Jiangling Motors Corporation, Ltd.
2019Half-year Report
2019-043
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its members, and the senior executives are jointly and severally liable for the truthfulness, accuracy and completeness of the information disclosed in the report and confirm that the information disclosed herein does not contain any false statement, misrepresentation or major omission.
Chairman Qiu Tiangao, CFO Li Weihua and Chief of Finance Department, Xie Wanzhao, confirm that the Financial Statements in this Half-year Report are truthful, accurate and complete.
Director David Johnston did not attend this meeting, and he authorized Vice Chairman Anning Chen to represent him at this meeting, and all the other Directors were present at the Board meeting in person.
Neither cash dividend nor stock dividend was distributed. The Board decided not to convert capital reserve to share capital this time.
All financial data in this report are prepared under International Financial Reporting Standards(‘IFRS’) unless otherwise specified.
The Half-year Report is prepared in Chinese and English. In case of discrepancy, the Chinese version will prevail.
Contents
Chapter I Important Notes, Contents and Abbreviations ................................ 2 Chapter II Brief Introduction ............................................................................ 4 Chapter V Major Events ................................................................................ 13 Chapter VI Share Capital Changes& Shareholders ...................................... 19 Chapter VII Preferred Shares.......................................................................... 23 Chapter VIII Directors, Supervisors and Senior Management ......................... 24 Chapter IX Company Bond ............................................................................ 25 Chapter X Financial Statements ................................................................... 26 Chapter XI Catalogue on Documents for Reference ...................................... 91 Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JHC Jiangling Motor Holdings Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
Chapter II Brief Introduction
1.Company’s information
|||||
|-|-|-|-|
|Share’s name|Jiangling Motors, Jiangling B|Share’s Code|000550, 200550|
|Place of listing|Shenzhen Stock Exchange|||
|Company’s Chinese|江铃汽车股份有限公司|||
|name||||
|English name|Jiangling Motors Corporation, Ltd.|||
|Abbreviation|JMC|||
|Company legal|Qiu Tiangao|||
|representative||||

2. Contact person and method
||||
|-|-|-|
|||Securities Affairs|
||Board Secretary||
|||Representative|
|Name|Wan Hong|Quan Shi|
||No. 509, Northern Yingbin|No. 509, Northern Yingbin|
|Address|Avenue, Nanchang City,|Avenue, Nanchang City,|
||Jiangxi Province, P.R.C|Jiangxi Province, P.R.C|
|Tel|86-791-85266178|86-791-85266178|
|Fax|86-791-85232839|86-791-85232839|
|E-mail|relations@jmc.com.cn|relations@jmc.com.cn|

 3. Other
I. Contact methods
Changes of registered address, headquarter address, postal code, website
and e-mail
□Applicable√Not Applicable
There is no change of registered address, headquarter address, postal code,
website and e-mail. Please refer to 2018 Annual Report for details.
II. Newspapers for information disclosure, website for publication ofJMC’s
half-year report and place for achieving half-year report
□Applicable√Not Applicable
There is no change of newspapers for information disclosure, website designated by CSRC for publication ofJMC’s Half-year Report and place for achieving Half-year Report. Please refer to 2018 Annual Report for details.
4. Main accounting data and financial ratios
Unit: RMB‘000
|||||
|-|-|-|-|
||Reporting period(2019 first half)|Same periodlast year|Change (%)|
|Revenue|13,721,954|14,287,497|-3.96|
|Profit Attributable to theEquity Holders of theCompany|58,862|318,951|-81.55|
|Net Cash GeneratedFrom Operating Activities|1,435,202|-906,818|258.27|
|Basic Earnings Per Share(RMB)|0.07|0.37|-81.55|
|Diluted Earnings PerShare (RMB)|0.07|0.37|-81.55|
|Weighted Average Returnon Equity Ratio|0.57%|2.72%|Down 2.15percentage points|
||At the end ofreporting period|At the end of theprevious year|Change (%)|
|Total Assets|23,668,970|23,396,529|1.16|
|Shareholders’ EquityAttributable to the EquityHolders of the Company|10,408,831|10,384,498|0.23|

5. Accounting data difference between domestic and foreign accounting
standards
I. Differences in net profit and net assets disclosed respectively per IFRS and
PRC GAAP.
□Applicable√Not Applicable
There is no difference between IFRS and PRC GAAP in net profit and net
assets.
II. Differences in net profit and net assets disclosed respectively per GAAP
and PRC GAAP.
□Applicable√Not Applicable
There is no difference between GAAP and PRC GAAP in net profit and net
assets.
Chapter III Operating Overview
1.Company’s Core Business during the Reporting Period
JMC’s core business is production and sales of commercial vehicles, SUV and related components.JMC’s major products include JMC series light truck, heavy truck, pickup and light bus; Yusheng SUV; Ford-brand light bus, MPV and SUV. The Company also produces and sells engines, castings and other components for sales to domestic and overseas markets.
2. Major Change of Main Assets
I. Major Change of Main Assets
There’s no major change of main assets during the reporting period.
II. Main Overseas Assets
□Applicable□√Not Applicable
3. Core Competitiveness Analysis
JMC is a sino-foreign joint venture auto company withR&D, manufacturing and sales operations. With leading position and advanced technology of commercial vehicles, JMC is China auto industry pioneer providing excellent products and solutions to smart logistics, which is certificated as a national high-tech enterprise, national innovative pilot enterprise, national enterprise technology centre, national industrial design centre, national intellectual property demonstration enterprises, advanced quality management enterprise and national automobile export base; and had been ranked among the top 100 most valuable global brands for consecutive years.
JMC insists on the guide of strategy, focuses on strengthening the strategy implementation: during the reporting period, the company developed “2025 Strategy” which identified the new vision of JMC, committed to become the industry leader of light commercial vehicle and provider of Ford products with excellent cost performance. Commercial vehicle is positioned on city/main line logistics products and suppliers of comprehensive service scheme. Achieve breakthrough and great development on small/middle passenger vehicle segment.
Centered on innovation and service, promoting structural renovation: JMC adheres to the road of scientific/technological and management innovation. During the reporting period, the company continued vigorous implementation of product innovation to drive development, integrate resources, strengthen technological innovation, promote market-oriented product innovation; deepen transformation and adjustment, adhere to business model innovation; develop systematic cost reduction strategies, focus on promoting the transformation of organization and efficiency, and comprehensively enhance the core competitiveness of products.
Focusing on advantageous business and create product leadership: JMC focuses on the core business, concentrates intensive cultivation on each segment, insists on customer-centered, improve the market awareness of the whole value chain, so as to actively makes the company's products the leaders of each segment.
Collaborative integration of the industrial system, positive layout of “ASEC”: aiming at the new trends in the development of the automotive industry, JMC promotes the implementation of the "ASEC" development strategy of "autonomous driving, sharing, electrification, connectivity". The company has developed layout in the core areas such as new energy vehicles, smart connectivity, and autonomous driving to accelerate the construction of a future-oriented and globally competitive business ecosystem through the overall collaboration and integration of “ASEC”.
Chapter IV Management Discussion and Analysis
1. Summary
In 2019, China's economy has maintained a trend of overall stable and progressive development. The main macroeconomic indicators reflected the operation in a reasonable range, and the economic structure is constantly being optimized and adjusted. Total sales volume was 12.32 million units, decreased12.40% compared with last year.
During the reporting period, to cope with more severe competition, more stringent regulatory requirement and intensifying cost pressures, the Company focused on quality improvement, new product development, operating cost control and production efficiency enhancement. Simultaneously, the Company introduced series of sales policy to respond the market risk. In the first half of 2019, JMC achieved sales volume of 136,643 units, decreased7.27% compared with last year, achieved revenue of RMB 13.72 billion, decreased3.96% compared with last year, achieved net profit of RMB 59 million, decreased81.55% compared with last year. It mainly reflects: I. the volume decrease of passenger vehicle in the interim period and the change of overall sales structure; II. Marketing expense increased to compete in the very challenging market. III. Continued spending on new product and technology.
2. Core Business Analysis
Year-over-Year Changes of Main Financial Data
Unit: RMB’000
||||||
|-|-|-|-|-|
||2019 1H|2018 1H|YOY change（%）|Reason|
|Revenue|13,721,954|14,287,497|-3.96%||
|Cost of sales|11,683,969|12,277,724|-4.84%||
|Distribution costs|705,875|452,934|55.85%|Due to the marketingexpense increase forTerritory launch.|
|Administrative expenses|1,274,585|1,138,530|11.95%|Due to Territorytrademark royalty andlabour economic.|
|Finance Income-net|90,141|103,392|-12.82%||
|Incometax expense|-46,302|27,404|-268.96%|Due to operating loss.|
|Research and DevelopmentExpenditure|914,829|820,752|11.46%||
|Net cash generated fromoperating activities|1,435,202|-906,818|258.27%|Due to payment of thegoods decrease.|
|Net cash used in investingactivities|-684,405|-442,747|-54.58%|Due to cash paymentincrease for fixed assetspurchase.|
|Net cash used in financingactivities|-220|-2,000,548|99.99%|Due to the 2017 mid-termspecial dividend paid in2018 Q1.|

||||||
|-|-|-|-|-|
|Net increase/(decrease) incash and cash equivalents|750,577|-3,350,113|122.40%|Due to increase of netcash generated fromoperating activities andthe 2017 mid-term specialdividend paid in 2018 Q1.|

 Composition of Core Business
Unit: RMB’000
||||||||
|-|-|-|-|-|-|-|
||Turnover|Cost|GrossMargin|Y-O-Yturnoverchange(%)|Y-O-Y CostChange(%)|Y-O-Ygrossmarginchange(points)|
|By Industry|||||||
|AutomobileIndustry|13,540,007|11,511,538|14.98%|-4.36%|-5.32%|0.86%|
|By Products|||||||
|Vehicle|12,327,573|10,656,459|13.56%|-3.34%|-4.31%|0.88%|
|By Region|||||||
|China|13,540,007|11,511,538|14.98%|-4.36%|-5.32%|0.86%|

 3. Non- core business analysis
□√Applicable□Not Applicable
Unit: RMB’000
||||||
|-|-|-|-|-|
|||||Sustainability|
|Item|Amount|Proportion|Explanation||
|||||（Y/N）|
||||Government incentives to||
|Non-operating|||||
||158,387|1,261.10%|support the Company’s|Y|
|Revenue|||||
||||development||
||||financial investment such||
|Investment return|13,841|110.20%|||
||||as structural deposits||

4. Analysis of Assets and Liabilities
I. Major changes
Unit: RMB’000
|||||||
|-|-|-|-|-|-|
|Asset item|June 30, 2019||December 31, 2018||YOY|
||||||Proportionchange|
||Amount|Proportion|Amount|Proportion|(Points)|
|Property, plant andequipment|7,118,181|30.07%|6,941,292|29.67%|0.40|
|Inventories|2,173,276|9.18%|2,522,354|10.78%|-1.60|
|Trade, other receivablesand prepayments|4,054,726|17.13%|4,678,284|20.00%|-2.87|
|Cash and cash equivalents|8,367,457|35.35%|7,616,880|32.56%|2.79|
|Trade and other payables|12,454,392|52.62%|12,195,966|52.13%|0.49|

 II. The fair value of the assets and liabilities (not applicable).
III. Restriction on Assets Rights as of the End of the Reporting Period
There was no major restriction on assets rights as of the end of the reporting period.
5. Investment
I. Summary
□Applicable□√Not Applicable
II. Obtained Major Equity Investment during the Reporting Period
□Applicable□√Not Applicable
III. Ongoing Major Non-Equity Investment during the Reporting Period
□√Applicable□Not Applicable
||||||||
|-|-|-|-|-|-|-|
|ProjectName|InvestmentMethod/source|FixedAssets(Y/N)|Spending in2019(RMB Mils)|InvestmentCommitted(RMB Mils)|Progress|Index|
|FushanSite|Self-funded|Y|338|710|34.60%|Announcement of thisproject (NO:2017-044) waspublished in the websitehttp://www.cninfo.com.cn|
|Total|||338|710|--|--|

 IV. Financial Assets Investment
(a) Stock Investment
□Applicable□√Not Applicable
(b) Derivative Investment
□Applicable□√Not Applicable
6. Sales of Major Assets and Equity
I. Sale of Major Assets
□Applicable□√Not Applicable
II. Sales of Major Equity
□Applicable□√Not Applicable
7. Operating Results of Main Subsidiaries and Joint-Stock Companies whose
impact onJMC’s net profit more than10%
Unit: RMB’000
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofCompanies|Type ofCompanies|Main Business|RegisteredCapital|Assets|NetAssets|Turnover|OperatingProfit|Net Profit|
|JianglingMotorsSales Co.,Ltd.|Subsidiary|Sale of vehicles,service parts|50,000|3,114,101|61,660|12,496,605|-250,459|-187,934|
|JMC HeavyDutyVehicleCo., Ltd.|Subsidiary|Production andsale of heavycommercialvehicles,engines,components,and relatedservice|281,793|2,812,829|-821,670|145,829|-153,738|-145,814|

Acquisition and disposal of the subsidiary
□Applicable□√Not Applicable
8. Structured Entities Controlled by JMC
□Applicable□√Not Applicable
9．Business performance prediction in 1-9, 2019
□ Applicable√ Not Applicable
10. Potential Challenges and Solutions
In 2019, the Company will continue to face fiercer competition, more stringent regulatory requirements, intensifying cost pressures and a slowdown inChina’s economic growth. To achieve steady growth, the Company will continue to focus on the following aspects in 2019:
(1) Insight customer demand and improve channel capability to realize the
customer-centered business growth;
(2) Accelerating product platformization, redefine product portfolio, enrich line
up and net connectivity configuration to better satisfy customer demand;
(3) Optimizingcompany’s production system to improve efficiency and
product quality ;
(4) Improvesuppliers’ capability and parts quality; continue to reduce parts
purchasing cost ;
(5) Sustaining the expense management and control to optimize the business
structure;
(6) Establish highly capable and efficient organization through the current
process optimization team to flexibly respond to the market change;
(7) Strengthening corporate governance and application of appropriate risk
assessment and control mechanisms.
The Company will focus on light commercial vehicle with the support of SUV, maximize its own advantage and fully take advantage of shareholders resource to realize sustainable profit. Strengthen channel coverage, improve financing service ability; promote new products development andR&D ability improvement, to accelerate the progress of launching new competitive products to the market; develop more proactive cost reduction plan to improve thecompany’s profit ability. Guided by the new strategy, the company will continuously implement all the specific initiatives to accelerate the strategic target achievement.
Chapter V Major Events
1. Annual and specialshareholders’ meeting
I.Shareholders’ meeting during the reporting period
|||||||
|-|-|-|-|-|-|
|||Investors||||
|||||Announcement||
|Number|Name|Attending|Meeting Date||Announcement Index|
|||||Date||
|||Percentage (%)||||
||||||Number 2019-007,|
||2019 First Special|||||
|1||77.45%|Feb 20, 2019|Feb 21, 2019|published on the website|
||Shareholders’ Meeting|||||
||||||www.cninfo.com.cn.|
||||||Number 2019-032,|
||2018 Annual|||||
|2||76.86%|June 28, 2019|June 29, 2019|published on the website|
||Shareholders’ Meeting|||||
||||||www.cninfo.com.cn.|

 II. Share holders who hold vote right restored preferred shares apply to hold a specialshareholders’ meeting
□Applicable√Not Applicable
2. Proposal on profit distribution and converting capital reserve to share
capital for the reporting period
□Applicable√Not Applicable
The Company planned that neither cash dividend nor stock dividend was distributed, and not to convert capital reserve to share capital for the first half of 2019.
3. Commitments of actual controlling parties, shareholders, related parties, acquirers and the Company finished in the reporting period or overdue unfinished by the end of the reporting period
□Applicable√Not Applicable
There is no commitments of actual controlling parties, shareholders, related parties, acquirers and the Company finished in the reporting period or overdue unfinished by the end of the reporting period.
4. Appointment or dismissal of accounting firm
Whether the 2019 half-year report is audited?
□Yes√No
JMC 2019 half-year report is not audited.
5. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm for the reporting period
□Applicable√Not Applicable
6. Explanation of the board of directors to abnormal opinions from accounting
firm in 2018
□Applicable√Not Applicable
7. Related matters regarding bankruptcy
□Applicable√Not Applicable
The Company did not go bankrupt during the reporting period.
8. Litigation or arbitration
Significant litigation or arbitration
□Applicable√Not Applicable
There is no significant litigation or arbitration in the reporting period.
Other litigation
□Applicable√Not Applicable
9. Punishment
□Applicable√Not Applicable
The Company have not been punished by regulatory authorities.
10. Honesty and credit of JMC and its controlling shareholder or actual
controlling party
□Applicable√Not Applicable
11. Implementation of equity incentive plan, employee stock ownership plan
and other employee incentive method
□Applicable√Not Applicable
12. Major related transactions
I. Routine operation related party transactions
Please refer to the note 31 “Related party Transactions” to the financial
statements for details.
II. Major related party transaction concerning transfer of assets or equity
□Applicable√Not Applicable
There was no major related party transaction concerning transfer of assets or
equity during the reporting period.
III. Related party transaction concerning outside co-investment
□Applicable√Not Applicable
There was no outside co-investment during the reporting period.
IV. Related credit and debt
√Applicable□Not Applicable
Is there non-operating related credit and debt?
□Yes√No
The Company had no non-operating related credit and debt during the
reporting period.
V. Other major related party transactions
□Applicable√Not Applicable
Please refer to the note 31 “Related party Transactions” to the financial
statements for details.
Index for the Announcement of Major related party transactions:
||||
|-|-|-|
|Announcement Title|Announcement Disclosure Date|Website for Disclosure|
|Jiangling Motors Corporation, Ltd.Public Announcement on Forecast ofthe Routine Related PartyTransactions in 2019|||
||March 28, 2019|http://www.cninfo.com.cn|

13. Non-operating funding in the Company occupied by controlling
shareholder and its affiliates
□Applicable√Not Applicable
There was no non-operating funding in the Company occupied by controlling shareholder and its affiliates during the reporting period.
14. Major contracts and execution
I. Entrustment, contract or lease
a. Entrustment
□Applicable√Not Applicable
There was no entrustment during the reporting period.
b. Contract
□Applicable√Not Applicable
There was no contract during the reporting period.
c. Lease
√Applicable□Not Applicable
See the note 31(b) to financial statements for lease of related parties.
Project earns more than10% of net profit.
□Applicable√Not Applicable
Project deficits more than10% of net profit.
□Applicable√Not Applicable
II Major guarantee
□Applicable√Not Applicable
The Company had no outside guarantee during the reporting period.
III. Other important contracts
□Applicable√Not Applicable
There was no other important contract during the reporting period.
15. Corporation social responsibilities
I. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit
published by environmental protection administration?
√Yes□No
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Emission|||||Emission|Meet|
|Main|Emission||Emission Outlet|Emission||Emission|||
|||Outlet|||Emission Standard||Standard|Standard|
|Pollutants|Ways||Distribution|Concentration||Amount|||
|||Number|||||Amount|or Not|
||||3 in Mainsite, 1||||||
||||||“Wastewater|COD:|||
|Wastewater|||in Xiaolan Site,||||||
||continuous|||"COD:128.8mg/L|Discharge|47.862t,|COD≤841.2t,|Meet|
|(COD, NH-||6|1 in Cast Plant||||||
|N)|discharge||and 1 in Axle|NH-N:12mg/L"|Standard”(GB 8978-|NH-N :|NH-N≤21.72t|Standard|
||||||1996)|2.635t|||
||||Plant||||||
|Exhaust|||||||||
|gas (SO2,||||SO2: 44mg/m3, NOx :|"The Emission||||
||||51 in Mainsite,||||||
|NOx,||||187mg/m3, solid:|Standard of Air|SO2:|||
||||58 in Xiaolan||||||
|smoke,|continuous|||63.7mg/m3, toluol :|Pollutants”,” Emission|9.856t,|SO2≤93.01t,|Meet|
|||148|Site, 33 in Cast||||||
|toluol,|discharge|||1.83mg/m3,|Standard of Air|NOx :|NOx≤60.91t|Standard|
||||Plant and 6 in||||||
|dimethylben||||dimethylbenzene:|Pollutants for Boiler”|15.307t|||
||||Axle Plant||||||
|zene,||||3.22mg/m3 .|（GB 13271-2014）||||
|NMHC）|||||||||

The construction and operation of environmental protection facilities
Since 2006, JMC has invested more than RMB 30 million to construct seven wastewater treatment stations (including the wastewater treatment station in the east plant area and Xiaolan wastewater treatment station), with the treatment capacity as high as 9,000t/d. The treated wastewater reached the
|||
|-|-|
||invested RMB 870|
|thousand to upgrade the wastewater treatment process of the wastewater||
|treatment station in Axle Plant||

 the treated wastewater will reach the national discharge standard.
.
For up-to-standard emission of waste gases, JMC has taken new control measures over the years. In 2012, the Company invested RMB 10 million to reconstruct the cupola furnace in the casting plant. In 2013, Xiaolan Branch invested RMB 14 million to install a TNV waste gas incinerator. In 2014, JMC invested RMB 14.6 million to construct the boiler coal-gas-switch project in the south district. In 2017, the casting plant reconstructed the ventilation& dust removal system for the smelting furnace in the large-size and middle& small- sized parts workshop, and installed efficient environmental-friendly dust removal equipment, effectively reducing the environmental pollution by dust. From 2018 to 2019, the casting plant add electric furnace dust collectors in the large-size part workshop, and reconstruct the sand shakeout& dust removal system for KW moulding line, reducing the environmental pollution.
For noise reduction, JMC took different measures to reduce the environmental impact, such as increase of protective sound-proof doors& windows, establishment of noise enclosure for air blower, installation of muffler and transformation of sound-proof doors& windows. All these measures can make sure up-to-standard discharge of noise at the plant boundary.
In the process of waste management, JMC managed from the source, and divided the generation of wastes. JMC established a temporary storage yard
for solid wastes. Warning graphic symbols have been posted at the temporary
storage site of hazardous wastes. Besides, signboards have been provided as
well, so as to remind the passer-by of probable hazards in the storage
process of hazardous wastes. In 2017, JMC invested RMB500 thousand to extend Xiaolan storage yard for solid wastes. In 2018 JMC has renovated the engine plant garbage station. In 2019, the Company plans to invest RMB600 thousand to extend Xiaolan Dangerous Waste Station. At the same time, Qingyunpu plant actively adopt waste reduction measures and invested RMB 110 thousand to purchase primer robot waste solvent recycling device in 2019. EIA on construction project and other administrative permits for
environmental protection
The Company strictly implements the construction project environmental impact assessment system. With respect to new construction, expansion and reconstruction, JMC comprehensively planned environmental protection and evaluated the “Three Simultaneities”. From the source of design, JMC carried out the philosophy of energy saving and low carbon all the time. The Company carries on the environmental monitoring every year according to the requirements, ensures the pollutant discharge meeting the requirements of discharge permit, formulates the stricter internal control target, and strives to reduce the impact of environmental pollution to the minimum. In 2019, the Company obtained the environmental assessment approval of the vehicle production expansion project, the new collision simulation laboratory project and the project of expanding the capacity of 300 thousand vehicle parts and components per year (Phase II).
Emergency plan on emergency environmental incidents
In order to dilute or prevent environmental risks, JMC established an emergency preparation and response procedure and specific environmental emergency plans which were submitted to the Environmental Protection Bureau for the record,so as to formulate corresponding control methods for potential accidents and emergences occurred or that may probably occur. JMC organized emergency drills every year to ensure the efficiency of emergency plan.
Environmental self-monitoring scheme
In 2019,JMC’s Qingyunpu Main Plant Area (the “Plant Area”) was listed as a key pollutant discharging organization of wastewater/hazardous wastes. The Plant Area monitored by itself in strict accordance with the Method for Self- monitoring and Information Disclosure of State Key Monitoring Enterprises (Trial). Its self-monitoring schemes, monitoring results and annual monitoring reports on pollution sources were disclosed on the “pollution source self- monitoring reporting platform of Jiangxi Province”.
Other information related to environmental protection
JMC paid high attention to environmental protection and pollution source control, taking resource saving and cost reduction as the primary task. Moreover, the Company also took full advantage of 6sigma, and controlled from the source, so as to achieve the effect of environmental improvement. In the new expansion and reconstruction projects, JMC laid emphasis on improving the environmental performance, strictly implemented the system of “Three Simultaneities”, transacted the EIA procedure according to national standards, stipulated the preventive and control measures for environmental pollution, and reported to competent administrative departments on environmental protection for approval.
II. One-to-one poverty alleviation
a. Plan on one-to-one poverty alleviation
The Company joined the one-to-one poverty alleviation, depending on JMCG, in Qianmo Village, Dai Jiapu Township, Suichuang County, Jiangxi Province and Xianting Village, Songhu Town, Xinjian District, Nanchang City in accordance with the working arrangement of Jiangxi Provincial Party Committee and Provincial Government. The overall goal is: to help the poor village to achieve a well-off standard of living before 2020 by cooperating with the local government.
b. Summary of one-to-one poverty alleviation in the first half
The Company regards the realization of precision poverty relief as the basic strategy of precision poverty alleviation. The Company continued to consolidate efforts of one-to-one poverty alleviation in the first half of 2019.
c. Status of targeted measures in poverty alleviation
||||
|-|-|-|
|Item|Unit|Amount/Progress|
|I. Brief Introduction|——|——|
|including：1. Funding|RMB (‘000)|828.9|
|2. Sum converted from the materials|RMB (‘000)|19.6|
|II. Investments|——|——|
|1. Anti-poverty depending on industry development|——|——|
|2. Anti-poverty depending on employment transfer|——|——|
|3. Anti-poverty depending on relocation|——|——|
|4. Anti-poverty depending on education|——|——|
|including：4.1 Grants in aid to poor students|RMB (‘000)|806.9|
|5. Health Anti-poverty|——|——|
|6. Ecological protection anti-poverty|——|——|
|7. Miscellaneous provisions|——|——|
|including：7.1 Investments on stay-at-home|||
||RMB (’000)|41.6|
|children, women and elderly|||
|8. Social anti-poverty|——|——|
|9. Other|——|——|
|III. Awards|——|——|

 16. Other major events
√Applicable□Not Applicable
JMC received government incentives about RMB 260 million appropriated by Nanchang County XiaolanEconomic& Technological Development Zone, Nanchang City Wanli District and Shanxi Comprehensive Reform Demonstration Zone during the reporting period, which is to supportJMC’s development.
17. Major event of JMC subsidiary
□Applicable√Not Applicable
Chapter VI Share Capital Changes& Shareholders
1. Changes of Shareholding Structure
I. Changes of shareholding structure
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Change (+, -)|||||After the change||
||Shares|Proportionof totalshares (%)|Newshares|BonusShares|Reserve-convertedshares|Others|Subtotal|Shares|Proportionof totalshares (%)|
|I. Limited tradable Ashares|786,840|0.09%|-|-|-|100|100|786,940|0.09%|
|1. Other domesticshares|786,840|0.09%|-|-|-|100|100|786,940|0.09%|
|Including:||||||||||
|Domestic legalperson shares|785,940|0.09%|-|-|-|-36,000|-36,000|749,940|0.09%|
|Domestic naturalperson shares|900|-|-|-|-|36,100|36,100|37,000|-|
|II. Unlimited tradableshares|862,427,160|99.91%|-|-|-|-100|-100|862,427,060|99.91%|
|1. A shares|518,307,145|60.06%|-|-|-|-100|-100|518,427,160|60.06%|
|2. B shares|344,000,000|39.85%|-|-|-|-|-|344,000,000|39.85%|
|III. Total|863,214,000|100.00%|-|-|-|-|-|863,214,000|100.00%|

 Causes of shareholding changes
√Applicable□Not Applicable
During the past three years as of June 30, 2019, the Company did not issue shares and derivative securities.JMC’s total number of shares remained unchanged. The change in shareholding structure was caused by the limited A shares of 36,000 shares held by Shenzhen Airport Terminal Building Co., Ltd. were transferred to nature person shareholders in 2019.
Approval of changes of shareholding structure
□Applicable√Not Applicable
Shares transfer
□Applicable√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS,shareholders’ equity attributable to the equity holders of the Company, generated from
shares changes
□Applicable√Not Applicable
Others to be disclosed necessarily or per the requirements of securities
regulator
□Applicable√Not Applicable
II. Changes of limited tradable shares
□Applicable√Not Applicable
2. Securities issuance and listing
□Applicable√Not Applicable
3. Shareholders and shareholding status
||||||||
|-|-|-|-|-|-|-|
|Total shareholders (as ofJune 30, 2018)|JMC had 20,943 shareholders, including 15,772 A-share holders, and 5,171 B-shareholders.||||||
|Top ten shareholders|||||||
|Shareholder Name|ShareholderType|ShareholdingPercentage(%)|Shares atthe End ofYear|Change(+,-)|Shares withTradingRestriction|Sharesdue tomortgageor frozen|
|Jiangling Motor HoldingsCo., Ltd.|State-ownedlegal person|41.03|354,176,000|0|0|0|
|Ford Motor Company|Foreign legalperson|32.00|276,228,394|0|0|0|
|China SecuritiesCorporation Limited|Other|2.72|23,458,066|0|0|0|
|Shanghai Automotive Co.,Ltd.|State-ownedLegal person|1.51|13,019,610|0|0|0|
|Harvest EnvironmentalProtection Low CarbonStock Investment Fund|Other|0.98|8,465,988|277,005|0|0|
|Central Huijin InvestmentLtd.|State-ownedlegal person|0.83|7,186,600|0|0|0|
|JPMBLSA RE FTIFTEMPLETON CHINAFUND GTI 5497|Foreign legalperson|0.68|5,848,450|0|0|0|
|GAOLING FUND, L.P.|Foreign legalperson|0.63|5,453,086|0|0|0|
|National Social SecurityFund 504 Portfolio|Other|0.61|5,250,455|5,250,455|0|0|
|INVESCO FUNDSSICAV|Foreign legalperson|0.58|5,035,746|0|0|0|
|Notes on association among above-mentioned shareholders|||None.||||
|Top ten shareholders holding unlimited tradable shares|||||||
|Shareholder Name||Shares without Trading Restriction|||Share Type||
|Jiangling Motor Holdings Co., Ltd.||354,176,000|||A share||
|Ford Motor Company||276,228,394|||B share||
|China Securities Corporation Limited||23,458,066|||A share||
|Shanghai Automotive Co., Ltd.||13,019,610|||A share||
|Harvest Environmental Protection LowCarbon Stock Investment Fund||8,465,988|||A share||
|Central Huijin Investment Ltd.||7,186,600|||A share||
|JPMBLSA RE FTIF TEMPLETON CHINAFUND GTI 5497||5,848,450|||B share||
|GAOLING FUND, L.P.||5,453,086|||B share||
|National Social Security Fund 504Portfolio||5,250,455|||A share||
|TEMPLETON DRAGON FUND, INC.||5,035,746|||B share||
|Notes on association among above-mentioned shareholders||None.|||||

Stock buy-back by top ten shareholders or top ten shareholders holding unlimited tradable shares in the reporting period
□Yes√No
There is no stock buy-back by top ten shareholders or top ten shareholders holding unlimited tradable shares in the reporting period.
4. Change of controlling shareholders or actual controlling parties
Change of controlling shareholders
□Applicable√Not Applicable
There was no change of controlling shareholders during the reporting period.
Change of actual controlling parties
□Applicable√Not Applicable
There was no change of actual controlling parties during the reporting period.
Subsequent events
Jiangling Motor Holdings Co., Ltd. (hereinafter referred to as “JHC”), a controlling shareholder of Jiangling Motors Co., Ltd. (hereinafter referred to as “JMC” or “the Company”), has been divided and separated into the new company, Nanchang Jiangling Investment Co., Ltd. (hereinafter referred to as “JIC”) and Jiangling Motor Holdings Co., Ltd. (as an existing company). After the separation, JHC intends to divide its hold41.03% equity of JMC into the new company, JIC, and therefore, the controlling shareholder of JMC will be changed from JHC to JIC, but actual controllers of JMC remains unchanged.
As of July 26, 2019, the 354,176,000 JMC shares, accounting for about41.03% of the total share capital of the Company, held by JHC, the former controlling shareholder of the Company, have been transferred to JIC, and JHC no longer held the shares of the Company. JIC holds 354,176.000 shares of the Company, accounting for about41.03% of the total share capital of the Company, and becomes a controlling shareholder of the Company.
Shareholding relationship with JMC and the shareholders of JHC before and after the separation are shown as follows:
（1）Before the separation
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
JHC
41.03%
JMC
（2）After the separation
Chongqing Changan Automobile Co., Ltd. JMCG
50% 50%
Nanchang Jiangling Investment Co., Ltd.
41.03%
JMC
Chapter VII Preferred Shares
□Applicable√Not Applicable
JMC have no preferred shares during the reporting period.
Chapter VIII Directors, Supervisors and Senior Management 1. Changes of shares held by directors, supervisors and senior management□Applicable√Not Applicable
There was no change of shares held by Directors, Supervisors and senior
management in the reporting period. Please refer to 2018 annual report for
details.
2. Changes of directors, supervisors and senior management
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Name|Position|Status|Date|Reason|
|Manto Wong|President|Appointed|March 1, 2019||
|Andy Ball|VP|Appointed|April 1, 2019||
|Luo Xiaofang|VP|Appointed|May 1, 2019||
|Manto Wong|Director|Elected|June 28, 2019||
|Jin Wenhui|Director|Elected|June 28, 2019||
|Milton Wong|VP|Appointed|July 1, 2019||
|Thomas Fann|President|Leave|March 1, 2019|Retirement.|
|Tim Slatter|VP|Leave|March 1, 2019|Work rotation.|
|Christian Chen|VP|Leave|May 1, 2019|Work rotation.|
|||||Resign from the vice|
|Andy Ball|VP|Leave|May 1, 2019|president position for|
|||||the personal reasons.|

Chapter IX Company Bond
Whether the Company owns the corporate bond that is lists in the securities
exchange and undue or is not paid in full althoughit’s due.
□Yes√No
Chapter X Financial Statements
JIANGLING MOTORS CORPORATION, LTD.
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30
JUNE 2019
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
Six Months Ended 30 June Notes 2019# 2018# Revenue from contracts with customers 5 13,721,954 14,287,497 Taxes and surcharges (368,975) (368,792) Cost of sales 6 (11,683,969) (12,277,724) Gross profit 1,669,010 1,640,981 Distribution costs 6 (705,875) (452,934) Administrative expenses 6 (1,274,585) (1,138,530) Net expected credit losses on financial assets 3.1(2) 1,056 (918) Net impairment losses on property, plant and equipment (3,126) (3,607) Other income 8 235,605 195,360 Operating (loss)/profit (77,915) 240,352 Finance income 9 92,765 106,654 Finance costs 9 (2,624) (3,262) Finance income-net 9 90,141 103,392 Share of profit of investments accounted for using the
equity method 16b 334 2,611 Profit before income tax 12,560 346,355 Income tax credit/(expense) 10 46,302 (27,404) Profit for the period 58,862 318,951 Profit attributable to:
Shareholders of the Company 58,862 318,951 Total comprehensive income for the period 58,862 318,951 Total comprehensive income attributable to:
Shareholders of the Company 58,862 318,951 Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.07 0.37#Unaudited financial indexes
The notes on pages 32 to 90 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 2019
(All amounts in thousands of RMB unless otherwise stated)
As at
31 December Notes
30 June2019# 2018 ASSETS
Non-current assets
Property, plant and equipment 12 7,118,181 6,941,292 Lease prepayment 13 593,473 601,260 Intangible assets 14 288,412 246,026 Deferred income tax assets 17 789,091 743,096 Investments accounted for using the equity method 16b 40,446 40,112 Total non-current assets 8,829,603 8,571,786 Current assets
Inventories 18 2,173,276 2,522,354 Trade and other receivables and prepayments 19 4,054,726 4,678,284 Derivative financial instruments 3.3 - 979 Financial assets at fair value through other
comprehensive income 3.3 223,907 6,246 Cash and cash equivalents 20 8,367,457 7,616,880 Restricted cash 20,001 - Total current assets 14,839,367 14,824,743 Total assets 23,668,970 23,396,529
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts in thousands of RMB unless otherwise stated)
As at
Notes 31 December 30 June2019# 2018 EQUITY
Share capital 21 863,214 863,214 Share premium 816,609 816,609 Other reserves 22 447,472 447,472 Retained earnings 8,281,536 8,257,203 Total equity 10,408,831 10,384,498 LIABILITIES
Non-current liabilities
Contract liabilities 5 54,499 38,382 Borrowings 23 3,376 3,595 Deferred income tax liabilities 17 25,676 26,024 Retirement benefit obligations 24 60,777 63,425 Provisions for statutory warranty 25 166,251 151,492 Other non-current liabilities 93,301 60,160 Total non-current liabilities 403,880 343,078 Current liabilities
Trade and other payables 26 12,454,356 12,195,966 Contract liabilities 5 188,911 266,702 Current income tax liabilities 72 179 Borrowings 23 450 449 Derivative financial instruments 2,578 - Retirement benefit obligations 24 4,595 4,595 Provisions for statutory warranty 25 205,297 201,062 Total current liabilities 12,856,259 12,668,953 Total liabilities 13,260,139 13,012,031 Total equity and liabilities 23,668,970 23,396,529#Unaudited financial indexes
The notes on pages 32 to 90 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 2019
(All amounts in thousands of RMB unless otherwise stated)
Share Share Other Retained
Notes capital premium reserves earnings Total Balance at 1 January 2018 863,214 816,609 450,914 10,441,665 12,572,402 Profit for the six months - - - 318,951 318,951 Dividends relating to 2017 - - - (2,276,295) (2,276,295) Balance at 30 June 2018 863,214 816,609 450,914 8,484,321 10,615,058 Balance at 1 January 2019 863,214 816,609 447,472 8,257,203 10,384,498 Profit for the six months - - - 58,862 58,862 Dividends relating to 2018 27 - - - (34,529) (34,529) Balance at 30 June 2019 863,214 816,609 447,472 8,281,536 10,408,831#Unaudited financial indexes
The notes on pages 32 to 90 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 2019
(All amounts in thousands of RMB unless otherwise stated)
Six Months Ended 30 June Notes 2019# 2018# Cash flows from operating activities
Cash generated from operations 28 1,435,500 (791,761) Interest paid (150) (151) Income tax paid (148) (114,906) Net cash inflow/(outflow) from operating activities 1,435,202 (906,818) Cash flows from investing activities
Payment for property, plant and equipment (“PPE”) (801,467) (572,583) Purchase of financial assets at fair value through profit
or loss (4,700,000) (3,462,000) Other cash paid relating to investing activities (7,591) (13,354) Proceeds from disposal of PPE 28 2,990 2,569 Proceeds from disposal of financial assets at fair value
through profit or loss 4,700,000 3,462,000 Investment income from financial assets at fair value
through profit or loss 18,447 10,202 Interest received 100,566 129,686 Other cash received from investing activities 2,650 733 Net cash outflow from investing activities (684,405) (442,747) Cash flows from financing activities
Repayments of borrowings (220) (207) Dividends paid to shareholders of the Company - (1,999,237) Other cash paid relating to financing activities - (1,104) Net cash outflow from financing activities (220) (2,000,548) Net increase/(decrease) in cash and cash equivalents 750,577 (3,350,113) Cash and cash equivalents at beginning of year 7,616,880 11,137,723 Effects of exchange rate changes - - Cash and cash equivalents at end of period 20 8,367,457 7,787,610#Unaudited financial indexes
The notes on pages 32 to 90 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in 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 Group Co.,Ltd (“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 2019, the total number of issued shares of the Company is 863,214,000 shares, which are all listed on the Shenzhen Stock Exchange, the PRC.
The Company and its subsidiaries (the “Group”) are principally engaged in the development, manufacturing and selling of automobiles, engines and automobile related parts, dies and tools.
These consolidated financial statements were authorised for issue by the Board of Directors on 27 August 2019.
2 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting the Company and its subsidiaries.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”). The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities (including derivative instruments, financial assets at FVOCI and financial liabilities at FVPL) are measured at fair value.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
|||
|-|-|
|2|Summary of significant accounting policies (continued)|
|2.1|Basis of preparation (continued)|

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 16 Leases
IFRS 16 has been effective from 1 January 2019. As permitted under the specific transitional provisions in the standard, the Group has adopted IFRS 16 retrospectively, but has not restated comparatives for the 2018 reporting period. There is no reclassifications and adjustments arising from the new leasing rules need to be recognised in the opening balance sheet on 1 January 2019 because the leases are short-term or for which the underlying asset is of low value.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.2 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 fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
2.3 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, after initially being recognised at cost.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to‘share of profit of investments accounted for using 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 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.4 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of theinvestee’s net assets including goodwill.
2.5 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.
2.6 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.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as fair value through other comprehensive income are recognised in other comprehensive income.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.7 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 automobiles 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 2.10).
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.
2.8 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 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.9 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition- date fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(e) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably measured.
The development cost of an internally generated intangible asset is the sum of the expenditure incurred from the date the asset meets the recognition criteria above to the date when it is available for use. The development costs capitalised in connection with the intangible asset include costs of materials and services used or consumed and employee costs incurred in the creation of the asset.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.9 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.
2.10 Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which 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 inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
2.11 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2.12 Investments and other financial assets
(1) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through OCI or through profit or loss), and
 those to be measured at amortised cost.
The classification depends on theentity’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (“FVOCI”).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
(2) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. (3) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on theGroup’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
 Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other income/(expense)-net together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Investments and other financial assets (continued)
(3) Measurement (continued)
 FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where theassets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income/(expense)-net. Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other income/(expense)-net and impairment expenses are presented as separate line item in the statement of profit or loss. FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other income/(expense)-net in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where theGroup’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when theGroup’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other income/(expense)- net in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(4) Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see Note 3.1 for further details.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position where the Group currently has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group has also entered into arrangements that do not meet the criteria for offsetting but still allow for the related amounts to be set off in certain circumstances, such as bankruptcy or the termination of a contract.
2.14 Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. No derivative is designated as a hedging instrument by the Group, changes in the fair value of derivatives are recognised immediately in profit or loss and included in other income/(expense)-net.
2.15 Inventories
Inventories are stated at the lower of cost and net realisable value. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads, the latter being allocated on the basis of normal operating capacity. Cost excludes borrowing costs. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.16 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. See Note 3.1 for further information about theGroup’s accounting for trade receivables and a description of theGroup’s impairment policies.
2.17 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. 2.18 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.
2.19 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
2.20 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Borrowings (continued)
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income/(expense)-net or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
2.21 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs include interest expense, finance charges in respect of finance lease and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. The exchange gains and losses that are an adjustment to interest costs include the interest rate differential between borrowing costs that would be incurred if the entity had borrowed funds in its functional currency, and the borrowing costs actually incurred on foreign currency borrowings. Such amounts are estimated based on interest rates on similar borrowings in 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.
2.22 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the currentperiod’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. (1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Current and deferred income tax (continued)
(2) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.23 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits.
(1) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, short-term paid absences and etc. The short-term employee benefits actually occurred are recognised as a liability in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at fair value.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 Employee benefits (continued)
(2) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the premiums or contributions on basic pensions and unemployment insurance belong to defined contribution plans; the premiums or contributions on supplementary retirement benefits belong to defined benefit plans.
(i) Defined contribution plans
Basic pensions
TheGroup’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to the bases and percentage prescribed by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
(ii) Defined benefit plans
The Group provides employees with some supplementary retirement benefits belong to defined benefit plans in addition to the social security policy prescribed by the State. The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of national debt that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit or loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the statement of financial position.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service costs.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 Employee benefits (continued)
(3) Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss for the current period at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses for a restructuring that involves the payment of termination benefits.
(4) Early retirement benefits
The Group offers early retirement benefits to those employees who accept early retirement arrangements. The early retirement benefits refer to the salaries and social security contributions to be paid to and for the employees who accept voluntary retirement before the normal retirement date prescribed by the State, as approved by the management. The Group pays early retirement benefits to those early retired employees from the early retirement date until the normal retirement date. The Group accounts for the early retirement benefits in accordance with the treatment for termination benefits, in which the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised as liabilities with a corresponding charge to the profit or loss for the current period. The differences arising from the changes in the respective actuarial assumptions of the early retirement benefits and the adjustments of benefit standards are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be settled within one year since the balance sheet date are classified as current liabilities.
2.24 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 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.25 Revenue recognition
The Group manufactures and sells a range of automobiles and automobile parts to dealers and ending customers. Besides, the Group also provides automobile maintenance and additional warranty services. The Group recognises revenue when the customer obtains control of the goods and services. The revenue is recognised based on the consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to customers.
(1) Sales of goods– Automobile and automobile parts
The Group manufactures and sells a range of automobiles and automobile parts to dealers and ending customers. Sales are recognised when control of the products has transferred, being when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits from the products. Control of automobiles is transferred when automobiles are delivered out of warehouse, being when customer has accepted the products. Control of automobile parts is transferred when the products out of warehouse or shipped to designated destination, being when customer has accepted the products.
When the contracts include two performance obligations, selling automobiles and providing shipping services, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated considering market information, expected cost plus margin.
No element of financing is deemed present as the sales are made with a credit term within one year, which is consistent with market practice. TheGroup’s obligation to repair or replace faulty products under the statutory warranty terms prescribed by the industry law and regulations is recognised as a provision, see Note 2.24. For additional warranty, it is considered as a separate performance obligation under IFRS 15, see Note 2.25(2).
Revenue from these sales is recognised based on the price specified in the contract, net of the estimated discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.
(2) Rendering of services
The Group provides service of automobile maintenance and additional warranty. Revenue is recognised on the basis of inputs to the satisfaction of the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation.
Trade receivables are recognised when the Group recognised revenue according to the completion process and has an unconditional right to consideration. Contract assets are recognised when the Group satisfies a performance obligation but does not have an unconditional right to consideration. The provision of trade receivables and contract assets are subject to expected credit loss model. Contract liabilities are recognised when the consideration received before the Group satisfies the performance obligation. The contract assets and liabilities are presented on a net basis for the some contract.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.26 Earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated by dividing: the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.
(2) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
2.27 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.
2.28 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.
2.29 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.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.29 Government grants (continued)
Government grants related to income will be recorded as deferred income and recognised in profit or loss in the period in which the related expenses are recognised if the grants are intended to compensate for future expenses or losses, and otherwise recognised in profit or loss for the current period if the grants are used to compensate for expenses or losses that have been incurred.
2.30 Interest income
Interest income from financial assets at FVPL is included in other income/(expense)-net, see Note 8 below.
Interest income on financial assets at amortised cost and financial assets at FVOCI (2017–loans and receivables) calculated using the effective interest method is recognised in the statement of profit or loss as part of finance income. Interest income is presented as finance income where it is earned from financial assets that are held for cash management purposes, see Note 9 below. Any other interest income is included in other income/(expense)-net.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
3 Financial risk management
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.
TheGroup’s risk management is predominantly controlled by Finance Department under policies approved by the Board of Directors. Group Finance Department identifies, evaluates and hedges financial risks in close co-operation with theGroup’s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
3.1 Financial risk factors
(1) Market risk
(i) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to other payables dominated in US dollar (“USD”) and Euro.
Management has set up a policy to require the Group to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the
Company’s functional currency.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(1) Market risk (continued)
(i) Foreign exchange risk (continued)
Exposure
TheGroup’s exposure to foreign currency risk at the end of the reporting period, expressed in RMB, was as follows:
30 June 2019 31 December 2018
Other Other USD EUR currency USD EUR currencyRMB’000RMB’000RMB’000RMB’000RMB’000RMB’000 Derivative financial instruments
Foreign exchange forwards (2,578) - - 979 - - Trade and other receivables - 266 - - 265 - Borrowings (3,826) - - (4,044) - - Trade and other payables
(202,250) (106,365) (4,171) (164,599) (100,450) (4,045) (208,654) (106,099) (4,171) (167,664) (100,185) (4,045) Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/RMB and Euro/RMB exchange rates.
As at 30 June 2019, 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 RMB17,722,000 (2018: RMB14,187,000) higher/lower.
As at 30 June 2019, 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 RMB9,074,000 (2018: RMB8,626,000) higher/lower.
(ii) Interest rate risk
TheGroup’s income and operating cash flows are substantially independent of changes in market interest rates. As at 30 June 2019, a large portion of its bank deposits were at variable rates and all of its borrowings were at fixed rate. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.
As at 30 June 2019, 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 RMB7,313,000 (2018: RMB14,174,000).
As at 30 June 2019, the difference between the fair value and book value of theGroup’s borrowings with fixed rate is immaterial.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk
Credit risk arises from cash and cash equivalents, contractual cash flows of other financial instruments at fair value through comprehensive income and at fair value through profit or loss, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables.
(i) Risk management
Credit risk is managed on a group basis. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The compliance with credit limits by customers is regularly monitored by line management.
(ii) Impairment of financial assets
The Group has four types of financial assets that are subject to the expected credit loss model:
trade receivables for sales of inventory and from the provision of services, and
notes receivables carried at FVOCI
other financial assets at amortised cost
cash and cash equivalents.
Trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 24 month before 31 December 2018 or 1 January 2018 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP and the unemployment rate of China in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.
On that basis, the loss allowance as at 30 June 2019 was determined as follows for trade receivables:
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(a) As at 30 June 2019, receivables with amounts are subject to separate assessment for impairment as below:
More than More than More than
1-30 days 30 days 60 days 90 days
30 June 2019 Current past due past due past due past due Total Expected loss rate - - - - 100% — Gross carrying amount– trade
- - - - 8,633 8,633 receivables
Loss allowance - - - - (8,633) (8,633) As the above debtors involved in several lawsuits, the Group cannot be able to collect the amount under the original terms, a full provision for bad debts of that receivable were made. (b) As at 30 June 2019, trade receivables have been grouped on the basis of shared credit risk characteristics and the days past due for the measurement of expected credit losses:
i) Notes receivables group
As at 30 June 2019, all the notes receivables are bank acceptance bills of RMB6,500,000, which will be accepted mainly by large state-owned banks or national commercial banks. The Group believes that there is no significant credit losses due to the bank default.
ii) Automobiles sales group
More than More than More than
1-30 days 30 days 60 days 90 days
30 June 2019 Current past due past due past due past due Total Expected loss rate 0.31% 0.36% 0.93% 15.58% 15.97% — Gross carrying amount– trade
receivables
1,893,816 47,929 8,611 5,115 22,607 1,978,078 Loss allowance (5,916) (173) (80) (797) (3,610) (10,576)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
(b) As at 30 June 2019, trade receivables have been grouped on the basis of shared credit risk characteristics and the days past due for the measurement of expected credit losses (continued):
iii) New energy automobiles subsidies group
More than More than More than
1-30 days 30 days 60 days 90 days
30 June 2019 Current past due past due past due past due Total Expected loss rate 0.30% - - - - — Gross carrying amount– trade
253,162 - - - - 253,162 receivables
Loss allowance (759) - - - - (759) iv) Automobile parts group:
More than More than More than
1-30 days 30 days 60 days 90 days
30 June 2019 Current past due past due past due past due Total Expected loss rate 0.30% 0.30% 0.50% 0.60% 5.00% — Gross carrying amount– trade
receivables
321,294 24,382 3,050 218 2,457 351,401 Loss allowance (964) (73) (15) (1) (123) (1,176) Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments.
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
Financial assets at fair value through other comprehensive income
Notes receivables carried at FVOCI are considered to have low credit risk, and the loss
allowance recognised during the period was therefore limited to 12 months expected losses. Management considers‘low creditrisk’ for the instruments that the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”), the subsidiary of the Group, held notes receivables for endorsement and presented as FVOCI at the statement of financial position. All the notes receivables are bank acceptable bills
and considered as low credit risk financial instruments without significant credit risk because the
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
banks have a strong capacity to meet its contractual cash flow obligations in the near term.
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
(ii) Impairment of financial assets (continued)
Other financial assets at amortised cost
Other financial assets at amortised cost include bank interest receivables and other receivables. The closing loss allowances for other financial assets as at 30 June 2019 reconcile to the opening loss allowances as follows:
More than
1-30 days 90 days
past due: past due:
expected expected
credit losses credit losses
in the next 12 throughout
months lifetime TotalRMB’000 RMB’000 RMB’000 Opening loss allowance as at 1 January 2019 240 203 443 Increase in the allowance recognised in profit or loss
during the period 29 63 92 Reverse of the allowance recognised in profit or loss
during the period (15) - (15) Closing loss allowance as at 30 June 2019 254 266 520 All the bank interest receivables are considered as low credit risk financial instruments without significant credit risk because the banks have a strong capacity to meet its contractual cash flow obligations in the near term.
Net impairment losses on financial assets recognised in profit or loss
Cash and cash equivalents
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group and aggregated by Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 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 Between 1 Between 2 Over 1 year and 2 years and 5 years 5 yearsRMB’000 RMB’000 RMB’000 RMB’000 At 30 June 2019
Bank borrowings
- Principals 450 450 1,350 1,576 - Interests 56 49 106 47 Trade and other payables
(exclude payroll and welfare
payables, other tax payables) 12,081,645 - - - 12,082,151 499 1,456 1,623 At 31 December 2018
Bank borrowings
- Principals 449 449 1,348 1,798 - Interests 59 52 116 61 Trade and other payables
(exclude payroll and welfare
payables, other tax payables) 11,658,259 - - - 11,658,767 501 1,464 1,859 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 2019
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 2019 and 31 December 2018 were as follows:
30 June 2019 31 December 2018 Total borrowings 3,826 4,044 Total equity 10,408,831 10,384,498 Total capital 10,412,657 10,388,542 Gearing ratio 0.04% 0.04% 3.3 Fair value estimation
(1) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the financial statements. The Group has classified its financial instruments into the three levels prescribed under the accounting standards:
As at 30 June 2019 Level 1 Level 2 Level 3 Total Financial assets
Financial assets at FVOCI
Notes receivables - - 223,907 223,907 Total financial assets - - 223,907 223,907 Financial Liabilities
Derivatives
Foreign exchange forwards - 2,578 - 2,578 Total financial liabilities - 2,578 - 2,578 As at 31 December 2018 Level 1 Level 2 Level 3 Total Financial liabilities
Derivatives
Foreign exchange forwards - 979 - 979 Financial assets at FVOCI
Notes receivables - - 6,246 6,246 Total financial liabilities - 979 6,246 7,225 There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
TheGroup’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
(2) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
for foreign currency forwards - present value of future cash flows based on forward exchange rates at the balance sheet date
for other financial instruments - discounted cash flow analysis.
(3) FFaaiirr vvaalluuee mmeeaassuurreemmeennttss uussiinngg ssiiggnniiffiiccaanntt uunnoobbsseerrvvaabbllee iinnppuuttss ((lleevveell 33))
The following table presents the changes in level 3 items for the periods ended 30 June 2019 and 31 December 2018:
Financial assets at
FVPL- monetary Financial assets at
fund and structural FVOCI- notes Total deposits receivables
Opening balance 1 January 2018 - — - Acquisitions 10,353,000 102,802 10,455,802 Disposals (10,353,000) (96,556) (10,449,556) Closing balance 31 December 2018
- 6,246 6,246 Opening balance 1 January 2019
- 6,246 6,246 Acquisitions 4,700,000 975,559 5,675,559 Disposals (4,700,000) (757,898) (5,457,898) Closing balance 30 June 2019 - 223,907 223,907 There is no unrealised gains or losses recognised in profit or loss attributable to balances held at the end of the reporting period. The gains or losses arising from the holding of the financial assets measured at fair value during the financial period are recognised in other income/(expense)-net.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates
(1) Measurement of expected credit losses
The Group calculates expected credit losses according to the default risk exposure and expected credit loss rate, and determines the expected credit loss rate based on default probability and default loss rate. In determining the expected credit loss rate, the Group uses data such as internal historical credit loss experience, etc., and adjusts historical data based on current conditions and forward-looking information. When considering forward-looking information, the indicators used by the Group include the risk of economic downturn, the expected increase in unemployment rate, the external market environment, the technological environment and changes in customer conditions. The Group regularly monitors and reviews assumptions related to the calculation of expected credit losses. In the six months ended 2019, there was no significant change in the above estimation techniques and key assumptions.
(2) Impairment of long term assets
The Group assesses whether there are indicators that the long term assets except for financial assets are impaired at each balance sheet date. When there are indicators that the carrying amounts of those long term assets are unrecoverable, an impairment test will be performed. When the carrying amount of the long term assets except for financial assets or the cash generating unit (“CGU”) is higher than its recoverable amount, which is the higher of anasset’s orCGU’s fair value less costs of disposal and its value in use, the impairment occurred.
The Group determines the fair value less costs of disposal based on discounted future cash flow forecasts. The Group use the medium and long-term budgets of the business development plan approved by the management as a starting point when applying the present value technique, adjusting for market conditions.
Key judgements are made on revenue growth rate, sales price growth rate, discount rate and long term growth rate when estimate the discounted future cash flow forecasts. The Group uses relevant accessible information, including the production and sales volumn, relevant market information which are based on the reasonable and supportable assumptions, to estimate the recoverable amount of those long term assets.
(3) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added tax and consumption tax. Significant judgment is required in determining the provision for these taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from amounts that were initial recorded, such differences will impact the tax provisions in the period 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.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates (continued)
(3) Taxation (continued)
As at 30 June 2019, the Group recorded deferred tax assets of approximately RMB789,091,000. To the extent that it is probable that taxable profit will be available against which the deductible temporary differences will be utilised, deferred tax assets are recognised mainly for temporary differences arising from accrued expenses and retirement benefit obligations.
(4) Provisions
The Group provides statutory warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Management estimates the related warranty claims based on historical warranty claim information including level of repairs and returns as well as recent trends that might suggest that past cost information may differ from future claims.
Factors that could impact the estimated claim information include the success of 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.
(5) Write-down of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The net realisable value is estimated sales price less estimated cost to finish goods, estimated distribution expenses and related taxes in the daily operation.
If management revises estimated sales price, estimated cost to finish goods, distribution expenses and related taxes, and revised sales price is lower than current sales price, or revised cost to finish goods, distribution expenses and related taxes are higher than those current estimation, the Group needs to consider increasing the write-down provision of the inventories.
If the actual sales price, the cost to finish goods, distribution expenses and related taxes are higher or lower than the estimation of management, the Group will recognise the relevant influence in profit or loss in the relevant accounting period.
4.2 Critical accounting judgements
(1) Classification of financial assets
Significant judgements made by the Group in the classification of financial assets include business model and analysis on contractual cash flow characteristics.
The Group determines the business model for financial assets management on the group basis, and factors to be considered include the methods for evaluating of the financial assets performance and reporting the financial assets performance to key management personnel, the risks relating to the financial assets performance and corresponding management methods, the ways in which related business management personnel are remunerated, etc.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements (continued)
(1) Classification of financial assets (continued)
When assessing whether contractual cash flow characteristics of financial assets are consistent with basic lending arrangement, key judgements made by the Group include: the possibility of changes in time schedule or amount of the principal during the lifetime due to reasons such as repayment in advance; whether interest only include time value of money, credit risks, other basic lending risks and considerations for costs and profits; whether the repayment in advance reflects the principal outstanding and corresponding interest and reasonable compensation paid for early termination of the contract.
(2) Judgement on significant increase in credit risk
Judgement made by the Group for significant increase in credit risk is mainly based on whether the overdue days exceed 30 days, or whether one or more of the following indicators change significantly: business environment of the debtor, internal and external credit rating, significant changes in actual or expected operating results, significant decrease in value of collateral or credit rate of guarantor, etc.
Judgement made by the Group for the occurrence of credit impairment is mainly based on whether the overdue days exceed 90 days (i.e., a default has occurred), or whether one or more of the following conditions is/are satisfied: the debtor is suffering significant financial difficulties, the debtor is undergoing other debt restructuring, or the debtor probably goes bankrupt, etc.
(3) Capitalisation of development costs
Development costs are capitalised when the criteria in Note 2.9(2) are fulfilled. The assessments on whether the criteria for capitalisation of development have been met involves the judgements of the Group, including the technical feasibility of the project, the likelihood of the project generating sufficient future economic benefits and the timing to start capitalisation particularly. The Group makes the judgements on the capitalisation of development costs and recorded the process in meeting minutes based on feasibility analysis and regular review on the development project phase etc.
(4) Timing of revenue recognition
The Group sells automobiles and automobile parts to distributors and ending customers. As prescribed in the contract, control of automobiles is transferred to the customers when the good are out of the warehouse, while control of automobile parts is transferred when the parts are out of the warehouse or shipped to the designate destination based on the contract terms. The distributors and ending customers sign the delivery documents after they accept the products. Thereafter, the distributors or ending customers control the products and have the right to set the price, bear the risks of any obsolescence and loss of the products. The distributors and ending customers have obtained the control of the products after accepting the products. Therefore, the Group recognises the sales revenue of the products at the time when the delivery documents have been signed.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
4.2 Critical accounting judgements (continued)
(5) Sales with product warranties
The Group provides statutory warranty for automobiles and automobile parts, and the period and terms of such warranty comply with the requirements of laws and regulations related to the products. The Group does not provide any significant additional service for this purpose, thus this kind of warranty does not identified as a separate performance obligation. In addition, the Group also offers additional warranty other than the requirements of laws and regulations, which identified as a separate performance obligation. The Group recognises the revenue of the additional warranty over time during the period when services are rendered.
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.
The revenue by product of the whole business as follows:
Six months ended 30 June 2019
Automobiles Automobile Maintenance Materials and Total parts services others
Main business income 12,327,573 1,168,533 43,900 - 13,540,006 -Recognition at a point
in time 12,327,573 1,168,533 - - 13,496,106 -Recognition over time - - 43,900 - 43,900 Other business income - - - 181,948 181,948 12,327,573 1,168,533 43,900 181,948 13,721,954 Six months ended 30 June 2018
Automobiles Automobile Maintenance Materials and Total parts services others
Main business income 12,753,388 1,370,722 33,762 - 14,157,872 -Recognition at a point
in time 12,753,388 1,370,722 - - 14,124,110 -Recognition over time - - 33,762 - 33,762 Other business income - - - 129,625 129,625 12,753,388 1,370,722 33,762 129,625 14,287,497 As at 30 June 2019, the expected revenue of unsatisfied performance obligations from signed contract is RMB103,676,000. The Group will recognise the revenue from 2019 to 2022.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
5 Revenue and segment information (continued)
The Group has recognised the following assets and liabilities related to contracts with customers: 30 June 2019 31 December 2018 Contract liabilities
Automobiles and automobile parts 139,734 212,246 Maintenance services and additional warranty 103,676 92,838 Total contract liabilities 243,410 305,084 Less: non-current liabilities (54,499) (38,382) Total current contract liabilities 188,911 266,702 6 Expenses by nature
Six months ended 30 June
2019 2018 Changes in inventories of finished goods and 101,187 (53,018) work in progress
Raw materials and consumables used 10,151,019 10,805,572 Employee benefit expense (Note 7) 1,246,623 1,118,958 Depreciation of PPE (Note 12, 28) 475,243 463,097 Repairs and maintenance expenditure on PPE 40,473 53,666 Transportation expenses 332,654 320,658 Amortisation of lease prepayment (Note 13, 28) 7,787 7,787 Amortisation of intangible assets (Note 14, 28) 35,164 25,814 Provision of statutory warranty (Note 25) 159,699 123,718 Design fees 243,684 250,316 Sales promotion expenses 106,691 94,463 Advertising and new product planning expenses 228,204 89,635 Provision for inventories write-down 5,310 5,195 Others 530,691 563,327 Total cost of sales, distribution expenses and
administrative expenses 13,664,429 13,869,188
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
Six months ended 30 June
2019 2018 Wages and salaries 907,635 812,503 Social security costs 119,810 109,307 Pension costs defined contribution plans 139,569 138,023 Others 79,609 59,125 1,246,623 1,118,958 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 make periodic benefit payments to certain early-retired employees until they reach their legal retirement ages.
8 Other income
Six months ended 30 June
2019 2018 Government grants (a) 230,279 159,254 Net fair value gains/(losses) on derivative
financial instruments (3,557) 6,915 Net loss on disposal of derivative financial
instruments (4,940) (12,620) Others 13,823 41,811 235,605 195,360 (a) In the six months ended 2019, the Group received grants of approximately RMB230,279,000, mainly from Economic Development District Administrative Commission of Xiaolan and the Finance Bureau of Economic, Transformation and Comprehensive Reform Demonstration Zone Administrative Commission of Shanxi. Those grants were income related government grants to support theGroup’s operation.
9 Finance income and expenses
Six months en ded 30 June
2019 2018 (a) Finance income
Interest income on bank deposits 87,147 95,632 Interest income on credit sales 5,618 11,022 92,765 106,654 (b) Finance expenses
Interest expense on bank loans (106) (107) Bank charges and others (2,518) (3,155) (2,624) (3,262) Net finance income
90,141 103,392
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation
(i) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax authorities in 2018, the Company is entitled to a preferential CIT rate of15% from 2018 to 2020 (2018:15%). The CIT rates of JMCH, Jiangling Motor Sales Co., Ltd. (“JMCS”), Shenzhen Fujiang New Energy Automobile Sales Co., Ltd. (“SZFJ”), Guangzhou Fujiang New Energy Automobile Sales Co., Ltd. (“GZFJ”) and Xiamen Fujiang New Energy Automobile Sales Co., Ltd. (“XMFJ”), the subsidiaries of the Company, are25%.
The amounts of income tax expense charged to profit or loss represented:
Six months ended 30 June
2019 2018 Current tax 41 7,428 Deferred tax (Note 17) (46,343) 19,976 (46,302) 27,404 The difference between the actual income tax charge in profit or loss and the amounts which result from applying the enacted tax rate to profit before income tax can be reconciled as follows:
Six months ended 30 June
2019 2018 Profit before tax 12,560 346,355 Tax calculated at tax rates applicable to profits in
the respective companies (38,028) 29,341 Tax concessions (9) (69) Expenses not deductible for tax purposes 294 297R&D costs deduction (64,124) (47,715) Income not subject to tax (882) (391) Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 18,925 10,116 Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised - (1,764) Temporary differences for which no deferred
income tax asset was recognised 4,195 - Tax losses for which no deferred income tax
asset was recognised 33,327 37,589 Tax charge
(46,302) 27,404
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(ii) Value-added tax (“VAT”)
Pursuant to the No.39, 2019 notice jointly issued from the Ministry of Finance, the State
Administration of Taxation, the general administration of customs, the Group's taxable
products sales income applicable VAT rate is13% from 1 April 2019, while the VAT rate was16% before then. The VAT rate applicable to the Group's transportation business is9% from 1 April 2019, while the VAT rate was10% before then.
(iii) 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
2019 2018 Profit attributable to shareholders of the
Company 58,862 318,951 Weighted average number of ordinary shares in
issue(‘000) 863,214 863,214 Basic earnings per share (RMB) 0.07 0.37 Diluted earnings per share equals to basic earnings per share as there were no dilutive potential ordinary shares outstanding during the year ended 30 June 2019.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Automobiles Moulds other equipment constructions Total At 1 January 2018
Cost 2,084,217 3,954,028 280,071 2,411,080 3,137,100 678,684 12,545,180 Accumulated depreciation and impairment (414,792) (1,935,093) (144,009) (1,608,649) (1,727,441) (1,108) (5,831,092) Net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088 Year ended 31 December 2018
Opening net book amount 1,669,425 2,018,935 136,062 802,431 1,409,659 677,576 6,714,088 Additions - - - - - 1,214,241 1,214,241 Transfers 101,202 97,601 21,936 176,549 199,671 (596,959) - Disposals (56) (1,164) (1,188) (5,986) (688) (7) (9,089) Reclassification 2,965 (143,415) 29,462 3,871 107,117 - - Other deductions - (10,119) - - (2,647) (32,151) (44,917) Impairment charge - (2,832) (478) - (3,478) (355) (7,143) Depreciation charge (51,781) (246,570) (37,514) (252,144) (337,879) - (925,888) Closing net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292 At 31 December 2018
Cost 2,188,306 3,837,053 326,799 2,556,744 3,376,670 1,263,392 13,548,964 Accumulated depreciation and impairment (466,551) (2,124,617) (178,519) (1,832,023) (2,004,915) (1,047) (6,607,672) Net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292 Six months ended 30 June 2019
Opening net book amount 1,721,755 1,712,436 148,280 724,721 1,371,755 1,262,345 6,941,292 Additions - - - - - 669,832 669,832 Tra nsfers 567 49,482 13,598 80,843 107,046 (251,536) - Disposals - (4,768) (1,798) - (374) (10) (6,950-) Other deductions (1,986) (5,481) - - (5) (152) (7,624) Impairment charge (Note 28) - ( 2 , 6 6 2) (91) -- ( 3 7 3) - (3,126) Depreciation charge (Note 6, 28) (27,016)- (121,043) (18,623) (134,848)- (173,713) - ( 4 7 5 , 2 4 3) Closing net book amount 1,693,320 1,627,964 141,366 670,716 1,304,336 1,680,479- 7,118,181 At 30 June 2019
Cost 2,186,887 3,819,204 333,327 2,626,163 3,460,597 1,681,171 14,107,349 Accumulated depreciation and impairment (493,567) (2,191,240) (191,961) (1,955,447) (2,156,261) (692) (6,989,168) Net book amount 1,693,320 1,627,964 141,366 670,716 1,304,336 1,680,479 7,118,181
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2019, depreciation expense of approximately RMB407,308,000 (the six months ended 30 June 2018: RMB404,610,000) has been charged in cost of sales, RMB1,639,000 (the six months ended 30 June 2018: RMB1,568,000) in distribution costs and RMB66,296,000 (the six months ended 30 June 2018: RMB56,919,000) in administrative expenses.
(i) Temporarily idle property, plant and equipment
As at 30 June 2019, property, plant and equipment with book value of approximately RMB 13,170,000 (cost of RMB132,424,000) (31 December 2018: book value of approximately RMB 2,497,000 and cost of RMB56,727,000) were temporarily idle due to product process adjustment and other reasons.The specific analysis is as follows:
Accumulated Net Cost depreciation Impairment book amount Plant and Machinery 110,939 (89,092) (11,503) 10,344 Motor Automobiles 2,418 (1,947) (98) 373 Electronic and other equipment 19,067 (15,564) (1,050) 2,453 132,424 (106,603) (12,651) 13,170 (ii) Property, plant and equipment not yet obtained proper certificate
Reasons for not completing Net book amount proper certificate Buildings 882,715 Procedure not yet completed 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 2019 31 December 2018 Opening net book amount 601,260 616,834 Additions - - Amortisation charge (Note 6, 28) (7,787) (15,574) Closing net book amount 593,473 601,260 Cost 751,626 751,626 Accumulated amortisation (158,153) (150,366) Net book amount 593,473 601,260 Amortisation expense was charged in administrative expenses.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2018
Opening net book amount 146,556 47,842 3,462 - - 197,860 Addi tion 71,814 32,152 - - - 103,966 Disposals - (63) - - - (63) Amortisation charge (38,952) (16,785) - - - (55,737) Closing net book amount 179,418 63,146 3,462 - - 246,026 At 31 December 2018
Cost 254,412 152,014 89,028 36,978 1,649 534,081 Accumulated amortisation and impairment (74,994) (88,868) (85,566) (36,978) (1,649) (288,055) Net book amount 179,418 63,146 3,462 - - 246,026 Six months ended 30 June 2019
Opening net book amount 179,418 63,146 3,462 - - 246,026 Addition 77,398 152 - - - 77,550 Disposals - - - - - - Amortisation charge (Note 6, 28) (25,002) (10,162) - - - (35,164) Closing net book amount 231,814 53,136 3,462 - - 288,412 At 30 June 2019
Cost 331,809 152,165 89,028 36,978 1,649 611,629 Accumulated amortisation and impairment (99,995) (99,029) (85,566) (36,978) (1,649) (323,217) Net book amount 231,814 53,136 3,462 - - 288,412
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(i) For six months ended 30 June 2019, amortisation expense of approximately RMB34,745,000 (the six months ended 30 June 2018: RMB25,356,000) was charged in administrative expenses, RMB249,000 (the six months ended 30 June 2018: RMB288,000) in cost of sales and RMB170,000 (the six months ended 30 June 2018: RMB170,000) in distribution costs. (ii) Development cost of approximately RMB77,398,000 (the six months ended 30 June 2018:RMB19,693,000) were capitalised by the Group during the six months ended 30 June 2019.
(iii) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the cash generating unit level. The goodwill is allocated to the following cash generating unit (“CGU”):
31 December 2018 Addition Impairment 30 June 2019 JMCH 3,462 - - 3,462 The recoverable amount of the CGU is determined based on fair value less costs of disposal. These calculations use after-tax cash flow projections based on financial budgets approved by management covering a seven-year period according to the medium and long-term budgets for the business development plan approved by the management. Adjustments for market conditions are also considered for the forecast. Cash flows beyond the seven-year period are extrapolated using the estimated long term growth rate stated below. The long term growth rate does not exceed the average growth rate for the heavy duty automobile business in which the CGU operates.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(iii) Impairment test for goodwill (continued)
In the opinion of management, the recoverable amount of the CGU will not be lower than the carrying amount even if taking into account a reasonably possible change in the key assumptions on the calculation of recoverable amount of the CGU.
The fair value measurement is categorised in level 3 of the fair value hierarchy.
15 Financial instruments by category
The Group holds the following financial instruments:
Financial assets Notes 30 June 2019 31 December 2018 Financial assets at amortised cost
Trade receivables 19 2,570,128 2,674,650 Notes receivables 19 6,500 626,509 Other receivables 19 89,423 84,588 Interest receivables 19 29,683 37,923 Cash and cash equivalents 20 8,367,457 7,616,880 Financial assets at fair value through
other comprehensive income
Notes receivables 223,907 6,246 Derivative financial instruments - 979 11,287,098 11,047,775 Financial liabilities Notes 30 June 2019 31 December 2018 Liabilities at amortised cost
Trade and other payables(exclude
payroll and welfare payables, other
tax payables) 26 12,081,645 11,658,259 Borrowings 23 3,826 4,044 Derivative financial instruments 2,578 - 12,088,049 11,662,303 TheGroup’s exposure to various risks associated with the financial instruments is discussed in Note 3. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date of Percentage of
Entity incorporation equity interest held Principal activities JMCH Taiyuan, PRC Manufacture and sale of /8 January 2013 100% automobiles and spare parts JMCS Nanchang, PRC Sale of automobiles and /11 October 2013 100% spare parts SZFJ Shenzhen, PRC Sale of automobiles and /3 May 2018 100% spare parts GZFJ Guangzhou, PRC Sale of automobiles and /15 June 2018 100% spare parts XMFJ Xiamen, PRC Sale of automobiles and /20 June 2018 100% spare parts 16b Investments accounted for using the equity method
(i) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow: 30 June 2019 31 December 2018 Associate 40,446 40,112 The amount recognised in the consolidated statement of comprehensive income was as follow: Six months ended 30 June
2019 2018 Share of profit 334 2,611 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.
(ii) Reconciliation of summarised financial information of the associate
Six months ended 30 June 2019 2018 At beginning of the year 209,460 197,774 Profit for the year 1,742 13,634 Dividends distributed - - At end of the year 211,202 211,408 Interest in associate 19.15% 19.15% Carrying value 40,446 40,485
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Deferred income tax
30 June 2019 31 December 2018 Deferred tax assets 1,016,943 926,630 Deferred tax liabilities-can be offset (227,852) (183,534) Deferred tax liabilities-cannot be offset (25,676) (26,024) Deferred tax assets-net 789,091 743,096 Deferred tax liabilities-net (25,676) (26,024) The gross movement on the deferred income tax account is as follows:
30 June 2019 31 December 2018 At beginning of the year 717,072 663,517 Credited to profit or loss (Note 10(i)) 46,343 52,407 Credited to other comprehensive income
(Note 10(i)) - 1,148 At end of the year 763,415 717,072 The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Accrued
expenses
and A mortization
Provision for Retirement provision of non-
impairment of benefits for statutory patented Tax
Deferred tax assets assets obligation warranty technology losses Others Total At 1 January 2018 12,149 13,543 723,387 4,505 - 4,293 757,877 Credited/(charged) to
profit or loss 4,549 1,405 (18,816) 4,869 178,791 (3,193) 167,605 Credited to other
comprehensive income - 1,148 - - - - 1,148 At 31 December 2018 16,698 16,096 704,571 9,374 178,791 1,100 926,630 (Charged) /credited to
(2,528) (397) 55,467 3,125 26,594 8,052 90,313 profit or loss
Credited to other
comprehensive income - - - - - - - At 30 June 2019 14,170 15,699 760,038 12,499 205,385 9,152 1,016,943 Amortisation Forwards
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total At 1 January 2018 (3,545) (64,079) (26,736) - (94,360) (Charged)/credited to
profit or loss (841) (114,922) 712 (147) (115,198) At 31 December 2018 (4,386) (179,001) (26,024) (147) (209,558) (Charged)/credited to
(1,309) (43,156) 348 147 (43,970) profit or loss
At 30 June 2019 (5,695) (222,157) (25,676) - (253,528)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Deferred income tax (continued)
||||
|-|-|-|
|The analysis of deferred tax assets and deferred tax liabilities is as follows:|||
||30 June 2019|31 December 2018|
|Deferred tax assets:|||
|–Deferred tax asset to be recovered after|||
|more than 12 months|233,281|203,802|
|–Deferred tax asset to be recovered|||
|within 12 months|783,661|722,828|
||1,016,942|926,630|

 30 June 2019 31 December 2018 Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (214,572) (182,373)–Deferred tax liabilities to be recovered
within 12 months (38,956) (27,185) (253,528) (209,558) Deductible temporary differences and tax losses which no deferred income tax assets were recognised were as follows:
30 June 2019 31 December 2018 Deductible temporary differences 251,214 234,433 Tax losses
749,897 639,805 1,001,111 874,238 The expiry years of the tax losses are as follows:
30 June 2019 31 December 2018 2019
36,772 36,772 2020
72,470 72,470 2021
115,820 115,820 2022
150,713 150,713 2023
240,815 264,030 2024
133,307 - 749,897 639,805
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Inventories
30 June 2019 31 December 2018 Raw materials 1,305,690 1,553,135 Work in progress 205,122 211,490 Finished goods 662,464 757,729 2,173,276 2,522,354 For the six months ended 30 June 2019, the cost of inventories recognised as expenses and included in cost of sales amounted to approximately RMB10,252,206,000 (the six months ended 30 June 2018: RMB10,752,554,000).
Movement on the provision for inventories write-down is as follows:
30 June 2019 31 December 2018 At beginning of the year (76,815) (45,130) Provision for inventories write-down (Note
28) (5,310) (53,651) Inventories written off during the year as
uncollectible 21,192 21,966 At end of the year (60,933) (76,815) 19 Trade and other receivables and prepayments
30 June 2019 31 December 2018 Trade receivables 2,591,273 2,696,928 Less: Provision for impairment of trade
receivables (21,145) (22,278) Trade receivables– net 2,570,128 2,674,650 Notes receivables 6,500 626,509 Other receivables 89,943 85,031 Less: Provision for impairment of other
receivables (520) (443) Other receivables– net 89,423 84,588 Prepayments 1,192,605 1,158,303 -Material payment in advance 555,268 525,777 -Advance payment of taxes and surcharges 637,337 632,048 -Others - 478 Deductable VAT input tax 166,387 96,311 Interest receivables 29,683 37,923 4,054,726 4,678,284 Refer to Note 31 for details of receivables from related parties.
The carrying amounts of trade and other receivables approximate their fair values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2019 31 December 2018 At beginning of the year (22,721) (21,674) Provision for receivables impairment
(Note 28) 1,056 (1,089) Receivables written off during the year as
uncollectible - 42 At end of the year (21,665) (22,721) The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.
20 Cash and cash equivalents
30 June 2019 31 December 2018 Cash at bank and in hand 6,655,457 2,016,859 Short-term bank deposits (a) 1,712,000 5,600,021 8,367,457 7,616,880 As at 30 June 2019 and 31 December 2018, all bank deposits are in RMB.
As at 30 June 2019, the Group had cash of approximately RMB577,916,000 (2018: RMB833,617,000) deposited in Jiangling Motor Group Finance Company (“JMCF”) (Note 31 (ix)). 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.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Tradable shares
Number of
shares “A” shares “B” shares Total (thousands) Restricted Non-restricted
Year ended 31 December 2018
Balance at 1 January 2018 863,214 907 518,307 344,000 863,214 Transfer - (120) 120 - - Balance at 31 December 2018 863,214 787 518,427 344,000 863,214 Six months ended 30 June
2019
Balance at 1 January 2019 863,214 787 518,427 344,000 863,214 Transfer - - - - - Balance at 30 June 2019 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 2019.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2018 431,607 18,627 680 450,914 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (3,442) (3,442) At 31 December 2018 431,607 18,627 (2,762) 447,472 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - - - At 30 June 2019 431,607 18,627 (2,762) 447,472 (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 2019.
23 Borrowings
30 June 2019 31 December 2018 Current
Bank borrowings - guaranteed (a) 450 449 Non-current
Bank borrowings - guaranteed (a) 3,376 3,595 Total borrowings 3,826 4,044 (a) Bank borrowings of USD557,000 (equivalent to approximately RMB3,826,000) (2018: USD589,000 equivalent to approximately RMB4,044,000) were guaranteed by JMCF (Note 31 (iii)).
The interest rate of bank borrowings is1.50% per annum (2018:1.50%).
The fair value of borrowings approximates their carrying values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2019 31 December 2018 Between 1 and 2 years 450 449 Between 2 and 5 years 1,350 1,348 Over 5 years 1,576 1,798 3,376 3,595 The Group has the following undrawn borrowing facilities:
30 June 2019 31 December 2018 Fixed rate
- Expiring within one year 1,973,097 2,270,784 24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the consolidated statement of financial position is as follows:
30 June 2019 31 December 2018 Present value of defined benefits obligations 65,372 68,020 The movement of early retirement and supplemental benefit obligations for the year ended 31 December 2018 is as follows:
30 June 2019 31 December2018 At beginning of the year 68,020 59,184 For the year
-Current service cost - 1,315 -Interest cost - 2,410 -Payment (2,648) (4,954) -Past service cost from the change of plan - 2,386 -Actuarial loss - 7,679 At end of the year 65,372 68,020 Current 4,595 4,595 Non-current 60,777 63,425 65,372 68,020 The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2019 31 December 2018 Discount rate adopted —— 3.5% Inflation rate adopted —— 2% 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 2019
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 2019, a provision of RMB65,372,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB65,372,000 is the present value of the unfunded obligations, of which the current portion amounting to RMB4,595,000 (2018: RMB4,595,000) has been included under current liabilities.
25 Provisions for statutory warranty
The movement on the statutory warranty provisions and other liabilities is as follows:
30 June 2019 31 December 2018 At beginning of the year 352,554 374,981 Charged for the year (Note 6) 159,699 291,471 Utilised during the year (140,705) (313,898) At end of the period 371,548 352,554 Analysis of total provisions:
30 June 2019 31 December 2018 Non-current 166,251 151,492 Current 205,297 201,062 371,548 352,554 The above represents the statutory warranty protecting customer from faults that arise after the product has been transferred to the customer. The statutory warranty is estimated based on prioryears’ experience on the occurrence of such cost.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
30 June 2019 31 December 2018 Trade payables 7,914,886 7,824,908 Payroll and welfare payables 356,075 304,322 Dividend payables 41,313 6,790 Other tax payables 16,636 233,385 Payables of sales rebates 1,748,027 1,714,485 Payables ofR&D expenses 930,737 828,807 Others 1,446,682 1,283,269 12,454,356 12,195,966 Refer to Note 31 for details of amount due to related parties.
27 Dividends
A final dividend for 2018 of RMB0.04 per share, amounting to a total dividend of approximately RMB34,529,000 was proposed at the Board ofDirectors’ Meeting on 26 March 2019, and such dividend is proposed at theShareholders’ Meeting on 28 June 2019.
28 Cash generated from operations
Six months ended 30 June 2019 2018 Profit before tax 12,560 346,355 Depreciation of PPE (Note 6, 12) 475,243 463,097 Amortisation of lease prepayment (Note 6, 13) 7,787 7,787 Amortisation of intangible assets (Note 6, 14) 35,164 25,814 Impairment charges of PPE (Note 12) 3,126 3,607 Provision for receivables impairment (Note 19) (1,056) 918 Provision of inventories (Note 18) 5,310 5,195 (Gain)/loss on disposals of PPE 4,412 (34,273) Finance expenses (Note 9) 2,170 2,879 Finance income (Note 9) (92,765) (106,654) Net foreign exchange transaction loss/(gain) 451 3,219 Share of profit from investment accounted for using
equity method (Note 16b) (334) (2,611) Investment gain of finance asset investment (18,447) (10,202) Investment loss of forwards exchange contracts 4,940 12,620 Changes on fair value of forwards exchange
contracts 3,557 (6,915) Provisions for statutory warranty 18,994 (7,799) Changes in working capital:
-Increase in restricted cash (20,001) - - Increase in inventories 333,470 (20,248) - Increase in trade and other receivables 368,709 (399,396) - (Decrease)/increase in trade and other payables 294,858 (1,072,349) - Increase/(decrease) in pensions and other
retirement benefits (2,648) (2,805) Cash generated from operations 1,435,500 (791,761)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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, lease prepayment and intangible assets comprise:
Six months ended 30 June 2019 2018 Net book amount 6,950 95,408 (Loss) /gain on disposal of PPE (4,412) 34,273 (Decrease)/increase in trade and other payables 452 (127,112) Proceeds from disposal of PPE 2,990 2,569 29 Contingencies
At 30 June 2019, 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 2019 31 December 2018 Contracted but not provided for:
Purchases of buildings, plant and machinery 946,316 1,095,333 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. (“JHC”) (a), 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 2019. The shareholders of JHC are Chongqing Changan Automobile Corporation Ltd. and JMCG, and both of them hold50% equity interest of JHC, respectively.
The following is a summary of the significant transactions carried out between the Group, its associates, JMCG and its subsidiaries, JHC 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 2019.
(a) As of July 26, 2019, JHC has transferred the total share capital of the Company to Nanchang Jiangling Investment Co., Ltd. (“JIC”). JHC no longer held the shares of the Company, the controlling shareholder of JMC will be changed from JHC to JIC.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 2019, related parties, other than the subsidiary, and their relationship with the Group are as follows:
Name of related party Relationship JMCG Shareholder of JHC Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Subsidiary of JMCG Jiangling Material Co. Subsidiary of JMCG Nanchang Gear Co., Ltd. Subsidiary of JMCG Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG Jiangxi Lingrui Recycling Resources Development Corporation Subsidiary of JMCG JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG JMCG Property Management Co. Subsidiary of JMCG Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Associate of JMCG Nanchang JMCG Mekra-Lang Vehicle Mirror Co., 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 Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Associate of JMCG Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Associate of JMCG GETRAG (Jiangxi) Transmission Company Associate of JMCG Jiangxi jiangling overseas automobile sales and service Co., Ltd Associate of JMCG Jiangxi JMCG Motorhome Co., Ltd. Associate of JMCG Jiangxi Jiangling Chassis Co.,Ltd. Subsidiary of JMCG Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG JMCF Subsidiary of JMCG Nanchang 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 Nanchang Yinlun Heat-exchanger Co., Ltd. Joint venture of JMCG Jiangxi ISUZU Engine Co.,Ltd. Joint venture of JMCG Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary 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 Jiang ling Motor Electricity Vehicle Sales Co., Ltd Subsidiary of JMCG Ford Global Technologies, LLC Subsidiary of Ford Ford Motor (China) Co., Ltd. Subsidiary of Ford Ford Motor Research& Engineering (Nanjing) Co., Ltd. Subsidiary of Ford Ford Otomotiv Sanayi A.S. Subsidiary of Ford Auto Alliance (Thailand) Co., Ltd. Subsidiary of Ford Ford Vietnam Limitied Subsidiary of Ford Changan Ford Automobile Co., Ltd. Joint venture of Ford Jiangxi JMCG boya brake system Co., Ltd Subsidiary of JMCG
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services
Six months ended 30 June Purchase of goods 2019 2018 Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 360,407 397,028 Nanchang Baojiang Steel Processing Distribution Co., Ltd. 356,064 464,830 Jiangxi Jiangling Chassis Co., Ltd. 341,935 464,265 Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 341,796 244,473 GETRAG (Jiangxi) Transmission Company 316,959 395,455 Jiangxi Jiangling Lear Interior System Co., Ltd. 255,709 234,271 Ford 187,925 301,095 Nanchang JMCG Liancheng Auto Component Co., Ltd. 170,539 211,971 Nanchang Unistar Electric& Electronics Co.,Ltd. 105,848 158,560 Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. 95,764 89,486 Hanon Systems 87,086 136,338 Nanchang JMCG Shishun Logistics Co., Ltd. 86,296 1,406 JMCG 53,907 58,674 Nanchang JMCG Mekra-Lang Vehicle Mirror Co., Ltd 50,767 51,150 Jiangxi Lingge Non-ferrous Metal Die-casting Co., Ltd. 33,620 34,052 Nanchang Yinlun Heat-exchanger Co., Ltd. 32,419 23,536 Nanchang Lianda Machinery Co., Ltd. 30,231 31,963 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 26,962 89,556 JHC 20,879 - Jiangling Material Co. 13,022 15,044 Jiangxi Jiangling Group Special Vehicle Co., Ltd. 12,366 13,928 Ford Otomotiv Sanayi A.S. 12,312 88,410 Auto Alliance (Thailand) Co., Ltd. 11,703 53,769 Jiangling Aowei Aotomobile Spare Part Co., Ltd. 10,039 13,657 Nanchang JMCG Xinchen Auto Component Co., Ltd. 8,683 9,717 Jiangxi ISUZU Engine Co., Ltd. 7,416 33,131 Nanchang Gear Co., Ltd. 5,921 7,220 Jiangxi JMCG Industry Co., Ltd. 5,746 5,359 NC.Gear Forging Factory 3,283 6,829 Jiangxi Biaohong Engine Tappet Co., Ltd. 3,134 3,379 Jiangxi Lingrui Recycling Resources Development Corporation 3,012 1,932 Changan Ford Automobile Co., Ltd. 2,401 6,869 Jiangxi JMCG boya brake system Co., Ltd 2,114 24 Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,459 2,248 Nanchang JMCG Skyman Auto Component Co., Ltd. (a) - 39,904 Others 152 206 3,057,876 3,689,735 (a) In December 2018, JHC absorbed Nanchang JMCG Skyman Auto Component Co.,Ltd. The Group purchased goods from related parties classified as two types: import parts and home- made parts.
 Purchase import parts from Ford 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 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June Purchase of services Natures of transaction 2019 2018 Nanchang JMCG Shishun Logistics Co., Ltd. Truckage/Transportation 141,954 126,082 Ford Global Technologies, LLC Royalty fee 110,123 94,135 Ford Engineering service and design 106,018 134,540 Changan Ford Automobile Co., Ltd. Service fee/Labor costs 58,387 4,959 Ford Otomotiv Sanayi A.S. Engineering service and design 25,937 21,604 Ford Secondments costs 17,446 19,647 Jiangxi JMCG Industry Co., Ltd. Working meal 12,669 20,196 Nanchang Hengou Industry Co., Ltd. Packing/Truckage 12,063 19,944 Ford Otomotiv Sanayi A.S. Royalty fee 7,508 9,877 JHC Labor costs /Secondments costs 6,979 687 Ford Motor (China) Co., Ltd. Regional personnel costs 4,461 3,784 Ford Otomotiv Sanayi A.S. Secondments costs 3,349 10,746 Ford Motor Research& Engineering (Nanjing) Co., Ltd. Regional personnel costs 3,279 1,561 Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. Promotion fee 2,902 - Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Agent business of importation 2,439 2,167 JMCG Property Management Co. Property management 998 1,083 JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance fee 969 4,012 GETRAG (Jiangxi) Transmission Company Design fee 460 3,280 Jiangxi Jiangling Group Special Vehicle Co., Ltd. Promotion fee 36 1,540 Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. Promotion fee - 1,959 Faurecia Emissions Control Technologies (Nanchang) Co., Ltd. Design fee - 1,315 Others 1,401 922 519,378 484,040 The Group purchased the service from related parties based on agreement price.
31 Related party transactions (continued)
(i) Purchases and sales of goods, provision and purchases of services (continued) Six months ended 30 June Sales of goods 2019 2018 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 474,714 566,065 Jiangxi JMCG Specialty Vehicles Sales Corporation, Ltd. 63,909 91,265 Jiangxi Jiangling Group Special Vehicle Co., Ltd. 41,557 35,586 Jiangxi Lingrui Recycling Resources Development Corporation 36,018 29,625 Jiangxi Jiangling Chassis Co., Ltd. 23,932 44,476 JMCG Jingma Motors Co., Ltd. 20,101 36,743 Nanchang JMCG Liancheng Auto Component Co., Ltd. 17,109 23,602 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 12,667 61,448 Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. 9,066 57,568 Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 7,640 7,707 Nanchang JMCG Shishun Logistics Co., Ltd. 4,499 - Jiangxi jiangling overseas automobile sales and service Co.,
4,341 - Ltd
Nanchang Hengou Industry Co., Ltd. 4,245 22,874 Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 3,385 6,996 Jiangxi JMCG Industry Co., Ltd. 2,303 3,050 Jiangxi Jiangling Lear Interior System Co., Ltd. 1,723 2,902 Nanchang Lianda Machinery Co., Ltd. 1,026 81 JMCG Property Management Co. 204 3,191 JHC 35 23,080 JMCG Jiangxi Engineering Construction Co., Ltd. - 1,919 Others 1,374 881 729,848 1,019,059 The Group sold goods to related parties, based on agreement price.
31 Related party transactions (continued)
(ii) Rental
Rental cost
Lessor Category Rental cost of six Rental cost of six months ended 30 months ended 30 June 2019 June 2018 JMCG Building 2,651 1,725 Jiangxi Jiangling Motors Imp.&
2,141 2,136 Exp. Co., Ltd. Building
JMCG Property Management Co. Building 190 211 4,982 4,072 Rental income
Lessee Category Rental income of six Rental income of six months ended 30 months ended 30 June 2019 June 2018 GETRAG (Jiangxi) Transmission
7 - Company Building
JHC Building 3 3 10 3 (iii) Guarantee
As at 30 June 2019, bank loans of USD557,000 (equivalent to approximately RMB 3,826,000) (2018:USD589,000, equivalent to approximately RMB4,044,000) were guaranteed by JMCF (Note 23).
(iv) Sales of PPE
Six months ended 30 June 2019 2018 Nanchang JMCG Shishun Logistics Co., Ltd. 299 - (v) Purchase of PPE
Six months ended 30 June 2019 2018 Nanchang Jiangling Hua Xiang Auto Components Co.,
6,337 - Ltd.
Jiangxi Jiangling Special Purpose Vehicle Co., Ltd. - 5,671 Nanchang JMCG Liancheng Auto Component Co., Ltd. - 677 6,337 6,348
31 Related party transactions (continued)
(vi) Provide technique sharing
Six months ended 30 June 2019 2018 Ford 28,810 - Ford Vietnam Limited 2,874 - 31,684 - (vii) 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 2019, the total remuneration of the key management was approximately RMB6,361,000 (the six months ended 30 June 2018: RMB7,212,000).
(viii) Interest received from cash deposit in related parties
Six months ended 30 June 2019 2018 JMCF 6,771 9,739 (ix) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2019 31 December 2018 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 165,281 251,236 Jiangxi JMCG Specialty Vehicles Sales
30,136 32,940 Corporation, Ltd.
Ford 17,610 - JMCG Jingma Motors Co., Ltd. 10,499 6,162 Nanchang JMCG Liancheng Auto Component
8,456 - Co., Ltd.
Jiangxi JMCG Specialty Vehicles Corporation,
8,190 237 Ltd.
Jiangxi Jiangling Group Special Vehicle Co., Ltd. 8,162 5,726 Jiang ling Motor Electricity Vehicle Sales Co., Ltd 5,961 5,961 Nanchang JMCG Shishun Logistics Co., Ltd. 4,736 - Ford Vietnam Limited 2,874 5,104 Nanchang Jiangling Hua Xiang Auto Components
1,522 1,899 Co., Ltd.
Jiangxi Jiangling Chassis Co., Ltd. - 9,803 Others 1,607 122 265,034 319,190
31 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Other receivables from related parties 30 June 2019 31 December 2018 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 39,142 35,027 Nanchang Unistar Electric& Electronics Co., Ltd. 28 - Hanon Systems 2 - Others - 11 39,172 35,038 Prepayments for purchasing of goods 30 June 2019 31 December 2018 Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 536,715 496,146 536,715 496,146 Notes receivables from related parties 30 June 2019 31 December 2018 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 15,000 - JMCG Jingma Motors Co., Ltd. - 41,418 15,000 41,418 Prepayments for construction in progress 30 June 2019 31 December 2018 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 121 - Jiangxi JMCG Specialty Vehicles Corporation,
- 500 Ltd.
121 500 Prepayments for mould lease 30 June 2019 31 December 2018 Changan Ford Automobile Co., Ltd. - 478 Cash deposit in related parties 30 June 2019 31 December 2018 JMCF 577,916 833,617
31 Related party transactions (continued)
(ix) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2019 31 December 2018 Nanchang Jiangling Hua Xiang Auto
415,736 316,174 Components Co., Ltd.
Jiangxi Jiangling Chassis Co., Ltd. 297,987 333,431 Jiangxi Jiangling Special Purpose Vehicle Co.,
269,443 336,126 Ltd.
Jiangxi Jiangling Lear Interior System Co., Ltd. 197,031 214,139 GETRAG (Jiangxi) Transmission Company 167,497 275,275 Jiangxi JMCG Specialty Vehicles Corporation,
144,038 138,209 Ltd.
Nanchang JMCG Liancheng Auto Component
122,978 148,483 Co., Ltd.
Hanon Systems 96,975 91,656 Nanchang JMCG Shishun Logistics Co., Ltd. 85,910 10,113 Nanchang JMCG Mekra-Lang Vehicle Mirror
62,152 48,200 Co., Ltd
Nanchang Unistar Electric& Electronics Co., Ltd. 61,872 96,905 Ford 55,833 151,749 Faurecia Emissions Control Technologies
54,896 58,966 (Nanchang) Co., Ltd.
JMCG 40,107 68,159 JHC 23,044 26,349 Jiangxi Lingge Non-ferrous Metal Die-casting
22,044 19,850 Co., Ltd.
Nanchang Yinlun Heat-exchanger Co., Ltd. 20,437 24,756 Nanchang Lianda Machinery Co., Ltd. 17,409 28,325 Jiangxi Jiangling Group Special Vehicle Co., Ltd. 9,941 28,944 Jiangling Aowei Aotomobile Spare Part Co., Ltd. 9,523 14,533 Jiangxi ISUZU Engine Co., Ltd. 8,784 9,956 Nanchang JMCG Xinchen Auto Component Co.,
6,314 6,355 Ltd.
Nanchang Gear Co., Ltd. 6,017 6,179 Jiangxi JMCG Industry Co., Ltd. 6,014 7,830 Auto Alliance (Thailand) Co., Ltd. 2,645 2,151 Jiangxi Lingrui Recycling Resources
2,607 1,736 Development Corporation
Jiangxi JMCG boya brake system Co., Ltd 2,322 - Jiangxi JMCG Shangrao Industrial Co., Ltd. 1,883 1,693 Jiangxi Biaohong Engine Tappet Co., Ltd. 1,586 2,037 NC.Gear Forging Factory 1,369 4,173 Ford Otomotiv Sanayi A.S. 1,344 1,031 Jiangling Material Co. 1,048 1,372 Changan Ford Automobile Co., Ltd. - 67,622 Others - 16 2,216,786 2,542,493
31 Related party transactions (continued)
(ix) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2019 31 December 2018 Ford 131,973 92,310 Ford Otomotiv Sanayi A.S. 101,544 115,254 Ford Global Technologies, LLC 64,933 41,203 Jiangxi JMCG Specialty Vehicles Sales
41,230 31,946 Corporation, Ltd.
Changan Ford Automobile Co., Ltd. 35,868 9,776 JMCG Jiangxi Engineering Construction Co., Ltd. 25,771 30,166 JHC 20,676 15,641 GETRAG (Jiangxi) Transmission Company 12,190 14,216 Nanchang JMCG Shishun Logistics Co., Ltd. 12,038 7,736 Jiangxi Jiangling Group Special Vehicle Co., Ltd. 7,303 6,921 Faurecia Emissions Control Technologies
5,469 13,584 (Nanchang) Co., Ltd.
JMCG 2,666 623 Jiangxi JMCG Industry Co., Ltd. 2,486 3,504 Ford Motor (China) Co., Ltd. 2,135 4,803 Jiangxi Jiangling Lear Interior System Co., Ltd. 1,207 4,612 JMCG Property Management Co. 1,189 748 Ford Motor Research& Engineering (Nanjing)
1,004 607 Co., Ltd.
Nanchang Hengou Industry Co., Ltd. 413 10,211 Jiangxi Jiangling Special Purpose Vehicle Co.,
250 1,403 Ltd.
Nanchang Jiangling Hua Xiang Auto
- 7,222 Components Co., Ltd.
Jiangxi JMCG Motorhome Co., Ltd. - 1,905 Others 1,733 2,086 472,078 416,477 Capital commitments 30 June 2019 31 December 2018 JMCG Jiangxi Engineering Construction Co.,
Ltd. 31,940 29,456
Chapter XI Catalogue on Documents for Reference
1. Originals of 2019 Half-year financial statements signed by Chairman, Chief Financial Officer and Chief of Finance Department.
2. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in the first half of 2019.
4. The Half-year Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 29, 2019