in profit or loss for the current period
- Current service cost-1,203,000
- Past service cost-(1,523,000)
- Actuarial losses recognised immediately-1,420,000
- Net interest-2,300,000
Remeasurement of net liabilities for defined benefit plan-
- Actuarial losses-1,623,000
Other changes-
- Benefits paid(2,408,515)(4,602,000)
Ending balance66,032,48568,441,000

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(32)Long-term employee benefits payable (Cont'd)
(b)The actuarial assumptions used to determine the present value of defined benefit plan obligations
30 June 202031 December 2019
Discount rates——3.5%
Inflation rate——2.0%
Salaries and benefits growth rates——0%-6%
Future mortality assumptions were determined based on the China Life Insurance Mortality Table (2010-2013), which is publicly available statistical information for the Chinese region.
(33)Other non-current liabilities
30 June 202031 December 2019
Contract liabilities expected to be included in revenue after one year (Note 4(22))78,768,31561,713,791
Others39,99880,000
78,808,31361,793,791

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(34)Share capital
31 December 2019Movements for the current period30 June 2020
Shares newly issuedBonus shareTransfer from capital surplusOthersSub-total
Shares subject to trading restriction -
Other domestic shares750,915---(75)(75)750,840
Including: Shares held by domestic non-state-owned legal persons749,940-----749,940
Shares held by domestic natural persons975---(75)(75)900
750,915---(75)(75)750,840
Shares not subject to trading restriction -
Ordinary shares denominated in RMB518,463,085---7575518,463,160
Domestically listed foreign shares344,000,000-----344,000,000
862,463,085---7575862,463,160
863,214,000-----863,214,000
Since the implementation of the Company's Scheme on Share Split Reform on 13 February 2006, as at 30 June 2020, there are 750,840 shares currently unavailable for trading.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(34)Share capital (Cont’d)
31 December 2018Movements for the current year31 December 2019
Shares newly issuedBonus shareTransfer from capital surplusOthersSub-total
Shares subject to trading restriction -
Other domestic shares786,840---(35,925)(35,925)750,915
Including: Shares held by domestic non-state-owned legal persons785,940---(36,000)(36,000)749,940
Shares held by domestic natural persons900---7575975
786,840---(35,925)(35,925)750,915
Shares not subject to trading restriction -
Ordinary shares denominated in RMB518,427,160---35,92535,925518,463,085
Domestically listed foreign shares344,000,000-----344,000,000
862,427,160---35,92535,925862,463,085
863,214,000-----863,214,000
Since the implementation of the Company's Scheme on Share Split Reform on 13 February 2006, as at 31 December 2019, there are 750,915 shares currently unavailable for trading. During the reporting period, 35,925 shares with trading restrictions were released from the restricted conditions on 30 December 2019 and converted to unrestricted ordinary shares denominated in RMB.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(35)Capital surplus
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Capital premium816,609,422--816,609,422
Other capital surplus22,833,068--22,833,068
839,442,490--839,442,490
31 December 2018Increase in the current yearDecrease in the current year31 December 2019
Capital premium816,609,422--816,609,422
Other capital surplus22,833,068--22,833,068
839,442,490--839,442,490

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(36)Other comprehensive income
Other comprehensive income in the balance sheetOther comprehensive income in the income statement for the six months ended 30 June 2020
31 December 2019Attributable to the parent company after tax30 June 2020Amount incurred before income tax for the current periodLess: Transfer-out of previous other comprehensive income in the current periodLess: Income tax expensesAttributable to the parent company after tax
Other comprehensive income items which will not be reclassified to profit or loss
Actuarial gains on defined benefit plans(11,395,500)-(11,395,500)----
Other comprehensive income in the balance sheetOther comprehensive income in the income statement for the year ended 31 December 2019
31 December 2018Attributable to the parent company after tax31 December 2019Amount incurred before income tax for the current yearLess: Transfer-out of previous other comprehensive income in the current yearLess: Income tax expensesAttributable to the parent company after tax
Other comprehensive income items which will not be reclassified to profit or loss
Actuarial gains on defined benefit plans(10,178,250)(1,217,250)(11,395,500)(1,623,000)-405,750(1,217,250)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(37)Surplus reserve
31 December 2019Increase in the current periodDecrease in the current period30 June 2020
Statutory surplus reserve431,607,000--431,607,000
31 December 2018Increase in the current yearDecrease in the current year31 December 2019
Statutory surplus reserve431,607,000--431,607,000
In accordance with the Company Law, the Company’s Articles of Association and the resolution of the Board of Directors, the Company should appropriate 10% of net profit for the year to the statutory surplus reserve, and the Company can cease appropriation when the statutory surplus reserve accumulated to more than 50% of the registered capital. The statutory surplus reserve can be used to make up for the loss or increase the share capital upon approval from the appropriate authorities. As the accumulated appropriation to the statuary surplus reserve exceeded 50% of the registered capital, no appropriation was made in the current year. (2019: Nil).
The Company appropriates for the discretionary surplus reserve after the shareholders’ meeting approves the proposal from the Board of Directors. The discretionary surplus reserve can be used to compensate for the losses incurred in prior years or increase the share capital upon approval from appropriate authorities.
(38)Undistributed profits
Six months ended 30 June
20202019
Undistributed profits at the beginning of the year8,373,695,7918,260,412,273
Add: Net profit attributable to shareholders of the parent company for the current period207,771,78258,861,816
Less: Ordinary share dividends payable (a)(60,424,980)(34,528,560)
Undistributed profits at the end of the year8,521,042,5938,284,745,529
(a)In accordance with the resolution of the Board of Directors dated on 24 March 2020, the Company proposed a cash dividend to the shareholders at RMB 0.07 per share, amounting to RMB 60,424,980 calculated by 863,214,000 issued shares, and the proposal was approved at the Shareholders’ Meeting on 19 June 2020.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(39)Revenue and cost of sales
Six months ended 30 June
20202019
Revenue from main operations13,877,590,85113,540,006,632
Revenue from other operations195,827,027181,946,870
14,073,417,87813,721,953,502
Six months ended 30 June
20202019
Cost of sales from main operations11,670,570,16511,511,538,229
Cost of sales from other operations189,552,200167,121,115
11,860,122,36511,678,659,344
(a)Revenue and cost of sales from main operations
Six months ended 30 June
20202019
Revenue from main operationsCost of sales from main operationsRevenue from main operationsCost of sales from main operations
Sales of automobiles13,030,304,98611,046,531,02412,327,573,06110,656,458,637
Sales of automobile parts809,320,498582,437,9161,168,533,129813,069,826
Auto maintenance services37,965,36741,601,22543,900,44242,009,766
13,877,590,85111,670,570,16513,540,006,63211,511,538,229
(b)Revenue and cost of sales from other operations
Six months ended 30 June
20202019
Revenue from other operationsCost of sales from other operationsRevenue from other operationsCost of sales from other operations
Sales of materials162,807,656155,071,014136,882,045121,423,387
Others33,019,37134,481,18645,064,82545,697,728
195,827,027189,552,200181,946,870167,121,115

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(39)Revenue and cost of sales (Cont’d)
(c)The Group's revenue in Six months ended 30 June 2020 was broken down as follows:
Six months ended 30 June 2020
AutomobilesAutomobile partsAutomobiles Maintenance servicesMaterials and othersTotal
Revenue from main operations13,030,304,986809,320,49837,965,367-13,877,590,851
Including: Recognised at a time point13,030,304,986809,320,498--13,839,625,484
Recognised within a certain period--37,965,367-37,965,367
Revenue from other operations---195,827,027195,827,027
13,030,304,986809,320,49837,965,367195,827,02714,073,417,878
(i)As at 30 June 2020, the amount of revenue corresponding to the performance obligation of the Group that has been contracted but not yet performed or not fulfilled was RMB 115,151,087, which were expected to be recognised between 2020 and 2025.
(40)Taxes and surcharges
Six months ended 30 June
20202019
Consumption tax271,679,866267,437,345
City maintenance and construction tax50,598,21141,419,650
Educational surcharge43,310,13836,956,574
Land use tax9,774,06410,568,114
Real estate tax8,220,5379,228,680
Stamp tax2,779,7402,765,628
Others216,586599,504
386,579,142368,975,495

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(41)Selling expenses
Six months ended 30 June
20202019
Advertising and new product planning fees138,350,765228,204,105
Warranties155,588,778159,699,478
Promotion expenses91,894,222106,690,658
Salaries and benefits70,754,09473,092,162
Sales network construction expenses41,733,97359,324,214
Storage expenses17,822,5229,830,994
Packaging material expenses14,586,04627,992,517
Others61,456,92041,041,134
592,187,320705,875,262
(42)General and administrative expenses
Six months ended 30 June
20202019
Salaries and benefits264,648,937249,176,100
Depreciation and amortisation100,780,73454,625,623
Trademark management fees20,627,89440,360,050
Repair expenses7,181,6375,022,003
General office expenses7,103,2987,915,410
Travel expenses2,092,8464,283,270
Others56,692,10075,772,234
459,127,446437,154,690
(43)Research and development expenses
Six months ended 30 June
20202019
Salaries and benefits277,417,893265,452,232
Design fee145,947,582243,683,558
Technology development expenses102,381,91576,309,417
Depreciation and amortisation74,219,19554,202,053
Material expenses27,797,46561,923,254
Others68,818,402135,860,122
696,582,452837,430,636

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(44)Financial expenses
Six months ended 30 June
20202019
Interest costs18,259,820106,053
Add: Interest expenses on lease liabilities802,145-
Interest expenses19,061,965106,053
Less: Interest income from bank deposits(89,499,630)(87,147,016)
Fund occupation fee (a)(4,740,888)(5,618,157)
Interest income(94,240,518)(92,765,173)
Exchange gains or losses7,561,075450,836
Others885,6652,517,680
(66,731,813)(89,690,604)
(a)
(45)Expenses by nature
The cost of sales, selling and distribution expenses, general and administrative expenses and research and development expenses in the income statement are listed as follows by nature:
Six months ended 30 June
20202019
Changes in inventories of finished goods and work in progress280,051,275101,187,742
Consumed raw materials and low value consumables, etc.10,272,137,28810,151,019,516
Employee benefits1,196,965,1441,246,622,679
Depreciation of fixed assets517,638,550475,243,004
Amortisation of intangible assets58,225,51342,950,608
Depreciation of right-of-use assets7,225,828-
Transportation expenses255,909,419332,654,242
Design fee145,947,582243,683,558
Advertising and new product planning fees138,350,765228,204,105
Warranties155,588,778159,699,476
Promotion expenses91,894,222106,690,658
Fixed asset repair and maintenance expenses41,966,65340,472,764
Others446,118,566530,691,580
13,608,019,58313,659,119,932

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(46)Asset impairment losses
Six months ended 30 June
20202019
Decline in the value of inventories23,856,5965,309,701
Impairment of fixed assets10,251,1143,125,543
34,107,7108,435,244
(47)Credit impairment losses
Six months ended 30 June
20202019
Losses on bad debts of accounts receivable66,317,513(1,132,652)
Losses on bad debts of other receivables(74,702)76,528
66,242,811(1,056,124)
(48)Other income
Six months ended 30 June
20202019Asset related/ Income related
Research and development activities related subsidies26,672,71660,800,000Income related
Subsidy for other operating activities138,966,75111,762,205Income related
165,639,46772,562,205

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(49)Investment income
Six months ended 30 June
20202019
Investment income from financial assets held for trading32,619,54118,446,866
Investment income from long-term equity investment under equity method(3,024,554)333,625
Investment loss from forward exchange settlement(1,316,987)(4,939,846)
28,278,00013,840,645
There is no significant restriction on recovery of investment income of the Group.
(50)Gains on changes in fair value
Six months ended 30 June
20202019
Derivative financial assets and derivative financial liabilities -
(Losses)/Gains on forward exchange contracts2,021,384(3,556,991)
Financial assets held for trading7,990,657-
10,012,041(3,556,991)
(51)Gains on disposals of assets
Six months ended 30 June
20202019Amount recognised in non-recurring profit or loss inSix months ended 30 June 2020
Losses on disposal of assets(581,955)(2,212,045)(581,955)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(52)Non-operating income
Six months ended 30 June
20202019Amount recognised in non-recurring profit or loss inSix months ended 30 June 2020
Government grants (a)40,000157,717,07040,000
Compensation and penalty income1,434,743652,6791,434,743
Others2,124,45017,5462,124,450
3,599,193158,387,2953,599,193
(a)Details of government grants
Six months ended 30 June
20202019Asset related/ Income related
Enterprise development support fund-157,677,070Income related
Others40,00040,000
40,000157,717,070
(53)Non-operating expenses
Six months ended 30 June
20202019Amount recognised in non-recurring profit or loss inSix months ended 30 June 2020
Losses on scrapping of assets25,278,6202,200,18825,278,620
Donations4,936,68211,7304,936,682
Others22,950419,30822,950
30,238,2522,631,22630,238,252
(54)Income tax expenses
Six months ended 30 June
20202019
Current income tax calculated based on tax law and related regulations12,440,65040,510
Deferred income tax1,696,507(46,342,884)
14,137,157(46,302,374)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(54)Income tax expenses (Cont’d)
The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated income statement to the income tax expenses is listed below:
Six months ended 30 June
20202019
Total profit221,908,93912,559,442
Income tax expenses calculated at applicable tax rates4,273,820(38,027,978)
Effect of change in the tax rates16,397,34018,924,390
Tax credit(68,983)(8,791)
Super deduction(74,643,356)(64,123,564)
Non-taxable income453,683(882,321)
Costs, expenses and losses not deductible for tax purposes143,379293,905
Utilisation of previously unrecognised deductible temporary differences(16,441,318)-
Deductible temporary differences for which no deferred tax asset was recognised-4,195,231
Deductible losses for which no deferred tax asset was recognised84,022,59233,326,754
Income tax expenses14,137,157(46,302,374)
(55)Earnings per share
(a)Basic earnings per share
Basic earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company by the weighted average number of outstanding ordinary shares of the parent company:
Six months ended 30 June
20202019
Consolidated net profit attributable to the owners of the Company207,771,78258,861,816
Weighted average number of ordinary shares outstanding issued by the Company863,214,000863,214,000
Basic earnings per share0.240.07
(b)Diluted earnings per share
Diluted earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of outstanding ordinary shares of the Company. As there were no dilutive potential ordinary shares in Six months ended 30 June 2020 (Six months ended 30 June 2019: Nil), diluted earnings per share equalled to basic earnings per share.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(56)Notes to the cash flow statement
(a)Cash received relating to other operating activities
Six months ended 30 June
20202019
Government grants164,857,450263,419,275
Deposits for bidding28,090,36132,565,950
Input VAT refund23,559,902-
Security deposits from distributors22,539,33146,069,304
Quality claims530,2631,655,279
Others6,343,0775,811,454
245,920,384349,521,262
(b)Cash paid relating to other operating activities
Six months ended 30 June
20202019
Research and development expenses515,676,803475,334,955
Promotion expenses147,975,736130,074,334
Warranties136,325,584159,626,148
Advertising expenses122,999,651132,128,111
Maintenance expenses20,729,10436,873,253
Guarantees17,904,23833,100,907
Travel expenses12,873,17132,625,056
Others255,310,888338,540,178
1,229,795,1751,338,302,942
(c)Cash received relating to other investing activities
Six months ended 30 June
20202019
Interest from cash at bank89,946,93495,386,009
Interest from acceptance notes4,229,9444,264,256
Interest from credit sales1,983,609915,686
Investment income from forward exchange settlement611,9452,650,477
96,772,432103,216,428

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(56)Notes to the cash flow statement (Cont’d)
(d)Cash paid relating to other financing activities
Six months ended 30 June
20202019
Repayments of lease liabilities4,800,032-
(57)Supplementary information to the cash flow statement
(a)Supplementary information to the cash flow statement
Reconciliation from net profit to cash flows from operating activities
Six months ended 30 June
20202019
Net profit207,771,78258,861,816
Add: Provision for asset impairment (Note 4(46))34,107,7108,435,244
Provision for credit impairment (Note 4(47))66,242,811(1,056,124)
Depreciation of fixed assets (Note 4(12))517,638,550475,243,004
Amortisation of intangible assets (Note 4(15))58,225,51342,950,608
Depreciation of right-of-use assets (Note 4(14))7,225,828-
Increase/(Decrease) in provisions32,984,46118,994,179
Losses/(Gains) on disposal of fixed assets25,860,5754,412,233
Financial expenses(67,128,763)(90,143,990)
Investment income (Note 4(49))(28,278,000)(13,840,645)
Loss/(Gains) on changes in fair value (Note 4(50))(10,012,041)3,556,991
Increase in deferred tax assets2,013,602(45,995,068)
Decrease in deferred tax liabilities(317,095)(347,816)
Decrease/(Increase) in inventories216,420,338333,470,124
Increase in restricted cash(49,718,600)(20,000,917)
Decrease/(Increase) in operating receivables(728,501,730)368,708,756
Increase/(Decrease) in operating payables449,748,686292,103,169
Net cash flows from operating activities734,283,6271,435,351,564

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

4Notes to the consolidated financial statements (Cont’d)
(57)Supplementary information to the cash flow statement (Cont’d)
(b)Net increase/(decrease) in cash
Six months ended 30 June
20202019
Cash at the end of the year7,872,553,8048,367,456,770
Less: Cash at the beginning of the year(8,937,936,658)(7,616,879,976)
Net increase/(decrease) in cash(1,065,382,854)750,576,794
(c)Cash and cash equivalents
30 June 202031 December 2019
Cash on hand7,872,553,8048,937,936,658
(58)Monetary items denominated in foreign currency
30 June 2020
Amounts denominated in foreign currenciesTranslation exchange rateAmounts in RMB
Other receivables -
EUR3,7337.961029,720
Long-term borrowings -
USD491,1317.07953,476,963
Other payables -
USD23,682,2667.0795167,658,599
EUR3,309,5127.961026,347,025
JPY106,157,1090.06586,985,987
200,991,611

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

5Interests in other entities
(1)Interests in subsidiaries
Structure of the enterprise group
SubsidiariesPlace of major businessPlace of registrationNature of businessShareholding (%)Method of acquisition
DirectIndirect
JMCSNanchang, JiangxiNanchang, JiangxiRetail, wholesale and lease of automobiles100%Set up by investment
JMCHTaiyuan, ShanxiTaiyuan, ShanxiManufacture and sales of automobiles100%Business combinations involving enterprises not under common control
SZFJShenzhen, GuangdongShenzhen, GuangdongRetail, wholesale and lease of automobiles100%Set up by investment
GZFJGuangzhou, GuangdongGuangzhou, GuangdongRetail, wholesale and lease of automobiles100%Set up by investment

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

5Interests in other entities (Cont’d)
(2)Interests in associates
Summarised information of insignificant associates
Six months ended 30 June
20202019
Aggregated carrying amount of investments37,910,00340,445,302
Aggregate of the following items in proportion
Net profit (i)(3,024,554)333,625
Other comprehensive income (i)--
Total comprehensive income(3,024,554)333,625
(i) The net profit and other comprehensive income have taken into account the impacts of both the fair value of the identifiable assets and liabilities upon the acquisition of investment in joint ventures and associates and the unification of accounting policies adopted by the joint ventures and the associates to those adopted by the Group.
6Segment information
Revenue and profits of the Group mainly arise from production and domestic sales of automobiles, and the primary assets of the Group are all located in China. Management of the Group assesses the operating performance of the Group as a whole. Therefore, no segment report is prepared for the current year.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions
(1)Information of main shareholders
(a)General information of main shareholders
Type of enterprisePlace of registrationLegal representativeNature of businessCode of organisation
JICState-owned enterpriseNanchang, ChinaQiu TiangaoInvestment and asset management91360125MA38LUR91F
Ford Motor Company (“Ford”)Foreign enterpriseUnited StatesWilliam Clay Ford, Jr.Manufacture and sales of automobilesNot applicable
(b)Registered capital and changes in main shareholders
31 December 2019Increase in the current periodDecrease in the current period30June 2020
JICRMB 1,000,000,000--RMB 1,000,000,000
FordUSD 41,000,000--USD 41,000,000
(c)The percentages of shareholding and voting rights in the Company held by main shareholders
30June 202031 December 2019
Shareholding (%)Voting rights (%)Shareholding (%)Voting rights (%)
JIC41.03%41.03%41.03%41.03%
Ford32%32%32%32%
(2)Information of the subsidiaries
The general information and other related information of the subsidiaries are set out in Note 5(1).
(3)Information of the associates
The information of associates that have related party transactions with the Group is set out in Note 5(2).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(4)Information of other related parties
Relationship with the Group
JMCGShareholder of JIC
Chongqing Changan Automobile Co., Ltd.Shareholder of JIC
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.Subsidiary of JMCG
Jiangling Material Co., Ltd.Subsidiary of JMCG
Jiangxi JMCG Industry Co., Ltd.Subsidiary of JMCG
Nanchang Gear Co., Ltd.Subsidiary of JMCG
Jiangxi Lingrui Recycling Resources Development CorporationSubsidiary of JMCG
JMCG Property Management Co.Subsidiary of JMCG
JMCG Jingma Motors Co., Ltd.Subsidiary of JMCG
Jiangxi Jiangling Chassis Co., Ltd.Subsidiary of JMCG
Nanchang JMCG Shishun Logistics Co., Ltd.Subsidiary of JMCG
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd.Subsidiary of JMCG
Nanchang JMCG Xinchen Auto Component Co., Ltd.Subsidiary of JMCG
JMCFSubsidiary of JMCG
Jingdezhen Shishun Logistics Co., Ltd.Subsidiary of JMCG
Fuzhou Shishun Logistics Co., Ltd.Subsidiary of JMCG
Ford Global Technologies,LLCSubsidiary of Ford
Ford Motor (China) Co., Ltd.Subsidiary of Ford
Ford Motor Research & Engineering (Nanjing) Co., Ltd.Subsidiary of Ford
Ford Motor Co., Thailand Ltd.Subsidiary of Ford
Ford Otomotiv Sanayi A.S.Subsidiary of Ford
Auto Alliance (Thailand) Co., Ltd.Subsidiary of Ford
Ford Vietnam LimitedSubsidiary of Ford
Changan Ford Automobile Co., Ltd.Joint venture of Ford
Nanchang JMCG Liancheng Auto Component Co., Ltd.Subsidiary of JMCG
Nanchang Lianda Machinery Co., Ltd.Subsidiary of JMCG
Jiangling Aowei Automobile Spare Part Co., Ltd.Subsidiary of JMCG
Jiangxi Biaohong Engine Tappet Co., Ltd.Subsidiary of JMCG
Jiangxi JMCG boya brake system Co., LtdSubsidiary of JMCG
NC.Gear Forging FactorySubsidiary of JMCG
Jiangxi JMCG Shangrao Industrial Co., Ltd.Subsidiary of JMCG
JMCG Jiangxi Engineering Construction Co., Ltd.Subsidiary of JMCG
Nanchang JMCG Frame Co., LtdSubsidiary of JMCG
Jiangling Motor Electricity Vehicle Sales Co.,LtdSubsidiary of JMCG
Dali Wanfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
Yunan Wanfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
Beijing Beifang Changfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
China Changan Group Hefei Investing Co., Ltd.Subsidiary of JIC’s shareholder
Chongqing Anfu Vehicle Marketing Co., Ltd.Subsidiary of JIC’s shareholder
Guizhou Wanfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
Chengdu Wanxing Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
Chongqing Anbo Vehicle Sales Co., Ltd.Subsidiary of JIC’s shareholder
Beijing Baiwang Changfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder
Honghe Wanfu Vehicle Sales & Service Co., Ltd.Subsidiary of JIC’s shareholder

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(4)Other related parties (Cont'd)
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.Joint venture of JMCG
Jiangxi Jiangling Lear Interior System Co., Ltd.Joint venture of JMCG
Nanchang Unistar Electric & Electronics Co., Ltd.Joint venture of JMCG
Nanchang Yinlun Heat-exchanger Co., Ltd.Joint venture of JMCG
Jiangxi ISUZU Engine Co., Ltd.Joint venture of JMCG
Jiangxi ISUZU Co., Ltd.Joint venture of JMCG
Nanchang Baojiang Steel Processing Distribution Co., Ltd.Associate of JMCG
GETRAG (Jiangxi) Transmission CompanyAssociate of JMCG
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd.Associate of JMCG
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd.Associate of JMCG
Jiangling Motor Holdings Co., Ltd.Associate of JMCG
Jiangxi Jiangling Group Special Vehicle Co., Ltd.Associate of JMCG
Jiangxi JMCG Specialty Vehicles Co., Ltd.Associate of JMCG
Nanchang Hengou Industry Co., Ltd.Associate of JMCG
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.Associate of JMCG
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd.Associate of JMCG
Jiangxi Jiangling Overseas Automobile Sales and Service Co., Ltd.Associate of JMCG
Jiangxi Lingyun Automobile Industry Technology Co.,LtdAssociate of JMCG
Jiujiang Fuwantong Vehicle Co., Ltd.Subsidiary of JMCG
Jiangxi Fuxiang Vehicle Co., Ltd.Subsidiary of JMCG
Yichun Xinfu Vehicle Co., Ltd.Subsidiary of JMCG
Ji'an Qingyuan District Yongfuda Vehicle Co., Ltd.Subsidiary of JMCG
Jiangxi Jiangling Group Health Science and Technology Co., Ltd.Subsidiary of JMCG
Jiangling Motor Electricity Vehicle Co., Ltd.Subsidiary of JMCG
Jiangxi Zhonglian Intelligent Logistics Co., Ltd.Subsidiary of JMCG

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions
(a)Purchase and sales of goods, provision and receipt of service
Purchase of goods:
Six months ended 30 June
Related partiesNature of related party transactions20202019
Nanchang Baojiang Steel Processing Distribution Co., Ltd.Purchase of raw materials405,185,757356,064,379
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.Purchase of spare parts383,892,896360,406,734
Jiangxi Jiangling Chassis Co., Ltd.Purchase of spare parts355,113,008341,935,348
GETRAG (Jiangxi) Transmission CompanyPurchase of spare parts336,800,228316,959,364
FordPurchase of spare parts331,917,143187,925,124
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.Purchase of spare parts272,438,364341,795,713
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd.Purchase of spare parts211,129,62195,763,670
Jiangxi Jiangling Lear Interior System Co., Ltd.Purchase of spare parts203,467,840255,708,959
Nanchang JMCG Shishun Logistics Co., Ltd.Purchase of spare parts180,731,66986,295,892
Nanchang JMCG Liancheng Auto Component Co., Ltd.Purchase of spare parts178,564,686170,539,394
Nanchang Unistar Electric & Electronics Co., Ltd.Purchase of spare parts130,765,035105,848,474
Hanon SystemsPurchase of spare parts86,204,27587,085,773
JMCGPurchase of spare parts71,583,87653,907,443
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd.Purchase of spare parts45,571,84250,766,740
Auto Alliance (Thailand) Co., Ltd.Purchase of spare parts45,263,12411,702,847
Nanchang Lianda Machinery Co., Ltd.Purchase of spare parts32,528,80030,230,608
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd.Purchase of spare parts32,436,58933,619,724
Nanchang Yinlun Heat-exchanger Co., Ltd.Purchase of spare parts30,324,25732,419,358
Ford Otomotiv Sanayi A.S.Purchase of spare parts25,895,66212,312,393
Jiangxi JMCG Specialty Vehicles Co., Ltd.Purchase of spare parts20,244,15426,961,562
Jiangling Motor Holdings Co., Ltd.Purchase of spare parts19,423,65320,879,223

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(a)Purchase and sales of goods, provision and receipt of service (Cont'd)
Purchase of goods (Cont'd):
Six months ended 30 June
Related partiesNature of related party transactions20202019
Jiangxi Jiangling Group Special Vehicle Co., Ltd.Purchase of spare parts18,057,70212,366,281
Changan Ford Automobile Co., Ltd.Purchase of spare parts16,159,0432,401,348
Jiangxi ISUZU Engine Co., Ltd.Purchase of spare parts11,670,0417,415,880
Jiangling Material Co., Ltd.Purchase of spare parts10,789,81913,022,298
Jiangling Aowei Automobile Spare Part Co., Ltd.Purchase of spare parts9,133,48510,039,195
Nanchang JMCG Xinchen Auto Component Co., Ltd.Purchase of spare parts6,833,4468,682,763
Jiangxi JMCG boya brake system Co., LtdPurchase of spare parts6,169,0982,113,558
Jiangxi Lingyun Automobile Industry Technology Co.,LtdPurchase of spare parts5,462,414-
Jiangxi Lingrui Recycling Resources Development CorporationPurchase of spare parts4,876,2953,012,461
Nanchang Gear Co., Ltd.Purchase of spare parts3,700,6645,921,454
Ford Motor Co. Thailand Ltd.Purchase of spare parts3,620,884-
Jiangxi Biaohong Engine Tappet Co., Ltd.Purchase of spare parts3,475,8643,133,788
NC.Gear Forging FactoryPurchase of spare parts3,436,9753,283,036
Jiangxi Jiangling Group Health Science and Technology Co., Ltd.Purchase of epidemic prevention materials2,214,000-
Jiangxi JMCG Shangrao Industrial Co., Ltd.Purchase of spare parts1,383,4171,458,728
Jiangxi JMCG Industry Co., Ltd.270,5825,746,130
Other related partiesPurchase of spare parts180,104151,666
3,506,916,3123,057,877,308
The products purchased by the Group from related parties are divided into two categories: purchase of imported parts and purchase of domestic parts. ? The pricing on imported parts purchased from Ford or its suppliers is based on the agreed price by both parties. ? The pricing on domestic accessories purchased from other related parties is determined through quotation, cost accounting, and negotiation between the two parties, and is adjusted regularly.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(a)Purchase and sales of goods, provision and receipt of service (Cont'd)
Receipt of services:
Six months ended 30 June
Related partiesNature of related party transactions20202019
Nanchang JMCG Shishun Logistics Co., Ltd.Truckage/Transportation145,365,321141,953,754
JMCG Jiangxi Engineering Construction Co., Ltd.Engineering construction and maintenance fee126,634,929969,426
FordEngineering service and design115,463,584106,017,941
Ford Global Technologies,LLCRoyalty fee111,064,126110,123,099
Changan Ford Automobile Co., Ltd.Service fee/Labor costs26,903,71358,387,301
FordSecondments costs13,361,47817,446,343
Ford Otomotiv Sanayi A.S.Royalty fee12,345,2037,507,715
Jiangxi JMCG Industry Co., Ltd.Working meal10,620,61412,668,922
Ford Motor (China) Co., Ltd.Regional personnel costs5,607,0074,460,566
Ford Motor Research & Engineering (Nanjing) Co., Ltd.Regional personnel costs5,380,8783,279,094
GETRAG (Jiangxi) Transmission CompanyDesign fee4,551,480460,005
Jiangxi JMCG Specialty Vehicles Co., Ltd.Promotion fee4,099,057160,377

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(a)Purchase and sales of goods, provision and receipt of service (Cont'd)
Receipt of services (Cont’d):
Six months ended 30 June
Related partiesNature of related party transactions20202019
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.Agent business of importation3,720,2842,438,503
Jiangxi Zhonglian Intelligent Logistics Co., Ltd.Transportation and processing services2,143,309
Ford Otomotiv Sanayi A.S.Secondments costs1,607,8093,348,792
Chongqing Changan Automobile Co., Ltd.Secondments costs638,559-
Jiangling Motor Holdings Co., Ltd.Labor costs /Secondments costs100,7006,978,676
Nanchang Hengou Industry Co., Ltd.Packing/Truckage-12,062,788
Ford Otomotiv Sanayi A.S.Engineering service and design-25,936,605
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd.Promotion fee-2,901,526
Other related parties3,543,3142,275,448
593,151,365519,376,881
The Group’s pricing on services received from related parties is based on the agreed price by both parties.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(a)Purchase and sales of goods, provision and receipt of service (Cont'd)
Sales of goods:
Six months ended 30 June
Related partiesNature of related party transactions20202019
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.Sales of automobiles and accessories515,648,431474,714,048
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd.Sales of automobiles247,784,77163,909,306
Jiangxi JMCG Specialty Vehicles Co., Ltd.Sales of automobiles and accessories116,257,01212,666,706
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.Sales of automobiles and accessories, utilities99,880,0819,065,509
Jiangxi Lingrui Recycling Resources Development CorporationScrapping materials and utilities37,417,13236,017,577
Jiangxi Jiangling Chassis Co., Ltd.Sales of automobiles25,066,36423,932,221
Dali Wanfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories22,654,665-
JMCG Jingma Motors Co., Ltd.Sales of automobiles and accessories21,175,86520,101,266
Nanchang JMCG Liancheng Auto Component Co., Ltd.Sales of accessories20,393,56017,109,318
Jiangxi Jiangling Group Special Vehicle Co., Ltd.Sales of automobiles19,430,20241,557,246
Nanchang JMCG Shishun Logistics Co., Ltd.Sales of automobiles and accessories11,258,8264,499,315
Guizhou Wanfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories11,046,682-
China Changan Group Hefei Investing Co., Ltd.Sales of automobiles and accessories8,700,430-
Jiujiang Fuwantong Vehicle Co., Ltd.Sales of automobiles and accessories8,476,498-
Beijing Beifang Changfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories8,291,761-
Chongqing Anfu Vehicle Marketing Co., Ltd.Sales of automobiles and accessories5,983,015-
Chongqing Anbo Vehicle Sales Co., Ltd.Sales of automobiles and accessories5,520,116-
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.Sales of accessories3,933,4373,385,165
Chengdu Wanxing Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories3,839,113-
Nanchang Hengou Industry Co., Ltd.Sales of accessories3,794,8004,245,457

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(a)Purchase and sales of goods, provision and receipt of service (Cont'd)
Sales of goods (Cont'd):
Six months ended 30 June
Related partiesNature of related party transactions20202019
Yunan Wanfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories3,000,142-
Jingdezhen Shishun Logistics Co., Ltd.Sales of automobiles2,389,380-
Jiangxi Jiangling Lear Interior System Co., Ltd.Sales of accessories2,349,9921,722,622
Jiangxi Fuxiang Vehicle Co., Ltd.Sales of automobiles and accessories, utilities1,962,208-
Honghe Wanfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories1,553,651-
Jiangxi JMCG Industry Co., Ltd.Sales of accessories andscrapping materials,utilities1,532,4732,302,598
Ji'an Qingyuan District Yongfuda Vehicle Co., Ltd.Sales of automobiles and accessories1,404,914-
Beijing Baiwang Changfu Vehicle Sales & Service Co., Ltd.Sales of automobiles and accessories1,312,986-
Yichun Xinfu Vehicle Co., Ltd.Sales of automobiles and accessories1,178,868-
Jiangxi Jiangling Overseas Automobile Sales and Service Co., Ltd.Sales of automobiles and accessories911,3694,341,320
Nanchang Lianda Machinery Co., Ltd.Sales of accessories273,6151,025,899
Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. i)Sales of automobiles7,639,660
Other related parties2,908,2511,612,130
1,217,330,610729,847,363
i) In July 2019, due to the change of equity, Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. was no longer a related party of the Group.
The Group’s pricing on goods sold to related parties is based on the agreed price by both parties.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(b)Leases
(i)The Group as the lessor:
Name of the lesseeType of the leased assetLease income recognised in six months ended 30 June 2020Lease income recognised in six months ended 30 June 2019
Jiangxi ISUZU Co., Ltd.Buildings53,411-
GETRAG (Jiangxi) Transmission CompanyBuildings-7,494
Jiangling Motor Holdings Co., Ltd.Buildings-3,160
53,41110,654
(ii)Interest expenses on lease liabilities in the current period with the Group as the lessee:
Six months ended 30 June
20202019
JMCG305,570-
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.41,038-
346,608-

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(c)Guarantee received
GuarantorGuaranteed amountStarting dateEnding dateFully performed or not
Jiangling Motor Group Finance Company (“JMCF”)3,476,9635 March 200130 October 2029Not fully performed
2020 first half-year, JMCF provided guarantees for some bank borrowings of the Group, with a maximum guarantee limit of USD 2,282,123. As at 30 June 2020, JMCF provided borrowing guarantee to the bank borrowing of USD 491,131, equivalent to RMB 3,476,963 (31 December 2019: USD 523,873, equivalent to RMB 3,654,644) guaranteed by the Group.
(d)Transfer of assets
Six months ended 30 June
Related partiesNature of related party transactions20202019
Jiangxi JMCG Industry Co., Ltd.Sales of fixed assets1,447402
Nanchang JMCG Shishun Logistics Co., Ltd.Sales of fixed assets-298,982
1,447299,384
The pricing on transfer of assets between the Group and related parties is based on the agreed price by both parties.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
(e)Purchase of assets
Six months ended 30 June
Related partiesNature of related party transactions20202019
GETRAG (Jiangxi) Transmission CompanyPurchase of fixed assets3,480,000-
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.Purchase of fixed assets1,370,067-
Jiangling Motor Holdings Co., Ltd.Purchase of fixed assets337,660-
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.Purchase of fixed assets-6,336,960
5,187,7276,336,960
The pricing on purchase of assets between the Group and related parties is based on the agreed price by both parties.
(f)Provision of technology sharing
Six months ended 30 June
Related partiesNature of related party transactions20202019
Ford Vietnam LimitedTechnical service11,123,0002,874,000
Ford Motor Research & Engineering (Nanjing) Co., Ltd.Technical service8,290,000-
FordTechnical service6,974,00028,810,000
26,387,00031,684,000
The Group’s pricing on technology sharing provided to related parties is based on the agreed price by both parties.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(5)Related party transactions (Cont’d)
Six months ended 30 June
(g)Purchase of fuel consumption integral
Related party20202019
Jiangling Motor Electricity Vehicle Co., Ltd.23,315,612-
The Group’s pricing on fuel consumption integral purchased from JMH is based on the agreed price by both parties.
(h)Remuneration of key management
20202019
Remuneration of key management6,783,1656,361,409
(i)Interest income
20202019
Jiangling Motor Group Finance Company (“JMCF”)8,942,3826,771,234

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties
Receivables from related parties:
30June 202031 December 2019
AmountProvision for bad debtsAmountProvision for bad debts
Accounts receivable
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.485,135,536(1,090,986)272,986,397(712,320)
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd.76,245,326(99,119)19,328,984(9,664)
Jiangxi Jiangling Chassis Co., Ltd.14,051,875(42,156)13,054,052(39,162)
Ford Vietnam Limited11,123,000(55,615)5,980,000(29,900)
JMCG Jingma Motors Co., Ltd.10,916,815(32,750)5,563,310(16,690)
Jiangxi Jiangling Group Special Vehicle Co., Ltd.6,742,249(8,765)--
Nanchang JMCG Liancheng Auto Component Co., Ltd.5,867,879(17,604)12,767,031(38,301)
Nanchang JMCG Frame Co., Ltd5,574,403(278,720)5,574,403(16,723)
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.3,364,388(10,093)2,131,677(6,395)
Ford Motor Research & Engineering (Nanjing) Co., Ltd.2,438,000(12,190)9,529,400(47,647)
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.2,160,598(6,482)2,128,387(6,385)
Jiangxi Jiangling Lear Interior System Co., Ltd.1,342,818(4,028)1,082,578(3,248)
Jiangxi JMCG Specialty Vehicles Co., Ltd.747,727(2,243)58,148,451(30,290)
Ford320,000(1,600)21,554,000(107,770)
Nanchang JMCG Shishun Logistics Co., Ltd.--6,279,155(178,666)
Jiangling Motor Electricity Vehicle Sales Co.,Ltd--5,961,020(374,352)
Other related parties2,564,363(10,090)1,357,184(7,984)
628,594,977(1,672,441)443,426,029(1,625,497)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties (Cont’d)
Receivables from related parties (Cont'd):
30June 202031 December 2019
AmountProvision for bad debtsAmountProvision for bad debts
Other receivables
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.35,029,720(106,189)35,208,392(106,725)
Other related parties540,498(1,621)41,481(125)
35,570,218(107,810)35,249,873(106,850)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties (Cont’d)
Receivables from related parties (Cont'd):
30June 202031 December 2019
Advances to suppliersNanchang Baojiang Steel Processing Distribution Co., Ltd.503,623,198492,604,607
Ford Otomotiv Sanayi A.S.1,839,838-
505,463,036492,604,607
Receivables financingJiangxi Jiangling Motors Imp. & Exp. Co., Ltd.717,94217,148,451
JMCG Jingma Motors Co., Ltd.-32,000,000
717,94249,148,451
Cash at bankJiangling Motor Group Finance Company (“JMCF”)618,877,485967,750,294

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties (Cont’d)
Payables to related parties:
30June 202031 December 2019

Accounts payable

Nanchang Jiangling HuaXiang Auto Components Co., Ltd.448,855,710468,877,821
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.350,666,967269,635,441
Jiangxi Jiangling Chassis Co., Ltd.328,068,328247,903,618
Jiangxi Jiangling Lear Interior System Co., Ltd.307,780,416275,328,167
GETRAG (Jiangxi) Transmission Company241,059,134241,934,120
Ford198,530,541145,686,393
Nanchang JMCG Shishun Logistics Co., Ltd.131,317,801135,343,920
Nanchang JMCG Liancheng Auto Component Co., Ltd.130,713,541133,716,243
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd.117,075,030127,516,031
Hanon Systems93,271,57286,208,726
Nanchang Unistar Electric & Electronics Co., Ltd.86,484,57081,834,768
JMCG77,184,76741,122,001
Changan Ford Automobile Co., Ltd.65,230,87857,562,568
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd.47,994,08438,644,169
Nanchang Yinlun Heat-exchanger Co., Ltd.26,386,23923,001,840
Jiangxi JMCG Specialty Vehicles Co., Ltd.26,049,71320,671,039
Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd.25,569,21322,458,920
Nanchang Lianda Machinery Co., Ltd.25,394,84120,459,811
Auto Alliance (Thailand) Co., Ltd.18,305,158797,030
Jiangxi ISUZU Engine Co., Ltd.17,627,6775,957,636
Jiangxi Jiangling Group Special Vehicle Co., Ltd.16,772,0728,983,517
Jiangling Motor Holdings Co., Ltd.15,057,39523,805,405
Jiangling Aowei Automobile Spare Part Co., Ltd.8,571,86814,676,461
Jiangxi JMCG boya brake system Co., Ltd6,527,2422,917,900
Nanchang JMCG Xinchen Auto Component Co., Ltd.6,422,2963,207,475
Jiangxi Lingrui Recycling Resources Development Corporation4,679,2415,037,812
Jiangxi Lingyun Automobile Industry Technology Co.,Ltd4,133,9965,019,020
NC.Gear Forging Factory3,753,04811,566
Ford Otomotiv Sanayi A.S.2,980,9415,715,771
Nanchang Gear Co., Ltd.2,605,2452,600,649
Jiangxi Zhonglian Intelligent Logistics Co., Ltd.2,143,309-
Jiangxi Biaohong Engine Tappet Co., Ltd.2,089,0921,982,683
Jiangling Material Co., Ltd.1,578,7521,505,272
Jiangxi JMCG Shangrao Industrial Co., Ltd.1,563,2231,139,163
Jiangxi JMCG Industry Co., Ltd.423,0319,408,467
Ford Motor Co., Thailand Ltd.615,725-
2,843,482,6562,530,671,423

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties (Cont’d)
Payables to related parties (Cont'd):
30June 202031 December 2019
Other payables
Ford99,756,238188,389,590
Ford Global Technologies,LLC62,971,29067,275,297
Ford Otomotiv Sanayi A.S.31,272,06147,911,656
Jiangling Motor Electricity Vehicle Co., Ltd.23,315,612-
Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd.22,730,92125,676,673
GETRAG (Jiangxi) Transmission Company19,957,49413,132,392
Changan Ford Automobile Co., Ltd.15,169,35526,537,316
Nanchang JMCG Shishun Logistics Co., Ltd.9,394,5656,916,458
JMCG Jiangxi Engineering Construction Co., Ltd.8,763,82910,407,756
Faurecia Emissions Control Technologies (Nanchang) Co., Ltd.7,471,4717,616,969
Jiangxi Jiangling Group Special Vehicle Co., Ltd.6,786,0026,983,776
JMCG2,103,538-
Nanchang Baojiang Steel Processing Distribution Co., Ltd.2,087,0232,087,023
Jiangxi JMCG Industry Co., Ltd.1,890,2412,502,826
Jiangxi Jiangling Group Health Science and Technology Co., Ltd.1,890,000-
Ford Motor (China) Co., Ltd.1,864,2343,325,531
Ford Motor Research & Engineering (Nanjing) Co., Ltd.1,836,4162,518,692
Jiangxi JMCG Specialty Vehicles Co., Ltd.1,461,613-
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd.1,412,7434,064,490
Nanchang Unistar Electric & Electronics Co., Ltd.1,258,8721,326,940
Jiangxi Jiangling Lear Interior System Co., Ltd.1,225,1701,207,000
Hanon Systems755,0004,362,412
Chongqing Changan Automobile Co., Ltd.638,559-
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.608,9551,779,455
Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd.181,7391,061,739
Nanchang Jiangling HuaXiang Auto Components Co., Ltd.100,00022,080,240
Other related parties1,889,0672,595,805
328,792,008449,760,036

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(6)Receivables from and payables to related parties (Cont’d)

Payables to related parties (Cont'd):

Contract liabilities30June 202031 December 2019
Jiangxi Jiangling Group Special Vehicle Co., Ltd.-2,681,847
Yunan Wanfu Vehicle Sales & Service Co., Ltd.241,6521,213,244
Other related parties1,852,667918,571
2,094,3194,813,662
Lease liabilities
JMCG10,874,81512,672,782
Jiangxi Jiangling Motors Imp. & Exp. Co., Ltd.1,187,4332,343,048
12,062,24815,015,830

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

7Related parties and related party transactions (Cont’d)
(7)Commitments in relation to related parties
Capital expenditure commitments30June 202031 December 2019
JMCG Jiangxi Engineering Construction Co., Ltd.563,684,39023,174,665
Guarantee of commitments in relation to related parties is set out in (Note 7(5)(c)).
8Contingencies
As at 30 June 2020, the Group had no contingencies that needed to be accounted for in the notes to the financial statements.
9Commitments
Capital commitments
Capital expenditures contracted for by the Group but are not yet necessary to be recognised on the balance sheet as at the balance sheet date are as follows:
30 June 202031 December 2019
Buildings, machinery and equipment1,220,164,000701,817,000
10Events after the balance sheet date
Evaluation of the impact on the outbreak of Coronavirus Disease.
After the outbreak of Coronavirus Disease 2019 (“COVID-19 outbreak”) in January 2020, a series of precautionary and control measures have continued to be implemented across the country. The Group will continue to earnestly implement the guaranteed supply for key medical materials for epidemic prevention and control, and support epidemic prevention and control work.
The epidemic has certain impacts on enterprise operation of some provinces and cities such as Hubei province and certain industries as well as overall economic operation. Thus, it is probable that the epidemic may affect the risk of the Group’s financial instruments or operating performance to a certain extent. The degree of impact depends on the situation and duration of epidemic prevention and control, and various regulation and control measures implemented.
The Group will continually pay close attention to the development of the epidemic, evaluate and actively respond to its impacts on the Company’s financial position and operating results. As at the date on which the financial statements were authorised for issue, the assessment work was still under progress and no material adverse effects had been identified.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

11Financial instrument and risk
The Group's activities expose it to a variety of financial risks: market risk (primarily including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The above financial risks and the Group's risk management policies to mitigate the risks are as follows: The Board of Directors is responsible for planning and establishing the Group's risk management framework, formulating the Group's risk management policies, and supervising the implementation of risk management measures. The Group has established risk management policies to identify and analyse the risks faced by the Group. These risk management policies specify the risks such as market risk, credit risk and liquidity risk management. The Group regularly evaluates the market environment and changes in the Group's operating activities to determine whether to update the risk management policies or not. The Group's risk management is carried out under policies approved by the Board of Directors. The business departments of the Group work closely to identify and evaluate related risks, and determine countermeasures with management to avoid or reduce the adverse impact of the related risks on the Company. The internal audit department of the Group conducts periodical audit to the controls and procedures for risk management and reports the audit results to the Risk Management Committee of the Group.
(1)Market risk
(a)Foreign exchange risk
The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from the recognised assets and liabilities, and future transactions denominated in foreign currencies, primarily with respect to USD. The Group’s monitors the amount of assets and liabilities, and transactions denominated in foreign currencies to minimise the foreign exchange risk. Therefore, the Group can consider entering into forward exchange contracts to mitigate the foreign exchange risk (Note 4(3)).
The financial assets and the financial liabilities denominated in foreign currencies, which were held by the Company and the subsidiaries of the Group, whose recording currencies were RMB, were expressed in RMB as at 30 June 2020 and 31 December 2019 as follows:
30 June 2020
USDEUROthersTotal
Financial assets denominated in foreign currency -
Derivative financial assets1,475,752--1,475,752
Other receivables-29,720-29,720
1,475,75229,720-1,505,472
Financial liabilities denominated in foreign currency -
Current portion of long-term borrowings463,595--463,595
Long-term borrowings3,013,368--3,013,368
Other payables167,658,59926,347,0256,985,987200,991,611
171,135,56226,347,0256,985,987204,468,574

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

11Financial instrument and risk (Cont’d)
(1)Market risk (Cont’d)
(a)Foreign exchange risk (Cont’d)
31 December 2019
USDEUROthersTotal
Financial assets denominated in foreign currency -
Other receivables-29,722-29,722
Financial liabilities denominated in foreign currency -
Derivative financial liabilities545,632--545,632
Current portion of long-term borrowings456,830--456,830
Long-term borrowings3,197,814--3,197,814
Other payables260,962,44742,659,1035,574,005309,195,555
265,162,72342,659,1035,574,005313,395,831
As at 30 June 2020, if the RMB had strengthened/weakened by 10% against the USD while all other variables had been held constant, the Group’s net profit would have been approximately RMB 14,436,603 (31 December 2019: approximately RMB 22,553,091) higher/lower for the financial assets and liabilities dominated in foreign currencies whose recording currency is RMB; if the RMB had strengthened/weakened by 10% against the EUR while all other variables had been held constant, the Group’s net profit would have been approximately RMB 2,297,312 higher/lower(31 December 2019: approximately RMB 4,000,039).
(b)Interest rate risk
The Group's revenue and operating cash flows are hardly affected by the fluctuation of the market interest rate. As at 30 June 2020, interest of most of the Group’s cash at bank was accrued at floating rate; interest of all bank borrowings was accrued at fixed rate. The Group does not take any measure to hedge interest risk at present.
As at 30 June 2020, if the interest rate of the Group’s cash at bank increased or decreased by 10% while all other circumstances had been held constant, the Group's net profit for the year would have been approximately RMB 7,543,808 higher/lower (31 December 2019: approximately RMB 16,235,358).
As at 30 June 2020 and 31 December 2019, the fair value of the Group’s cash at bank accrued at fixed rate was a reasonable approximation of its carrying amount.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

11Financial instrument and risk (Cont’d)
(2)Credit risk
Credit risk mainly arises from cash at bank and on hand, notes receivable, accounts receivable, receivables financing, other receivables, and derivative financial assets at fair value through profit or loss that are not included in the impairment assessment scope. The carrying amount of the Group’s financial assets reflects its maximum credit exposure on the balance sheet date.
The Group expects that there is no significant credit risk associated with cash at bank and on hand since they are deposited at state-owned banks and other medium or large size listed banks with good reputation and high credit rating. The Group does not expect that there will be significant losses from non-performance by these banks.
In addition, the Group has policies to limit the credit exposure on notes receivable, accounts receivable, receivables financing and other receivables. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
As at 30 June 2020, the Group had no significant collateral or other credit enhancements held as a result of the debtor's mortgage.
(3)Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in its headquarters. The Group’s monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.
The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash flows :
30 June 2020
Within 1 year1 to 2 years2 to 5 yearsOver 5 yearsTotal
Short-term borrowings
- Principal1,300,000,000---1,300,000,000
- Interest15,312,083---15,312,083
Notes payable71,901,506---71,901,506
Accounts payable8,735,960,426---8,735,960,426
Other payables3,983,922,576---3,983,922,576
Lease liabilities10,115,2777,152,84811,986,666-29,254,791
Long-term borrowings
- Principal463,595463,5951,390,7851,158,9883,476,963
- Interest50,41643,46288,66326,077208,618
14,117,725,8797,659,90513,466,1141,185,06514,140,036,963

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

11Financial instrument and risk (Cont’d)
(3)Liquidity risk (Cont’d)
31 December 2019
Within 1 year1 to 2 years2 to 5 yearsOver 5 yearsTotal
Derivative financial liabilities545,632---545,632
Notes payable31,400,000---31,400,000
Accounts payable8,116,169,589---8,116,169,589
Other payables4,145,266,838---4,145,266,838
Lease liabilities13,386,5766,987,28715,604,965-35,978,828
Long-term borrowings
- Principal456,830456,8301,370,4921,370,4923,654,644
- Interest53,10746,25497,64835,975232,984
12,307,278,5727,490,37117,073,1051,406,46712,333,248,515
12Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that is significant to the entire fair value measurement:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

-

12Fair value estimates (Cont’d)
(1)Assets and liabilities measured at fair value on a recurring basis
As at 30 June 2020, the assets measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1Level 2Level 3Total
Financial assets -
Derivative financial-1,475,752-1,475,752
Financial assets held for trading2,725, 990,6572,725,990,657
Receivables financing--270,951,837270,951,837
1,475,7522,996,942,4942,998,418,246
As at 30 June 2020, the Group had no liabilities measured at fair value: As at 31 December 2019, the assets measured at fair value on a recurring basis by the above three levels were analysed below:
Level 1Level 2Level 3Total
Financial assets -
Receivables financing--289,044,373289,044,373
As at 31 December 2019, the liabilities measured at fair value on a recurring basis by the above three levels were analysed below.
Level 1Level 2Level 3Total
Financial liabilities -
Derivative financial liabilities-545,632-545,632
The Group takes the date on which events causing the transfers between the levels take place as the timing specific for recognising the transfers. There is no transfer between Level 1 and Level 2 for the current year.
The fair value of financial instruments traded in an active market is determined at the quoted market price; and the fair value of those not traded in an active market is determined by the Group using valuation technique. The valuation models used mainly comprise discounted cash flow model and market comparable corporate model. The inputs of the valuation technique mainly include risk-free interest rate, benchmark rate and exchange rate.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

12Fair value estimates (Cont’d)
(1)Assets and liabilities measured at fair value on a recurring basis (Cont'd)
The changes in Level 3 financial assets are analysed below:
(a)Gains recognised in profit or loss is recognised in investment income in the income statement.
31 December 2019IncreaseDecreaseTransfer into Level 3Transfer out of Level 3Gains recognised in profit or loss (a)Changes in unrealised gains or losses included in profit or loss for the current period with respect to assets still held as at 30 June 2020 - gains or losses arising from changes in fair value
30 June 2020
Financial assets
Financial assets held for trading -
Structural deposits-9,189,000,000(6,471,000,000)--2,718,000,00032,619,5417,990,657
Receivables financing -
Notes receivable289,044,373328,944,967(347,037,503)--270,951,837--
Total assets289,044,3739,517,944,967(6,818,037,503)--2,988,951,83732,619,5417,990,657

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

12Fair value estimates (Cont’d)
(1)Assets and liabilities measured at fair value on a recurring basis (Cont'd)
The changes in Level 3 financial assets are analysed below:
(a)Gains recognised in profit or loss for the current period has been recognised in investment income in the income statement.
31 December 2018IncreaseDecreaseTransfer into Level 3Transfer out of Level 3Gains recognised in profit or loss (a)Changes in unrealised gains or losses included in profit or loss for the current year with respect to assets still held as at 31 December 2019 - gains or losses arising from changes in fair value
31 December 2019
Financial assets
Financial assets held for trading -
Monetary fund-3,300,000,000(3,300,000,000)---5,739,140-
Structural deposits-5,900,000,000(5,900,000,000)---41,646,567-
Other current assets -
Notes receivable6,246,2441,654,757,442(1,371,959,313)--289,044,373--
Total assets6,246,24410,854,757,442(10,571,959,313)--289,044,37347,385,707-

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

12Fair value estimates (Cont’d)
(2)Assets measured at fair value on a non-recurring basis
As at 30 June 2020 and 31 December 2019, the Group did not have assets measured at fair value on a non-recurring basis.
(3)Assets and liabilities not measured at fair value but for which the fair value is disclosed
Financial assets and liabilities measured at amortised cost mainly include notes receivable, accounts receivable, other receivables, payables and long-term borrowings, etc.
The carrying amount of the Group's financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value.
The fair value of long-term borrowings is the present value of the contractually determined stream of future cash flows discounted at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially the same cash flows on the same terms, and categorised within Level 3 of the fair value hierarchy.
13Capital management
The Group’s capital management policies aim 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.
The Group's total capital is calculated as “shareholders’ equity” as shown in the consolidated balance sheet. The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of equity ratio.
As at 30 June 2020 and 31 December 2019, the Group's equity ratio was as follows:
30 June 202031 December 2019
Total borrowings1,303,476,9633,654,644
Total equities10,643,910,58310,496,563,781
11,947,387,54610,500,218,425
Equity ratio10.91%0.03%

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements
(1)Accounts receivable
30 June 202031 December 2019
Accounts receivable1,260,745,851980,998,110
Less: Provision for bad debts(177,082,301)(115,069,813)
1,083,663,550865,928,297
(a)The aging of accounts receivable is analysed as follows:
30 June 202031 December 2019
Within 1 year782,355,884489,899,574
1 to 2 years475,240,745490,230,937
2 to 3 years3,149,222867,599
1,260,745,851980,998,110
(b)As at 30 June 2020, the five largest accounts receivable were analysed by debtors as follows:
BalanceAmount of provision for bad debts% of total balance
Company 1477,414,335(1,060,063)37.87%
Company 2167,183,588-13.26%
Company 381,020,000(81,020,000)6.43%
Company 475,716,600(98,432)6.01%
Company 526,016,000(33,821)2.06%
827,350,523(82,212,316)65.63%
(c)Provision for bad debts
For accounts receivable, irrespective of whether a significant financing component exists, the Company measures the loss provision according to the lifetime expected credit losses.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

13Notes to the Company’s financial statements (Cont’d)
(1)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(i)Accounts receivable for which provision for bad debts is made on the individual basis are analysed as follows:
30 June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Provision for bad debts
Receivables from related parties within the Group i)184,202,828--
Accounts receivable for automobiles ii)81,020,000100%(81,020,000)
New energy subsidies receivable iii)84,903,126100%(84,903,126)
350,125,954(165,923,126)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Provision for bad debts
Receivables from related parties within the Group i)179,138,311--
Accounts receivable for automobiles ii)81,020,000100%(81,020,000)
New energy subsidies receivable iii)20,410,500100%(20,410,500)
280,568,811(101,430,500)
i) As at 30 June 2020, the Company's accounts receivable from subsidiaries JMCH,SZFJ and GZFJ were RMB 14,132,531,RMB 167,183,587 and RMB 2,886,710 respectively, totalling RMB 184,202,828. The Company carried out individual assessment on receivables from subsidiaries. Based on the judgement of credit risk, there is no significant credit risk on the accounts receivable from subsidiaries, and there is no overdue or impairment. As at 31 December 2019, the Company's accounts receivable from subsidiaries JMCH and SZFJ were RMB 10,847,413 and RMB 168,290,898 respectively, totalling RMB 179,138,311. The Company carried out individual assessment on receivables from subsidiaries. Based on the judgement of credit risk, there is no significant credit risk on the accounts receivable from subsidiaries, and there is no overdue or impairment.
ii) As at 30 June 2020, since these companies in debts were involved in several legal proceedings, the Company considered that it was difficult to recover such receivables, so related provision for bad debts was made in full amount.
iii) As at 30 June 2020, state subsidies for new energy automobiles receivable amounted to RMB 84,903,126. Since the estimated mileage of such new energy automobiles may not meet the target within two years, the Company considered it was difficult to recover the state subsidies, so related provision for bad debts was made is full amount.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(1)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows:
Grouping - Sales of general automobiles:
30 June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue490,454,3370.13%(642,250)
Overdue for 1 to 30 days395,1390.13%(517)
490,849,476(642,767)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue52,890,9450.05%(25,599)
Grouping - Sales of new energy automobiles:
30 June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue156,460,8135.77%(9,023,417)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue252,014,8584.86%(12,256,229)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(1)Accounts receivable (Cont’d)
(c)Provision for bad debts (Cont’d)
(ii)Accounts receivable for which provision for bad debts is made on the grouping basis are analysed as follows (Cont’d):
Grouping - spare parts:
30 June 2020
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue150,821,8340.30%(452,466)
Overdue for 1 to 30 days77,138,9810.30%(231,417)
Overdue for 31 to 60 days17,688,6420.50%(88,443)
Overdue for 61 to 90 days3,689,6040.60%(22,138)
Overdue over 90 days13,970,5475.00%(698,527)
263,309,608(1,492,991)
31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL (%)Amount
Not overdue357,250,1720.30%(1,071,751)
Overdue for 1 to 30 days28,373,8320.30%(85,122)
Overdue for 31 to 60 days3,849,5410.50%(19,248)
Overdue for 61 to 90 days2,752,9930.60%(16,518)
Overdue over 90 days3,296,9585.00%(164,846)
395,523,496(1,357,485)
(iii)The provision for bad debts for the year amounted to RMB 64,492,626 andreversed the provision for bad debts RMB 2,480,138.
(d)In thesix months ended 30 June 2020, no accounts receivable had been written off.
(e)As at 30 June 2020 and 31 December 2019, the Company did not have accounts receivable that were pledged.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(2)Other receivables
30 June 202031 December 2019
Receivables from JMCH3,182,043,6773,023,189,184
Import working capital advances35,000,00035,000,000
Interest receivable from cash at bank28,851,27030,719,215
Deposits receivable5,409,6007,192,773
Advances for research and development projects1,014,1842,109,522
Reserves receivable385,973959,945
Others15,233,21419,385,731
3,267,937,9183,118,556,370
Less: Provision for bad debts(189,179)(238,665)
3,267,748,7393,118,317,705
(a)The aging of other receivables is analysed as follows:
30 June 202031 December 2019
Within 1 year3,186,165,6783,043,832,479
1 to 2 years18,044,50716,684,253
2 to 3 years14,258,45913,253,240
Over 3 years49,469,27444,786,398
3,267,937,9183,118,556,370

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(2)Other receivables (Cont'd)
(b)Provision for losses and changes in book balance statements
Stage 1Stage 3Total
Expected credit losses in the following 12 months (grouping)Expected credit losses in the following 12 months (individual)Sub-totalLifetime ECL (Credit impaired)
Book balanceProvision for bad debtsBook balanceProvision for bad debtsProvision for bad debtsBook balanceProvision for bad debtsProvision for bad debts
31 December 201994,158,526(190,319)3,023,189,184-(190,319)1,208,660(48,346)(238,665)
Increase in the current period-----
Reversal in the current period20,522-20,52228,96449,486
Write-off in the current period-----
Including: Charge-off in the current period-----
Derecognition-----
30 June 202085,450,202(169,797)3,182,043,677-(169,797)444,039(19,382)(189,179)
As at 30 June 2020, the Group had no other receivables transferred from Stage 1 to Stage 3, and no other receivables reversed from Stage 3 to Stage 1.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(2)Other receivables (Cont'd)
(b)Provision for losses and changes in book balance statements (Cont’d)
As at 30 June 2020 and 31 December 2019, the Company did not have any other receivables at Stage 2. Other receivables at Stage 1 and Stage 3 were analysed below:
(i)As at 30 June 2020 and 31 December 2019, provision for bad debts of other receivables on individual basis was analysed as follows:
30 June 2020
Stage 1Book balance12-month ECL (%)Provision for bad debtsReason
Receivables from JMCH3,182,043,677--i)
31 December 2019
Stage 1Book balance12-month ECL (%)Provision for bad debtsReason
Receivables from JMCH3,023,189,184--i)
i) As at 30 June 2020, the Company’s other receivables from subsidiary JMCH were RMB 3,182,043,677 (31 December 2019: RMB 3,023,189,184). The Company carried out individual assessment on receivables from subsidiaries. Based on the judgement of credit risk, there is no significant credit risk on the accounts receivable from subsidiaries, and there is no overdue or impairment.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(2)Other receivables (Cont'd)
(b)Provision for losses and changes in book balance statements (Cont’d)
(ii)As at 30 June 2020 and 31 December 2019, the Company’s other receivables with provision for bad debts on grouping basis were analysed below:
Other receivables with provision on the grouping basis at Stage 1:
30 June 202031 December 2019
Book balanceProvision for bad debtsBook balanceProvision for bad debts
Amount%AmountAmount%Amount
Grouping of interest receivable from cash at bank i):
Within 1 year28,851,270--30,719,215--
Grouping of operating advances and guarantees:
Within 1 year56,598,9320.30%(169,797)63,439,3110.30%(190,319)
85,450,202(169,797)94,158,526(190,319)
i) As at 30 June 2020 and 31 December 2019, the Company’s interest receivable from cash at bank mainly came from four major state-owned banks or national joint stock banks. Therefore, the Company expected there was no significant loss on related interest receivable from non-performance by these banks.
Other receivables with provision on the grouping basis at Stage 3:
30 June 202031 December 2019
Book balanceProvision for bad debtsBook balanceProvision for bad debts
Amount%AmountAmount%Amount
Grouping of operating advances and guarantees:
Over 1 year444,0394.36%(19,382)1,208,6604.00%(48,346)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(2)Other receivables (Cont'd)
(c)In thesix months ended 30 June 2020, the Company did not increase any provision for bad debts. The provision for bad debts reversed amounted to RMB 49,486. The reversal in the current period was due to the actual receipt of other receivables relating to the provision for bad debts made in the prior period.
(d)In thesix months ended 30 June 2020, no other receivables had been written off.
(e)As at 30 June 2020, other receivables from top five debtors in respect of outstanding balance were analysed as follows:
NatureBalanceAging% of total balanceProvision for bad debts
Company 1Subsidiary current accounts and personnel costs, etc.3,182,043,677Within 6 years97.38%-
Company 2Advances35,000,000Within 1 year1.07%(105,000)
Company 3Advances6,291,984Within 1 year0.19%(18,876)
Company 4Advances4,480,000Within 1 year0.14%(13,440)
Company 5Advances3,486,966Within 1 year0.11%(10,461)
3,231,302,62798.89%(147,777)

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(3)Long-term equity investments
30 June 202031 December 2019
Subsidiaries (a)340,000,000340,000,000
Associates (b)37,910,00340,934,557
377,910,003380,934,557
Less: Provision for impairment of long-term equity investments--
377,910,003380,934,557
(a)Subsidiaries
Accounting methodInvestment cost31 December 2019Movements for the current periodClassified as held for sale30 June 2020Shareholding (%)Voting rights (%)Ending balance of provision for impairmentProvision for impairment in the current periodCash dividends declared in the current period
JMCHCost method270,000,000270,000,000--270,000,000100%100%----
JMCSCost method50,000,00050,000,000--50,000,000100%100%----
SZFJCost method10,000,00010,000,000--10,000,000100%100%----
GZFJCost method10,000,00010,000,000--10,000,000100%100%----
340,000,000--340,000,000----
(b)Associates
Refer to Note 4(11).

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(4)Revenue and cost of sales
Six months ended 30 June
20202019
Revenue from main operations12,901,713,33312,797,370,935
Revenue from other operations198,396,600177,166,683
13,100,109,93312,974,537,618
Six months ended 30 June
20202019
Cost of sales from main operations11,010,954,90811,065,887,460
Cost of sales from other operations186,559,118161,068,277
11,197,514,02611,226,955,737
(a)Revenue and cost of sales from main operations
Six months ended 30 June
20202019
Revenue from main operationsCost of sales from main operationsRevenue from main operationsCost of sales from main operations
Sales of automobiles12,091,989,04010,397,191,18711,636,452,65610,215,567,046
Sales of automobile parts771,758,926572,162,4961,117,017,837808,310,648
Automobile maintenance services37,965,36741,601,22543,900,44242,009,766
12,901,713,33311,010,954,90812,797,370,93511,065,887,460
(b)Revenue and cost of sales from other operations
Six months ended 30 June
20202019
Revenue from other operationsCost of sales from other operationsRevenue from other operationsCost of sales from other operations
Sales of materials157,745,817149,930,871130,017,203114,894,018
Others40,650,78336,628,24747,149,47946,174,259
198,396,600186,559,118177,166,683161,068,277

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020(All amounts in RMB Yuan unless otherwise stated)

14Notes to the Company’s financial statements (Cont’d)
(4)Revenue and cost of sales (Cont’d)
(c)The breakdown of revenue earned in the six months ended 30 June 2020 were as follows:
Six months ended 30 June 2020
AutomobilesAutomobile partsAuto maintenance servicesMaterials and othersTotal
Revenue from main operations12,091,989,040771,758,92637,965,367-12,901,713,333
Including: Recognised at a time point12,091,989,040771,758,926--12,863,747,965
Recognised within a certain period--37,965,367-37,965,367
Revenue from other operations---198,396,600198,396,600
12,091,989,040771,758,92637,965,367198,396,60013,100,109,933
(i)As at 30 June 2020, the amount of revenue corresponding to the performance obligation of the Company that had been contracted but not yet performed or not fulfilled was RMB 104,206,171, which was expected to be recognised between 2020 and 2025.
(5)Investment income
Six months ended 30 June
20202019
Investment income from financial assets held for trading32,619,54118,446,866
Investment income from long-term equity investment under equity method(3,024,554)333,625
Investment loss from forward exchange settlement(1,316,987)(4,939,846)
28,278,00013,840,645
There is no significant restriction on the remittance of investment income to the Company.

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

1Statement of non-recurring profit or loss
Six months ended 30 June
20202019
Profit or loss on disposal of non-current assets(25,860,575)(4,412,233)
Government grants recognised in profit or loss for the current period165,679,468230,279,274
Gains and losses arising from changes in fair value of financial assets and liabilities held at fair value through profit or loss, and investment gains and losses from disposal of related financial assets and liabili