JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF THE AUDITORS
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2018
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June Note 2018# 2017# Revenue 5 14,287,497 15,666,476 Taxes and surcharges (368,792) (544,622) Cost of sales 6 (12,277,724) (12,371,957) Gross profit 1,640,981 2,749,897 Distribution expenses 6 (452,934) (1,270,477) Administrative expenses 6 (1,139,448) (1,193,666) Impairment charge of non-current assets (3,607) (3,347) Other income 8 195,360 203,584 Operating profit 240,352 485,991 Finance income 9 106,654 127,903 Finance expenses 9 (3,262) (2,003) Finance income-net 9 103,392 125,900 Share of profit of investments accounted for using the
equity method 15b 2,611 3,447 Profit before income tax 346,355 615,338 Income tax expense 10 (27,404) (62,435) Profit for the period 318,951 552,903 Profit attributable to:
Owners of the Company 318,951 552,903 Total comprehensive income for the period 318,951 552,903 Total comprehensive income attributable to:
Owners of the Company 318,951 552,903 Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.37 0.64#Unaudited financial indexes
The notes on pages 11 to 61 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTHS ENDED 30 JUNE 2018
(All amounts in thousands of RMB unless otherwise stated)
As at
31 December Note
30 June2018# 2017 Assets
Non-current assets
Property, plant and equipment 12 6,659,992 6,714,088 Lease prepayment 13 609,047 616,834 Intangible assets 14 191,924 197,860 Investments accounted for using the equity method 15b 40,485 37,874 Other non-current assets - 478 Deferred income tax assets 16 669,949 690,253 Total non-current assets 8,171,397 8,257,387 Current assets
Inventories 17 2,348,117 2,339,304 Trade and other receivables and prepayments 18 4,925,270 4,555,934 Cash and cash equivalents 19 7,787,610 11,137,723 Assets classified as held for sale 20 - 93,413 Total current assets 15,060,997 18,126,374 Total assets 23,232,394 26,383,761
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2018
(All amounts in thousands of RMB unless otherwise stated)
As at
Note 31 December 30 June2018# 2017 EQUITY
Share capital 21 863,214 863,214 Share premium 816,609 816,609 Other reserves 22 450,914 450,914 Retained earnings 8,484,321 10,441,665 Total equity 10,615,058 12,572,402 LIABILITIES
Non-current liabilities
Borrowings 23 3,683 3,851 Deferred income tax liabilities 16 26,408 26,736 Retirement benefit obligations 24 51,959 54,764 Provisions for warranty and other liabilities 25 180,628 184,688 Other non-current liabilities 200 240 Total non-current liabilities 262,878 270,279 Current liabilities
Financial liabilities at fair value through profit or loss 1,578 8,493 Trade and other payables 26 12,161,438 13,222,540 Current income tax liabilities 35 114,906 Borrowings 23 433 428 Retirement benefit obligations 24 4,420 4,420 Provisions for warranty and other liabilities 25 186,554 190,293 Total current liabilities 12,354,458 13,541,080 Total liabilities 12,617,336 13,811,359 Total equity and liabilities 23,232,394 26,383,761#Unaudited financial indexes
The notes on pages 11 to 61 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2018
(All amounts in thousands of RMB unless otherwise stated)
Attributable to owners of the Company
Share Share Other Retained Total Note capital premium reserves earnings Equity# Balance at 1 January 2017 863,214 816,609 452,126 10,277,287 12,409,236 Profit for the six months - - - 552,903 552,903 Dividends relating to 2016 - - - (526,560) (526,560) Balance at 30 June 2017 863,214 816,609 452,126 10,303,630 12,435,579 Balance at 1 January 2018 863,214 816,609 450,914 10,441,665 12,572,402 Profit for the six months 318,951 318,951 Dividends relating to 2017 27 (2,276,295) (2,276,295) Balance at 30 June 2018 863,214 816,609 450,914 8,484,321 10,615,058#Unaudited financial indexes
The notes on pages 11 to 61 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June Note 2018# 2017# Cash flows from operating activities
Cash generated from operations 28 (791,761) (733,272) Interest paid (151) (158) Income tax paid (114,906) (165,971) Net cash generated from operating activities (906,818) (899,401) Cash flows from investing activities
Purchase of financial assets at fair value through profit
or loss (3,462,000) - Purchase of property, plant and equipment (“PPE”) (572,583) (407,102) Other cash paid relating to investing activities (13,354) (3,886) Proceeds from disposal of PPE 28 2,569 2,097 Proceeds from repayment of financial assets at fair value
through profit or loss 3,462,000 - Investment income received 10,202 - Interest received 129,686 120,666 Other cash received from investing activities 733 5,469 Net cash used in investing activities (442,747) (282,756) Cash flows from financing activities
Repayments of borrowings (207) (5,226) Dividends paid to shareholders of the Company (1,999,237) (892) Other cash paid relating to financing activities (1,104) - Net cash used in financing activities (2,000,548) (6,118) Net decrease in cash and cash equivalents (3,350,113) (1,188,275) Cash and cash equivalents at beginning of year 11,137,723 11,666,222 Effects of exchange rate changes - - Cash and cash equivalents at end of period 19 7,787,610 10,477,947#Unaudited financial indexes
The notes on pages 11 to 61 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in thePeople’s Republic of China (the “PRC”) under the Company Law of the PRC and according to the approval of Hongban (1992) No. 005 of Nangchang Revolution and Authorisation Group ofCompany’s Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was owned by Jiangling Motors Corporation Group (“JMCG”). The legalrepresentative’s operating license of the Company is No. 913600006124469438.
The address of theCompany’s registered office is No.509, Northern Yingbin Avenue, Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”). In addition, the Company issued 25,214,000 A shares as bonus shares to the existing shareholders in 1994. The bonus shares were issued by utilisation of theCompany’s retained earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and the Company issued 170,000,000 additional B shares in 1998.
As at 30 June 2018, the total number of issued shares of the Company is 863,214,000 shares, which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development, manufacturing and selling of automobiles, engines and automobile related parts, dies and tools.
These consolidated financial statements were authorised for issue by the Board of Directors on 27 August 2018.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying theGroup’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimations are significant to the consolidated financial statements are disclosed in Note 4.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
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|2|Summary of significant accounting policies (continued)|
|2.1|Basis of preparation (continued)|

2.1.1 Changes in accounting policy and disclosuresau
(a) New and amended standards adopted by the Group
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below. The other standards did not have any impact on theGroup’s accounting policies and did not require retrospective adjustments.
 IFRS 15 Revenue from contracts with customers
The Group assessed the effects of applying the new standard on theGroup’s financial statements and no significant impact identified except for the reclassification from distribution expenses as a deduction of revenue. No retrospective adjustments are required. (b) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2018 reporting periods and have not been early adopted by the Group. TheGroup’s assessment of the impact of these new standards and interpretations is set out below.
 IFRS 16 Leases
Nature of change
IFRS 16 will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change.
Impact
The Group only have operating leases and the leased assets and the lease arrangement have no significant impact on financial statement.
Date of adoption by the Group
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|The new standard is mandatory for financial years commencing on or after 1 January|
|2019. At this stage, the Group does not intend to adopt the standard before its effective|
|date.|

There are no other standards that are not yet effective that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of theinvestee’s net assets including goodwill.
2.3 Associates
An associate is an entity over which the Group has significant influence but not control, generally accompanying a shareholding of between20% and50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise theinvestor’s share of the profit or loss of the investee after the date of acquisition.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to‘share of profit of investments accounted for using equitymethod’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in theGroup’s financial statements only to the extent of unrelatedinvestor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive committee that makes strategic decisions.
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of theGroup’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is theCompany’s functional and theGroup’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within‘other income/(expense)-net’.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale, are included in other comprehensive income.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the items.
Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings 35-40 years Plant and machinery 10-15 years Motor vehicles 6-10 years Moulds 5 years Electronic and other equipment 5-7 years Theassets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Anasset’s carrying amount is written down immediately to its recoverable amount if theasset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within‘other income/(expense) -net’ in profit or loss.
Assets under construction represent buildings under construction and plant and equipment pending installation, and are stated at cost. Costs include construction and acquisition costs. No provision for depreciation is made on assets under construction until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is expensed in profit or loss on a straight-line basis over the period of the lease or when there is impairment, the impairment is expensed in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and
(e) the expenditure attributable to the intangible asset during its development can be reliably measured.
The development cost of an internally generated intangible asset is the sum of the expenditure incurred from the date the asset meets the recognition criteria above to the date when it is available for use. The development costs capitalized in connection with the intangible asset include costs of materials and services used or consumed and employee costs incurred in the creation of the asset.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 5 years.
(4) Non-patent technology
Non-patent technology is capitalised from the development cost. These costs are amortised over their estimated useful lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.10 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The non-current assets (except for certain assets as explained below), are stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets and financial assets (other than investments in subsidiaries and associates), which are classified as held for sale, would continue to be measured in accordance with the policies set out elsewhere in Note 2.
2.11 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(1) Classification (continued)
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date-the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the‘financial assets at fair value through profit orloss’ category are presented in profit or loss within‘other income/(expense)-net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for- sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as‘gains and losses from investmentsecurities’.
Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends on available-for-sale equity instruments are recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Financial liabilities at fair value through profit or loss and offsetting financial instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this category if incurred principally for the purpose of selling in the short term. A financial liability initially recognised at fair value, and transaction costs are expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in this category are classified as current liabilities if expected to be settled within 12 months; otherwise, they are classified as non-current. A financial liability is derecognised when it is extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.13 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a‘lossevent’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financialasset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of aninstrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in thedebtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.
For debt securities, if any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is reclassified from equity and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.
For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is reclassified from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling prices in the ordinary course of business, less applicable variable distribution expenses.
2.15 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. See Note 2.11(2) for further information about theGroup’s accounting for trade receivables and Note 2.13 for a description of theGroup’s impairment policies.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases theCompany’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to theCompany’s shareholders.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Borrowing costs (continued)
Borrowing costs include interest expense, finance charges in respect of finance lease and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. The exchange gains and losses that are an adjustment to interest costs include the interest rate differential between borrowing costs that would be incurred if the entity had borrowed funds in its functional currency, and the borrowing costs actually incurred on foreign currency borrowings. Such amounts are estimated based on interest rates on similar borrowings in theentity’s functional currency.
When the construction of the qualifying assets takes more than one accounting period, the amount of foreign exchange differences eligible for capitalisation is determined for each annual period and are limited to the difference between the hypothetical interest amount for the functional currency borrowings and the actual interest incurred for foreign currency borrowings. Foreign exchange differences that did not meet the criteria for capitalisation in previous years should not be capitalised in subsequent years.
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the PRC. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
(2) Deferred income tax
Inside basis differences
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax (continued)
(2) Deferred income tax (continued)
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Outside basis differences
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only when there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable temporary differences arising from theassociate’s undistributed profits is not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries and associate only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.22 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed by the PRC government. The contribution to the scheme is charged to profit or loss as and when incurred. TheGroup’s obligations are determined at a certain percentage of the salaries of the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees. Such supplementary pension subsidies are considered as under defined benefit plans. The liability recognised in the statement of financial position in respect of these defined benefit plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for recognised actuarial gains or losses and past service cost. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows according to the terms of the related pension liability.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Employee benefits (continued)
(1) Pension obligations (continued)
The current service cost of the defined benefit plan, recognised in profit or loss in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit obligation results from employee service in the current year, benefit changes, curtailments and settlements.
Past-service costs are recognised immediately in profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
(2) Housing fund and other benefits
TheGroup’s full-time employees are entitled to participate in a state-sponsored housing fund. The fund can be used by the employees for the purchase of apartment accommodation, or may be withdrawn upon their retirement. The Group is required to make annual contributions to the state-sponsored housing fund equivalent to a certain percentage of theemployees’ salaries.
(3) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled within twelve months and are measured at the amounts expected to be paid when they are settled.
2.23 Provisions
Provisions, mainly warranty costs, are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.24 Revenue recognition
An entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (that is, an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. A customer obtains control of a good or service if it has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service.
(1) Sales of goods
The Group recognises revenue when the goods is transferred to the customer and customer obtain control of the goods. Consistent with industry practices, the Group provides the credit period to the customer and there is no significant financing component. The Group provides quality warranty to the customer, and recognises as a liability.
The Group provides sales discounts to dealers, the revenue is recognised on a net amount after deducting the estimated discount based on historical experience.
(2) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
(3) Rendering of services
The Group provides service of vehicle maintenance. The related revenue is recognised using the percentage of completion method, with the stage of completion being determined based on proportion of costs incurred to date to the estimated total costs.
2.25 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables are recognised using the original effective interest rate.
2.26 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
2.27 Dividend distribution
Dividend distribution to theCompany’s shareholders is recognised as a liability in theGroup’s financial statements in the period in which the dividends are approved by theCompany’s shareholders, where appropriate.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.28 Government grants
Government grants refer to the monetary or non-monetary assets obtained by the Group from the government, including tax return, financial subsidy and etc.
Government grants are recognised when the grants can be received and the Group can comply with all attached conditions. If a government grant is a monetary asset, it will be measured at the amount received or receivable. If a government grant is a non-monetary asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be measured at its nominal amount.
Government grants related to assets refer to government grants which are obtained by the Group for the purposes of purchase, construction or acquisition of the long-term assets. Government grants related to income refer to the government grants other than those related to assets.
Government grants related to assets will be recorded as deferred income and recognised evenly in profit or loss over the useful lives of the related assets. However, the government grants measured at their nominal amounts will be directly recorded in profit and loss for the current period.
Government grants related to income will be recorded as deferred income and recognised in profit or loss in the period in which the related expenses are recognised if the grants are intended to compensate for future expenses or losses, and otherwise recognised in profit or loss for the current period if the grants are used to compensate for expenses or losses that have been incurred.
3 Financial risk management
3.1 Financial risk factors
TheGroup’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. TheGroup’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on theGroup’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board of Directors.
(1) Market risk
(a) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to other payables dominated in US dollar (“USD”) and Euro.
Management has set up a policy to require the Group to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not theCompany’s functional currency.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(1) Market risk (continued)
(a) Foreign exchange risk (continued)
As at 30 June 2018, if RMB had strengthened/weakened by10% against USD with all other variable held constant, theGroup’s net profit for the year then ended would have been approximately RMB21,910,000 (2017: RMB20,650,000) higher/lower.
As at 30 June 2018, if RMB had strengthened/weakened by10% against Euro with all other variable held constant, theGroup’s net profit for the year then ended would have been approximately RMB6,761,000 (2017: RMB9,263,000) higher/lower.
(b) Interest rate risk
TheGroup’s income and operating cash flows are substantially independent of changes in market interest rates. As at 30 June 2018, a large portion of its bank deposits and all of its borrowings were at fixed rate. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.
As at 30 June 2018, if the interest rate of theGroup’s bank deposits had been increased/decreased by10% and all other variables were held constant, theGroup’s net profit for the year then ended would have been increased/decreased by approximately RMB8,019,000 (2017: RMB19,352,000).
(2) Credit risk
TheGroup’s maximum exposure to credit risk in relation to financial assets is the carrying amounts of cash and cash equivalents and trade and other receivables.
As at 30 June 2018, the Group had cash of approximately RMB861,476,000 (2017: RMB1,120,806,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a non-bank financial institution and a subsidiary of JMCG (Note 19). TheGroup’s other bank deposits are mainly deposited in state-owned banks or other listed banks. Management believes all these financial institutions have high credit quality without significant credit risk.
All theGroup’s trade and other receivables have no collateral. However, the Group has policies in place to ensure that sales are made to customers with appropriate credit history and the Group performs periodic credit evaluations of its customers. The Group assesses the credit quality of each customer by taking into account its financial position, past experience and other factors. Credit limit and terms are reviewed on periodic basis, and the financial department is responsible for such monitoring procedures. In determining whether provision for impairment is required, the Group takes into consideration the aging status and the likelihood of collection. In this regards, the directors of the Company are satisfied that the risks is minimal as all customers are existing ones or related parties and have no default in the past and adequate provision for impairment, if any, has been made in the financial statements after assessing the collectability of individual debts. Further quantitative disclosures in respect of the impairment of trade and other receivables are set out in Note 18.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group in and aggregated by Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 23) at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
The table below analyses theGroup’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 Between 2 Over 5 year and 2 years and 5 years years At 30 June 2018
Bank borrowings
- Principals 433 433 1,300 1,950 - Interests 60 54 122 73 Financial liabilities at fair
value through profit or loss 1,578 - - - Trade and other payables 11,339,878 - - - 11,341,949 487 1,422 2,023 At 31 December 2017
Bank borrowings
- Principals 428 428 1,284 2,139 - Interests 63 56 130 88 Financial liabilities at fair
value through profit or loss 8,493 - - - Trade and other payables 12,636,400 - - - 12,645,384 484 1,414 2,227 3.2 Capital risk management
TheGroup’s objectives when managing capital are to safeguard theGroup’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as borrowings divided by total capital. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus borrowings. The Group aims to maintain the gearing ratio at a reasonable level.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.2 Capital risk management (continued)
The gearing ratios at 30 June 2018 and 31 December 2017 were as follows:
30 June 2018 31 December 2017 Total borrowings 4,116 4,279 Total equity 10,615,058 12,572,402 Total capital 10,619,174 12,576,681 Gearing ratio 0.04% 0.03% 3.3 Fair value estimation
The inputs to valuation techniques used to measure fair value are categorised into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Financial assets and liabilities at fair value through profit or loss are forward exchange contracts which are not traded in an active market. The fair value is determined by using valuation techniques which maximised the use of observable market data where it is available and rely as little as possible on entity specific estimates. Since all significant inputs required to value forward exchange contracts are observable, the forward exchange contracts are classified as level 2.
The carrying amounts of theGroup’s financial assets including cash and cash equivalents, trade and other receivables and financial liabilities including trade and other payables, borrowing, approximate their fair values due to their short maturities. The book values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
(1) Impairment of long term assets
The Group assesses whether there are indicators that the long term assets except for financial assets are impaired at each balance sheet date. When there are indicators that the carrying amounts of those long term assets are unrecoverable, an impairment test will be performed. When the carrying amount of the long term assets except for financial assets or the cash generating unit (“CGU”) is higher than its recoverable amount, which is the higher of anasset’s orCGU’s fair value less costs of disposal and its value in use, the impairment occurred.
To determine the fair value less costs of disposal, the Group take reference to the prices in sales agreements in relevant asset transactions or the observable market prices, and the incremental cost which could directly attributable to the assets disposal.
Key judgements are made on the outputs, sales prices, relevant operation costs and discount rates when estimate the discounted future cash flow forecasts. The Group uses relevant accessible information, including the assets outputs, sales prices, relevant operation costs which are based on the reasonable and supportable assumptions, to estimate the recoverable amount of those long term assets.
(2) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added tax and consumption tax. Significant judgment is required in determining the provision for these taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from amounts that were initial recorded, such differences will impact the tax provisions in the period of final tax outcome.
Deferred income tax assets relating to certain temporary differences are recognised as management considers it is probable that future taxable profit will be available against which the temporary differences can be utilised. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred tax assets and tax in the periods in which such estimate is changed.
As at 30 June 2018, the Group recorded the deferred tax assets of approximately RMB669,949,000. To the extent that it is probable that taxable profit will be available against which the deductible temporary differences will be utilised, deferred tax assets are recognised mainly for temporary differences arising from accrued expenses and retirement benefit obligations.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
(3) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Management estimates the related warranty claims based on historical warranty claim information including level of repairs and returns as well as recent trends that might suggest that past cost information may differ from future claims.
Factors that could impact the estimated claim information include the success of theGroup’s productivity and quality controls, as well as parts and labour costs. Any increase or decrease in the provision would affect profit or loss in future years.
(4) Write-down of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The net realisable value is estimated sales price less estimated cost to finish goods, estimated distribution expenses and related taxes in the daily operation.
If management revises estimated sales price, estimated cost to finish goods, distribution expenses and related taxes, and revised sales price is lower than current sales price, or revised cost to finish goods, distribution expenses and related taxes are higher than those current estimation, the Group need to consider increasing the write-down provision of the inventories.
If the actual sales price, the cost to finish goods, distribution expenses and related taxes are higher or lower than the estimation of management, the Group will recognise the relevant influence in profit or loss in relevant accounting period.
5 Revenue and segment information
The Group principally derives its turnover from the manufacture, assembly and sale of automobiles, related spare parts and components, and sales are made principally in the PRC. Revenue represents the total invoiced value of goods supplied to customers, net of value-added tax, returns and allowances.
Management has determined the operating segment based on the reports reviewed by the strategic executive committee that are used to make strategic decisions. The committee considers the business from the product perspective as all theGroup’s sales are made in the PRC. Since the Group principally derives its turnover from the sale of automobiles, the committee considers the automobile business as a whole in allocating resources and assessing performance. Accordingly, no segment information is presented.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
6 Expenses by nature
Six months ended 30 June
2018 2017 Changes in inventories of finished goods and
work in progress (53,018) 162,825 Raw materials and consumables used 10,727,511 11,127,866 Employee benefit expense (Note 7) 1,118,958 1,042,529 Depreciation of PPE (Note 12, 28) 438,714 397,762 Repairs and maintenance expenditure on PPE 52,752 43,305 Research and development expenditure 801,059 852,674 Amortisation of lease prepayment (Note 13, 28) 7,787 7,787 Amortisation of intangible assets (Note 14, 28) 7,199 5,527 Provision of warranty 123,718 150,360 Others 639,313 1,023,595 Total cost of sales, distribution expenses and
administrative expenses 13,863,993 14,814,230 For the six months ended 30 June 2018, depreciation of PPE of approximately RMB24,383,000 (the six months ended 30 June 2017: RMB 24,788,000) and amortisation of intangible assets of approximately RMB18,615,000 (the six months ended 30 June 2017: RMB 12,642,000) were included in research and development expenditure.
Impairment charge for trade and other receivables of approximately RMB918,000 (the six months ended 30 June 2017: RMB2,207,000) and impairment charge for inventories of approximately RMB5,195,000 (the six months ended 30 June 2017: RMB 19,663,000), which were included in administrative expenses, were not included in expenses by nature.
7 Employee benefit expense
Six months ended 30 June
2018 2017 Wages and salaries 812,503 748,104 Social security costs 109,307 98,055 Pension costs defined contribution plans 138,023 129,990 Others 59,125 66,380 1,118,958 1,042,529 The employees of the Group participated in a retirement benefit plan organised by the municipal and provincial governments under which the Group was required to make defined contributions monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In accordance with theGroup’s early retirement programs, the Group was also committed to making periodic benefit payments to certain early-retired employees until they reach their legal retirement ages.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
8 Other income
Six months ended 30 June
2018 2017 Government grants (a) 159,254 205,468 Others 36,106 (1,884) 195,360 203,584 (a) For the six months ended 30 June 2018, the Group received grants of approximately RMB159,254,000, mainly from Finance Bureau of Nanchang Qingyunpu District and Wanli District, Economic Development District Administrative Commission of Xiaolan, Comprehensive Reform Demonstration District of Shanxi Province. These government grants were income related to support theGroup’s operation and were charged to profit or loss directly up received.
9 Finance income and expenses
Six months ended 30 June
2018 2017 (a) Finance income
Interest income on bank deposits 95,632 121,328 Interest income on credit sales 11,022 6,575 106,654 127,903 (b) Finance expenses
Interest expense on bank loans (107) (114) Bank charges and others (3,155) (1,889) (3,262) (2,003) Net finance income 103,392 125,900 10 Taxation
(a) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax authorities in 2015, the Company is entitled to a preferential CIT rate of15% from 2015 to 2017 (2016:15%). The application of the authorised certificate of High-Tech Enterprise is in progress pursuant to the relevant PRC tax rules and regulations.The CIT rates of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) and Jiangling Motor Sales Co, Ltd. (“JMCS”) and Shenzhen Fujiang NEV Sales Co., Ltd.,the subsidiaries of the Company, are25%.
The amounts of income tax expense charged to profit or loss represented:
Six months ended 30 June
2018 2017 Current tax 7,428 84,376 Deferred tax (Note 16) 19,976 (21,941) 27,404 62,435
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(a) Corporate income tax (“CIT”) (continued)
The tax on theGroup’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
Six months ended 30 June
2018 2017 Profit before tax 346,355 615,338 Tax calculated at tax rates applicable to profits in
the respective companies 29,341 70,822 Tax concessions (69) (28) Expenses not deductible for tax purposes 297 361 Income not subject to tax (48,106) (40,650) Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 10,116 10,849 Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised (1,764) (2,391) Tax losses for which no deferred income tax
asset was recognised 37,589 23,472 Tax charge 27,404 62,435
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of16% on the selling price of goods from 1 May 2018. Pursuant to “The Announcement of VAT Rate Adjustment” (Cai Shui[2018] 32) jointly issued by the Ministry of Finance and the State Administration of Taxation,from 1 May 2018, the original applicable tax rate of17% was adjusted to16%, the applicable tax rate of real estate rental income is10%
(c) Consumption Tax (“CT”)
TheGroup’s automobile sale is subject to CT at3%,5% or9% on the selling price of goods. 11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
Six months ended 30 June
2018 2017 Profit attributable to shareholders of the
Company 318,951 552,903 Weighted average number of ordinary shares in
issue(‘000) 863,214 863,214 Basic earnings per share (RMB) 0.37 0.64 Diluted earnings per share equals to basic earnings per share as there were no dilutive potential ordinary shares outstanding during the six months ended 30 June 2018.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Vehicles Moulds other equipment constructions Total At 1 January 2017
Cost 1,865,850 3,526,187 262,667 2,206,895 2,862,436 1,100,860 11,824,895 Accumulated depreciation and impairment (373,449) (1,787,948) (123,898) (1,399,618) (1,450,760) (692) (5,136,365) Net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530 Year ended 31 December 2017
Opening net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530 Additions - - - - - 921,700 921,700 Transfers 230,556 517,758 33,133 220,145 320,019 (1,321,611) - Disposals (370) (351) (4,562) - (617) - (5,900) Classified as held for sale (5,777) - - - - - (5,777) Other deductions - (4,817) - - (433) (22,265) (27,515) Impairment charge - (8,061) (352) - (3,021) (416) (11,850) Depreciation charge (47,385) (223,833) (30,926) (224,991) (317,965) - (845,100) Closing net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088 At 31 December 2017
Cost 2,084,217 3,954,028 280,071 2,411,080 3,137,100 678,684 12,545,180 Accumulated depreciation and impairment (414,792) (1,935,093) (144,009) (1,608,649) (1,727,441) (1,108) (5,831,092) Net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088 Six months ended 30 June 2018
Opening net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088 Additions - - - - - 415,891 415,891 Tra nsfers 6,597 15,646 2,518 91,317 39,797 (155,875) - Other transfer 2,966 5,948 29,085 3,871 112,607 - 154,477 Disposals (56) (398) (1,035) - (436) (7) (1,932) Other deductions - (147,436) (1,324) - (6,820) (248) (155,828) Impairment charge (Note 28) - (1,321) (24)- - (1,907) (355) (3,607) Depreciation charge (Note 6, 28) (25,747) (122,149) (18,285) (122,931) (173,985) - (463,097) Closing net book amount 1,653,185 1,769,225 146,997 774,688 1,378,915 936,982 6,659,992 At 30 June 2018
Cost 2,093,702 3,814,674 307,183 2,501,879 3,254,054 938,029 12,909,521 Accumulated depreciation and impairment (440,517) (2,045,449) (160,186) (1,727,191) (1,875,139) (1,047) (6,249,529) Net book amount 1,653,185 1,769,225 146,997 774,688 1,378,915 936,982 6,659,992
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the six months ended 30 June 2018, depreciation expense of approximately RMB404,610,000 (the six months ended 30 June 2017: RMB367,960,000) has been charged in cost of sales, RMB1,568,000 (the six months ended 30 June 2017: RMB1,349,000) in distribution costs and RMB56,919,000 (the six months ended 30 June 2017: RMB53,241,000) in administrative expenses.
Lease rental expenses amounting to RMB4,072,000 (the six months ended 30 June 2017: RMB4,419,000) relating to the lease of property are included in profit or loss.
13 Lease prepayment
Lease prepayment represents theGroup’s interests in land which are held on leases of 50 years. The movement is as follows:
30 June 2018 31 December 2017 Opening net book amount 616,834 632,408 Additions - - Amortisation charge (Note 6, 28) (7,787) (15,574) Closing net book amount 609,047 616,834 Cost 751,626 751,626 Accumulated amortisation (142,579) (134,792) Net book amount 609,047 616,834 Amortisation expense was charged in administrative expenses.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets
Non-patent After-sale
technology Software Goodwill management model Other Total Year ended 31 December 2017
Opening net book amount 115,893 38,797 3,462 - 8 158,160 Addi tion 58,010 22,265 - - - 80,275 Amortisation charge (27,347) (13,220) - - (8) (40,575) Closing net book amount 146,556 47,842 3,462 - - 197,860 At 31 December 2017
Cost 182,597 120,282 89,028 36,978 1,649 430,534 Accumulated amortisation and impairment (36,041) (72,440) (85,566) (36,978) (1,649) (232,674) Net book amount 146,556 47,842 3,462 - - 197,860 Six months ended 30 June 2018
Opening net book amount 146,556 47,842 3,462 - - 197,860 Addition 19,693 248 - - - 19,941 Disposals - (63) - - - (63) Amortisation charge (Note 6, 28) (18,025) (7,789) - - - (25,814) Closing net book amount 148,224 40,238 3,462 - - 191,924 At 30 June 2018
Cost 202,289 120,112 89,028 36,978 1,649 450,056 Accumulated amortisation and impairment (54,065) (79,874) (85,566) (36,978) (1,649) (258,132) Net book amount 148,224 40,238 3,462 - - 191,924
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(a) For six months ended 30 June 2018, amortisation expense of approximately RMB25,356,000 (the six months ended 30 June 2017: RMB17,690,000) was charged in administrative expenses, RMB288,000 (the six months ended 30 June 2017: RMB309,000) in cost of sales and RMB170,000 (the six months ended 30 June 2017: RMB170,000) in distribution costs. (b) Development costs of approximately RMB19,693,000 (the six months ended 30 June 2017: RMB7,751,000) were capitalised as non-patent technology by the Group during the six months ended 30 June 2018.
(c) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the cash generating unit level. The goodwill is allocated to the following CGU:
31 December 2017 Addition Impairment 30 June 2018 JMCH 3,462 - - 3,462 The recoverable amount of the CGU is determined based on value in use calculations. These calculations use after-tax cash flow projections based on financial budgets approved by management covering a nine-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the heavy duty vehicle business in which the CGU operates.
The key assumptions used for value in use calculations in 2017 were as follows:
Item JMCH Compound annual volume growth rate 135% Long term growth rate 3% Discount rate 19.40% The long term growth rates used are consistent with the forecasts included in industry reports. The discount rates used are after-tax and reflect specific risks relating to the relevant operating subsidiary.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date Percentage of
Entity of incorporation equity interest held Principal activities JMCH Taiyuan, PRC / 100% Manufacture and sale of 8 January 2013 automobiles and spare parts JMCS Nanchang, PRC / 100% Sale of automobiles and 11 October 2013 spare parts Shenzhen Fujiang Shenzhen,PRC/ 100% Sale of automobiles and NEV Sales 3 May 2018 spare parts Co.,Ltd.
As at May 2018, the Group set up Shenzhen Fujiang NEV Sales Co.,Ltd. with a capital contribution of RMB 10,000,000, which is a wholly-owned subsidiary of the Group.
15b Investments accounted for using the equity method
(a) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow: 30 June 2018 31 December 2017 Associate 40,485 37,874 The amount recognised in the consolidated statement of comprehensive income was as follow: Six months ended 30 June 2018 2017 Share of profit 2,611 3,447 The Company holds19.15% interest of Hanon Systems (Nanchang) Co., Ltd. (“Hanon Systems”) and the investment is accounted for using the equity method of accounting.
(b) Reconciliation of summarised financial information for immaterial associates
Six months ended 30 June 2018 2017 At beginning of the year 197,774 208,317 Profit for the year 13,634 18,000 Dividends distributed - - At end of the period 211,408 226,317 Interest in associate 19.15% 19.15% Carrying value 40,485 43,340
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax
30 June 2018 31 December 2017 Deferred tax assets 780,370 757,877 Deferred tax liabilities-can be offset (110,421) (67,624) Deferred tax liabilities-cannot be offset (26,408) (26,736) Deferred tax assets-net 669,949 690,253 Deferred tax liabilities-net (26,408) (26,736) The gross movement on the deferred income tax account is as follows:
30 June 2018 31 December 2017 At beginning of the year 663,517 527,105 Credited to profit or loss (Note 10(a)) (19,976) 136,008 Credited to other comprehensive income
(Note 10(a)) - 404 At end of the period 643,541 663,517 The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Amortization
Provision for Retirement of
impairment of benefits Accrued nonpatented
Deferred tax assets assets obligation expenses technology Others Total At 1 January 2017 7,586 14,094 567,486 1,087 646 590,899 Credited/(charged) to
profit or loss 4,563 (955) 155,901 3,418 3,647 166,574 Credited to other
comprehensive income - 404 - - - 404 At 31 December 2017 12,149 13,543 723,387 4,505 4,293 757,877 Credited/(charged) to 58 (421) (82,922) 2,253 103,525 22,493 profit or loss
Credited to other
comprehensive income - - - - - - At 30 June 2018 12,207 13,122 640,465 6,758 107,818 780,370 Amortisation Forward
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total At 1 January 2017 (4,696) (30,434) (27,383) (1,281) (63,794) Credited / (charged) to
profit or loss 1,151 (33,645) 647 1,281 (30,566) At 31 December 2017 (3,545) (64,079) (26,736) - (94,360) (Charged) /credited to
profit or loss (188) (42,609) 328 - (42,469) At 30 June 2018 (3,733) (106,688) (26,408) - (136,829)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax (continued)
||||
|-|-|-|
|The analysis of deferred tax assets and deferred tax liabilities is as follows:|||
||30 June 2018|31 December 2017|
|Deferred tax assets:|||
|–Deferred tax asset to be recovered after|||
|more than 12 months|19,240|17,453|
|–Deferred tax asset to be recovered|||
|within 12 months|761,130|740,424|
||780,370|757,877|

 30 June 2018 31 December 2017 Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (124,514) (90,097)–Deferred tax liabilities to be recovered
within 12 months (12,315) (4,263) (136,829) (94,360) Deductible temporary differences and tax losses which no deferred income tax assets were recognised were as follows:
30 June 2018 31 December 2017 Deductible temporary differences 107,587 114,642 Tax losses
570,451 420,977 678,038 535,619 The expiry years of the tax losses are as follows:
30 June 2018 31 December 2017 2018
44,319 44,319 2019
36,772 36,772 2020
72,470 72,470 2021
115,820 115,820 2022
150,713 151,596 2023
150,357 - 570,451 420,977
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Inventories
30 June 2018 31 December 2017 Raw materials 1,522,639 1,566,589 Work in progress 258,892 208,981 Finished goods 566,586 563,734 2,348,117 2,339,304 For the six months ended 30 June 2018, the cost of inventories recognised as expenses and included in cost of sales amounted to approximately RMB10,674,493,000 ( the six months ended 30 June 2017: RMB11,290,691,000).
A provision of approximately RMB44,374,000 (2017: RMB45,130,000) was made as at 30 June 2018. The Group reversed approximately RMB2,266,000 of a previous inventory write- down in 2018. In 2018, the Group wrote-off inventories with provision of approximately RMB5,951,000 made in prior years. The provision and reversal of the inventory write-down have been included in administrative expenses in profit or loss.
As at 30 June 2018, no inventory was pledged as security for liabilities.
18 Trade and other receivables and prepayments
30 June 2018 31 December 2017 Trade receivables 2,661,638 2,328,135 Less: Provision for impairment of trade
receivables (22,125) (21,016) Trade receivables– net 2,639,513 2,307,119 Notes receivables 855,005 654,335 Other receivables 85,201 131,617 Less: Provision for impairment of other
receivables (426) (658) Other receivables– net 84,775 130,959 Prepayments 1,288,352 1,384,304 Interest receivables 57,625 79,217 4,925,270 4,555,934 Refer to Note 31 for details of receivables from related parties. The carrying amounts of theGroup’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables and prepayments approximate their fair values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2018 31 December 2017 At beginning of the year (21,674) (16,373) Provision for receivables impairment
(Note 28) (918) (5,301) Receivables written off during the year as
uncollectible 41 - At end of the year (22,551) (21,674) The creation of provision for impaired receivables was included in‘administrativeexpense’ in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Cash and cash equivalents
30 June 2018 31 December 2017 Cash at bank and in hand 1,137,610 2,046,999 Short-term bank deposits (a) 6,650,000 9,090,724 7,787,610 11,137,723 As at 30 June 2018, the Group had cash of approximately RMB861,476,000 (2017: RMB1,120,806,000) deposited in JMCF (Note 31 (h)). The interest rates range from1.495%-2.25% per annum (2017:1.495% to2.25%). JMCF, a non-bank financial institution, is a subsidiary of JMCG.
(a) Short-term bank deposits can be withdrawn at the discretion of the Group without any restriction.
20 Assets classified as held for sale
30 June 2018 31 December 2017 Lease prepayment and buildings of
Transit plant - 93,413 As at 26 March 2015, under the authorisation from the Board of Directors, the Company signed an agreement of “state-owned land reserves” with Nanchang Land Reserve Centre (the “agreement”). According to the agreement, the Company sold its land use right and buildings of Transit plant, with a consideration of RMB135,000,000 to Nanchang Land Reserve Centre, the transaction completed in the first half year of 2018
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Tradable shares Total Number of
shares “A” shares “B” shares
(thousands) Restricted Non-restricted
Year ended 31 December 2017
Balance at 1 January 2017 863,214 1,726 517,488 344,000 863,214 Transfer - (819) 819 - - Balance at 31 December 2017 863,214 907 518,307 344,000 863,214 Six months ended 30 June
2018
Balance at 1 January 2018 863,214 907 518,307 344,000 863,214 Transfer (120) 120
Balance at 30 June 2018 863,214 787 518,427 344,000 863,214 All the “A” and “B” shares are registered, issued and fully paid shares of RMB1 each.
All the “A” and “B” shares rank pari passu in all respects.
After the implementation of the share reform scheme on 13 February 2006, 787,000 shares were still restricted as at 30 June 2018.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total At 1 January 2017 431,607 18,627 1,892 452,126 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,212) (1,212) At 31 December 2017 431,607 18,627 680 450,914 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - - - At 30 June 2018 431,607 18,627 680 450,914 (a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of the Company, it is required to appropriate10% of its annual net profit, after offsetting any prioryears’ losses as determined under the Accounting Standards for Business Enterprises in the PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance of the statutory surplus reserve fund reaches50% of theCompany’s share capital, any further appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be used to offset prioryears’ losses, if any, and may be converted into share capital by issuing new shares to shareholders in proportion to their existing shareholding or by increasing the par value of the shares currently held by them. The fund is non-distributable except for liquidation. As the balance of the statutory surplus reserve fund has reached50% of theCompany’s share capital, no further appropriations to the statutory surplus reserve fund were provided for the six months ended 30 June 2018
23 Borrowings
30 June 2018 31 December 2017 Current
Bank borrowings - guaranteed (a) 433 428 Non-current
Bank borrowings - guaranteed (a) 3,683 3,851 Total borrowings 4,116 4,279 (a) Bank borrowings of USD622,000 (equivalent to approximately RMB4,116,000) (2017: USD655,000, equivalent to approximately RMB4,279,000) were guaranteed by JMCF (Note 31 (c)).
The interest rate of bank borrowings is1.50% per annum (2017:1.50%).
The fair value of borrowings approximates their carrying values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
30 June 2018 31 December 2017 Between 1 and 2 years 433 428 Between 2 and 5 years 1,300 1,284 Over 5 years 1,950 2,139 3,683 3,851 The Group has the following undrawn borrowing facilities:
30 June 2018 31 December 2017 Fixed rate
- Expiring within one year 1,519,924 2,113,140 24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement of financial position is as follows:
30 June 2018 31 December 2017 Present value of defined benefits obligations 56,379 59,184 The movement of early retirement and supplemental benefit obligations for the year ended 30 June 2018 is as follows:
30 June 2018 31 December2017 At beginning of the year 59,184 58,188 For the year
-Current service cost - 1,804 -Interest cost - 1,951 -Payment (2,805) (4,871) -Past service cost from the change of plan - 670 -Actuarial loss - 1,442 At end of the year 56,379 59,184 Current 4,420 4,420 Non-current 51,959 54,764 56,379 59,184 The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2018 31 December 2017 Discount rate adopted —— 4.25% The salary and supplemental benefits inflation
rate of retiree, early-retiree and employee at post —— 0% to6%
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 30 June 2018, a provision of approximately RMB56,379,000 is sufficient to cover all future retirement-related obligations. Obligation in respect of retirement benefits of RMB56,379,000 is the present value of the unfunded obligations, of which the current portion amounting to RMB4,420,000 (2017: RMB4,420,000) has been included under current liabilities.
25 Provisions for warranty and other liabilities
The movement on the warranty provisions and other liabilities is as follows:
30 June 2018 31 December 2017 At beginning of the year 374,981 284,627 Charged for the year 123,703 313,289 Utilised during the year (131,502) (222,935) At end of the period 367,182 374,981 Analysis of total provisions:
30 June 2018 31 December 2017 Non-current 180,628 184,688 Current 186,554 190,293 367,182 374,981 The above represents the warranty costs for repairs and maintenance, which are estimated based on present after-sale service policies and prioryears’ experience on the occurrence of such cost.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
30 June 2018 31 December 2017 Trade payables 7,954,384 8,603,320 Payroll and welfare payable 285,624 273,666 Dividend payables 284,033 4,969 Other payables 3,637,397 4,340,585 12,161,438 13,222,540 For details of amount due to related parties, please refer to Note 31.
27 Dividends
A special interim dividend for 2017 of RMB2.317 per share, amounting to a total dividend of RMB2,000,067,000 was paid in 2018.
A final dividend for 2017 of RMB0.32 per share, amounting to a total dividend of approximately RMB276,228,000 was proposed at the Board ofDirectors’ Meeting on 22 March 2018, and such dividend is proposed at theShareholders’ Meeting on 26 June 2018.
28 Cash generated from operations
Six months ended 30 June 2018 2017 Profit before tax 346,355 615,338 Depreciation of PPE (Note 6, 12) 463,097 422,550 Amortisation of lease prepayment (Note 6, 13) 7,787 7,787 Amortisation of intangible assets (Note 6, 14) 25,814 18,169 Impairment charges of PPE (Note 12) 3,607 3,347 Provision for receivables impairment (Note 18) 918 2,207 Provision of inventories (Note 17) 5,195 19,663 (Gain)/loss on disposals of PPE (34,273) 246 Finance expenses 2,879 1,646 Finance income (Note 9) (106,654) (127,903) Net foreign exchange transaction loss 3,219 5,383 Share of profit from investment accounted for using
equity method (Note 15b) (2,611) (3,447) Investment income of other investment (10,202) - Investment loss/(gain) of forward exchange contracts 12,620 (1,583) Changes on fair value of forward exchange contracts (6,915) 2,590 Changes in working capital:
- Increase in inventories (20,248) (52,548) - Increase in trade and other receivables (399,396) (948,781) -(Decrease)/ Increase in provisions for warranty (7,799) 31,812 - Decrease in trade and other payables (1,072,349) (727,034) - Decrease in pensions and other retirement benefits (2,805) (2,714) Cash generated from operations (791,761) (733,272)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Six months ended 30 June 2018 2017 Net book amount 95,408 2,161 Gain/(loss) on disposal of PPE 34,273 (246) Offset with trade and other payables (127,112) 182 Proceeds from disposal of PPE 2,569 2,097 29 Contingencies
At 30 June 2018, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:
30 June 2018 31 December 2017 Contracted but not provided for:
Purchases of buildings, plant and machinery 991,617 477,482 31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise significant influence in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns41.03% of theCompany’s shares, and Ford Motor Company (“Ford”), which owns32% of theCompany’s shares, are major shareholders of the Company as at 30 June 2018. The shareholders of JMH are Chongqing Changan Automobile Corporation Ltd. and JMCG, and both of them hold50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its associates, JMCG and its subsidiaries, JMH and its subsidiaries and joint venture, Ford and its subsidiaries and joint venture in the ordinary course of business during the six months ended 30 June 2018.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the six months ended 30 June 2018, related parties, other than the subsidiary, and their relationship with the Group are as follows:
Name of related party Relationship JMCG Shareholder of JMH Jiangxi Jiangling Chassis Co.,Ltd. Subsidiary of JMCG Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. Subsidiary of JMCG Nanchang Gear Co.,Ltd. Subsidiary of JMCG Jiangxi JMCG Industry Co.,Ltd. Subsidiary of JMCG Jiangling Material Co. Subsidiary of JMCG Jiangxi Lingrui Recycling Resources Development Corporation Subsidiary of JMCG JMCG Property Management Co. Subsidiary of JMCG Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Associate of JMCG Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Associate of JMCG Jiangxi JMCG Specialty Vehicles Corporation, Ltd. Associate of JMCG Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Associate of JMCG Nanchang Hengou Industry Co., Ltd. Associate of JMCG GETRAG (Jiangxi) Transmission Company Associate of JMCG Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd Associate of JMCG Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. Associate of JMCG Nanchang JMCG Skyman Auto Component Co.,Ltd. Associate of JMCG Nanchang Baojiang Steel Processing Distribution Co.,Ltd. Associate of JMCG JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. Subsidiary of JMCG Nanchang JMCG Xinchen Auto Component Co.,Ltd. Subsidiary of JMCG JMCF Subsidiary of JMCG Nanchang Jiangling Hua Xiang 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 Jiangxi ISUZU Engine Co.,Ltd. Joint venture of JMCG Nanchang Yinlun Heat-exchanger Co.,Ltd. Joint venture of JMCG Jiangxi ISUZU Co., Ltd. Joint venture of JMCG Nanchang Lianda Machinery Co.,Ltd. Subsidiary of JMCG Jiangling Aowei Aotomobile Spare Part Co.,Ltd. Subsidiary of JMCG NC.Gear Forging Factory Subsidiary of JMCG Jiangxi Biaohong Engine Tappet Co.,Ltd. Subsidiary of JMCG Jiangxi JMCG Shangrao Industrial Co.,Ltd. Subsidiary of JMCG JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG Nanchang JMCG Liancheng Auto Component Co.,Ltd. Subsidiary of JMCG Ford Global Technologies, LLC Subsidiary of Ford Ford Motor (China) Co., Ltd. Subsidiary of Ford Ford Motor Research& Engineering (Nanjing) Co., Ltd. Subsidiary of Ford Ford Otomotiv Sanayi A.S. Subsidiary of Ford Auto Alliance (Thailand) Co.,Ltd. Subsidiary of Ford Changan Ford Automobile Co.,Ltd. Joint venture of Ford
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Six months ended 30 June Purchase of goods 2018 2017 Nanchang Baojiang Steel Processing Distribution Co.,Ltd. 464,830 457,760 Jiangxi Jiangling Chassis Co.,Ltd. 464,265 421,636 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 397,028 326,851 GETRAG (Jiangxi) Transmission Company 395,455 391,606 Ford 301,095 452,439 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 244,473 278,927 Jiangxi Jiangling Lear Interior System Co.,Ltd. 234,271 282,853 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 211,971 234,711 Nanchang Unistar Electric& Electronics Co.,Ltd. 158,560 122,995 Hanon Systems 136,338 120,879 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 89,556 73,564 Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. 89,486 99,189 Ford Otomotiv Sanayi A.S. 88,410 16,047 JMCG 58,674 50,538 Auto Alliance (Thailand) Co.,Ltd. 53,769 72,011 Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 51,150 - Nanchang JMCG Skyman Auto Component Co.,Ltd. 39,904 31,861 Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 34,052 29,077 Jiangxi ISUZU Engine Co.,Ltd. 33,131 - Nanchang Lianda Machinery Co.,Ltd. 31,963 30,357 Nanchang Yinlun Heat-exchanger Co.,Ltd. 23,536 28,259 Jiangling Material Co. 15,044 14,658 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 13,928 - Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 13,657 13,956 Nanchang JMCG Xinchen Auto Component Co.,Ltd. 9,717 11,909 Nanchang Gear Co.,Ltd. 7,220 12,040 Changan Ford Automobile Co.,Ltd. 6,869 115,331 NC.Gear Forging Factory 6,829 - Jiangxi JMCG Industry Co.,Ltd. 5,359 1,355 Jiangxi Biaohong Engine Tappet Co.,Ltd. 3,379 4,042 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 2,248 3,062 Jiangxi Lingrui Recycling Resources Development Corporation 1,932 1,961 Nanchang JMCG Shishun Logistics Co., Ltd. 1,406 - Others 230 2,546 3,689,735 3,702,420 The Group purchased goods from related parties classified as two types: import parts and home- made parts.
 Purchase import parts from Ford orFord’s suppliers, based on agreed price;
 Purchase home-made parts from other related parts, based on quotation, cost accounting and negotiation.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2018 2017 Ford Engineering service and design 134,432 148,586 Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 126,082 128,924 Ford Global Technologies, LLC Royalty fee 94,135 134,653 Ford Otomotiv Sanayi A.S. Engineering service and design 21,604 32,749 Jiangxi JMCG Industry Co.,Ltd. Working meal 20,196 15,434 Nanchang Hengou Industry Co., Ltd. Packing/Truckage 19,944 29,705 Ford Secondments costs 19,647 16,631 Ford Otomotiv Sanayi A.S. Secondments costs 10,746 16,652 Ford Otomotiv Sanayi A.S. Royalty fee 9,877 9,582 Changan Ford Automobile Co.,Ltd. Channel fee 4,959 - JMCG Jiangxi Engineering Construction Co., Ltd. Construction and repair costs 4,012 20,430 Ford Motor (China) Co., Ltd. Regional personnel costs 3,318 2,847 GETRAG (Jiangxi) Transmission Company Design and test fee 3,280 644 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Agent business of importation 2,167 1,972 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. Promotion fee 1,959 113 Ford Motor Research& Engineering (Nanjing) Co., Ltd. Regional personnel costs 1,561 937 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Promotion fee 1,540 774 Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. Design fee 1,315 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2018 2017 Afforestation fees and property
JMCG Property Management Co. 1,083 302 management
JMH Secondments costs 687 957 Ford Motor (China) Co., Ltd. Software and consulting fees 466 3,327 Ford Market research fees 108 - Nanchang JMCG Liancheng Auto Component Co.,Ltd. Experimental manufacturing costs - 1,145 Hanon Systems Experimental manufacturing costs - 2,263 JMH Royalty fee - 10,000 Others Design fee/Warranty fee 922 2,313 484,040 580,940 The Group purchased the service from related parties based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued) Six months ended 30 June Sales of goods 2018 2017 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 566,065 452,175 Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. 91,265 - Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 61,448 42,953 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 57,568 18,326 Jiangxi Jiangling Chassis Co.,Ltd. 44,476 47,632 JMCG Jingma Motors Co., Ltd. 36,743 39,224 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 35,586 12,823 Jiangxi Lingrui Recycling Resources Development Corporation 29,625 29,891 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 23,602 30,036 JMH 23,080 2,853 Nanchang Hengou Industry Co., Ltd. 22,874 44,199 Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 7,707 14,511 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 6,996 9,155 JMCG Property Management Co. 3,191 3,343 Jiangxi JMCG Industry Co.,Ltd. 3,050 3,060 Jiangxi Jiangling Lear Interior System Co.,Ltd. 2,902 3,355 JMCG Jiangxi Engineering Construction Co., Ltd. 1,919 21 Jiangxi ISUZU Co., Ltd. 516 1,009 Others 446 745 1,019,059 755,311 The Group sold goods to related parties, based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental
Rental cost
Lessor Category Rental cost of six Rental cost of six months ended 30 months ended 30 June 2018 June 2017 Jiangxi Jiangling Motors Imp.&
2,136 2,138 Exp. Co., Ltd. Building
JMCG Building 1,725 2,070 JMCG Property Management Co. Building 211 211 4,072 4,419 Rental income
Lessee Category Rental income of six Rental income of six months ended 30 months ended 30 June 2018 June 2017 JMH Building 3 4 GETRAG (Jiangxi) Transmission
- 3 Company Building
3 7 (c) Guarantee
As at 30 June 2018, bank loans of USD622,000 (equivalent to approximately RMB 4,116,000) (2017:USD655,000, equivalent to approximately RMB4,279,000) were guaranteed by JMCF (Note 23).
(d) Sales of PPE
Six months ended 30 June 2018 2017 Jiangxi JMCG Industry Co.,Ltd. - 2 (e) Purchase of PPE
Six months ended 30 June 2018 2017 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 5,671 - Nanchang JMCG Liancheng Auto Component Co.,Ltd. 677 - Jiangxi JMCG Specialty Vehicles Corporation, Ltd. - 150 6,348 150
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(f) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive Committee, the Company Secretary and members of the Supervisory Board. During the six months ended 30 June 2018, the total remuneration of the key management was approximately RMB7,212,000 (the six months ended 30 June 2017: RMB9,256,000).
(g) Interest received from cash deposit in related parties
Six months ended 30 June 2018 2017 JMCF 9,739 10,098 During the six months ended 30 June 2018, the interest rates range from1.495% to2.25% per annum.( the six months ended 30 June 2017: RMB10,098,000)
(h) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2018 31 December 2017 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 296,142 171,475 JMH 39,329 170,853 Jiangxi JMCG Specialty Vehicles Sales
29,991 - Corporation, Ltd.
JMCG Jingma Motors Co., Ltd. 15,458 8,543 Jiangxi JMCG Specialty Vehicles Corporation,
13,761 - Ltd.
Nanchang JMCG Shishun Logistics Co., Ltd. 5,815 14,731 Nanchang Jiangling Hua Xiang Auto Components
2,612 3,765 Co.,Ltd.
Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 1,311 - Nanchang Hengou Industry Co., Ltd. 7 1,508 Nanchang JMCG Liancheng Auto Component
- 5,913 Co.,Ltd.
Others 957 549 405,383 377,337 Other receivables from related parties 30 June 2018 31 December 2017 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 35,073 42,356 Ford 186 5,158 GETRAG (Jiangxi) Transmission Company - 2,770 Others 639 964 35,898 51,248
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 30 June 2018 31 December 2017 Nanchang Baojiang Steel Processing
454,727 457,613 Distribution Co.,Ltd.
Ford Otomotiv Sanayi A.S. 31,779 31,069 486,506 488,682 Notes receivables from related parties 30 June 2018 31 December 2017 JMCG Jingma Motors Co., Ltd. 33,438 48,491 Prepayments for construction in progress 30 June 2018 31 December 2017 JMCG Jiangxi Engineering Construction Co.,
2,228 2,231 Ltd.
Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 762 572 Jiangxi JMCG Specialty Vehicles Corporation,
500 500 Ltd.
3,490 3,303 Prepayments for mould lease 30 June 2018 31 December 2017 Changan Ford Automobile Co.,Ltd. 1,721 11,990 Cash deposit in related parties 30 June 2018 31 December 2017 JMCF 861,476 1,120,806
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2018 31 December 2017 Jiangxi Jiangling Chassis Co.,Ltd. 347,120 303,148 Jiangxi Jiangling Lear Interior System Co.,Ltd. 315,049 352,627 GETRAG (Jiangxi) Transmission Company 275,770 251,080 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 264,467 262,946 Nanchang Jiangling Hua Xiang Auto Components
257,405 243,796 Co.,Ltd.
Nanchang JMCG Liancheng Auto Component
149,256 153,529 Co.,Ltd.
Hanon Systems 136,498 135,846 Nanchang Unistar Electric& Electronics Co.,Ltd. 103,587 118,889 Ford 85,513 86,504 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 78,884 209,228 JMCG 71,112 74,918 Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 67,733 - Changan Ford Automobile Co.,Ltd. 63,356 68,221 Faurecia Emissions Control Technologies (Nanchang)
54,569 83,113 Co.,Ltd.
Nanchang JMCG Skyman Auto Component Co.,Ltd. 47,993 36,998 Jiangxi ISUZU Engine Co.,Ltd. 38,115 11,714 Nanchang Lianda Machinery Co.,Ltd. 26,837 24,651 Nanchang Yinlun Heat-exchanger Co.,Ltd. 26,782 25,151 Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 19,416 30,751 Auto Alliance (Thailand) Co.,Ltd. 15,115 17,000 Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 14,836 17,142 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 12,234 10,490 Nanchang Gear Co.,Ltd. 5,856 7,902 NC.Gear Forging Factory 4,889 - Nanchang JMCG Xinchen Auto Component Co.,Ltd. 4,423 5,334 Jiangxi JMCG Industry Co.,Ltd. 3,867 2,394 Ford Otomotiv Sanayi A.S. 2,480 29,711 Jiangxi Biaohong Engine Tappet Co.,Ltd. 1,870 2,891 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 1,866 4,009 Nanchang JMCG Shishun Logistics Co., Ltd. 1,422 293 Jiangling Material Co. 1,284 1,002 Jiangxi Lingrui Recycling Resources Development
1,241 1,712 Corporation
Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. - 1,007 Others 40 - 2,500,885 2,573,997
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2018 31 December 2017 Ford 153,232 104,814 Ford Otomotiv Sanayi A.S. 124,469 134,059 Ford Global Technologies, LLC 42,510 62,410 JMCG Jiangxi Engineering Construction Co., Ltd. 25,488 36,818 JMH 19,555 30,000 Nanchang JMCG Shishun Logistics Co., Ltd. 12,136 10,751 Faurecia Emissions Control Technologies (Nanchang)
10,951 8,521 Co.,Ltd.
Jiangxi JMCG Specialty Vehicles Sales Corporation,
10,624 - Ltd.
Nanchang Hengou Industry Co., Ltd. 10,195 3,498 GETRAG (Jiangxi) Transmission Company 9,280 6,309 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 7,561 510 Nanchang JMCG Liancheng Auto Component
4,606 4,860 Co.,Ltd.
Nanchang Jiangling Hua Xiang Auto Components
3,861 3,693 Co.,Ltd.
Jiangxi Jiangling Lear Interior System Co.,Ltd. 3,649 11,455 Jiangxi JMCG Industry Co.,Ltd. 2,565 1,922 JMCG 1,799 76 Changan Ford Automobile Co.,Ltd. 1,788 2,765 Ford Motor (China) Co., Ltd. 1,685 1,755 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 1,640 484 Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 1,342 - JMCG Property Management Co. 1,124 954 Hanon Systems 45 2,520 Others 1,919 4,159 452,024 432,333 Advance from related parties 30 June 2018 31 December 2017 Jiangxi Jiangling Special Purpose Vehicle
3,369 694 Co.,Ltd.
Jiangxi JMCG Specialty Vehicles Corporation,
93 294 Ltd.
Others 532 807 3,994 1,795 (i) I Related parties commitments
Capital commitments 30 June 2018 31 December 2017 JMCG Jiangxi Engineering Construction Co.,
Ltd. 31,768 35,178