Jiangling Motors Corporation, Ltd. 2014 Annual Report
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 false statements, misrepresentations or major omissions. Chairman Wang Xigao, President Yuan-Ching Chen, CFO Dennis Leu and Chief of Finance Department, Ding Ni, confirm that the Financial Statements in this Annual Report are truthful and complete.
The year 2014 profit distribution proposal approved by the Board of Directors is as follows:
A cash dividend of RMB 9.7 (including tax) will be distributed for every 10 shares held, and there is no stock dividend. Based on the total share capital of 863,214,000 shares as of December 31, 2014, the total cash dividend distribution amounts shall be RMB 837,317,580.
B share dividend shall be paid in Hong Kong Dollars and converted based on the HKD-to-RMB standard exchange rate published by thePeople’s Bank of China on the first working day following the approval on the profit distribution proposal by theShareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
The prospective description regarding future business plan and development strategy in this report does not constitute virtual commitment. The investors shall pay attention to the risk. All financial data in this report are prepared under International Financial Reporting Standards(‘IFRS’) unless otherwise specified.
The Annual Report is prepared in Chinese and English. In case of discrepancy, the Chinese version will prevail.
Contents
Chapter I Important Notes, Contents and Abbreviations ........................... 1 Chapter II Brief Introduction ...................................................................... 3 Chapter III Operating Highlight ................................................................... 4 Chapter IV Report of the Board of Directors ............................................... 4 Chapter V Major Events ............................................................................ 16 Chapter VI Share Capital Changes& Shareholders ................................... 18 Chapter VII Directors, Supervisors, Senior Management and Employees . 22 Chapter VIII Corporate Governance Structure ............................................. 30 Chapter IX Internal Control ........................................................................ 35 Chapter X Financial Statements ................................................................ 37 Chapter XI Catalog on Documents for Reference ...................................... 97 Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
Jiangling-Isuzu Jiangling-Isuzu Motors Company, Ltd.
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
Company’s Chinese name:江铃汽车股份有限公司
English name: Jiangling Motors Corporation, Ltd.
Abbreviation: JMC
Company legal representative: Mr. Wang Xigao
JMC’s Board secretary: Mr. Wan Hong (Tel: 86-791-85235675)
Person for financial information disclosure:
Mr. Dennis Leu (Tel: 86-791-85266503)
JMC’s securities affairs representative:
Mr. Quan Shi (Tel: 86-791-85266178)
Contact address: No. 509, Northern Yingbin Avenue, Nanchang City,
Jiangxi Province, P.R.C
Switchboard: 86-791-85266000
Fax: 86-791-85232839
E-mail:relations@jmc.com.cn
Company registered address& headquarters address:
No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.C
Postal Code: 330001
JMC’s website: http://www.jmc.com.cn
Newspapers for information disclosure: China Securities, Securities Times, Hong Kong Commercial Daily
Website designated by CSRC for publication ofJMC’s Annual
Report: http://www.cninfo.com.cn
Place for archiving Annual Report:
Securities Department, Jiangling Motors Corporation, Ltd.
Place of listing: Shenzhen Stock Exchange
Share’s name: Jiangling Motors Jiangling B
Share’s code: 000550 200550
Other Information:
1. JMC was registered with Nanchang Municipal Bureau of Industrial& Commercial Administration on November 28, 1993. The information of JMC initial registration can be inquired from Jiangxi Provincial Bureau of Industrial& Commercial Administration. The company registration was changed with Jiangxi Provincial Bureau of Industrial& Commercial Administration on January 8, 1997, on September 20, 1999, on November 25, 2003, on September 23, 2004, on June 21, 2007 and on April 30, 2008.
2. Changes of Controlling Shareholders:
On December 1, 1993, JMC A shares were listed on Shenzhen Stock Exchange, while JMCG, the founder-member, was the controlling shareholder of the Company. On September 29, 1995 and November 12, 1998, JMC issued additional 344 million B shares totally, while, after the additional B share issuance, JMCG and Ford were the controlling shareholders of the Company. On December 8, 2005, the 354.176 million JMC shares held by JMCG, the former controlling shareholder, were transferred to JMH. Presently, JMH and Ford are the controlling shareholders of the Company.
3. Business License Registration Number: 360000511000021.
4. Taxation Registration Number:
(State Administration of Taxation) 360108612446943
(Nanchang Local Taxation) 360104612446943
5. Organization Code: 61244694-3.
6. Accounting Firm appointed by JMC for audit under both China General Acceptable Accounting Principles(‘ChinaGAAP’) and International Financial Reporting Standards(‘IFRS’):
Name: PricewaterhouseCoopers Zhong Tian CPAs LLP
(‘PwC ZhongTian’)
Headquarters address: 11th Floor, PricewaterhouseCoopers Center, 202 Hu Bin Road, Shanghai City, P.R.C.
Names of Signed Accountants: Ye Jun, Xiong Huanwei
Chapter III Operating Highlight
I. Main accounting data and financial ratios of the past three years.
Unit: RMB‘000
||||||
|-|-|-|-|-|
||2014|2013|Change(%)|2012|
|Revenue|25,537,290|20,889,706|22.25|17,474,707|
|Profit Attributable to the EquityHolders of the Company|2,107,852|1,694,848|24.37|1,515,327|
|Net Cash Generated FromOperating Activities|4,189,649|3,141,249|33.58|2,265,638|
|Basic Earnings Per Share (RMB)|2.44|1.96|24.37|1.76|
|Diluted Earnings Per Share (RMB)|2.44|1.96|24.37|1.76|
|Weighted Average Return on NetAsset Ratio|21.20%|19.54%|Up 1.66percentagepoints|19.53%|
||End of Year2014|End of Year2013|Change(%)|End of Year2012|
|Total Assets|19,496,528|16,484,699|18.27|13,112,376|
|Shareholders’ Equity Attributableto the Equity Holders of theCompany|10,598,429|9,173,999|15.53|8,079,807|

Chapter IV Report of the Board of Directors
1. Summary
In 2014, China automobile industry production and sales volume increased steadily and rationally. Total sales volume was 23.49 million, increased6.9% compared with 2013. Commercial vehicle sales volume was 3.79 million, decreased6.5% compared with 2013.JMC’s core business is production and sales of light commercialvehicles，SUV and related
components.JMC’s major products include JMC series light truck, pickup, Yusheng SUV,
Transit series commercial vehicles, and heavy duty trucks. The Company also produces and
sells engines, castings and other components for sales to domestic and overseas markets.
During the reporting period, to face more severe competition, more stringent regulatory requirement, intensifying cost pressures and commercial vehicle industry slowdown pressure, the Company focused on quality improvement and new product development. Simultaneously, the Company introduced a series of sales policy to respond the segment markets slowdown pressure. In 2014, JMC achieved sales volume of 275,858 units, increased20% compared with 2013, achieved a revenue of RMB 25.54 billion, increased22% compared with 2013, and achieved a net profit of RMB 2.11 billion, increased24% compared with 2013.
2. Core Business Analysis
i. Sales Revenue Analysis
In 2014, JMC sales volume was 275,858 units, including JMC light truck of 106,582 units, JMC pickup of 70,454 units, Yusheng SUV of 26,708 units, Transit CV of 72,076 units and Heavy Truck of 38 units. Total sales volume increased20% compared with 2013. Total production volume was 274,161 units, including JMC light truck of 105,988 units, JMC pickup of 70,083 units, Yusheng SUV of 26,230 units, Transit CV of 71,814 units and Heavy Truck of 46 units.
In 2014, JMC achieved a market share at1.17% of total industry, up 0.13 percentage point from last year. JMC light truck and pickup accounted for11.4% market share, up 3.2 percentage points from last year. Transit accounted for18.7% market share, down 1.9 percentage points from last year. (Data source for above data: China Association of Automobile Manufacturers and the Company sales records)
In 2014, JMC total sales revenue was RMB 25.54 billion, increased22% compared with 2013.
In 2014, JMC total sales value to the top 5 customers was RMB 3,595 million, accounting for about14% ofJMC’s total turnover.
Top 5 Customers:
|||||
|-|-|-|-|
|No.|Name of the Customer|Sales Value(RMB Yuan)|Percentage of JMC’sTotal Turnover (%)|
|1|JMCG Import & Export Co., Ltd.|1,312,707,993|5.1%|
|2|Zhejiang Jiangling Motors SalesCompany|1,202,699,700|4.7%|
|3|Shanghai Keda Auto SalesCompany|371,652,527|1.5%|
|4|Henan Jiangling Motors SalesCompany|363,297,139|1.4%|
|5|Shanghai Keda Zhoupu Auto SalesCompany|344,640,052|1.4%|
|Total||3,594,997,411|14.1%|

ii. Cost Analysis
Unit:RMB’000
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||2014 FY||||2013 FY||||YOY|
||||Cost in||||Cost in||||change|
||Product||||Proportion||||Proportion|||
||||Core||||Core||||(Percentage|
||||||（%）||||（%）|||
||||Business||||Business||||Points)|
|Vehicle||17,420,269||92.3%||14,086,325||91.9%||0.4||
|Components||1,454,105||7.7%||1,242,679||8.1%||-0.4||

 The total value of purchases from the top 5 suppliers was RMB 3,872 million, accounting for about22% ofJMC’s total annual purchase amount.
Top 5 Suppliers:
|||||
|-|-|-|-|
|No.|Name of the Dealer|Purchases Value(RMB Yuan)|Percentage of JMC’sTotal Annual PurchaseAmount (%)|
|1|Bosch Auto Diesel SystemCompany|952,330,505|5.5%|
|2|Jiangxi Jiangling Chassis Company|832,971,063|4.8%|
|3|JMCG Interior Trim Factory|726,805,981|4.2%|
|4|GETRAG (Jiangxi) TransmissionCompany|692,007,317|4.0%|
|5|Nanchang Bao-jiang SteelProcessing & Distribution Co., Ltd.|667,940,411|3.9%|
|Total||3,872,055,277|22.4%|

 iii. Expense Analysis
Unit:RMB’000
|||||
|-|-|-|-|
|Items|2014 FY|2013 FY|YOY Change(%)|
|Sales Tax|852,416|614,397|38.7%|
|Income Tax Expense|321,443|208,468|54.2%|

 Sales tax increased by39%, mainly due to the total volume increase and more consumption tax (because of the taxable vehicles volume increase).
Income tax expense increased by54%, mainly due to the profit increase and applicable tax rate adjustment of 2013 deferred income tax assets accrual.
iv. Product Development
In 2014, JMC continued to focus on development of new product programs. Product related spending centered at future product development and compliance with regulatory
requirements. The N800, N352, N330, J08, J09, J10, J18 programs will incorporate market
driven improvements including increased payloads, new styling, and improved power lift,
etc. The JX493, E802, J15 and self-developed gas engine G501 projects will further expand
the Company's engine development capability, engine manufacturing capacity and ensure the Company is compliant with stringent emission regulations. The development expenditure which accounted in administrative expense was 1,554 Mils, representing15% of net assets, or6% of revenue.
v. Cash Flow Analysis
Net cash generated from operating activities increased by RMB 1,048 Mils, up33.4% from 2013, mainly due to the increase of sales volume.
Net cash used in financing activities decreased by RMB 365 Mils, down34.8% from 2013, mainly due to repayment of bank borrowing of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) in 2013.
3. Composition of Main Business
Table below breaks down Revenue& Cost of Goods Sold from Core Business.
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|Product|Turnover|Cost in CoreBusiness|GrossMargin|YOYTurnoverChange (%)|YOY Changein Costs ofCore Business(%)|YOY GrossMarginChange(PercentagePoints)|
|I. Vehicle|23,334,321|17,420,269|25.3%|23.0|23.7|(0.4)|
|II. Components|1,974,502|1,454,105|26.4%|14.9|17|(1.3)|
|Total|25,308,823|18,874,374|25.4%|22.3|23.1|(0.5)|
|Including:Related PartyTransaction|1,712,390|1,398,634|18.3%|4.4|3.8|0.5|

The decrease of the margin in the reporting period reflected the negative production mix change of the Company.
Details pertaining to core business classified according to region:
Unit:RMB’000
||||
|-|-|-|
|Region|Turnover|YOY Turnover Change (%)|
|North-east China|1,012,046|11.50|
|North China|2,613,085|18.60|
|East China|12,039,515|19.53|
|South China|4,160,761|39.34|
|Central China|2,272,070|23.23|
|North-west China|962,279|9.19|
|South-west China|2,249,067|25.36|

4. Analysis of Assets and Liabilities
i. Major Changes in Assets
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|Asset Items|December 31, 2014||December 31, 2013||YOY|YOY|
||||||Amountchange|Proportionchange|
||Amount|Proportion|Amount|Proportion|(%)|(Points)|
|Property, Plant andEquipment|5,736,408|29.4%|5,149,137|31.2%|11.4%|(1.8)|
|Inventories|1,658,707|8.5%|1,745,927|10.6%|(5.0)%|(2.1)|
|Trade, other receivables andprepayments|2,006,162|10.3%|2,059,295|12.5%|(2.6)%|(2.2)|
|Cash and Cash Equivalents|8,970,278|46.0%|6,479,972|39.3%|38.4%|6.7|
|Lease Prepayment|590,629|3.0%|604,831|3.7%|(2.3)%|(0.7)|

 Cash and cash equivalents at the end of report period increased by RMB 2,490 Mils, up38% from the end of 2013, mainly due to increase of sales volume and revenue.
ii. Major Changes in Liabilities
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|LiabilitiesItems|December 31, 2014||December 31, 2013||YOY|YOY|
||||||Amountchange|Proportionchange|
||Amount|Proportion|Amount|Proportion|(%)|(Points)|
|Trade andother Payables|8,420,273|94.6%|6,934,919|94.9%|21.4%|(0.3)|

Trade and other payables at the end of report period increased by RMB 1,485 million, up21% from the end of 2013, mainly due to increase of other payables for marketing and engineering expense at the end of 2014.
iii. The fair value of the assets and liabilities - see the notes to financial statements for 25. 5. Core Competitiveness Analysis
JMC is a sino-foreign joint venture auto company withR&D, manufacturing and sales operations. As a mainstream of domestic light commercial vehicle industry, JMC ranked among the top hundred Chinese listing corporations with comprehensive strength for many years. Company has been certificated as a national enterprise technology center, high-tech enterprise and national automobile export base which improvecompany’s core business competence.
||
|-|
|JMC's influence over auto industry is improving steadily, making considerable progress|
|both in technical equipment and new product development. JMC successfully launched|

||
|-|
|Xiaolan New Plant, R&D Center, which greatly strengthen the company’s product|
|development capability, manufacturing efficiency and overall sales performance. Ford|
|brand SUV EVEREST will be launched in 2015 which will further enhance the Company’s|
|competitive advantage. Meanwhile, JMC has always been strictly implementing national|
|emission regulation, and has accumulated a steady technical force and made full|
|preparation for the emission standard promotion. With the government’s emphasis on|
|environment protection and the accelerated progress of emission policies, the Company’s|
|competitive advantage will be further recognized.|

6. Investment in the Reporting Period
i. External Investment
During the reporting period, JMC did not invest in securities, or in holding the corporate equity of other listed or non-listed financial enterprises.
ii. JMC did not entrust financial transactions, derivatives investment and entrust loan during the reporting period.
iii. JMC did not raise equity funding, nor did it use equity funding raised in previous years. iv. Operating Results of Main Subsidiaries and Joint-Stock Companies
Unit:RMB’000
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofCompanies|Type ofCompanies|MainProducts|RegisteredCapital|Assets|Net Assets|Turnover|OperatingProfit|NetProfit|
|Jiangling MotorsSalesCorporation, Ltd|Subsidiary|Sales vehicle,service parts|50,000|1,875,179|171,642|21,947,492|162,842|121,623|
|JMC HeavyDuty VehicleCo., Ltd|Subsidiary|Productheavycommercialvehicle ,engine,component,and relatedservice|281,793|997,626|28,636|11,210|(256,624)|(65,283)|
|Visteon AutoAir-conditioning(Nanchang) Co.Ltd.|Joint-StockCompany|Automotiveairconditioningand Parts|46,627|374,040|140,719|586,780|136,088|101,031|

v. Self-funded major projects of which amount invested reaches10% of net asset:
||||||
|-|-|-|-|-|
|Project Name|TotalInvestmentApproval(RMBMils)|Spendingin 2014(RMBMils)|InvestmentCommitted(RMBMils)|Planned Job#1Time|
|J08 Program|1,233|327|596|Second Half, 2015|
|Capacity Investmentin Xiaolan Site|2,133|96|1,804|First Half, 2017|

J09 Program 2,414 516 1,006 First Half, 2016
The spending will be self-funded from cash reserves.
7．Outlook
i. Industry Competition and Development Trend
In 2015,China’s automobile industry sales volume is projected to be 25.13 million, up7% over 2014. Commercial vehicle sales volume is projected to be 3.88 million, up2.4% over 2014. Meanwhile passenger vehicle industry will maintain growth, increasing by8% compared with 2014, including SUV sales growth of25%, which will become a major force in the future growth of the auto market.
||
|-|
|With the boost of domestic infrastructure construction and vigorous development of|
|logistics industry, there is still a great opportunity for the development of China’s|
|commercial vehicle market. Meanwhile, China's Car Parc per capita is still lower than|
|world’s average level indicating a strong auto market potential in the future.|

ii. Company Strategy
Company’s objective is to produce and sell world class products with the best customer satisfaction in auto industry. JMC will continue to introduce new light truck, pickup, light bus and SUV programs in the future to further strengthen the market share performance. At the same time, JMC will further improve SUV sales performance and penetrate into heavy truck segment.
iii. 2015 Business Plan
The Company is targeting 2015 revenue level at RMB 28.4 billion, an increase of11% vs. 2014. With many new vehicle projects, theCompany’sR&D expenditures will continue to rise. To enhance profitability, the company is committed to the following plans in 2015: (1) Achieve volume and market share targets by enhancing the distribution network and sales/marketing activities, especially successful Ford SUV EVEREST market launch. (2) Continue to improve product quality, pursue cost reduction opportunities, and improve operating efficiency to achieve profit and cost targets.
(3) Initiate the new fuel economy and emission compliance program to satisfy regulatory requirements.
(4) Work with technical partners to execute the N800, N352, N330, J08, J09, J10, J15, J18, J20, J21 programs.
(5) Expand finished vehicle exports and OEM components sales business.
iv. Potential Challenges and Solutions
In 2015, 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 2015.
(1) Optimizingcompany’s production system to improve efficiency and product quality. (2) Optimizing dealer network and marketing spending to improve market share.
(3) Improvesuppliers’ capability and parts quality; continue to reduce parts purchasing
cost.
(4) Strengthening corporate governance and application of appropriate risk assessment and control mechanisms.
(5) Sustaining the expense management and control to optimize the business structure. (6) Optimize and executecompany’s growth strategies to pursue sustainable long-term growth.
The Company will continue to optimize cost structure, improve production efficiency, mitigate management cost as well as focus on new product development to deliver the launch quality and cost target. With the support from technical partner, the Company has been working on major programs approved by the Board, including N800, N352, N330, J08, J09, J10, J15, J18, J20, J21, etc. to accelerate the progress of launching new competitive and profitable products to the market. Meanwhile, the Company will strive to ensure the timely delivery of high quality heavy trucks, and devote to strengthening dealer network, expanding overseas market and parts business.
8. Profit Distribution
Profit Distribution Policy and Implementation
According to the requirements of Notice on Further Implementing Cash Dividend Distribution Policy Among Listed Companies and Supplementary Notice on Further Implementing Cash Dividend Distribution Policy Among Listed Companies promulgated respectively by CSRC and Jiangxi Branch, CSRC, the Company amended the related articles regarding profit distribution stipulated in the Articles of Association of JMC. The standards and proportion on profit distribution is clear and independent directors fulfill their own duties. The Company thinks over reasonable appeals from the middle and small shareholders and defends their legal rights and interests when drafting and executing the plan.
JMC had distributed cash dividends to all the shareholders in the consecutive eleven years since 2003. Accumulated cash dividends for the ten years totaled RMB 4,695 million. During the reporting period, the Proposal on Profit Distribution for Year 2013 was reviewed and approved by the Board of Directors, and was approved by 2013 AnnualShareholders’ Meeting. On July 2014, the Company completed the Profit Distribution for Year 2013 smoothly. Both the formulation of JMC Profit Distribution Plan and implementation complies with the relevant requirements of the Articles of Association and other profit distribution policy, and the procedures are valid and legal, which protect the interests of all shareholders.
Profit Distribution Plans or Proposal from 2012 to 2014
(1) Proposal on 2014 Year Profit Distribution Plan
Details on the profit available for appropriation of the Company in 2014 prepared in accordance with the China GAAP and International Financial Reporting Standard(‘IFRS’) are as follows:
Unit:RMB’000
||||
|-|-|-|
||China GAAP|IFRS|
|Retained earnings at Dec. 31, 2013|7,040,934|7,037,725|
|2014 net profit|2,107,852|2,107,852|
|Allocation of dividend for 2013|-681,939|-681,939|
|Retained earnings at Dec. 31, 2014|8,466,847|8,463,638|

The upper limit of profit available for distribution was based on the lower of the un-appropriated profit calculated in accordance with the China GAAP and that calculated in accordance with IFRS. Therefore, theCompany’s retained earnings available for distribution as of December 31, 2014 was RMB 8,463,638 thousand.
The Board approved to submit to the 2014 AnnualShareholders’ Meeting the following proposal on year 2014 profit distribution:
(1). to appropriate for the dividend distribution from the profit available for distribution, which shall be equal to RMB 0.97 per share and shall apply to theCompany’s total share capital; and
(2). to carry forward the un-appropriated portion to the following fiscal year.
Profit distribution proposal: a cash dividend of RMB 9.7 (including tax) will be distributed for every 10 shares held. Based on the total share capital of 863,214,000 shares as of December 31, 2014, the total cash dividend distribution amounts shall be RMB 837,317,580.
B share dividend shall be paid in Hong Kong Dollars and converted based on the HKD-to-RMB standard exchange rate published by thePeople’s Bank of China on the first working day following the approval on the profit distribution proposal by theShareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(2) 2013 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 7.9 (including tax) will be distributed for every 10 shares held. Based on the total share capital of 863,214,000 shares as of December 31, 2013, the total cash dividend distribution amounts shall be RMB 681,939,060.
B share dividend shall be paid in Hong Kong Dollars and converted based on the HKD-to-RMB standard exchange rate published by thePeople’s Bank of China on the first working day following the approval on the profit distribution proposal by theShareholders’ Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
(3) 2012 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 7 (including tax) will be distributed for every 10 shares held. Based on the total share capital of 863,214,000 shares as of December 31, 2012, the total cash dividend distribution amounts shall be RMB 604,249,800.
B share dividend shall be paid in Hong Kong Dollars and converted based on the HKD-to-RMB standard exchange rate published by thePeople’s Bank of China on the first working day following the approval on the profit distribution proposal by theShareholders’
Meeting of the Company.
The Board decided not to convert capital reserve to share capital this time.
Table of cash dividend in the past three years
Unit:RMB’000
|||||
|-|-|-|-|
||Cash dividend(Including tax)|Profit attributable to theequity holders of theCompany in that year|Cash dividend as % of profitattributable to the equityholders of the Company|
|2014*|837,318|2,107,852|39.72%|
|2013|681,939|1,698,232|40.16%|
|2012|604,250|1,516,904|39.83%|

*The proposal on 2014 year profit distribution is subject to approval of theShareholders’ Meeting of the Company.
9. Corporation Social Responsibilities
JMC 2014 Corporation Social Responsibilities Report can be downloaded from JMC official website: www.jmc.com.cn or the website: www.cninfo.com.cn.
10. External research and media interview to the Company
In the reporting period, JMC welcomed institutional investors including 85 persons and discussed operating highlights with them. The Company does not disclose, reveal or divulge major information not yet disclosed to special persons or entities.
Table of external research, communication and media interviews with the Company
|||||||
|-|-|-|-|-|-|
|Date|Place|CommunicationMethod|Type ofObject|Object|Information Discussed andMaterials offered|
|January 9,2014|In theCompany|OralCommunication|Institution|Seven analysts fromOrient SecuritiesCompany Limited, Bankof CommunicationsSchroder FundManagement Co., Ltd.,China AssetManagement Co., Ltd.,First Capital SecuritiesCo., Ltd., EverbrightPramerica FundManagement Co., Ltd.,Minsheng Tonghui AssetManagement Co., Ltd.,Industrial Securities Co.,Ltd.|JMC Operating highlights|
|January 13,2014|In theCompany|OralCommunication|Institution|Two analysts fromShanghai HeqiInvestment ConsultingCompany, Owl CreekAsset Management LP.|JMC Operating highlights|
|January 20,2014|In theCompany|OralCommunication|Institution|An analyst from CLSAAsia-Pacific Markets|JMC Operating highlights|
|February 14,2014|In theCompany|OralCommunication|Institution|Two analysts from UBSSecurities Co., Ltd.|JMC Operating highlights|

|||||||
|-|-|-|-|-|-|
|February 19,2014|In theCompany|OralCommunication|Institution|Three analysts fromBeijing Runhui AssetManagement Co., Ltd.,China MerchantsSecurities Co., Ltd.,CITIC SecuritiesCompany Limited|JMC Operating highlights|
|March 17,2014|In theCompany|OralCommunication|Institution|An analyst fromChangjiang SecuritiesCompany Limited|JMC Operating highlights|
|March 25,2014|In theCompany|OralCommunication|Institution|An analyst from ChinaInternational CapitalCorporation Limited|JMC Operating highlights|
|March 27,2014|In theCompany|OralCommunication|Institution|Six analysts from HeshiInvestment ConsultingCompany, APS ChinaResearch Pte Ltd.,Soochow AssetManagement Co., Ltd.,Essence FundManagement Co., Ltd.,UG Investment AdvisersLimited, IndustrialSecurities Co., Ltd.|JMC Operating highlights|
|April 22,2014|In theCompany|OralCommunication|Institution|Nine analysts from UBSSecurities Co., Ltd.,ABC-CA FundManagement Co., Ltd.,CITIC Private EquityFunds Management Co.,Ltd., Galaxy AssetManagement Company,Rongtong FundManagement Co., Ltd.,UG Investment AdvisersLimited, BOCInternational (China)Limited, ShenzhenHongchou InvestmentCo., Ltd.|JMC Operating highlights|
|April 30,2014|In theCompany|OralCommunication|Institution|Four analysts fromGuotan Junan SecuritiesCo., Ltd., First CapitalSecurities Co., Ltd.,Bohai Securities Co.,Ltd., Future AssetInvestment Consulting(Shanghai) Company|JMC Operating highlights|
|May 13,2014|In theCompany|OralCommunication|Institution|An analysts fromCITIC-Prudential FundManagement Co., Ltd.|JMC Operating highlights|
|May 29,2014|In theCompany|OralCommunication|Institution|Three analysts from UBSSecurities Co., Ltd.,Bosera AssetManagement Co., Ltd.,China Southern AssetManagement Co., Ltd.|JMC Operating highlights|
|June 16,|In the|Oral|Institution|Two analysts from|JMC Operating highlights|

|||||||
|-|-|-|-|-|-|
|2014|Company|Communication||CITIC Securities Co.,Ltd., Harvest FundManagement Co.,Ltd.||
|September 4,2014|In theCompany|OralCommunication|Institution|Six analysts from PinganSecurities CompanyLimited, Harvest FundManagement Co., Ltd.,GF Securities AssetManagement Co., Ltd.,GF Securities Co., Ltd.,King Tower AssetManagement CompanyLtd.|JMC Operating highlights|
|November 3,2014|In theCompany|OralCommunication|Institution|Six analysts fromIndustrial Securities Co.,Ltd., Naito SecuritiesCo., Ltd., MizuhoSecurities Co., Ltd.,CIMB-GK Securities（HK）Limited, GFSecurities Co., Ltd.,Shanghai ZhizhuConsulting Company|JMC Operating highlights|
|November 6,2014|In theCompany|OralCommunication|Institution|Twenty-seven analystsfrom Penghua FundManagement Co., Ltd.,AEGON-INDUSTRIALFund Management Co.,Ltd., Pingan SecuritiesCo., Ltd., New ChinaAsset ManagementCompany Ltd., GuotaiJunan Asset ManagementCompany Ltd., ChinaMerchants SecuritiesCo., Ltd., GF FundManagement Co., Ltd.,Bosera FundManagement Co., Ltd.,Dacheng FundManagement Co., Ltd.,Changcheng FundManagement Co., Ltd.,Industrial SecuritiesFund Management Co.,Ltd., Taiping FundManagement Co., Ltd.,Changjiang SecuritiesCompany Limited, UBS,Manulife Teda FundManagement Co., Ltd.,Pingan AssetManagement Co., Ltd.,Fortune SG FundManagement Co., Ltd.,Huatai AssetManagement Co., Ltd.,Shanghai Simpleway|JMC Operating highlights|

|||||||
|-|-|-|-|-|-|
|||||Asset Management Co.,Morgan Stanley HuaxinFund Management Co.,Ltd., China InternationalCapital CorporationLimited, New ChinaFund Management Co.,Ltd., CLSA Asia-PacificMarkets, Valu PartnersGroup||
|December15, 2014|In theCompany|OralCommunication|Institution|Two analysts from CCBPrincipal AssetManagement Co., Ltd.,Guotai Junan SecuritiesCo., Ltd.|JMC Operating highlights|
|December19, 2014|In theCompany|OralCommunication|Institution|Two analysts fromMingsheng Royal FundManagement Co., Ltd.,Starrock InvestmentConsulting Company|JMC Operating highlights|

Chapter V Major Events
1. There was neither major litigation or arbitration, nor query from the media in 2014. 2. Major purchase or sale of assets
The second session of the eighth Board of Directors approved acquiring the land use right for the 485 Mu Greenfield, located in Xiaolan Economic Development Zone, Nanchang City, P.R.C, with a consideration of no more than RMB 95 million on September 26, 2014. Upon the issuance of 2014 annual report, there is no investment agreement regarding the aforesaid land transaction.
3. Major Related Transactions
i. Routine related party transactions
A. JMC purchased certain raw materials, auxiliary materials and components from related parties. Transactions with annual value over RMB 450 million are listed as below:
|||||||
|-|-|-|-|-|-|
|Transaction Parties|Relationship|PricingPrinciple|Settlement Method|Amount(RMB’000)|As % of TotalPurchases|
|Jiangxi Jiangling ChassisCompany|Subsidiary ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|832,971|4.82|
|JMCG Interior Trim Factory|JMCGwholly-ownedsubsidiary|Contractedprice|30 days afterdelivery andinvoicing|726,806|4.21|
|GETRAG (Jiangxi)Transmission Company|Associate ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|692,007|4.00|
|Nanchang Bao-jiang SteelProcessing & DistributionCo., Ltd.|Associate ofJMCG|Contractedprice|Prepayment|667,940|3.87|

|||||||
|-|-|-|-|-|-|
|Jiangling-Lear Interior TrimFactory|Subsidiary ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|543,648|3.15|

Necessity and continuity: the purchase of the imported components will immediately stop when the respective localization is achieved, and these components will be substituted by localized ones; some components from other related parties were unique parts forJMC’s Transit series, N series and T series, and other general components were purchased through open bidding. Contracted price will be decided byseller’s quote, cost accounting and bilateral negotiation because the market data of unique parts can not be collected or toughly.
B. The sales of products by JMC to related parties with annual value over RMB 450 million:
|||||||
|-|-|-|-|-|-|
|Transaction Parties|Relationship|PricingPrinciple|SettlementMethod|Amount(RMB’000)|As % of TotalRevenue|
|JMCG Import and ExportCo., Ltd.|Subsidiary ofJMCG|Contractedprice|40% ofprepayment andthe remains paidduring 30 daysafter delivery|1,312,708|5.14|

Necessity and continuity: because JMCG Import and Export Co., Ltd. has a mature network and human resources to support import& export trade, JMC will continue to use its sales network to sell products to overseas markets.
ii. There was no major related party transaction concerning transfer of assets or equity in 2014.
4. Major Contracts and Execution
i. There was neither entrustment, contract or lease of assets from other companies, nor entrustment, contract or lease ofJMC’s assets to other companies from which profit was generated to exceed10% of 2014 total profit in the reporting period.
ii The Company had no outside guarantee in 2014.
iii. JMC did not entrust other people with cash asset management in the reporting period. 5. Commitments of the Company or the shareholder holding5% or more of the Company shares
Ford undertakes that the additional shares acquired by it within 12 months as of the First Shareholding Increase Date (January 21, 2013) will not exceed2% of the aggregate issued shares of the Company, and it will not reduce the shares it acquires in this Shareholding Increase within 6 months as of the completion date of this Shareholding Increase.
In the reporting period, Ford exercised its commitments sincerely and did not breach the
promise. The aforesaid commitments have been completed.
6. Appointment or Dismissal of Accounting Firms
Upon the approval of 2011 AnnualShareholders’ Meeting, JMC continues to appoint PwC Zhong Tian asJMC’s A& B share auditor from year 2013 to year 2015. The firm has offered JMC audit services for thirteen consecutive years.
Upon the approval of 2013 AnnualShareholders’ Meeting, JMC agrees to appoint PwC Zhong Tian asJMC’s 2014 and 2015 C-SOX auditor.
The compensation paid to the accounting firm is as follows:
|||||
|-|-|-|-|
|Accountant Firm|A & B ShareAuditor for Year2014|2014 C-SOX auditor|Out of Pocket Expense|
|PwC ZhongTian|RMB 1.80 million|RMB 0.64 million|Included in audit fee.|

 7. Neither JMC nor its Directors or senior management were punished by regulatory authorities in 2014.
8. Other Major Events
JMC received government incentives of about RMB 88.25 million appropriated by Qingyunpu District, Nanchang City and Xiaolan Economy Development Zone, Nanchang County in March 2014, which is to supportJMC’s development; JMC received government incentives of RMB 176.72 million appropriated by Nanchang City, Xiaolan Economy Development Zone, Nanchang County, and Taiyuan Economic& Technological Development Zone in June 2014, which is to supportJMC’s development; JMC received government incentives of RMB 299.36 million appropriated by Nanchang City, Xiaolan Economy Development Zone, Nanchang County, and Taiyuan Economic& Technological Development Zone in the second half of 2014, which is to supportJMC’s development. Chapter VI Share Capital Changes& Shareholders
I. Table of the 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 tradableA shares|2,541,900|0.29%|-|-|-|-720,000|-720,000|1,821,900|0.21%|
|1.State-ownedshares|-|-|-|-|-|-|-|-|-|
|2. State-owned legalperson shares|-|-|-|-|-|-|-|-|-|
|3. Other domesticshares|2,541,900|0.29%|-|-|-|-720,000|-720,000|1,821,900|0.21%|
|Including:||||||||||
|Domestic legalperson shares|2,421,000|0.29%|-|-|-|-636,000|-636,000|1,785,000|0.21%|
|Domestic naturalperson shares|120,900|-|-|-|-|-84,000|-84,000|36,900|-|
|4. Management|860,672,100|99.71%|-|-|-|720,000|720,000|861,392,100|99.79%|

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Shares||||||||||
|II. Unlimitedtradable shares|516,672,100|59.86%|-|-|-|720,000|720,000|517,392,100|59.94%|
|1. A shares|344,000,000|39.85%|-|-|-|-|-|344,000,000|39.85%|
|2. B shares|863,214,000|100%|-|-|-|-|-|863,214,000|100%|
|III. Total|2,541,900|0.29%|-|-|-|-720,000|-720,000|1,821,900|0.21%|

 JMC did not issue shares or derivative securities during the past three years as of December 31, 2014.JMC’s total shares remained the same in 2014, and the change in shareholding structure was caused by
1. the trading restriction on the limited A shares of 600,000 shares held by GWQM Corporation and 120,000 shares held by Mr. Wang Zhenyi were relieved on June 5, 2014;
2. limited A shares of 36,000 shares, formerly held by Zaozhuang Central District Credit Cooperative, were transferred to Mr. Chu Kun by the way of judicial judgement.
II. Shareholders
1. Total shareholders, top ten shareholders, and top ten shareholders holding unlimited tradable shares
||||||||
|-|-|-|-|-|-|-|
|Total shareholders (as ofDecember 31, 2014)|JMC had 17,675 shareholders, including 13,475 A-share holders and 4,200 B-share holders.||||||
|Total shareholders (as ofMarch 10, 2015)|JMC had 16,080 shareholders, including 12,104 A-share holders and 3,976 B-share holders.||||||
|Top ten shareholders|||||||
|Shareholder Name|ShareholderType|ShareholdingPercentage(%)|Shares at theEnd of Year|Change(+,-)|Shares withTradingRestriction|Shares dueto mortgageor frozen|
|Jiangling Motor HoldingCo., Ltd.|State-ownedlegal person|41.03|354,176,000|0|0|0|
|Ford Motor Company|Foreign legalperson|32|276,228,394|0|0|0|
|Shanghai AutomotiveCo., Ltd.|State-ownedLegal person|1.51|13,019,610|0|0|0|
|Canada Pension PlanInvestment Board|Foreign legalperson|0.92|7,923,990|0|0|0|
|Gaoling Fund, L.P.|Foreign legalperson|0.77|6,653,012|6,953,781|0|0|
|CICC (Hong Kong)Asset Management Co.,Ltd.|Foreign legalperson|0.75|6,487,675|0|0|0|
|Jpmblsa Re FtifTempleton China FundGti 5497|Foreign legalperson|0.70|6,026,850|-45,000|0|0|
|National Social SecurityFund- Portfolio 418|Domesticnon-state-ownedlegal person|0.65|5,599,712|5,599,712|0|0|
|Kuwait InvestmentAuthority|Foreign legalperson|0.62|5,345,174|5,345,174|0|0|
|Invesco Funds Sicav|Foreign legalperson|0.54|4,698,109|0|0|0|

||||
|-|-|-|
|Top ten shareholders holding unlimited tradable shares|||
|Shareholder Name|Shares without Trading Restriction|Share Type|
|Jiangling Motor Holding Co., Ltd.|354,176,000|A share|
|Ford Motor Company|276,228,394|B share|
|Shanghai Automotive Co., Ltd.|13,019,610|A share|
|Canada Pension Plan Investment Board|7,923,990|A share|
|Gaoling Fund, L.P.|6,653,012|B share|
|CICC (Hong Kong) Asset Management Co.,Ltd.|6,487,675|A share|
|Jpmblsa Re Ftif Templeton China Fund Gti5497|6,026,850|B share|
|National Social Security Fund- Portfolio 418|5,599,712|A share|
|Kuwait Investment Authority|5,345,174|A share|
|Invesco Funds Sicav|4,698,109|B share|
|Notes on association amongabove-mentioned shareholders|None.||

2. Controlling Shareholders
The controlling shareholders of JMC are Jiangling Motor Holding Co., Ltd. and Ford Motor Company.
JMH was founded on November 1, 2004 and its registered capital is RMB 2 billion. Jiangling Motors Company (Group)(‘JMCG’) and Chongqing Changan Automobile Co., Ltd. held50% of total equity of JMH respectively.
Legal representative: Mr. Xu Liuping
Organization code: 76703230-7
Main scope of business: manufacturing of automobiles, engines, chassis, and automotive components and parts, sales of self-produced products, as well as related after-sales services; industrial investment; management& agent for merchandise and technology export& import; property management; sales of household articles, mechanical& electronic equipment, artistic handicrafts, agricultural by-products and steel; consulting business in enterprise management.
The unaudited financial data as of December 31, 2014 of JMH are: total assets of RMB 7,035 million, net assets of RMB 4,690 million, and net cash generated from operating activities of negative RMB 122.48 million and net profit of RMB 726.04 million in 2014. Ford, founded in 1903, is a US-based listed company. Chairman: William Clay Ford, Jr. Main scope of business: design, manufacturing, assembly and sales of cars, trucks, parts and components, financing, leasing of vehicles and equipment, and insurance business. As of December 31, 2014, Ford has total assets ofUS$ 208,527 million, net assets ofUS$ 24,832 million, and net cash provided by operating activities ofUS$ 14,507 million and net income ofUS$ 3,187 million in 2014.
3. Actual Controlling Parties
The controlling shareholders of JMH are JMCG and Chongqing Changan Automobile Co., Ltd.
JMCG, founded on July 27, 1991, is a wholly state-owned enterprise with registered capital of RMB 1.5 billion and subordinate to Nanchang State-owned Assets Supervision and Administration Committee. Its legal representative is Mr. Qiu Tiangao. Main scope of business: manufacturing of automobiles, engines, chassis, specialty vehicle, transmission, other products, automotive quality testing, sales of self-produced products and raw materials, equipment, electronic products, parts and others, as well as related after-sales services and maintenance services; development of products derived from JMC brand light vehicle; oversea auto project-contracting, export equipment, material and related labor services.
Chongqing Changan Automobile Co., Ltd., founded on December 31, 1996, is a state-controlled enterprise with registered capital of RMB 2.33 billion and subject to the State-owned Assets Supervision and Administration Committee of the State Council(‘SASAC’). Its legal representative is Mr. Xu Liuping. Main scope of business: development, manufacturing, sales, import& export business of auto (including sedan), engine, automotive components, die, tools, installation of machinery, technological consultant services.
Ownership and control relations between the Company and the actual controlling parties are shown as follows:
SASAC
Nanchang State-owned Assets
Supervision and Administration
45.55% 100%
C hongqing Changan Automobile Co., Ltd. JMCG
50% 50%
JMH Ford
41.03% 32%
JMC
4. The shareholder and its person acting in the concert had no intention or implement of Shareholding Increase Plan during the reporting period.
Chapter VII Directors, Supervisors, Senior Management and Employees I. Directors, Supervisors and Senior Management
1. Basic Information
||||||||||
|-|-|-|-|-|-|-|-|-|
|Position|Name|Gender|Age|Term of Office|Sharesas ofDec. 31,2013|Sharesas ofDec. 31,2014|ShareChange inYear 2014|CauseofShareChange|
|Directors：|||||||||
|Chairman|Wang Xigao|Male|65|2014.6-2017.6|0|0|0||
|Vice Chairman|John Lawler|Male|49|2014.6-2017.6|0|0|0||
|Director|Qiu Tiangao|Male|49|2014.6-2017.6|0|0|0||
|Director|Manto Wong|Male|53|2014.6-2017.6|0|0|0||
|Director & President|Yuan-Ching Chen|Male|63|2014.6-2017.6|0|0|0||
|Director|Wang Kun|Male|40|2014.6-2017.6|0|0|0||
|Independent Director|Wang Xu|Female|52|2014.6-2017.6|0|0|0||
|Independent Director|Lu Song|Male|58|2014.6-2017.6|0|0|0||
|Independent Director|Wang Kun|Female|39|2014.6-2017.6|0|0|0||
|Supervisors：|||||||||
|Chief supervisor|Zhu Yi|Male|45|2014.6-2017.6|0|0|0||
|Supervisor|Alvin Qing Liu|Male|58|2014.6-2017.6|0|0|0||
|Supervisor|Zhang Jian|Male|46|2014.6-2017.6|40|40|0||
|Supervisor|Liu Niansheng|Male|48|2014.6-2017.6|0|0|0||
|Supervisor|Xu Lanfeng|Female|46|2014.6-2017.6|0|0|0||
|Senior Management:|||||||||
|EVP|Xiong Chunying|Female|51|2014.6-2017.6|1,200|1,200|0||
|EVP|Jin Wenhui|Male|48|2015.1-2017.6|0|0|0||
|CFO|Dennis Leu|Male|51|2014.6-2017.6|0|0|0||
|VP & Board Secretary|Wan Hong|Male|54|2014.6-2017.6|0|0|0||
|VP|Zhong Wanli|Male|52|2014.6-2017.6|0|0|0||
|VP|Li Qing|Male|50|2014.6-2017.6|0|0|0||
|VP|Zhu Shuixing|Male|50|2014.6-2017.6|100|100|0||
|VP|John Scholtes|Male|56|2014.6-2017.6|0|0|0||
|VP|Liu Shuying|Female|52|2014.6-2017.6|0|0|0||
|VP|Liao Zanping|Male|52|2014.6-2017.6|0|0|0||

 2. Positions at the shareholder entities held by the JMC directors and the supervisors:
||||||
|-|-|-|-|-|
|Name|ShareholderEntity|Title|Term ofOffice|Compensation Paidby ShareholderEntity (Y/N)|
|Wang Xigao|JMH|Vice Chairman|2004.11—|N|
|Qiu Tiangao|JMH|Director|2012.4—|N|
|John Lawler|Ford|Vice President|2012.12—|Y|
|Zhu Yi|JMH|Board member|2004.11—|N|

||||||
|-|-|-|-|-|
|Alvin Qing Liu|Ford|Asia Pacific VicePresident and GeneralCounsel|2009.1—|Y|

3. Particulars about working experience of directors, supervisors and senior management in the past five years
Directors:
Mr. Wang Xigao, born in 1950, is a senior engineer equivalent to professor, and holds aBachelor’s Degree in Thermodynamics from Tsinghua University and aBachelor’s Degree in Economic Management from Fudan University. In the past five years, Mr. Wang Xigao held various positions including Chairman of JMCG, Chairman of Jiangling-Isuzu Motors Company Limited, and Vice-Chairman of JMH. Since March 2004, Mr. Wang Xigao assumed the post of the Chairman of JMC.
Mr. John Lawler, born in 1966, holds aBachelor’s Degree in Business-Economics from Knox College, U.S.A. and aMaster’s Degree in Business-Finance from University of Iowa, U.S.A. In the past five years, Mr. John Lawler held various positions including Controller of North America Product Programs, Controller of US Marketing& Sales of Ford Motor Company, CFO of Ford Asia Pacific and Africa, Vice Chairman of JMC, Vice President of Ford and Chairman& CEO of Ford Motor (China) Ltd. Mr. John Lawler was appointed as Vice Chairman of JMC in December 2013.
Mr. Qiu Tiangao, born in 1966, holds aBachelor’s Degree in Mechanical Manufacturing and aMaster’s Degree in Industrial Engineering from Huazhong University of Science and Technology. In the past five years, Mr. Qiu Tiangao held various positions including Vice President of JMH., Director, General Manager, Chairman of JMCG, Director of Jiangling Motor Holding Co., Ltd., Chairman of JMCG Jingma Motors Co., Ltd., Chairman of Jiangxi Isuzu Motors Co., Ltd. Mr. Qiu Tiangao was appointed as Director of JMC in June 2014.
Mr. Manto Wong, born in 1962, holds aBachelor’s Degree in Computer Engineering and aMaster’s Degree in Business Administration from the University of Michigan, U.S.A. In the past five years, Mr. Manto Wong held various positions including Director of Business Strategy for Asia Pacific of Ford, and Vice President and CFO of Ford Motor (China) Ltd. Mr. Manto Wong was appointed as Director of JMC in October 2013.
Mr. Yuan-Ching Chen, born in 1952, holds mechanical engineering Degree from National Cheng Kung University of China Taiwan. In the past five years, Mr. Yuan-Ching Chen has held the positions of the President and Director of JMC. Mr. Yuan-Ching Chen was appointed as Director of JMC in June 2009.
Mr. Wang Kun, born in 1975, senior accountant, holds aBachelor’s Degree, and is a
Director and Vice President of Chongqing Changan Automobile Company Limited. Mr.
Wang Kun held various positions including the Director of Capital Operation
(Administration Division) under Capital Operation Department, Vice Director of Capital Operation Department for China South Industries Group, the Director and Chief Accountant of China Changan Automobile Group Co., Ltd. Mr. Wang Kun was appointed as Director of JMC in June 2014.
Ms. Wang Xu, born in 1963, professor, holds aBachelor’s andMaster’s Degree in Engineering and aDoctor’s Degree in Mechanical Engineering from Chongqing University, and is a doctorial tutor. In the past five years, Ms. Wang Xu held various positions including Deputy Dean, Dean of Trading and Public Administration School, Head of Science and Technology Research Department for Chongqing University, and a member of Advisory Committee for Policy Decision-making of Chongqing Municipal Government. Ms. Wang Xu was appointed as Independent Director of JMC in June 2011.
Mr. Lu Song, born in 1957, associate professor and lawyer, holds aBachelor’s Degree in Law from Peking University and aMaster’s Degree in Law from China Foreign Affairs University (“CFAU”) and Free University of Brussels respectively. In the past five years, Mr. Lu Song held various positions including associate professor of CFAU and the arbitrator of international arbitral institutions, Vice President of the Chinese Society of Private International Law, Executive Council of the Chinese Society of International Law. Mr. Lu Song was appointed as Independent Director of JMC in June 2014.
Ms. Wang Kun, born in 1976, associate professor, holds aBachelor’s Degree in Administration from Nankai University and aDoctor’s Degree in Accounting from Hong Kong University of Science and Technology. In the past five years, Ms. Wang Kun held various positions including lecturer in Tsinghua University School of Economics and Management, Assistant to Dean of Tsinghua University School of Economics and Management and Deputy Director of Tsinghua University Corporate Governance Center. Ms. Wang Kun was appointed as Independent Director of JMC in June 2014.
Supervisors:
Mr. Zhu Yi, born in 1970, is a senior accountant, and holds aBachelor’s Degree in Business Management and a MBA from Jiangxi University of Finance& Economics. In the past five years, Mr. Zhu Yi used to be the Chief of JMCG Asset& Finance Department, Assistant to General Manager, Vice General Manager of JMCG, and Director of JMH. Mr. Zhu Yi has been a Supervisor of JMC since June 2002.
Mr. Alvin Qing Liu, born in 1957, has a Jurisprudence Doctor Degree and a Master Degree in International Economics from Marquette University, U.S.A. and is a member of American Bar Association and was admitted to practice in the U.S. Federal Court for the Eastern District of Wisconsin. In the past five years, Mr. Alvin Qing Liu has held the positions including Vice President and General Counsel of Ford Motor (China) Ltd, Vice President and General Counsel of Ford Asia Pacific. Mr. Alvin Qing Liu has been a Supervisor of JMC since June 2002.
Mr. Zhang Jian, born in 1969, holds a College Degree in Secretarial Professional from North China University of Technology. In the past five years, Mr. Zhang Jian held various positions including Chairman Secretary& Office Deputy Director of JMC, JMCG Office Director, Director of JMCG Communist Party Office, Chief of Publicity Department and Assistant to General Manger of JMCG., Senior Vice Chairman, Chairman of JMCG Labor Union and Chief of JMCG Publicity Department. Mr. Zhang Jian held the post of Supervisor of JMC in June 2011.
Mr. Liu Niansheng, born in 1967, is a senior engineer, and holds aBachelor’s Degree in Forging Technology and Equipment from Jiangxi University of Technology and aMaster’s Degree in National Economic Management from Renmin University of China. In the past five years, Mr. Liu Niansheng held various positions including Plant Manager of JMC Framing Plant, Plant Manager of JMC Transit Plant and Assistant to the President of JMC . Mr. Liu Niansheng held the post of Supervisor of JMC in December 2011.
Ms. Xu Lanfeng, born in 1969, senior engineer, holds aBachelor’s Degree in Forging Technology and Equipment from Nanchang University and a MBA from University of International Business and Economics. In the past five years, Ms. Xu Lanfeng held various positions including Deputy Plant Manager of JMC Framing Plant, Deputy Chief, Chief of Manufacturing Department. Ms. Xu Lanfeng has been a Supervisor of JMC in June 2008. Senior management:
Ms. Xiong Chunying, born in 1964, senior engineer, holds aBachelor’s Degree in Automobile Engineering from Jiangsu Engineering College, aMaster’s Degree in Industrial Economics from Jiangxi University of Finance and Economics and an EMBA Degree in China Europe International Business School. In the past five years, Ms. Xiong Chunying has held the positions of Executive Vice President of JMC and Director of JMCG.
Mr. Jin Wenhui, born in 1967, is a senior engineer and holds aBachelor’s Degree in Mechanical Manufacturing and aMaster’s Degree in Mechanical Engineering from Huazhong University of Science and Technology. In the past five years, Mr. Jin Wenhui held various positions including Chief of Manufacturing Department, Assistant to the President for JMC and Vice General Manager of Jianging-Isuzu Motors Company Limited, Director, General Manager of JMCG Jingma Motors Co., Ltd., Executive Vice General Manager of Jiangxi-Isuzu Motors Co., Ltd.
Mr. Dennis Leu, born in 1964, holds aBachelor’s Degree in Business from Chung Yuan Christian University of China Taiwan and aMaster’s Degree in Business Administration from National Central University of China Taiwan. In the past five years, Mr. Dennis Leu held various positions including Controller of Ford Lio Ho Motor Company, Controller of Changan Ford Mazda Automobile Co., Ltd, Chief of Planning and Management Department, Controller, CFO of the Company.
Mr. Wan Hong, born in 1961, is an engineer, and holds a Master of Business
Administration Degree from Jiangxi University of Finance& Economics. In the past five years, Mr. Wan Hong has held the positions of Vice President and Board Secretary of JMC. Mr. Zhong Wanli, born in 1963, holds aBachelor’s Degree from Nanchang Aeronautical Institute and aMaster’s Degree from Jiangxi University of Finance& Economics. In the past five years, Mr. Zhong Wanli has held the positions of President of Zhongtian Hi-tech Special Vehicle Co., Ltd., Deputy Director of China Sourcing Office for Ford (China), and Vice President of JMC.
Mr. Li Qing, born in 1965, holds aBachelor’s Degree in Marketing from Wuhan University of Technology and a MBA from University of South Australia and Jiangxi University of Finance& Economics. In the past five years, Mr. Li Qing has held the positions of Vice General Manager and General Manager of the former Jiangling Motors Sales General Company, General Manager of JMC Sales& Services Branch, Vice President of JMC and Director of JMCG.
Mr. Zhu Shuixing, born in 1965, holds aMaster’s Degree in Pressure Processing from Northwestern Polytechnical University and a MBA from Jinan University. In the past five years, Mr. Zhu Shuixing has held the positions of Operation Officer of Amphenol East Asia Electronic Technology (Shenzhen) Limited, Assistant to the President and Vice President of JMC.
Mr. John Scholtes, born in 1959, holds a Bachelor Degree in Mechanical Engineering from Purdue University, U.S.A. and aMaster’s Degree in Business Administration from University of Detroit Mercy, U.S.A. In the past five years, Mr. John Scholtes held various positions including Product Development& TVM Director of Ford Southern Africa and Vice President of JMC.
Ms. Liu Shuying, born in 1962, is a senior engineer and holds aBachelor’s Degree in Mechanical Manufacturing from Jiangxi University of Technology. In the past five years, Ms. Liu Shuying has held various positions including Director of Product Development Center, Assistant to the President of JMC and Vice General Manager of Jiangling-Isuzu Motors Company Limited, and Vice President of JMC.
Mr. Liao Zanping, born in 1963, is a senior engineer and holds aBachelor’s Degree in Internal-combustion Engine from Tianjing University and a MBA from Peking University. In the past five years, Mr. Liao Zanping has held various positions including General Manager of Beijing Automobile Works Co., Ltd., General Manager, Chairman of Wolff Engine (Jiangxi) Co., Ltd., General Manager of JMCG Jingma Motors Co., Ltd., Vice President of JMC and General Manger of JMC Heavy Duty Vehicle Co., Ltd.
4. Particulars about positions and concurrent positions in other entities other than
shareholder entities:
|||||
|-|-|-|-|
|Name/Title in theCompany|Entity|Relationship with theCompany|Title|

|||||
|-|-|-|-|
|Wang Xigao/Chairman|JMC Heavy DutyVehicle Co., Ltd.*|Wholly-owned subsidiaryof JMC|Executive Director|
|John Lawler /ViceChairman|Ford Motor (China) Ltd.|Ford wholly-ownedsubsidiary|Chairman and CEO|
||Ford Motor Research &Engineering (Nanjing)Co., Ltd.|Ford wholly-ownedsubsidiary|Chairman and CEO|
||Changan FordAutomobile Co., Ltd.|Ford holds 50% shares|Vice Chairman|
||Changan Ford MazdaEngine Co., Ltd.|Ford holds 25% shares|Vice Chairman|
|Qiu Tiangao/Director|JMCG|The Chairman of JMCGalso takes the post of theCompany’s Director|Chairman & GeneralManager|
||JMCG Jingma MotorsCo., Ltd.|The Chairman of JMCGJingma Motors Co., Ltd.also takes the post of theCompany’s Chairman|Chairman|
||Jiangxi-Isuzu MotorsCo., Ltd.|The Chairman ofJiangxi-Isuzu Motors Co.,Ltd. also takes the post ofthe Company’s Chairman|Chairman|
|Manto Wong/Director|Ford Motor (China) Ltd.|Ford wholly-ownedsubsidiary|Director, VicePresident & CFO|
||Ford Motor Research &Engineering (Nanjing)Co., Ltd.|Ford wholly-ownedsubsidiary|Director|
||Changan FordAutomobile Co., Ltd.|Ford holds 50% shares|Director|
|Wang Kun /Director|Chongqing ChanganAutomobile Co., Ltd.|See the figure in ChapterIII|Director, VicePresident|
|Wang Xu/IndependentDirector|Chongqing University|No relationship|Head of Science andTechnology ResearchDepartment|
|Lu Song/IndependentDirector|CAFU|No relationship|Associated Professor|
|Wang Kun/IndependentDirector|Tsinghua University|No relationship|Assistant to Dean ofTsinghua UniversitySchool of Economicsand Management andDeputy Director ofTsinghua UniversityCorporate GovernanceCenter|
|Zhu Yi/Supervisor|JMCG|The Chairman of JMCGalso takes the post of theCompany’s Chairman|Vice General Manager|
|Alvin Qing Liu/Supervisor|Changan FordAutomobile Co., Ltd.|Ford holds 50% shares|Director|
|Xiong Chunying/Director|JMCG|The Chairman of JMCG|Director|

|||||
|-|-|-|-|
|||also takes the post of theCompany’s Chairman||
|Jin Wenhui/EVP|JMCG|The Chairman of JMCGalso takes the post of theCompany’s Chairman|Director|
|Dennis Leu|JMC Heavy DutyVehicle Co., Ltd.|Wholly-owned subsidiaryof JMC|Supervisor|
||Jiangling Motors SalesCo., Ltd.|Wholly-owned subsidiaryof JMC|Supervisor|
|Li Qing/Vice President|JMCG|The Chairman of JMCGalso takes the post of theCompany’s Chairman|Director|
||Jiangling Motors SalesCo., Ltd.|Wholly-owned subsidiaryof JMC|Executive Director|
|Liao Zanping/ VicePresident|JMC Heavy DutyVehicle Co., Ltd.|Wholly-owned subsidiaryof JMC|General Manager|

5. Annual Compensation
Directors and Supervisors who did not concurrently hold other management positions in JMC were not paid by JMC. Director Wang Xigao, Supervisors Zhu Yi and Zhang Jian were paid by JMCG. Directors John Lawler, Manto Wong and Supervisor Alvin Qing Liu were paid by Ford. Director Wang Kun was paid by Chongqing Changan Automobile Co., Ltd.
(1) In accordance with the Senior Executive Compensation& Incentive Plan of JMC approved by the Board of Directors and the Senior Executive Base Salary Plan of JMC agreed by the Compensation Committee, the compensation for the Chinese-side senior management consists of base salary, short-term incentive and long-term incentive, and the long-term incentive would be paid equally in a deferred period of three yeas. In 2014, the Company paid annual compensation before tax of approximately RMB 1,360 thousand to EVP Xiong Chunying, paid former EVP Liu Nianfeng approximately RMB 1,270 thousand, paid approximately RMB 990 thousand per person to VP& Board Secretary Wan Hong, paid VP Li Qing approximately RMB 1,000 thousand, paid VP Zhu Shuixing approximately RMB 980 thousand, paid VP Liu Shuying and VP Liao Zanping approximately RMB 960 thousand respectively. Two employee-representative supervisors, Mr. Liu Niansheng and Ms Xu Lanfeng, were paid annual compensation before tax of about RMB 610 thousand and RMB 390 thousand respectively. The total compensation before tax paid by JMC for the aforesaid persons was about RMB 8.52 million in the reporting period, including the long-term incentive of RMB 1.07 million deferred from the previous years.
(2) JMC pays annual compensation for Ford-seconded senior management personnel to Ford in accordance with the revised Personnel Secondment Agreement signed between JMC and Ford and Ford Affiliates. In 2014, JMC should payUS$ 375 thousand per person to Ford for Director& President Yuan-Ching Chen, CFO Dennie Leu and VP John Scholtes,
RMB 750 thousand for VP Zhong Wanli. These payments made by JMC to Ford do not
reflect the actual salaries earned by Ford-seconded senior management.
(3) Pursuant to the resolutions of JMC 2011 AnnualShareholder’s Meeting, the annual compensation for the JMC Independent Directors is adjusted as RMB 100 thousand per person, and JMC bears their travel-related expenses associated withJMC’s business.
6. Changes of Directors, Supervisors and Senior Management
Directors Change:
Given the three-year term for the seventh Board expired, the Board members were re-elected pursuant to the provisions of the Articles of Association of JMC.
Upon the approval of JMC 2013 AnnualShareholders’ Meeting, Mr. Wang Xigao, Mr. John Lawler, Mr. Qiu Tiangao, Mr. Manto Wong, Mr. Yuan-Ching Chen and Mr. Wang Kun were elected as Directors of JMC, and Ms. Wang Xu, Mr. Lu Song and Ms. Wang Kun were elected as Independent Directors. Mr. Cai Yong and Ms. Xiong Chunying did not hold the posts of Directors of JMC, and Mr. Shi Jiansan and Mr. Vincent Pun-Fong KWAN did not hold the posts of Independent Director of JMC.
Supervisors Changes:
Given the three-year term for the seventh Supervisory Board expired, the Supervisory Board members were re-elected pursuant to the provisions of the Articles of Association of JMC.
Upon the approval of JMC 2013 AnnualShareholders’ Meeting, Mr. Zhu Yi, Mr. Alvin Qing Liu and Mr. Zhang Jian were elected as Supervisors of JMC. Mr. Liu Niansheng and Ms. Xu Lanfeng were elected in the meeting of employee representatives as members of the new Supervisory Board of JMC.
Senior Management changes:
Due to re-election of the Board of Directors, the first session of the new Board held on June 27, 2014 approved the following resolutions: appointed Mr. Yuan-Ching Chen as the President of the Company; based on theChairman’s nomination, appointed Mr. Wan Hong as the Board Secretary; based on thePresident’s nomination, appointed Ms. Xiong Chunying and Ms. Liu Nianfeng as EVPs, Mr. Dennis Leu as CFO, Mr. Wan Hong, Mr. Zhong Wanli, Mr. Li Qing, Mr. Zhu Shuixing, Mr. John Scholtes, Ms. Liu Shuying and Mr. Liao Zanping as VPs.
The third session of the eighth Board of Directors accepted Ms. LiuNianfeng’s resignations from Executive Vice President and Member of Executive Committee of the Company due to work rotation. Per President Yuan-ChingChen’s nomination, the Board of Directors appointed Mr. Jin Wenhui as Executive Vice President and Member of Executive Committee of the Company. The personnel changes shall enter into effect as of January 1, 2015.
In the reporting period, the key technical personnel had no major change.
II. Employees
At the end of 2014, JMC had a total of 14,036 employees, of which 9,786were production workers, 549 sales personnel, 2,803 technical personnel, 144 finance personnel, 754 administrative staff. There were 1,334 persons with junior technical titles, 686 with intermediate technical titles and 146 with senior technical titles, altogether accounting for15% of the total employees. There were 123 early-retired employees. JMC bore retirement benefits of 900 retired employees.
Comparing with market compensation system and income level and considering theCompany’s actual situation, JMC regarded Position, Person, Performance Compensation Concept as guideline and offered competitive compensation, which could ensure the inner fairness and competitive ability against the outside, to attract, reserve and give incentive to the excellent talents,.
In 2014,JMC’s training expense was RMB 17,365 thousand, and training person-time were 95,011 with training stratification of95.85%. Please refer to the Chapter IV of 2014 JMC Corporation Social Responsibility Report for more details on 2014 training plan implementation.
2251
2961
8387
437
Polytechnic school degree
Bachelor Degree
Master Degree and Higher
Below Polytechnic School Degree
Chapter VIII Corporate Governance Structure
1. Status of the Corporate Governance in JMC
During the reporting period, the Company continued to improve its corporate governance in compliance with the Company law, the Code of Corporate Governance for Listed Companies in China, the Rules Governing Listing of Stock on Shenzhen Stock Exchange, as well as relevant laws and regulations, amended the Articles of Association of JMC and the Rules of theShareholders’ Meeting, and formulated JMC Year 2014-2016 Shareholder Return Plan. JMC fulfilled its social responsibilities positively and made a report on 2013 Corporate Social Responsibilities.
Special Activities on Corporate Governance and Formulation and Implementation of Rules on Registration and Filling of Insiders of JMC
The sixth session of the sixth Board of Directors approved the Rules on Registration and
Filling of Insiders of JMC on September 30, 2009. During the reporting period, no insiders of the Company bought or soldJMC’s shares prior to disclosure of major and sensitive information which had an impact on JMC stock price, and there was no situation which the Company was investigated or requested to improve by the securities regulator.
2. Introduction to theShareholders’ Meeting
The 2014 First SpecialShareholders’ Meeting of JMC was held in the conference room on the second floor of the Administration Building of JMC on April 25, 2014. Resolution passed at the 2014 First SpecialShareholders’ Meeting is as follows:
1. J09 Program Approval.
Public announcement on the resolutions of the SpecialShareholders’ Meeting was published in China Securities, Securities Times and Hong Kong Commercial Daily on April 26, 2014.
The 2013 AnnualShareholders’ Meeting of JMC was held in the conference room on the fourth floor of the Administration Building of JMC on June 27, 2014. Resolutions passed at the 2013 AnnualShareholders’ Meeting are as follows:
1. 2013 Work Report of the Board of Directors;
2. 2013 Work Report of the Supervisory Board;
3. 2013 Financial Statements;
4. The Proposal on Profit Distribution for Year 2013;
5. JMC Year 2014 Amendment to the Articles of Association;
6. JMC Year 2014-2016 Shareholder Return Plan;
7. Proposal on electing Mr. Wang Xigao as a Director of the Eighth Board of Directors of JMC;
8. Proposal on electing Mr. Wang Xigao as a Director of the Eighth Board of Directors of JMC;
9. Proposal on electing Mr. John Lawler as a Director of the Eighth Board of Directors of JMC;
10. Proposal on electing Mr. Qiu Tiangao as a Director of the Eighth Board of Directors of JMC;
11. Proposal on electing Mr. Manto Wong as a Director of the Eighth Board of Directors of JMC;
12. Proposal on electing Mr. Yuan-Ching Chen as a Director of the Eighth Board of Directors of JMC;
13. Proposal on electing Mr. Wang Kun as a Director of the Eighth Board of Directors of JMC;
14. Proposal on electing Ms. Wang Xu as an Independent Director of the Eighth Board of Directors of JMC;
15. Proposal on electing Mr. Lu Song as an Independent Director of the Eighth Board of Directors of JMC;
16. Proposal on electing Ms. Wang Kun as an Independent Director of the Eighth Board of Directors of JMC;
17. Proposal on electing Mr. Zhu Yi as a Supervisor of the Eighth Supervisory Board of JMC;
18. Proposal on electing Mr. Alvin Qing Liu as a Supervisor of the Eighth Supervisory Board of JMC;
19. Proposal on electing Mr. Zhang Jian as a Supervisor of the Eighth Supervisory Board of
JMC;
Proposal on continuing to appoint PricewaterhouseCoopers Zhong Tian LLP asJMC’s 2014 and 2015 C-SOX auditor with annual audit fee of RMB 640 thousand and RMB 590 thousand respectively
Public announcement on the resolutions of the AnnualShareholders’ Meeting was published in China Securities, Securities Times and Hong Kong Commercial Daily on June 28, 2014.
3. IndependentDirectors’ Performance of Duty
JMC has appointed three Independent Directors so far. The Independent Directors exercised their fiduciary duties regarding routine work and major decision-making of the Board of Directors. They studied every proposal reviewed by the Board of Directors thoroughly and raised their opinions, inquired about major events which required opinions from the Independent Directors and issued their written opinions, and actively engaged in the affairs of the Compensation Committee and the Audit Committee in the reporting period, to protect the interests of the Company and all the shareholders.
Particulars about thedirectors’ attendance to the Board meeting
|||||||||
|-|-|-|-|-|-|-|-|
|Name|RequiredBoardAttendance|Presencein Person|Presencein Formof PaperMeeting|Presenceby Proxy|Absence|Not to present inperson in twoconsecutivemeetings (Y/N)|Presence attheShareholders’Meeting|
|Wang Xu|11|2|7|2|0|N|1|
|Lu Song|6|3|3|0|0|N|1|
|Wang Kun|6|1|3|2|0|N|1|

 The Independent Directors of the Company did not object to any proposal and issue of the Company reviewed at Board meetings in the reporting period.
4. 2014 Diligence Report of the Committees under the Board of Directors
I. AuditCommittee’s Works
A. Work Summary Report of the Audit Committee
According to Audit Committee Working Rules, the Audit Committee diligently executed its duties and delivered guiding opinions. The primary tasks during the reporting period were as follows:
i. The Audit Committee reviewed theCompany’s internal control work plan and internal control implementation results regularly.
ii. The Audit Committee reviewed the Eight Accounting Provisions and Write-off proposal and submitted it to the Board for approval.
iii. The Audit Committee reviewed and agreed to retain PwC as the 2014-2015 C-Sox auditor with the audit fees RMB 640,000 and 590,000 respectively, and agreed to submit forShareholders’ meeting approval.
iv. The Audit Committee reviewed the independentauditor’s audit plan, letter of
engagement and risks and controls.
v. The Audit Committee has coordinated with the independent auditor to allow the audit
and associated financial report can be submitted within the appointed period.
vi. The Audit Committee reviewed the financial statements before the certifiedauditor’s on-site audit, after receiving the certifiedauditor’s initial and final audit opinions. The Committee communicated with auditors face to face over important events and major accounting estimations, audit adjustment items and important accounting policies which potentially affect the financial statements, and believes that the financial statements are truthful, accurate and fully reflect theCompany’s actual status.
vii. The Audit Committee has submitted the 2014 Independent Auditor Summary Report to Board for review.
viii. The Audit Committee reviewed the Internal Control Self-assessment Report and agreed to submit this to the Board for approval.
B. Written opinions on JMC financial statements
The Audit Committee reviewed the unaudited financial statements prepared by the Company and issued its written opinions on January 16, 2015 as follows:
The Audit Committee reviewed the Financial Statements compiled by JMC and believes that the Financial Statements have in all material respects reflected the actual company status. The Audit Committee will continue to keep in close contact with auditor. After receiving theauditor’s initial audit comments, Audit Committee will review Company Financial Statements a second time.
The Audit Committee reviewed the financial statements prepared by JMC after the external auditor issued its initial audit opinions, and issued its written opinions on February 23, 2015 as follows:
i. Financial statements have been prepared according to China New GAAP and thecompany’s financial policies.
ii. The financial status reported for December 31, 2014 including Balance Sheet, Income Statement and Cash Flow is accurate and truthful.
The Audit Committee made resolutions on the audited 2014 financial statements on March 3, 2015 as follows:
The Audit Committee has reviewed the financial statements after the certified auditor issued its final audit opinions. The Audit Committee believes that the financial status reported for December 31, 2014 including Balance Sheet, Income Statement and Cash Flow is accurate and truthful. The Audit Committee supports submitting to the Board approval.
C. 2014 External Auditor Work Summary Report
The Audit Committee has reviewed the 2014 Audit Work Plan submitted by PwC via a communication with the PwC leading auditor. Agreement was achieved regarding timing and content and both parties believe that the plan ensures a comprehensive completion of the 2014 audit.
The independent auditor thoroughly communicated with the management and the Audit Committee Members regarding: accounting policies implementation, revenue recognition, significant accounting estimates related to accrued expenses, accounting treatment for 8 Provisions, Goodwill impairment and R& D expenses, related party transaction recognition and fairness and information disclosure. They have also discussed about issues identified and the corrective actions. As a result, all parties have a more in-depth understanding of the business status, financial status and internal control. Therefore, a solid
foundation was laid for a fair audit conclusion issued by the independent auditor.
The Audit Committee believes that the external certified auditor has executed the audit work consistently with the requirements of China Certified Auditor Independent Audit Principles. The audit period is adequate and the allocation of personnel resources is sufficient to deliver an audit report which accurately reflects theCompany’s financial position as at December 31, 2014, and the financial performance and cash flows for the year then ended. The audit conclusion reflects theCompany’s actual status.
II. 2014 Diligence Report of the Compensation Committee
In the reporting period, the Compensation Committee exercised its duties as follows:
i. reviewed and approved the Proposal on 2013 Year-end Bonus for Senior Executives; ii. reviewed and approved the KPIs of JMC Senior Executives in 2014;
iii. reviewed and approved 2013 Diligence Report of the Compensation Committee, and iv. approved to amend JMC Senior Executive Compensation& Incentive Plan, adjusted the fixed pay of senior executives.
The CompensationCommittee’s opinions on the annual compensation of the directors, supervisors and senior management disclosed in this Report are as follows:
The 2014 annual compensation for the Chinese-side senior management was paid upon the principles promulgated in the Senior Executive Compensation& Incentive Plan of JMC and the Senior Executive Base Salary Plan of JMC. The 2014 annual compensation for Ford-seconded senior management personnel was paid in accordance with revised Personnel Secondment Agreement signed between JMC and Ford and Ford Affiliates. The annual compensation for the director and supervisor that the Company paid abided by JMC salary management system.
In the reporting period, the annual compensation of the directors, supervisors and senior executives disclosed in this Report was complied with JMC salary management system, and there was neither breach nor inconsistency of this system.
5. Works of Supervisory Board
Pursuant to the relevant regulations in the Company Law, Securities Law and JMC Articles of Association as well as consistent with the spirit of being responsible to the shareholders, the Supervisory Board earnestly fulfilled its duties stipulated by the laws and regulations and energetically worked to perform its functions fully in 2014. The Supervisory Board held 7 meetings during the reporting period. The supervisors of the Company did not object to any proposal and issue of the Company reviewed at Supervisory meetings in the reporting period.
6. Separation between JMC and the Controlling Shareholders in respect of Personnel, Assets and Finance, and Independence concerning Organization and Business:
(1) With respect to personnel matters, the positions of chairman and president are held by different individuals;JMC’s senior management do not hold positions other than director positions with its controlling shareholders; JMC senior management personnel are paid by JMC; labor, personnel matters and compensation management of JMC are completely independent.
(2) With respect to assets, JMC assets are complete. The assets utilized by JMC, including
production system, supporting production system and peripheral facilities, and non-patent technology, are owned and/or controlled by JMC.
(3) With respect to finance, JMC has an independent finance department and independent accounting system, and has a uniform and independent accounting system and financial control system for its branches and subsidiaries. JMC has its own bank accounts, and there are no bank accounts jointly owned by JMC and its controlling shareholders. JMC pays taxes independently in accordance with relevant laws.
(4) With respect to organization,JMC’s organization is independent, complete and scientifically established with a sound and efficient operating mechanism. The establishment and the operation ofJMC’s corporate governance are strictly carried out per the Articles of Association of JMC. Production and administrative management are independent from the controlling shareholders. JMC has established an organization structure that meets the need for ongoing development.
(5) With respect to business, JMC has independent purchasing, production and sales systems. The purchasing, production and sales of main materials and products are carried out through its own purchasing, production& sales functions. JMC is independent from the controlling shareholders in respect to its business, and has independent and complete business and self-sufficient operating capability.
7. Horizontal Competition
In principle, controlling shareholders did not engage in production or sales of similar products in competition with JMC.
8. Compensation& Incentive Mechanism for Senior Management in the Reporting Period In accordance with the Senior Executive Compensation& Incentive Plan of JMC approved by the Board of Directors on December 18, 2006 and the Senior Executive Base Salary Plan of JMC agreed by the Compensation Committee on March 2007, the compensation for senior management consists of base salary, short-term incentive and long-term incentive. The base salary grade of senior management is in line with his/her position, and the funding of the short-term incentives and long-term incentives are all derived from an incentive fund based on the pre-tax profit. The short-term incentives will be paid in that year, and the long-term incentives will be paid equally in a deferred period of three years. The Compensation Committee approved to amend the Senior Executive Compensation& Incentive Plan of JMC on March 1, 2013, upon which the fixed pay of senior executives was adjusted. These plans are applicable only to the Chinese-side senior management. Chapter IX Internal Control
1. Internal Control System Building
JMC has established comprehensive and systematic internal control policies to ensure the effectiveness of business activities and daily operations, per the requirements of Internal Control Guidelines for the Listed Companies published by Shenzhen Stock Exchange and
the Basic Standard for Enterprise Internal Control (C-SOX) along with its implementation guidelines, promulgated by Ministry of Finance, National Audit office, CSRC, CBRC and CIRC. Meanwhile, in the year of 2014, the Company further strengthened its internal control system with the combination of statutory requirements and its actual operational conditions as below.
i. JMC C-SOX implementation team led by the Board secretary and the CFO developed a Work Plan for 2014 C-SOX Implementation. The Company performed self-assessment over internal control status, analyzed and evaluated the control gaps identified and developed corrective actions for the gaps. Based on which, the Internal Control Self-assessment Report was prepared.
ii. The Company continued to implement internal controls within JMC Heavy Duty Vehicle Co, Ltd (JMCH), the wholly owned subsidiary acquired in 2013. Key business procedures were further optimized and internal control related training cascaded within the subsidiary.
iii. The Company invited external consulting agency to provide internal control related training regarding highly concerned areas such as tax, changes of Accounting System for Business Enterprises, occupational code of conduct, etc.
iv. The Company updated control documentations like the risk control lists (MCRP) based on the actual situation of business and organized all functions to perform self-testing with the applicable MCRPs.
v. The Company benchmarked its policies& procedures with the C-SOX guidelines to identify any internal control design deficiencies and tested the key processes with samples per the planned audit engagements in 2014 to identify operating deficiencies. Corrective actions were developed and implemented for the control deficiencies detected and relevant processes optimized.
vi. In 2014 the Company carried out a comprehensive risk assessment to identify internal and external risks and developed response strategies and action plans to the key risks. vii. The Company retained PwC to perform the C-SOX audit for the year of 2014.
2. Statement of the Board of Directors
The Board of Directors is responsible for the establishment, improvement and effective implementation of internal control policies, the assessment on the internal control status, as well as the disclosure of the self-assessment report on internal control. The Supervisory Board is responsible for supervision over the internal control policies establishment and implementation. The Management is responsible for the implementation of internal control in the daily operations. 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 false statements, misrepresentations or major omissions.
3. Basis for the Establishment of Financial Reporting Internal Control
The Company has established a complete set of accounting policies in accordance with accounting and C-SOX related regulatory requirements, and set up internal control policies over financial reporting. For instances, controls within activities such as treasury, purchasing, manufacturing, sales revenue recognition, fixed assets, investment& financing,
and financial statements compilation were implemented effectively. Financial information
disclosure is strictly adherence to theCompany’s Information Disclosure Affairs Management Policy.
4. Internal Control Self-assessment Report
No major deficiency was identified during the reporting period. The original of the Internal Control Self-assessment Report is disclosed in the website ( http://www.cninfo.com.cn) on March 17, 2015.
5. Internal Control Audit Report
The opinions in the Internal Control Audit Report issued by Pwc Zhong Tian are as follows:
As of December 31, 2014, JMC maintained adequate control over financial statements in all the material aspects according to the Basic Standard for Enterprise Internal Control and other relevant rules. The original of the Internal Control Audit Report is disclosed in the website ( http://www.cninfo.com.cn) on March 17, 2015.
6. Establishment and Execution Regarding the Rules on Investigating the Person Responsible for Major Mistakes in Disclosure of Annual Report
JMC reviewed and approved the Rules on Investigating the Person Responsible for Major Mistakes in Disclosure of Annual Report in 2011, which further strengthens the information disclosure administration concerning periodical reports. 2013 Annual Report of JMC does not contain major mistakes or omissions, and Year 2013 Performance Flash Report has no significant difference with 2013 final operating results.
Chapter X Financial Statements
Type of Audit Report Standard Abnormal Opinion
Signature date March 13, 2015
Name of Auditor PricewaterhouseCoopers Zhong Tian CPAs LLP
Document No. of Audit Report 2015/SH-053/JJY/DX
Independent Auditor's Report
2015/SH-053/JJY/DX (Page1 of 2) To the shareholders of Jiangling Motors Corporation, Ltd.
We have audited the consolidated financial statements of Jiangling Motors Corporation, Ltd. (“the Company”) and its subsidiaries (together, the “Group”) set out on pages 3 to 59, which comprise the consolidated statement of financial position as at 31 December 2014, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
The management of the Company is responsible for the preparation and fair presentation of consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
2015/SH-053/JJY/DX (Page 2 of 2) Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2014, and of theGroup’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, thePeople’s Republic of China
13 March 2015
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
(All amounts in RMB unless otherwise stated)
Year ended 31 December Note 2014 2013RMB’000 RMB’000 Revenue 5 25,537,290 20,889,706 Sales tax (852,416) (614,397) Cost of sales 6 (19,098,715) (15,523,061) Gross profit 5,586,159 4,752,248 Distribution costs 6 (1,738,087) (1,443,447) Administrative expenses 6 (2,166,903) (1,722,221) Impairment charge of non-current assets 6 (89,073) (47,364) Other income 8 568,227 176,697 Operating profit 2,160,323 1,715,913 Finance income 9 251,736 200,575 Finance costs 9 (2,111) (6,275) Finance income-net 9 249,625 194,300 Share of profit of investments accounted for using the
equity method 15 19,347 12,363 Profit before income tax 2,429,295 1,922,576 Income tax expense 10 (321,443) (208,468) Profit for the year 2,107,852 1,714,108 Other comprehensive income:
Item that will not be reclassified subsequently to profit or
loss
- Remeasurements of retirement benefits obligations (1,978) 4,792 - Income tax relating to remeasurements of retirement
benefit obligations 495 (1,198) Other comprehensive income for the year, net of tax (1,483) 3,594 Total comprehensive income for the year 2,106,369 1,717,702 Profit attributable to:
Equity holders of the Company 2,107,852 1,694,848 Non-controlling interests - 19,260 2,107,852 1,714,108 Total comprehensive income attributable to:
Equity holders of the Company 2,106,369 1,698,442 Non-controlling interests - 19,260 2,106,369 1,717,702 Earnings per share for profit attributable to the
equity holders of the Company
(expressed in RMB per share)
- Basic and diluted 11 2.44 1.96 The notes on pages 44 to 96 are an integral part of these consolidated financial statements.
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
(All amounts in RMB unless otherwise stated)
As at 31 December
Note 2014 2013RMB’000 RMB’000 ASSETS
Non-current assets
Property, plant and equipment (“PPE”) 12 5,736,408 5,149,137 Lease prepayment 13 590,629 604,831 Intangible assets 14 32,173 108,035 Investments accounted for using the equity method 15 26,948 34,682 Other non-current assets 34,493 - Deferred income tax assets 16 440,730 302,351 6,861,381 6,199,036 Current assets
Financial assets at fair value through profit or loss - 469 Inventories 17 1,658,707 1,745,927 Trade, other receivables and prepayments 18 2,006,162 2,059,295 Cash and cash equivalents 19(a) 8,963,468 6,479,972 Restricted cash 19(b) 6,810 - 12,635,147 10,285,663 Total assets 19,496,528 16,484,699 EQUITY
Capital and reserves attributable to the
Company’s equity holders
Share capital 20 863,214 863,214 Share premium 816,609 816,609 Other reserves 21 454,968 456,451 Retained earnings 8,463,638 7,037,725 10,598,429 9,173,999 Non-controlling interests - - Total equity 10,598,429 9,173,999 LIABILITIES
Non-current liabilities
Borrowings 22 4,808 5,190 Deferred income tax liabilities 16 29,458 30,535 Retirement benefit obligations 23 50,146 48,788 Provisions for warranty and other liabilities 24 226,503 191,095 Other non-current liabilities 480 5,560 311,395 281,168 Current liabilities
Financial liabilities at fair value through profit or loss 25 2,011 - Trade and other payables 26 8,420,273 6,934,919 Current income tax liabilities 153,439 86,001 Borrowings 22 401 399 Retirement benefit obligations 23 5,580 8,213 Other current liabilities 5,000 - 8,586,704 7,029,532 Total liabilities 8,898,099 7,310,700 Total equity and liabilities 19,496,528 16,484,699
The notes on pages 44 to 96 are an integral part of these consolidated financial statements.
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
(All amounts in RMB unless otherwise stated)
Attributable to equity holders of the Company
Non-control Note
Share Share Other Retained ling Total capital premium reserves earnings interests equityRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 1 January 2013 863,214 816,609 452,857 5,947,127 106,378 8,186,185 Profit for the year - - - 1,694,848 19,260 1,714,108 Other comprehensive income
- Remeasurements of
retirement benefit
obligations, net of tax - - 3,594 - - 3,594 Dividend relating to 2012 - - - (604,250) (19,472) (623,722) Other - - - - (106,166) (106,166) Balance at 31 December 863,214 816,609 456,451 7,037,725 - 9,173,999 2013
Balance at 1 January 2014 863,214 816,609 456,451 7,037,725 - 9,173,999 Profit for the year - - - 2,107,852 - 2,107,852 Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of tax - - (1,483) - - (1,483) Dividend relating to 2013 27 - - - (681,939) - (681,939) Balance at 31 December 2014 863,214 816,609 454,968 8,463,638 - 10,598,429 The notes on pages 44 to 96 are an integral part of these consolidated financial statements.
Jiangling Motors Corporation, Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
(All amounts in RMB unless otherwise stated)
Year ended 31 December Note 2014 2013RMB’000 RMB’000 Cash flows from operating activities
Cash generated from operations 28 4,583,032 3,408,444 Interest paid (417) (5,366) Income tax paid (392,966) (261,829) Net cash generated from operating activities 4,189,649 3,141,249 Cash flows from investing activities
Purchase of held-to-maturity investments - (200,000) Purchase of PPE (1,287,649) (1,066,353) Acquisition of a subsidiary, net of cash acquired - (166,169) Other cash paid relating to investing activities (2,546) (805) Proceeds from disposal of a subsidiary - (125,709) Proceeds from disposal of PPE 28 11,124 5,056 Proceeds from repayment of held-to-maturity - 200,524 investments
Interest received 246,153 182,242 Dividends received 11,424 - Other cash received from investing activities 59 269 Net cash used in investing activities (1,021,435) (1,170,945) Cash flows from financing activities
Repayments of borrowings (404) (424,401) Dividends paid to theCompany’s shareholders (682,620) (604,564) Dividends paid to minority shareholders of a subsidiary - (19,472) Other cash paid relating to financing activities (1,694) (1,588) Net cash used in financing activities (684,718) (1,050,025) Net increase in cash and cash equivalents 2,483,496 920,279 Cash and cash equivalents at beginning of year 6,479,972 5,559,693 Effects of exchange rate changes - - Cash and cash equivalents at end of year 19 8,963,468 6,479,972 The notes on pages 44 to 96 are an integral part of these consolidated financial statements.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in 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 Authorization Group ofCompany’s Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was owned by Jiangling Motors Corporation Group (“JMCG”). The legalrepresentative’s operating license of the Company is No. 360000511000021.
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 31 December 2014, 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 13 March 2015.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The consolidated financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying theGroup’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimations are significant to the consolidated financial statements are disclosed in Note 4.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
Changes in accounting policy and disclosures
(a) New and amended standards adopted by the group
The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014:
• Amendment to IAS 32, 'Financial instruments: Presentation' on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements.
• Amendments to IAS 36, 'Impairment of assets', on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.
• IFRIC 21, 'Levies', sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to the payment a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.
Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Group.
(b) New standards and interpretations not yet adopted
||
|-|
|A number of new standards and amendments to standards and interpretations are effective for|
|annual periods beginning after 1 January 2014, and have not been applied in preparing these|
|consolidated financial statements. None of these is expected to have a significant effect on the|
|consolidated financial statements of the Group, except the following set out below|

Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(b) New standards and interpretations not yet adopted (continued)
||
|-|
|IFRS 9, ‘Financial instruments’, addresses the classification, measurement and|
|recognition of financial assets and financial liabilities. The complete version of IFRS 9|
|was issued in July 2014. It replaces the guidance in IAS 39 that relates to the|
|classification and measurement of financial instruments. IFRS 9 retains but simplifies the|
|mixed measurement model and establishes three primary measurement categories for|
|financial assets: amortised cost, fair value through OCI and fair value through P&L. The|
|basis of classification depends on the entity's business model and the contractual cash|
|flow characteristics of the financial asset. Investments in equity instruments are required|
|to be measured at fair value through profit or loss with the irrevocable option at inception|
|to present changes in fair value in OCI not recycling. There is now a new expected credit|
|losses model that replaces the incurred loss impairment model used in IAS 39. For|
|financial liabilities there were no changes to classification and measurement except for|
|the recognition of changes in own credit risk in other comprehensive income, for liabilities|
|designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge|
|effectiveness by replacing the bright line hedge effectiveness tests. It requires an|
|economic relationship between the hedged item and hedging instrument and for the|
|‘hedged ratio’ to be the same as the one management actually use for risk management|
|purposes.|

||
|-|
|Contemporaneous documentation is still required but is different to that currently|
|prepared under IAS 39. The standard is effective for accounting periods beginning on or|
|after 1 January 2018. Early adoption is permitted. The Group is yet to assess IFRS 9’s full|
|impact.|

||
|-|
|IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and|
|establishes principles for reporting useful information to users of financial statements|
|about the nature, amount, timing and uncertainty of revenue and cash flows arising from|
|an entity’s contracts with customers. Revenue is recognised when a customer obtains|
|control of a good or service and thus has the ability to direct the use and obtain the|
|benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11|
|'Construction contracts' and related interpretations. The standard is effective for annual|
|periods beginning on or after 1 January 2017 and earlier application is permitted. The|
|Group is assessing the impact of IFRS 15.|

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
2.2 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.3 Associates
An associate is an entity over which the Group has significant influence but not control, generally accompanying a shareholding of between20% and50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise theinvestor’s share of the profit or loss of the investee after the date of acquisition. TheGroup’s investment in associates includes goodwill identified on acquisition.
The Group's share of post-acquisition profit or loss is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to‘share of profit of investments accounted for using equitymethod’ in profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in theGroup’s financial statements only to the extent of unrelatedinvestor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Gains or losses on dilution of equity interest in associates are recognised in profit or loss.
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive committee that makes strategic decisions.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.5 Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of theGroup’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is theCompany’s functional and theGroup’s presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses are presented in profit or loss within‘otherincome/(expense)-net’.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale, are included in other comprehensive income.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the items.
Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings 35-40 years
Plant and machinery 10-15 years
Motor vehicles 6-10 years
Moulds 5 years
Electronic and otherequipment’s 5-7 years
Theassets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Anasset’s carrying amount is written down immediately to its recoverable amount if theasset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within‘other income/(expense)–net’ in profit orloss’.
Assets under construction represent buildings under construction and plant and equipment pending installation, and are stated at cost. Costs include construction and acquisition costs. No provision for depreciation is made on assets under construction until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is expensed in profit or loss on a straight line basis over the period of the lease or when there is impairment, the impairment is expensed in profit or loss.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. 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.
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. 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.
No development costs were capitalised by the Group during the year ended 31 December 2014.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.10 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables,, held-to-maturity financial assets and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets.
(c) Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that theGroup’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.10 Financial assets (continued)
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date– the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the‘financial assets at fair value through profit orloss’ category are presented in profit or loss within‘other (losses)/gains–net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as‘gains and losses from investmentsecurities’.
Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends on available-for-sale equity instruments are recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial liabilities at fair value through profit or loss and offsetting financial instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this category if incurred principally for the purpose of selling in the short term. A financial liability initially recognised at fair value, and transaction costs are expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in this category are classified as current liability if expected to be settled within 12 months; otherwise, they are classified as non-current. A financial liability is derecognised when it is extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
2.12 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a‘lossevent’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financialasset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of aninstrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in thedebtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.
For debt securities, if any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is removed from equity and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.
For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss.
2.1 Inventories
3
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling prices in the ordinary course of business, less applicable variable distribution costs.
2.1 Trade and other receivables
4
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.
2.15 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, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.16 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 equity holders.
2.17 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.18 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are 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.
2.19 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
(1) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the PRC. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
(2) Deferred income tax
Inside basis differences
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Outside basis differences
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only when there is an agreement in place that gives the group the ability to control the reversal of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable temporary differences arising from theassociate’s undistributed profits is not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Current and deferred income tax (continued)
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 2.21 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed by the PRC government. The contribution to the scheme is charged to profit or loss as and when incurred. TheGroup’s obligations are determined at a certain percentage of the salaries of the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees. Such supplementary pension subsidies are considered as under defined benefit plans. The liability recognised in the statement of financial position in respect of these defined benefit plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for recognised actuarial gains or losses and past service cost. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows according to the terms of the related pension liability.
The current service cost of the defined benefit plan, recognised in profit or loss in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit obligation results from employee service in the current year, benefit changes, curtailments and settlements.
Past-service costs are recognised immediately in income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
(2) Housing fund and other benefits
TheGroup’s full-time employees are entitled to participate in a state-sponsored housing fund. The fund can be used by the employees for the purchase of apartment accommodation, or may be withdrawn upon their retirement. The Group is required to make annual contributions to the state-sponsored housing fund equivalent to a certain percentage of theemployees’ salaries.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Employee benefits (continued)
(3) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled within twelve months and are measured at the amounts expected to be paid when they are settled.
2.22 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.
2.23 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of theGroup’s activities, as described below. The Group bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.23 Revenue recognition (continued)
(1) Sales of goods
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the customer, the customer has accepted the products and collectability of the related receivables is reasonably assured.
(2) Rental income
Rental income is recognised on a straight-line basis over the period of the rental contracts.
2.24 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables are recognised using the original effective interest rate.
2.25 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.
2.26 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.
2.27 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs they are intended to compensate. Government grants not relating to future costs are recognised on receipt basis.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight line basis over the expected lives of the related assets.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management
3.1 Financial risk factors
TheGroup’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. TheGroup’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on theGroup’s financial performance.
Risk management is carried out by Finance Department under policies approved by the Board of Directors.
(1) Market risk
(a) Foreign exchange risk
The Group operates domestically and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to other payables dominated in US dollar (“USD”). Management has set up a policy to require the Group to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not theCompany’s functional currency.
As at 31 December 2014, 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 RMB12,614,000(2013:RMB10,405,000) higher/lower.
(b) Interest rate risk
TheGroup’s income and operating cash flows are substantially independent of changes in market interest rates. As at 31 December 2014, a large portion of its bank deposits and all of its borrowings were at floating rate. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.
As at 31 December 2014, 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 RMB17,192,000(2013:RMB13,601,000).
(2) Credit risk
TheGroup’s maximum exposure to credit risk in relation to financial assets is the carrying amounts of cash and cash equivalents and trade and other receivables.
As at 31 December 2014, the Group had cash of approximately RMB181,674,000(2013: RMB181,387,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a non-bank financial institution and a subsidiary of JMCG (Note 19). TheGroup’s other bank deposits are deposited in state-owned banks or other listed banks. Management believes all these financial institutions have high credit quality without significant credit risk.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
All theGroup’s trade and other receivables have no collateral. However, the Group has policies in place to ensure that sales are made to customers with appropriate credit history and the Group performs periodic credit evaluations of its customers. The Group assesses the credit quality of each customer by taking into account its financial position, past experience and other factors. Credit limit and terms are reviewed on periodic basis, and the financial department is responsible for such monitoring procedures. In determining whether provision for impairment is required, the Group takes into consideration the aging status and the likelihood of collection. In this regards, the directors of the Company are satisfied that the risks is minimal as all customers are existing ones or related parties and have no default in the past and adequate provision for impairment, if any, has been made in the financial statements after assessing the collectability of individual debts. Further quantitative disclosures in respect of the impairment of trade and other receivables are set out in Note 18.
(3) Liquidity risk
Cash flow forecasting is performed in the operating entities of the Group in and aggregated by Finance Department. Finance Department monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 22) at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
The table below analyses theGroup’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 and Between 2
year 2 years and 5 years Over 5 years RMB‘000 RMB‘000 RMB‘000 RMB‘000 At 31 December 2014
Bank borrowings
- Principals 401 401 1,202 3,205 - Interests 77 71 176 204 Trade and other payables 7,828,285 - - - Financial liabilities at fair
value through profit or loss 2,011 - - - 7,830,774 472 1,378 3,409 At 31 December 2013
Bank borrowings
- Principals 399 399 1,198 3,593 - Interests 82 76 193 256 Trade and other payables 6,353,471 - - - 6,353,952 475 1,391 3,849
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 F i n ancial risk management (continued)
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.
The gearing ratios at 31 December 2014 and 2013 were as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Total borrowings 5,209 5,589 Total equity 10,598,429 9,173,999 Total capital 10,603,638 9,179,588 Gearing ratio 0.05% 0.06% 3.3 Fair value estimation
Financial liabilities at fair value through profit or loss are forward exchange contracts which are not traded in an active market. The fair value is determined by using valuation techniques which maximised the use of observable market data where it is available and rely as little as possible on entity specific estimates. The different levels have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Since all significant inputs required to value the instrument are observable, the forward exchange contracts are classified as level 2.
The carrying amounts of theGroup’s financial assets including cash and cash equivalents, trade and other receivables and financial liabilities including trade and other payables, borrowing, approximate their fair values due to their short maturities. The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
3 F i n ancial risk management (continued)
3.3 Fair value estimation (continued)
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
(1) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Management estimates the related warranty claims based on historical warranty claim information including level of repairs and returns as well as recent trends that might suggest that past cost information may differ from future claims.
Factors that could impact the estimated claim information include the success of theGroup’s productivity and quality controls, as well as parts and labour costs. Any increase or decrease in the provision would affect profit or loss in future years.
(2) Pension benefits
The present value of the pension obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.
Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in Note 23.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
4 Critical accounting estimates and judgements (continued)
(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 such determination is made.
Deferred income tax assets relating to certain temporary differences are recognised as management considers it is probable that future taxable profit will be available against which the temporary differences can be utilised. Where the expectation is different from the original estimate, such differences will impact the recognition of deferred tax assets and tax in the periods in which such estimate is changed.
As at 31 December 2014, the Group has deferred tax assets of approximately RMB440,730,000. 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) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.8. The recoverable amounts of cash-generating units have been determined based on value in use calculations. These calculations require the use of estimates (Note 14).
(5) Impairment of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The Group will reassess whether theinventories’ net realisable value is lower than theinventories’ cost at end of each year. Impairment provision for inventories is recognised in profit or loss when the cost is higher than the net realisable value.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
5 Revenue and segment information
The Group principally derives its turnover from the manufacture, assembly and sale of automobiles, related spare parts and components, and sales are made principally in the PRC. Revenue represents the total invoiced value of goods supplied to customers, net of value-added tax, returns and allowances.
Management has determined the operating segment based on the reports reviewed by the strategic executive committee that are used to make strategic decisions. The committee considers the business from the product perspective as all 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.
6 Expenses by nature
2014 2013RMB’000 RMB’000 Changes in inventories of finished goods and
work in progress 161,290 (423,747) Raw materials and consumables used 17,123,578 13,963,246 Employee benefit expenses (Note 7) 1,572,313 1,296,883 Depreciation of PPE (Note 12, 28) 516,247 442,078 Impairment charges of PPE 3,506 47,364 Repairs and maintenance expenditure on PPE 157,175 126,185 Research and development expenditure 1,554,018 1,187,886 Amortisation of lease prepayment (Note 13, 28) 14,202 13,166 Amortisation of intangible assets (Note 14, 28) 4,313 3,667 Impairment charges of goodwill (Note 14, 28) 85,566 - Write-down of inventories (Note 28) 28,296 17,055 Provision for receivables impairment (Note 18, 28) 1,623 1,151 Provision of warranty (Note 24) 204,768 182,196 Finance costs (Note 8, 9) 6,232 6,275 Others 1,665,884 1,878,963 Total cost of sales, distribution costs, impairment
charges of non-current assets, finance costs
and administrative expenses 23,099,011 18,742,368 In 2014, depreciation of PPE of RMB30,394,000 (2013: RMB19,635,000) and amortisation of intangible assets of RMB3,201,000 (2013: RMB3,388,000) were included in research and development expenditure.
Finance costs included interest expense on bank loan, exchange losses and other finance costs.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
7 Employee benefit expenses
2014 2013RMB’000 RMB’000 Wages and salaries 1,142,623 936,355 Social security costs 137,825 110,478 Pension costs− defined contribution plans 176,564 144,634 Pension costs− defined benefit plans (Note 23) 4,125 5,393 Others 111,176 100,023 1,572,313 1,296,883 The employees of the Group participated in a retirement benefit plan organised by the municipal and provincial governments under which the Group was required to make defined contributions monthly to this plan.
In addition, the Group also paid certain pension subsidies to certain retired employees. In accordance with theGroup’s early retirement programs, the Group was also committed to making periodic benefit payments to certain early-retired employees until they reach their legal retirement ages.
8 Other income
2014 2013RMB’000 RMB’000 Government grants (a) 579,765 173,553 Others (11,538) 3,144 568,227 176,697 (a) In 2014, the Group received grants of approximately RMB579,765,000, mainly from Finance Bureau of Nanchang, Finance Bureau of Nanchang Qingyunpu District, Economic Development District Administrative Commission of Xiaolan and the Finance Bureau of Economic Development District Administrative Commission of Taiyuan. Those grants were to support thegroup’s operation.
9 Finance income and cost
2014 2013RMB’000 RMB’000 (a) Finance income
Interest income on bank deposits 203,159 160,030 Interest income on credit sales 48,577 40,545 251,736 200,575 (b) Finance cost
Interest expense on bank loans (416) (4,687) Bank charges (1,695) (1,588) (2,111) (6,275) Net finance income 249,625 194,300
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation
(a) Corporate income tax (“CIT”)
As the Company is qualified as a high-tech enterprise and approved by the relevant tax authorities in 2012, the Company is entitled to a preferential CIT rate of15% from 2012 to 2014 (2013:15%). The CIT rates of JMC Heavy Duty Vehicle Co., Ltd (JMCH) and Jiangling Motor Sales Co, Ltd., the subsidiaries of the Company are25%.
The amounts of income tax expense charged to profit or loss represented:
2014 2013RMB’000 RMB’000 Current tax (460,404) (331,198) Deferred tax (Note 16) 138,961 122,730 (321,443) (208,468) 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:
2014 2013RMB’000 RMB’000 Profit before tax 2,429,295 1,922,576 Tax calculated at tax rates applicable to profits in
the respective companies (387,392) (323,595) Tax concessions 469 43 Expenses not deductible for tax purposes (5,466) (1,787) Income not subject to tax 97,638 54,525 Effect of different tax rates applied for the periods
in which the temporary differences are expected
to reverse (1,107) 87,980 Tax losses for which no deferred income tax
asset was recognised (25,585) (25,634) Tax charge (321,443) (208,468) The weighted average applicable tax rate was16% (2013:17%).
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
10 Taxation (continued)
(a) Corporate income tax (continued)
The tax credit/(charge) relating to other comprehensive income is as follows:
2014 2013
Before Tax After Before Tax After tax credit tax tax charge taxRMB’000 RMB’000 RMB’000 RMB’000RMB’000RMB’000 Actuarial (loss)/gain on
retirement benefit obligations (1,978) 495 (1,483) 4,792 (1,198) 3,594 Other comprehensive income (1,978) 495 (1,483) 4,792 (1,198) 3,594 Current tax - -
Deferred tax (Note 16) 495 (1,198)
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of17% on the selling price of goods. Input VAT paid on purchase of goods and equipment can be used to offset the output VAT to determine the net VAT payable.
(c) Consumption Tax (“CT”)
TheGroup’s automobile sale is subject to CT at5% or9% on the selling price of goods.
11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.
2014 2013 Profit attributable to equity holders of the
Company(‘000) 2,107,852 1,694,848 Weighted average number of ordinary shares in
issue(‘000) 863,214 863,214 Basic earnings per share (RMB) 2.44 1.96 Diluted earnings per share equals to basic earnings per share as there were no dilutive potential ordinary shares outstanding during the year ended 31 December 2014.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and other Assets under
Buildings Machinery Vehicles Moulds equipment’s constructions TotalRMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2013
Cost 822,468 2,439,904 125,753 1,308,927 1,437,180 1,837,898 7,972,130 Accumulated depreciation and impairment (234,865) (1,596,981) (57,995) (996,636) (945,685) (692) (3,832,854) Net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276 Year ended 31 December 2013
Opening net book amount 587,603 842,923 67,758 312,291 491,495 1,837,206 4,139,276 Additions 214,810 43,625 16,394 5,408 46,004 1,283,797 1,610,038 Transfers 664,312 911,034 27,756 57,588 522,328 (2,183,018) - Disposals (1,072) (1,863) (6,291) - (1,684) - (10,910) Other deductions - (1,583) - - (1,631) (76,976) (80,190) Impairment charge (Note 6, 28) - (26,475) (1,075) (1,936) (17,878) - (47,364) Depreciation charge (Note 6, 28) (32,126) (154,472) (18,444) (97,534) (159,137) - (461,713) Closing net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137 At 31 December 2013
Cost 1,721,207 3,369,228 156,912 1,333,643 1,982,205 861,701 9,424,896 Accumulated depreciation and impairment (287,680) (1,756,039) (70,814) (1,057,826) (1,102,708) (692) (4,275,759) Net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137 Year ended 31 December 2014
Opening net book amount 1,433,527 1,613,189 86,098 275,817 879,497 861,009 5,149,137 Additions - - - - - 1,250,711 1,250,711 Transfers 98,938 193,735 46,055 89,145 384,468 (812,341) - Disposals (89) (10,203) (1,643) (581) (6,139) - (18,655) Other deductions - (73,794) - - (3,627) (17,217) (94,638) Impairment charge (Note 6, 28) - (1,229) - - (2,277) - (3,506) Depreciation charge (Note 6, 28) (42,870) (178,027) (25,350) (87,230) (213,164) - (546,641) Closing net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408 At 31 December 2014
Cost 1,819,897 3,138,887 190,888 1,421,197 2,030,067 1,282,854 9,883,790 Accumulated depreciation and impairment (330,391) (1,595,216) (85,728) (1,144,046) (991,309) (692) (4,147,382) Net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the year ended 31 December 2014, depreciation expense of approximately RMB473,020,000 (2013: RMB396,155,000) has been charged in cost of sales, RMB2,080,000 (2013: RMB2,131,000) in distribution costs and RMB71,541,000 (2013: RMB63,427,000) in administrative expenses.
Lease rental expenses amounting to RMB6,159,000 (2013: RMB5,447,000) relating to the lease of property are included in profit or loss.
13 Lease prepayment
Lease prepayment represents theGroup’s interests in land which are held on leases of 50 years. The movement is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Opening net book amount 604,831 264,824 Additions - 353,173 Amortisation charge (Note 6, 28) (14,202) (13,166) Closing net book amount 590,629 604,831 Cost 683,036 683,036 Accumulated amortisation (92,407) (78,205) Net book amount 590,629 604,831 Amortisation expense was charged in administrative expenses.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets
After-sale
management
Total model Software Goodwill OtherRMB’000 RMB’000 RMB’000 RMB’000RMB’000 Year ended 31 December
2013
Opening net book amount - 17,678 - - 17,678 Addi tion - 8,335 89,028 49 97,412 Impa irment charge - - - - - Amortisation charge (Note 6, (7,045) - (10) (7,055) 28) -
Closing net book amount - 18,968 89,028 39 108,035 At 31 December 2013
Cost 36,978 48,991 89,028 1,649 176,646 Accumulated amortisation (36,978) (30,023) - (1,610) (68,611) Net book amount - 18,968 89,028 39 108,035 Year ended 31 December
2014
Opening net book amount - 18,968 89,028 39 108,035 Addition - 17,217 - - 17,217 Impairment charge - - (85,566) - (85,566) Amortisation charge (Note 6, (7,503) - (10) (7,513) 28) -
Closing net book amount - 28,682 3,462 29 32,173 At 31 December 2014
Cost 36,978 68,040 89,028 1,649 195,695 Accumulated amortisation (163,522 and impairment (36,978) (39,358) (85,566) (1 ,620) ) Net book amount - 28,682 3,462 29 32,173 For the year ended 31 December 2014, amortisation expense of approximately RMB7,288,000 (2013: RMB6,869,000) was charged in administrative expenses, RMB194,000 (2013: RMB155,000) in cost of sales and RMB31,000 in distribution costs (2013: RMB31,000).
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
14 Intangible assets (continued)
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 2013 Addition Impairment 31 December 2014RMB’000 RMB’000 RMB’000 RMB’000 JMCH 89,028 - (85,566) 3,462 The recoverable amount of the CGU is determined based on value in use calculations. These calculations use after-tax cash flow projections based on financial budgets approved by management covering a nine-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the heavy duty vehicle business in which the CGU operates.
The key assumptions used for value in use calculations in 2014 are as follows:
Item JMCH Compound annual volume growth rate 257% Long term growth rate 3% Discount rate 19.4% The key assumptions used for value in use calculations in 2013 are as follows:
Item JMCH Compound annual volume growth rate 179% Long term growth rate 3% Discount rate 19.4% The long term growth rates used are consistent with the forecasts included in industry reports. The discount rates used are after-tax and reflect specific risks relating to the relevant operating subsidiary.
The impairment charge arose in the wholesale CGU following a decision in 2014 to reduce the manufacturing output and adjust the gross profit margin of products of JMCH. Following this decision, the group reassessed the recoverable value of the CGU, and made impairment provision in accordance with the accounting policy stated in Note 2.8. No other class of asset other than goodwill was impaired.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15 Investments accounted for using the equity method
(a) Movement of investment accounted for using the equity method is set out as follows which is an investment in an associate:
31 December 2014 31 December 2013RMB’000 RMB’000 At beginning of the year 34,682 22,319 Share of profit (Note 28) 19,347 12,363 Dividends receivable (15,657) - Dividends received (11,424) - At end of the year 26,948 34,682 In March 1996, the Company entered into a Sino-foreign equity joint venture agreement with Visteon International Holding Co., Ltd. (“Visteon”) to form Jiangxi Fuchang Climate Systems Co., Ltd. (“Jiangxi Fuchang”) in PRC, with operating period of 30 years, and its principal activities include manufacture and sale of air-conditioners and spare parts for motor vehicles. On 1 June 2008, Visteon transferred its equity interests of Jiangxi Fuchang to Visteon Motor Climate Control Holding (Hong Kong) Co., Ltd. (“Visteon Hong Kong”), a subsidiary of Visteon, and Jiangxi Fuchang was renamed as Visteon Climate Control (Nanchang) Co., Ltd. (“Visteon Climate Control Nanchang”).On 14 May 2013, Visteon transferred its equity interests of Visteon Hong Kong to Halla Visteon Climate Control Corporation, a subsidiary of Visteon, and Visteon Climate Control Nanchang was renamed as Halla Visteon Climate Control (Nanchang) Co., Ltd. (“Halla Visteon Climate Control (Nanchang)”).
Halla Visteon Climate Control (Nanchang) has a registered capital of USD5.6 million, of which Visteon Hong Kong has80.85% interest and the Company has the remaining19.15% interest. Although the Group holds less than20% of the equity interests of Halla Visteon Climate Control (Nanchang), the Group exercises significant influence by virtue of its appointment on two directors to the board of directors of that company and has the power to participate in the financial and operating policy decisions of Halla Visteon Climate Control (Nanchang), and is regarded as an associate of the Group. The investment is accounted for using the equity method of accounting.
(b) Summarised financial information for associate are as follows:
Summarised balance sheet
31 December 2014 31 December 2013RMB’000 RMB’000 Current
Cash and cash equivalents 113,954 78,536 Other current assets (excluding cash) 202,430 163,095 Total current assets 316,384 241,631 Current liabilities (233,321) (113,574) Non-current
Assets 57,656 53,048 Net assets 140,719 181,105
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
15 Investments accounted for using the equity method (continued)
Summarised statement of comprehensive income
2014 2013RMB’000 RMB’000 Revenue 586,780 502,838 Cost of sales (398,897) (381,179) Sale tax (4,083) (3,423) Distribution costs (8,514) (2,156) Administrative expenses (40,959) (29,688) Financial income 1,051 298 Non-operating income/(expenses) 1,942 (40) Profit before income tax 137,320 86,650 Income tax expense (36,289) (22,092) Other comprehensive income - - Total comprehensive income 101,031 64,558 (c) Reconciliation of summarised financial information
2014 2013RMB’000 RMB’000 Opening net assets 1 January 181,105 116,547 Profit for the period 101,031 64,558 Dividends distributed (141,417) - Closing net assets 140,719 181,105 Interest in associate 19.15% 19.15% Carrying value 26,948 34,682 16 Deferred income tax
31 December 2014 31 December 2013RMB’000 RMB’000 Deferred tax assets 442,408 304,492 Deferred tax liabilities- can be offset (1,678) (2,141) Deferred tax liabilities- cannot be offset (29,458) (30,535) Deferred tax assets (net) 440,730 302,351 Deferred tax liabilities (net) (29,458) (30,535)
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
The gross movement on the deferred income tax account is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 At beginning of the year 271,816 182,537 Acquisition of subsidiary - (32,253) Credited to profit or loss 138,961 122,730 Credited/(charged) to other
comprehensive income (Note 10) 495 (1,198) At end of the year 411,272 271,816 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:
Deferred tax assets Provision for Retirement
impairment of benefits Accrued
assets obligation expenses Others TotalRMB’000RMB’000RMB’000 RMB’000 RMB’000 At 1 January 2013 1,172 14,592 138,985 29,555 184,304 Credited/(Charged) to
profit or loss 6,029 36 111,359 3,962 121,386 Charged to other
comprehensive income - (1,198) - - (1,198) At 31 December 2013 7,201 13,430 250,344 33,517 304,492 (Charged)/ Credited to
profit or loss (1,872) (1,483) 131,093 9,683 137,421 Charged to other
comprehensive income - 495 - - 495 At 31 December 2014 5,329 12,442 381,437 43,200 442,408 Deferred tax liabilities Forward
Amortization of Fair value exchange
Intangible Assets gains contracts TotalRMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2013 (1,719) - (48) (1,767) (Charged)/Credited to
profit or loss (352) 1,718 (22) 1,344 Acquisition of subsidiary - (32,253) - (32,253) At 31 December 2013 (2,071) (30,535) (70) (32,676) Credited to profit or loss 393 1,077 70 1,540 At 31 December 2014 (1,678) (29,458) - (31,136)
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
16 Deferred income tax (continued)
.
||||
|-|-|-|
|The analysis of deferred tax assets and deferred tax liabilities is as follows:|||
||31 December 2014|31 December 2013|
||RMB’000|RMB’000|
|Deferred tax assets:|||
|–Deferred tax asset to be recovered after|||
|more than 12 months|12,036|13,942|
|–Deferred tax asset to be recovered within|||
|12 months|430,372|290,550|
||442,408|304,492|

 31 December 2014 31 December 2013RMB’000 RMB’000 Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (29,458) (30,301)–Deferred tax liabilities to be recovered
within 12 months (1,678) (2,375) (31,136) (32,676) Tax losses for which no deferred income tax assets were recognised is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Tax losses
275,289 231,162 The expiry years of the tax losses are as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 2015
32,459 32,459 2016
6,721 6,721 2017
89,447 89,447 2018
44,319 102,535 2019
102,343 - 275,289 231,162
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
17 Inventories
31 December 2014 31 December 2013RMB’000 RMB’000 Raw materials 927,110 852,041 Work in progress 159,502 126,919 Finished goods 572,095 766,967 1,658,707 1,745,927 For the year ended 31 December 2014, the cost of inventories recognised as expenses and included in cost of sales amounted to approximately RMB17,284,868,000 (2013: RMB13,539,499,000), which included inventory provision of RMB29,175,000 (2013: RMB19,701,000).
A provision of RMB33,216,000 (2013: RMB19,410,000) was made as at 31 December 2014. The Group reversed RMB878,000 of a previous inventory write-down in 2014. In 2014, the Group wrote-off inventories with provision of RMB14,490,000 made in prior years. The provision and reversal of the inventory write-down have been included in‘cost ofsales’ of profit or loss.
As at 31 December 2014, no inventory was pledged as security for liabilities.
18 Trade, other receivables and prepayments
31 December 2014 31 December 2013RMB’000 RMB’000 Trade receivables 696,258 472,540 Less: Provision for impairment of trade
receivables (6,919) (6,208) Trade receivables– net 689,339 466,332 Notes receivables 799,782 951,012 Other receivables 53,387 36,155 Less: Provision for impairment of other
receivables (719) (633) Other receivables– net 52,668 35,522 Prepayments 340,880 513,335 Dividends receivables 15,657 - Interest receivables 107,836 93,094 2,006,162 2,059,295 Refer to Note 31 for details of receivables from related parties. The carrying amounts of theGroup’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables approximate their fair values.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
18 Trade, other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 At beginning of the year (6,841) (1,954) Provision arose from business
combination - (3,736) Provision for receivables impairment (Note
6, 28) (1,623) (1,151) Receivables written off during the year as
uncollectible (Note 6, 28) 826 - At end of the year (7,638) (6,841) The creation of provision for impaired receivables have been included in‘administrativeexpense’ in profit or loss (Note 6).
As at 31 December 2014, trade receivables of approximately RMB42,191,000 (2013: RMB13,499,000) were past due but not impaired. These balances related to a number of independent customers for whom there was no recent history of default. The ageing analysis of these trade receivables based on past due date is as below:
31 December 2014 31 December 2013RMB’000 RMB’000 Up to 3 months 8,167 6,897 3 months to 6 months 23,858 359 Over 6 months 10,166 6,243 42,191 13,499 The other classes within trade and other receivables do not contain impaired assets.
As of 31 December 2014, trade receivables of RMB3,455,000 (2013:RMB3,864,000) were individually impaired. The amount of the provision was RMB3,455,000 as of 31 December 2014 (2013: RMB3,864,000). The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult economic situations. It was assessed that the receivable is expected to be not recovered. The ageing of these receivables is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Over 6 months 3,455 3,864 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.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
19 Cash and bank balances
(a) Cash and cash equivalents
31 December 2014 31 December 2013RMB’000 RMB’000 Cash at bank and in hand 982,460 874,972 Short-term bank deposits (i) 7,981,008 5,605,000 8,963,468 6,479,972 As at 31 December 2014, the Group had cash of approximately RMB181,674,000 (2013: RMB 181,387,000) deposited in JMCF (Note 31 (iv)). The interest rates range from0.42% to1.38% per annum (2013:0.39% to1.27%). JMCF, a non-bank financial institution, is a subsidiary of JMCG.
(i) Short-term bank deposits can be withdrawn at the discretion of the Group without any restriction.
(b) Restricted cash
As at 31 December 2014, RMB6,810,000 (2013:Nil) are restricted deposits held at bank as reserve for bank acceptance note.
20 Share capital
Number of
Tradable shares Total shares “A” shares “B” shares
(thousands) Restricted Non-restricted
RMB’000 RMB’000 RMB’000 RMB’000 Year ended 31 December 2013
Balance at 1 January 2013 863,214 2,782 516,432 344,000 863,214 Transfer - (240) 240 - - Balance at 31 December 2013 863,214 2,542 516,672 344,000 863,214 Year ended 31 December 2014
Balance at 1 January 2014 863,214 2,542 516,672 344,000 863,214 Transfer - (720) 720 - - Balance at 31 December 2014 863,214 1,822 517,392 344,000 863,214 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, 1,822,000 shares were still restricted as at 31 December 2014.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
21 Other reserves
Statutory
surplus
reserve fund Reserve
(a) fund Others TotalRMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2013 431,607 18,627 2,623 452,857 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - 3,594 3,594 At 31 December 2013 431,607 18,627 6,217 456,451 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (1,483) (1,483) At 31 December 2014 431,607 18,627 4,734 454,968 (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, there are no further appropriations to the statutory surplus reserve fund for the years ended 31 December 2013 and 2014.
22 Borrowings
31 December 2014 31 December 2013RMB’000 RMB’000 Current
Bank borrowings
- guaranteed (a) 401 399 Non-current
Bank borrowings - guaranteed (a) 4,808 5,190 Total borrowings 5,209 5,589 (a) Bank borrowings of USD851,000 (equivalent to approximately RMB5,209,000) (2013:USD917,000 equivalent to approximately RMB5,589,000) were guaranteed by JMCF (Note 31 (vi)).
The interest rate of bank borrowings is1.50% per annum (2013:1.50%).
The fair value of borrowings approximates their carrying values.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
22 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Between 1 and 2 years 401 399 Between 2 and 5 years 1,202 1,198 Over 5 years 3,205 3,593 4,808 5,190 The Group has the following undrawn borrowing facilities:
31 December 2014 31 December 2013RMB’000 RMB’000 Fixed rate
- Expiring within one year 1,174,626 1,630,324 23 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement of financial position is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Present value of defined benefits obligations 55,726 57,001 The movement of early retirement and supplemental benefit obligations for the year ended 31 December 2014 is as follows:
31 December2014 31 December2013RMB’000 RMB’000 At beginning of the year 57,001 66,396 For the year
-Current service cost 1,292 1,202 -Interest cost 2,399 2,246 -Payment (7,378) (9,996) -Actuarial loss 2,412 (2,847) At end of the year 55,726 57,001 Current 5,580 8,213 Non-current 50,146 48,788 55,726 57,001 The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted:3.75% (2013:4.50%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at post:0% to6% (2013:0% to5%)
(3) Mortality: average life expectancy of residents in the PRC
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
23 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2014, a provision of RMB55,726,000 is sufficient to cover all future retirement-related obligations. Obligation in respect of retirement benefits of RMB55,726,000 is the present value of the unfunded obligations, of which the current portion amounting to RMB5,580,000 (2013: RMB8,213,000) has been included under current liabilities.
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is: Change in assumption Impact on overall liability Discount rate Increase/decrease by0.5% Decrease/increase by4.9%/5.5% Inflation rate Increase/decrease by0.5% Increase/decrease by2.1%/1.8% Rate of mortality Increase/decrease by 1 year Decrease/increase by1.1%/1.3% In 2014, RMB4,125,000 (2013:RMB5,393,000) were charged in‘administrativeexpenses’ and RMB1,978,000 were debited in other comprehensive income (2013:RMB4,792,000 were credited in other comprehensive income).
24 Provisions for warranty and other liabilities
The movement on the warranty provisions is as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 At beginning of the year 191,095 152,467 Charged for the year (Note 6) 204,768 182,196 Utilised during the year (169,360) (145,160) Other addition - 1,592 At end of the year 226,503 191,095 The above represents the warranty costs for repairs and maintenance, which are estimated based on present after-sale service policies and prioryears’ experience on the occurrence of such cost. For the business motor vehicles the warranty period is the sooner of 2 years and 50,000 kilometres since the motor vehicles are sold to consumer, while for the SUV the warranty period is the sooner of 3 years and 60,000 kilometres since the motor vehicles are sold to consumer. 25 Financial liabilities at fair value through profit or loss
31 December 2014 31 December 2013RMB’000 RMB’000 Forward exchange contracts 2,011 -
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
26 Trade and other payables
31 December 2014 31 December 2013RMB’000 RMB’000 Trade payables 5,626,580 4,721,270 Payroll and welfare payable 280,620 216,913 Dividend payables 10,001 8,730 Other payables 2,503,072 1,988,006 8,420,273 6,934,919 Refer to Note 31 for details of amount due to related parties.
27 Dividends
A final dividend for 2013 of RMB681,939,000 (RMB0.79 per share) was paid in 2014.
A final dividend for 2014 of RMB0.97 per share, amounting to a total dividend of RMB837,318,000 is proposed at theDirectors’ Meeting on 13 March 2015, and such dividend is to be approved by the shareholders at the Annual General Meeting. These financial statements do not reflect this dividend payable.
28 Cash generated from operations
2014 2013RMB’000 RMB’000 Profit before tax 2,429,295 1,922,576 Depreciation of PPE (Note 6, 12) 546,641 461,713 Amortisation of lease prepayment (Note 6, 13) 14,202 13,166 Amortisation of intangible assets (Note 6, 14) 7,513 7,055 Impairment charges of PPE (Note 6, 12) 3,506 47,364 Impairment charges of goodwill (Note 6, 14) 85,566 - Provision for receivables impairment (Note 6, 18) 1,623 1,151 Write-down of inventories (Note 6) 28,296 17,055 Loss on disposals of PPE 7,297 2,227 Finance cost (Note 9) 2,111 6,275 Finance income (Note 9) (251,736) (200,575) Net foreign exchange transaction loss /(gain) 4,121 (2,952) Share of profit from investment accounted for using
equity method (Note 15) (19,347) (12,363) Investment income of held-to-maturity investments - (524) Investment loss of forward exchange contracts 2,488 537 Changes on fair value of forward exchange contracts 2,481 (147) Changes in working capital:
- Increase in restricted cash (6,810) - - Decrease/(Increase) in inventories 34,549 (552,632) - Decrease/(Increase) in trade and other
receivables 35,787 (344,916) - Increase in provisions for warranty 35,408 37,796 - Increase in trade and other payables 1,623,293 2,010,241 - Decrease in pensions and other retirement benefits (3,252) (4,603) Cash generated from operations 4,583,032 3,408,444
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Year ended 31 December 2014 2013RMB’000 RMB’000 Net book amount 18,655 10,910 Loss on disposal of PPE (7,297) (2,227) Offset with trade and other payables (234) (3,627) Proceeds from disposal of PPE 11,124 5,056 29 Contingencies
At 31 December 2014, the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:
31 December 2014 31 December 2013RMB’000 RMB’000 Contracted but not provided for:
Purchases of buildings, plant and machinery 1,218,684 903,865 31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise significant influence in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns41.03% of theCompany’s shares, and Ford Motor Company (“Ford”), which owns32% of theCompany’s shares, are major shareholders of the Company as at 31 December 2014. For JMH, the shareholders are Chongqing Changan Automobile Corporation Ltd. (“Changan Auto”) and JMCG, both of them hold50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its associates, JMCG and its subsidiaries, Ford and its subsidiaries in the ordinary course of business during the year ended 31 December 2014.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
For the year ended 31 December 2014, related parties, other than the subsidiary, and their relationship with the Group are as follows:
Name of related party Relationship JMCG Shareholder of JMH Ford Motor (China) Co., Ltd. Subsidiary of Ford Ford Motor Research& Engineering (Nanjing) Co., Ltd. Subsidiary of Ford Ford Global Technologies, LLC Subsidiary of Ford Ford Otosan Company Subsidiary of Ford Ford Motor Company of Australia Limited Subsidiary of Ford JMCG Interior Trim Factory Subsidiary of JMCG Jiangxi JMCG Industry Co., Ltd. Subsidiary of JMCG JMCG Property Management Co. Subsidiary of JMCG Jiangxi Jiangling Chassis Co., Ltd. Subsidiary of JMCG Jiangling Material Co. Subsidiary of JMCG Land Wind Sales Co., Ltd. Subsidiary of JMH Nanchang JMCG Skyman Auto Component Co., Ltd. Subsidiary of JMH Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Subsidiary of JMCG Nanchang Gear Co., Ltd. Subsidiary of JMCG Jiangxi Jiangling Lear Interior System Co., Ltd. Subsidiary of JMCG Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. Subsidiary of JMCG Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. Subsidiary of JMCG JMCF Subsidiary of JMCG Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd. Subsidiary of JMCG Jiangxi Jiangling Material Utilization Co., Ltd. Subsidiary of JMCG Jiangxi JMCG Shangrao Industrial Co., Ltd. Subsidiary of JMCG JMCG Jiangxi Engineering Construction Co., Ltd. Subsidiary of JMCG Nanchang JMCG Xinchen Auto Component Co., Ltd. Subsidiary of JMCG Jiangling New-power Auto Manufacturing Co., Ltd. Subsidiary of JMCG Nanchang JMCG Shishun Logistics Co., Ltd. Subsidiary of JMCG Nanchang Lianda Machinery Co., Ltd. Subsidiary of JMCG Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. Subsidiary of JMCG Jiangxi ISUZU Engine Co., Ltd. Subsidiary of JMCG Nanchang JMCG Liancheng Auto Component Co., Ltd. Subsidiary of JMCG JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG Nanchang JMCG Printing Plant Co., Ltd. Associate of JMCG JMCG Hequn Costume Co., Ltd. Associate of JMCG GETRAG (Jiangxi) Transmission Company Associate of JMCG Nanchang Baojiang Steel Processing Distribution Co., Ltd. Associate of JMCG Jiangling Aowei Aotomobile Spare Part Co., Ltd. Associate of JMCG Halla Visteon Climate Control (Nanchang) Co., Ltd. Associate of the Company GETRAG Ford Transmissions Gmbh Joint venture of Ford Jiangxi Biaohong Engine Tappet Co., Ltd. Subsidiary of JMCG Nanchang Jiangling Huasheng Cleaner Co., Ltd. Subsidiary of JMCG Jiangxi Sinodef International Trade Co.,Ltd. Subsidiary of JMCG Nanchang Unistar Electric& Electronics Co.,Ltd Subsidiary of JMCG Nanchang Yinlun Heat-exchanger Co.,Ltd Subsidiary of JMCG Faurecia Emissions Control Technologies (Nanchang) Co., Ltd Associate of JMCG Nanchang Hengou Industry Co., Ltd. Subsidiary of JMCG Nanchang JMCG Car Frame Co., Ltd. Subsidiary of JMCG Changan Ford Automobile Co., Ltd Joint venture of Ford
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services
Purchase of goods 2014 2013RMB’000 RMB’000 Jiangxi Jiangling Chassis Co., Ltd. 832,971 694,982 GETRAG (Jiangxi) Transmission Company 692,007 666,918 JMCG Interior Trim Factory 726,806 600,092 Nanchang Baojiang Steel Processing Distribution Co., Ltd. 667,940 571,516 Jiangxi Jiangling Lear Interior System Co., Ltd. 543,648 450,602 Ford 406,427 424,261 Nanchang JMCG Liancheng Auto Component Co., Ltd. 323,374 262,175 Nanchang Jiangling Hua Xiang Auto Components Co., Ltd. 299,685 242,576 Halla Visteon Climate Control (Nanchang) Co., Ltd. 266,215 242,188 Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. 252,342 228,466 Nanchang Unistar Electric& Electronics Co.,ltd 261,195 143,619 JMCG 144,222 106,358 Nanchang JMCG Skyman Auto Component Co., Ltd. 83,072 66,539 Nanchang Lianda Machinery Co., Ltd. 74,365 63,070 Jiangling Material Co. 34,318 42,383 Jiangling Aowei Aotomobile Spare Part Co., Ltd. 41,173 39,209 Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd. 35,641 36,609 Nanchang JMCG Xinchen Auto Component Co., Ltd. 26,527 24,942 Nanchang Yinlun Heat-exchanger Co.,ltd 56,171 14,139 Jiangxi JMCG Shangrao Industrial Co., Ltd. 22,055 12,406 Jiangxi Jiangling Material Utilization Co., Ltd. 9,487 8,440 Jiangxi ISUZU Engine Co., Ltd. 13,653 8,409 Nanchang Jiangling Huasheng Cleaner Co., Ltd. 9,827 7,609 Jiangxi Biaohong Engine Tappet Co., Ltd. 10,208 7,240 Nanchang JMCG Printing Plant Co., Ltd. 6,784 5,828 Nanchang Gear Co., Ltd. 10,085 4,531 JMCG Hequn Costume Co., Ltd. 4,539 3,628 Faurecia Emissions Control Technologies (Nanchang)
Co., Ltd 1,422 36 Ford Motor (China) Co., Ltd. 18,906 - Ford Otosan Company 3,557 - Others 1,116 498 5,879,738 4,979,269
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchase of services 2014 2013RMB’000 RMB’000 Ford
- services (a) 390,726 319,805 Nanchang JMCG Shishun Logistics Co., Ltd.
- services 184,034 121,627 Jiangxi JMCG Industry Co.,Ltd.
- services 31,857 28,308 Jiangxi Specialty Vehicles Jiangling Motors
Group Co., Ltd.
- services - 27,708 JMCG Jiangxi Engineering Construction Co., Ltd.
- services 16,749 16,553 JMCG
- services 1,080 944 - rental expense 5,041 5,447 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd.
- commission expenses 5,116 4,808 - rental expense 1,118 - JMCG Property Management Co.
- services 2,134 2,317 Ford Motor Research& Engineering (Nanjing)
Co., Ltd.
- services 699 1,610 Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd.
- services 2,679 1,597 Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd.
- services 98 1,072 Jiangxi Jiangling Lear Interior System Co., Ltd.
- services 1,646 57 Nanchang JMCG Liancheng Auto Component
Co., Ltd.
- services 1,702 - GETRAG (Jiangxi) Transmission Company
- services 11,999 - Changan Ford Automobile Co., Ltd
- services 19,389 - Nanchang Hengou Industry Co., Ltd.
- services 34,367 - Others 2,208 1,826 712,642 533,679
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i) Purchases of goods and services (continued)
Purchase of services (continued)
(a) The purchase of services from Ford mainly included the following:
Pursuant to an agreement between the Company and Ford in 2012, the Company agreed to pay engineering service fee for project J08 with the total amount of approximately USD41,600,000 before 30 May 2015 in each quarter starting from 2012. During the year ended 31 December 2014, the Company accrued service fee of USD10,351,000 (equivalent to approximately RMB64,217,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to pay engineering service fee for project J08 with the total amount of approximately USD9,600,000 before 30 June 2015 in each quarter starting from 2014. During the year ended 31 December 2014, the Company accrued service fee of USD6,903,000 (equivalent to approximately RMB42,797,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2013, the Company agreed to pay engineering service fee for project J09 with the total amount of approximately USD64,700,000 before 31 October 2015 in each quarter starting from 2013. During the year ended 31 December 2014, the Company accrued service fee of USD26,878,000 (equivalent to approximately RMB167,082,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to pay engineering service fee for project J09 with the total amount of approximately RMB10,076,000. During the year ended 31 December 2014, the Company accrued service fee of RMB10,076,000 payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to pay engineering service fee for project J09 with the total amount of approximately USD13,300,000 before 30 June 2015 in each quarter starting from 2014. During the year ended 31 December 2014, the Company accrued service fee of USD6,055,000 (equivalent to approximately RMB37,534,000) payable to Ford.
Pursuant to an agreement between the Company and Ford in 2014, the Company agreed to pay engineering service fee for project J09 with the total amount of approximately USD16,100,000 before 31 January 2016 in each quarter starting from 2014. During the year ended 31 December 2014, the Company accrued service fee of USD4,956,000 (equivalent to approximately RMB30,919,000) payable to Ford.
ii) Rental income
Lessee Category Lease beginning Lease ending Rental income of date date 2014RMB’000 Jiangling
Material Co. Building 1 September 2014 31 August 2015 132
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
iii) Sales of goods and provision of services
Sales of goods 2014 2013RMB’000 RMB’000 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 1,312,708 1,242,602 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 194,263 209,750 Jiangxi Jiangling Material Utilization Co., Ltd. 82,020 87,790 JMCG Interior Trim Factory 77,186 78,774 Jiangxi Jiangling Chassis Co., Ltd. 67,998 45,081 Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 52,658 43,909 JMCG Jingma Motors Co., Ltd. 50,659 38,664 Jiangxi Sinodef International Trade Co.,Ltd. 19,488 17,777 Jiangxi Jiangling Lear Interior System Co., Ltd. 17,977 14,733 JMCG Property Management Co. 7,691 8,324 Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. 3,500 5,154 Jiangxi ISUZU Engine Co., Ltd. 6,031 3,614 Jiangling New-power Auto Manufacturing Co., Ltd. - 3,368 Jiangling Aowei Aotomobile Spare Part Co., Ltd. 1,770 1,965 Nanchang JMCG Shishun Logistics Co., Ltd. 566 1,193 JMH 666 1,191 Jiangxi JMCG Industrial Co. 7,937 1,132 Nanchang Lianda Machinery Co., Ltd 1,173 934 Nanchang JMCG Car Frame Co., Ltd. 1,573 - Others
1,328 2,386 1,907,192 1,808,341 Sales of PPE 2014 2013RMB’000 RMB’000 Nanchang JMCG Liancheng Auto Component Co.,
Ltd. 622 24 Jiangxi JMCG Industrial Co. 5 108 Jiangxi JMCG Yichehang Second-hand Motors
Sales Co., Ltd. - 343 JMCG - 207 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. - 33 627 715 Transfer of equity interest 2014 2013RMB’000 RMB’000 JMCG - 318,499
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
iv) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 203,352 142,943 JMCG Jingma Motors Co., Ltd. 2,308 4,817 JMH 12 11 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 3,287 - Jiangxi JMCG Industrial Co. 13 - 208,972 147,771 Notes receivables from related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 15,044 23,737 JMCG Jingma Motors Co., Ltd. 34,378 14,847 49,422 38,584 Other receivables from related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Ford Otosan Company 3,758 8,164 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 5,411 2,186 JMCG Jiangxi Engineering Construction Co., Ltd. 211 - 9,380 10,350 Prepayments for purchasing of goods 31 December 2014 31 December 2013RMB’000 RMB’000 Nanchang Baojiang Steel Processing Distribution
Co., Ltd. 240,046 268,940 Changan Ford Automobile Co., Ltd 17,109 - 257,155 268,940
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i iv) Balances arising from sales/purchases of goods/services (continued)
Prepayments for construction in progress 31 December 2014 31 December 2013RMB’000 RMB’000 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 8,063 17,891 JMCG Jiangxi Engineering Construction Co., Ltd. 1,697 603 9,760 18,494 Trade payables to related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Jiangxi Jiangling Chassis Co., Ltd. 326,231 256,590 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 317,797 252,203 GETRAG (Jiangxi) Transmission Company 228,766 184,361 JMCG Interior Trim Factory 191,894 161,939 Jiangxi Jiangling Lear Interior System Co., Ltd. 188,264 157,850 Nanchang Jiangling Hua Xiang Auto
Components Co., Ltd. 102,423 99,181 Nanchang JMCG Liancheng Auto Component
Co., Ltd. 116,829 94,647 Halla Visteon Climate Control (Nanchang) Co.,
Ltd. 83,065 87,927 Ford 53,668 70,172 Nanchang Unistar Electric& Electronics Co.,ltd 76,056 55,293 JMCG 85,250 33,110 Nanchang Lianda Machinery Co., Ltd. 26,881 18,627 Nanchang JMCG Skyman Auto Component Co.,
Ltd. 25,826 18,626 Jiangling Aowei Aotomobile Spare Part Co., Ltd. 16,110 13,103 Nanchang Yinlun Heat-exchanger Co.,ltd 18,577 13,036 Jiangxi Jiangling Non-ferrous Metal Die-casting
Co., Ltd. 12,612 10,891 Nanchang JMCG Xinchen Auto Component Co.,
Ltd. 8,699 7,191 Jiangxi JMCG Shangrao Industrial Co., Ltd. 14,153 4,752 Nanchang Jiangling Huasheng Cleaner Co., Ltd. 4,927 3,865 Jiangxi ISUZU Engine Co., Ltd. 4,697 3,114 Jiangxi Jiangling Material Utilization Co., Ltd. 2,060 2,437 Nanchang Gear Co., Ltd. 4,052 2,388 Jiangxi Biaohong Engine Tappet Co., Ltd. 3,359 2,078 Jiangling Material Co. 1,647 2,039 Nanchang JMCG Printing Plant Co., Ltd. 1,208 962 Others 654 255 1,915,705 1,556,637
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
i iv) Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Ford 118,926 96,164 Jiangxi Specialty Vehicles Jiangling Motors Group
Co., Ltd. 3,386 30,513 Ford Global Technologies,LLC 17,574 14,750 Ford Otosan Company 6,309 5,037 JMCG Jiangxi Engineering Construction Co., Ltd. 3,648 4,454 Nanchang JMCG Shishun Logistics Co., Ltd. 2,803 4,027 Jiangxi JMCG Industrial Co. 235 3,338 Nanchang Jiangling Hua Xiang Auto Components
Co., Ltd. 8,687 3,148 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 2,401 2,814 Jiangxi Jiangling Lear Interior System Co., Ltd. 1,832 2,257 GETRAG (Jiangxi) Transmission Company 8,090 2,401 Ford Motor Research& Engineering (Nanjing)
Co., Ltd. 1,943 1,770 Jiangxi Jiangling Chassis Co., Ltd. 466 1,208 Ford Motor (China) Co., Ltd. 11,582 1,178 JMCG Property Management Co. 1,077 1,113 JMH 17 17 Nanchang JMCG Liancheng Auto Component
Co., Ltd. 1,764 - JMCG Hequn Costume Co., Ltd. 1,025 684 Nanchang Hengou Industry Co., Ltd. 10,785 - Others 3,691 3,784 206,241 178,657 Advance from related parties 31 December 2014 31 December 2013RMB’000 RMB’000 Jiangxi Specialty Vehicles Jiangling
Motors Group Co., Ltd. 9 3,816 Others 923 1,095 932 4,911 Cash deposit in related parties 31 December 2014 31 December 2013RMB’000 RMB’000 JMCF (Note 19) 181,674 181,387 Interest received from cash deposit in related 31 December 2014 31 December 2013 parties
RMB’000 RMB’000 JMCF (Note 19) 4,342 4,237
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
v) Service fee paid for management staff
Pursuant to an agreement among the Company, Ford, Ford Motor Research& Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. in 2008, some employees of Ford, Ford Motor Research& Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. were assigned to the Company as management staff. During the year ended 31 December 2014, the Company accrued service fee of approximately USD8,313,000 (equivalent to approximately RMB51,288,000), RMB1,922,000 and RMB3,700,000 payable to Ford, Ford Motor Research& Engineering (Nanjing) Co., Ltd and Ford Motor (China) Co., Ltd. for these employees, respectively.
Pursuant to an agreement among the subsidiary of Company, Ford and Ford Motor (China) Co., Ltd. in 2014, some employees of Ford and Ford Motor (China) Co., Ltd. were assigned to the subsidiary of Company as management staff. During the year ended 31 December 2014, the subsidiary of Company accrued service fee of approximately USD344,000 (equivalent to approximately RMB2,112,000) and RMB1,193,000 payable to Ford and Ford Motor (China) Co., Ltd. for these employees, respectively.
Pursuant to an agreement between the Company and JMH in January 2014, some employees of JMH were assigned to the Company as management staff. During the year ended 31 December 2014, the Company accrued service fee of approximately RMB1,292,000 payable to JMH for these employees.
vi) Guarantee
As at 31 December 2014, bank loans of USD851,000 (equivalent to approximately RMB5,209,000) (2013:USD917,000 equivalent to approximately RMB5,589,000) were guaranteed by JMCF (Note 22).
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
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 year ended 31 December 2014, the total remuneration of the key management was approximately RMB9,430,000 (2013: RMB9,956,000 ).
viii) Royalty fee
a) Pursuant to a development agreement among the Company, Ford, Ford Global Technologies, LLC and Ford Otosan Company in 2008, the Company agreed to pay royalty fee to Ford at2.6% on the net sales amount of V348 series automobiles till the sale of the products ceased. The67.31% and32.69% of total royalty fee should be paid to Ford Global Technologies, LLC and Ford Otosan Company respectively. During the year ended 31 December 2014, the total royalty fee payable to Ford Global Technologies, LLC and Ford Otosan Company was approximately USD9,874,000 (equivalent to approximately RMB60,630,000). As at 31 December 2014, the balance of USD3,154,000 (equivalent to approximately RMB19,297,000) not yet paid was included in other payables.
b) Pursuant to a technology licensing contract between the Company, Ford and Ford Global Technologies, LLC in 2007, the Company agreed to pay of licensing fee to Ford or its designee at USD92 for each of the Puma Diesel Engine manufactured by the Company. During the year ended 31 December 2014, the total licensing fee payable to Ford Global Technologies, LLC was approximately USD3,457,000 (equivalent to approximately RMB21,231,000). As at 31 December 2014, the balance of USD749,000 (equivalent to approximately RMB4,585,000) not yet paid was included in other payables.
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
31 Related party transactions (continued)
viii) Royalty fee (continued)
c) Pursuant to a technology licensing contract between JMCH, the subsidiary of the Company, and Ford Otosan Company in 2014, JMCH agreed to pay licensing fee to Ford Otosan Company of approximately EUR8,000,000. During the year ended 31 December 2014, JMCH accrued licensing fee of USD4,000,000 (equivalent to approximately RMB30,829,000) payable to Ford Otosan Company. As at 31 December 2014, the balance of US4,000,000 not yet paid was included in other payables.
d) Pursuant to an agreement among JMCH, the subsidiary of the Company, and Ford Otosan Company in 2014, some employees of Ford Otosan Company were assigned to JMCH as management staff. During the year ended 31 December 2014, JMCH accrued service fee of approximately RMB25,717,000 payable to Ford Otosan Company for these employees. ix) Transaction with other state-owned entities
TheCompany’s largest shareholder is JMH, which was established by state-owned enterprises, Changan Auto and JMCG, with equity interests of50% and50%, respectively. The Group is thereby considered to be significantly influenced by the PRC Government, which controls a substantial number of entities in the PRC. For the purpose of related party transactions disclosure, the Group has in place procedures to assist the identification of the immediate ownership structure of its customers and suppliers as to whether they are state-owned entities. Many state-owned entities have multi-layered corporate structure and the ownership structures change overtime. Nevertheless management of the Company believes that meaningful information relating to such kind of related parties transactions has been adequately disclosed. The Group has certain transactions with other state-owned enterprises mainly including sales and purchases of goods and services, payments for utilities, purchase of fixed assets and depositing and borrowing money. Except for the transactions and balances disclosed as follows, there is no individually or collectively significant transactions:
Transactions with other state-owned entities 2014 2013RMB’000 RMB’000 Purchase of goods 1,702,652 1,608,808 Purchase of fixed assets 109,766 32,387 Interest income 191,684 153,680 Balances with other state-owned entities
31 December 2014 31 December 2013RMB’000 RMB’000 Cash and cash equivalents 8,142,814 6,147,016 Trade and other payables 550,149 471,479
Jiangling Motors Corporation, Ltd.
FOR THE YEAR ENDED 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in RMB unless otherwise stated)
32 Principal subsidiary
As at the date of this report, the Group has the following subsidiary:
Place and date Percentage of
Entity of incorporation equity interest held Principal activities
JMCH Taiyuan, PRC / 100% Manufacture and sale of
automobiles and spare parts
8 January 2013
Jiangling Motors Nanchang, PRC / 100% Sale of automobiles and
spare parts
Sales Corporation, 11 October 2013
Ltd
33 Comparative figures
Certain comparative figures have been reclassified to conform to the currentyear’s
presentation.
Chapter XI Catalog on Documents for Reference
1. Originals of 2014 financial statements signed by legal representative and Chief Financial Officer.
2. Originals of the IndependentAuditor’s Reports signed by Independent accountants and stamped by the accounting firm.
3. Originals of all the documents and public announcements disclosed in newspapers designated by CSRC in 2014.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 17, 2015