Jiangling Motors Corporation, Ltd. 2016 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 any false statement, misrepresentation or major omission.
Chairman Qiu Tiangao, CFO Gong Yuanyuan and Chief of Finance Department, Ding Ni, confirm that the Financial Statements in this Annual Report are truthful and complete.
All Directors were present at the Board meeting to review this Annual Report.
The prospective description regarding future business plan and development strategy in this report does not constitute virtual commitment. The investors shall pay attention to the risk.
All financial data in this report are prepared under International Financial Reporting Standards(‘IFRS’) unless otherwise specified.
The Annual Report is prepared in Chinese and English. In case of discrepancy, the Chinese version will prevail.
The year 2016 profit distribution proposal approved by the Board of Directors is as follows:
A cash dividend of RMB 6.1 (including tax) will be distributed for every 10 shares held based on the total share capital of 863,214,000 shares, and there is no stock dividend. The Board decided not to convert capital reserve to share capital this time.
Contents
Chapter I Important Notes, Contents and Abbreviations ............................... 1 Chapter II Brief Introduction and Operating Highlight .................................... 3 Chapter III Operating Overview ...................................................................... 5 Chapter IV Management Discussion and Analysis .......................................... 6 Chapter V Major Events ............................................................................... 14 Chapter VI Share Capital Changes& Shareholders ...................................... 23 Chapter VII Preferred Shares .......................................................................... 27 Chapter VIII Directors, Supervisors, Senior Management and Employees ...... 27 Chapter IX Corporate Governance Structure ................................................. 37 Chapter X Corporate Bond ............................................................................ 44 Chapter XI Financial Statements ................................................................... 44 Chapter XII Catalog on Documents for Reference .............................................. 108 Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
Chapter II Brief Introduction and Operating Highlight
1.Company’s Information
|||||
|-|-|-|-|
|Share’s name|Jiangling Motors, Jiangling B|Share’s Code|000550, 200550|
|Place of listing|Shenzhen Stock Exchange|||
|Company’s Chinese|江铃汽车股份有限公司|||
|name||||
|English name|Jiangling Motors Corporation, Ltd.|||
|Abbreviation|JMC|||
|Company legal|Qiu Tiangao|||
|representative||||
||No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi|||
|Registered Address||||
||Province, P.R.C|||
|Postal Code of||||
||330001|||
|Registered Address||||
|Headquarters|No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi|||
|Address|Province, P.R.C|||
|Postal Code of||||
|Headquarters|330001|||
|Address||||
|Website|http://www.jmc.com.cn|||
|E-mail|relations@jmc.com.cn|||

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

 3. Information Disclosure and Place for Achieving Annual Report
|||
|-|-|
|Newspapers for information|China Securities, Securities Times, Hong Kong|
|disclosure|Commercial Daily|
|Website designated by CSRC for||
||http://www.cninfo.com.cn|
|publication of JMC’s Annual Report||
||Securities Department, Jiangling Motors|
|Place for Achieving Annual Report||
||Corporation, Ltd.|

4. Changes of Registration
|||
|-|-|
|Organization Code|913600006124469438|
|Changes of Controlling|On December 1, 1993, JMC A shares were listed on|
|Shareholders|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.|

5. Other Information
Accounting Firm Appointed by JMC for Audit
|||
|-|-|
||PricewaterhouseCoopers Zhong Tian CPAs LLP|
|Name||
||(‘PwC Zhong Tian’)|
||11th Floor, PricewaterhouseCoopers Center, 202 Hu Bin Road,|
|Headquarters address||
||Shanghai City, P.R.C.|
|Names of Signed||
||Ye Jun, Xiong Huanwei|
|Accountants||

6. Main accounting data and financial ratios
Unit: RMB‘000
||||||
|-|-|-|-|-|
||2016|2015|Change (%)|2014|
|Revenue|26,633,949|24,527,893|8.59|25,537,290|
|Profit Attributable to theEquity Holders of theCompany|1,318,016|2,222,061|-40.68|2,107,852|
|Net Cash GeneratedFrom Operating Activities|4,593,000|1,924,474|138.66|4,189,649|
|Basic Earnings Per Share(RMB)|1.53|2.57|-40.68|2.44|
|Diluted Earnings PerShare (RMB)|1.53|2.57|-40.68|2.44|
|Weighted Average Returnon Equity Ratio|10.74%|19.56%|Down 8.82percentage point|21.20%|
||End of Year2016|End of Year2015|Change (%)|End of Year2014|
|Total Assets|24,493,789|21,050,726|16.36|19,496,528|
|Shareholders’ EquityAttributable to the EquityHolders of the Company|12,409,236|11,981,142|3.57|10,598,429|

7. Accounting data difference between China GAAP and IFRS
Impact of IFRS adjustments on the net profit andshareholders’ equity
□Applicable□√Not Applicable
8. Main accounting data quarterly
Unit:RMB’000
||||||
|-|-|-|-|-|
||Q1|Q2|Q3|Q4|
|Revenue|5,341,490|5,469,246|6,418,622|9,404,591|
|Profit Attributable to the|||||
|Equity Holders of the|413,564|290,953|389,036|224,463|
|Company|||||
|Net Cash Generated|||||
|From Operating|-142,756|1,130,310|1,086,184|2,519,262|
|Activities|||||

Chapter III Operating Overview
1.Company’s Core Business during the Reporting Period
JMC’s core business is production and sales of commercial vehicles, SUV and related components.JMC’s major products include JMC series light truck, pickup, Yusheng SUV, Ford-brand SUV, Ford-brand commercial vehicles, and heavy duty trucks. The Company also produces and sells engines, castings and other components for sales to domestic and overseas markets.
2. Major Change of Main Assets
I. Major Change of Main Assets
There’s no major change of main assets during the reporting period.
II. Main Overseas Assets
□Applicable□√Not Applicable
3. Core Competitiveness Analysis
JMC is a sino-foreign joint venture auto company withR&D, manufacturing and sales operations. As a mainstream of domestic light commercial vehicle industry, JMC had been ranked among the top hundred Chinese listed corporations with comprehensive strength for consecutive years; and certificated as a national enterprise technology center, high-tech enterprise and national automobile export base which improve thecompany’s core business competence.
With the support from Ford's advanced technology and management experience, JMC's influence over auto industry is improving steadily, making considerable progress both in new product development and technical equipment. Series of Ford
new products such as Ford brand SUV EVEREST, Ford brand MPV Tourneo and
Ford new Transit launched further improvedJMC’s competence onR&D and
manufacturing. JMC self- developed new Yusheng SUV S330 launched in the second
half of 2016, further enhancedJMC’s capability ofR&D, manufacturing and market competitiveness in SUV field. In 2016, JMC KaiRui N800 program won the First Prize of China Automotive Industry Awards for Science and Technology, fully showedJMC’s leading technology in light commercial vehicle field. High standard Xiaolan manufacturing site continues to expand modern plants of vehicle, engine and frame. It will further ensure JMC's product production and quality improvement. Xiaolan nationalR&Dcentre’s research and development capability will also be further improved.
Chapter IV Management Discussion and Analysis
1. Summary
In 2016, benefited from sustained rapid growth of SUV market, China's automotive market continues to keep growth. Total sales volume was 28.03 million units,
increased13.65% compared with last year. Commercial vehicle sales volume was 3.65 million units, increased5.80% compared with 2015.
During the reporting period, to cope with more severe competition, more stringent regulatory requirement and intensifying cost pressures, the Company focused on quality improvement, new product development, operating cost control and production efficiency enhancement. Simultaneously, the Company introduced series of sales policy to respond the market risk. In 2016, JMC achieved sales volume of 281,019 units, increased6.95% compared with last year, achieved revenue of RMB 26.63 billion, increased8.59% compared with last year, achieved net profit of RMB 1.32 billion, decreased40.68% compared with last year. It mainly reflected the product pricing reduction and market expense increase because of severe automotive market competition.
2. Core Business Analysis
I. Summary
In 2016, JMC sales volume achieved 281,019 units, increased6.95% compared with last year, including 102,379 units truck, 60,892 units pickup, 44,753 units SUV and 72,995 units Transit CV.
2016 total production volume was 281,463 units, increased8.20% compared with last year, including 101,651 units truck, 61,186 units pickup, 46,590 units SUV and 72,036 units Transit CV.
JMC total sales revenue in 2016 was RMB 26.63 billion, increased8.59% compared with last year.
II. Revenue and Cost
(a) Composition of Sales Revenue
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||2016 FY||||2015 FY|||||
|||||||||||YOY|
|||||Proportion||||Proportion||change|
|||Amount||||Amount|||||
|||||(%)||||(%)||(%)|
|Revenue|||||||||8.59%||
|||26,633,948,551||100%||24,527,892,839||100%|||
|By Industry|||||||||||
|AutomobileIndustry|26,633,948,551||100.00%||24,527,892,839||100.00%||8.59%||
|By Products|||||||||||
|Vehicle|23,876,058,142||89.64%||22,115,996,697||90.17%||7.96%||
|Components|2,369,645,586||8.90%||2,176,421,920||8.87%||8.88%||
|Material& Others|388,244,823||1.46%||235,474,222||0.96%||64.88%||
|By region|||||||||||
|China|26,633,948,551||100.00%||24,527,892,839||100.00%||8.59%||

 (b) Reach to10% of Revenue or Profit by Industry, Product or Region
□√Applicable□Not Applicable
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Turnover|Cost|GrossMargin|Y-O-Yturnoverchange(%)|Y-O-Y CostChange(%)|Y-O-Ygrossmarginchange(points)|
|By Industry|||||||
|AutomobileIndustry|26,633,948,551|20,612,722,940|22.61%|8.59%|13.69%|-3.47%|
|By Products|||||||
|Vehicle|23,876,058,142|18,626,319,979|21.99%|7.96%|14.16%|-4.23%|
|By Region|||||||
|China|26,633,948,551|20,612,722,940|22.61%|8.59%|13.69%|-3.47%|

 If thecompany’s core business scope is adjusted during the reporting period, thecompany’s core business data of last year need to be adjusted per the scope in this year
□Applicable□√Not Applicable
(c) WhetherCompany’s Goods Revenue Higher Than Service Revenue
□√Yes□No
|||||||
|-|-|-|-|-|-|
|Industry|Item|Unit|2016|2015|Change (%)|
|Automobile|Sales volume|unit|281,019|262,756|6.95%|

Explanation on YOY change of over30%
□Applicable□√Not Applicable
(d) Execution ofCompany’s Signed Major Sales Contract
□Applicable□√Not Applicable
(e) Composition of Operating Cost
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||2016 FY||||2015 FY|||||
||||||||||||YOY|
||Product||||Proportion||||Proportion||change|
||||Cost||||Cost|||||
||||||(%)||||(%)||（%）|
|Vehicle||18,626,319,979||90.36%||16,316,619,585||89.99%||14.16%||
|Components||1,718,540,492||8.34%||1,587,708,668||8.76%||8.24%||
|Material& Others||267,862,469||1.30%||226,806,699||1.25%||18.10%||

(f) Whether Consolidated Scope was Changed During the Reporting Period
□Yes□√No
(g) Major Change or Adjustment on Business, Products or Services During the Reporting Period
□Applicable□√Not Applicable
(h) Main Customers and Suppliers
Top 5 Customers:
|||
|-|-|
|Total sales value to top 5 customers（RMB）|3,307,592,709|
|Accounted for the proportion of JMC’s total||
||12.42%|
|annual turnover||
|Included related party transaction accounted for||
||4.45%|
|the proportion of JMC’s total annual turnover||

|||||
|-|-|-|-|
|No.|Name of the Customer|Sales Value(RMB)|Percentage ofJMC’s TotalTurnover (%)|
|1|JMCG Import & Export Co., Ltd.|1,184,309,674|4.45%|
|2|Zhejiang Jiangling Motors SalesCompany|959,394,766|3.60%|
|3|Shanghai Keda Zhoupu AutoSales Company|405,751,604|1.52%|
|4|Henan Jiangling Motors SalesCompany|401,849,815|1.51%|
|5|Hunan Transit Jiangling MotorsSales Company|356,286,850|1.34%|
|Total||3,307,592,709|12.42%|

Other introduction to main customers
□√Applicable□Not Applicable
JMIE is a related party of the Company. Both Chief Supervisor Zhu Yi and VP Li Qing of JMC hold the position of director of JMIE.
Top 5 Suppliers:
|||
|-|-|
|Total purchase value from top 5 suppliers（RMB）|3,588,838,197|
|Accounted for the proportion of JMC’s total annual||
||18.97%|
|purchase amount||
|Included related party transaction accounted for the||
||15.08%|
|proportion of JMC’s total annual purchase amount||

|||||
|-|-|-|-|
|No.|Name of the Supplier|Purchase Value(RMB)|Percentage ofJMC’s TotalAnnual PurchaseAmount (%)|
|1|Jiangxi Jiangling ChassisCompany|805,642,254|4.26%|
|2|Bosch Auto Diesel SystemCompany|736,195,285|3.89%|
|3|Jiangxi Jiangling Special PurposeVehicle Company|700,308,641|3.70%|
|4|Nanchang Bao-jiang SteelProcessing & Distribution Co., Ltd.|690,097,399|3.65%|
|5|GETRAG (Jiangxi) TransmissionCompany|656,594,618|3.47%|
|Total||3,588,838,197|18.97%|

 Other introduction to main suppliers
□√Applicable□Not Applicable
Except Bosch Auto Diesel System Company, the other four suppliers are related parties of the Company.
III. Expense Analysis
There’s no major change of expense during the reporting period.
IV. Research& Development
In 2016, JMC continued to focus on development of new product programs. Product related spending centered at future product development and compliance with regulatory requirements, including new model, increased payloads, new styling, and improved power, etc., ensuring the Company is compliant with stringent environmental and safety regulations. The competitiveR&D will ensure thecompany’s volume and profit growth. Development expenditure in 2016 was 1,937 million, representing15.61% of net assets, or7.27% of revenue.
R&D
|||||
|-|-|-|-|
||2016|2015|Change (%)|
|R&D Staff (person)|2,225|2,110|5.45%|
|R&D Staff as % of total employees|13.19%|13.44%|-0.25%|
|R&D Investment (RMB)|1,937,312,797|1,830,992,839|5.81%|
|R&D Investment as % of revenue|7.27%|7.46%|-0.19%|
|Capitalization of R&D investment|124,586,552|0.00|-|
|Capitalization of R&D investment as %||||
||6.43%|0.00%|6.43%|
|of R&D Investment||||

Major change ofR&D Investment as% of revenue
□Applicable□√Not Applicable
Major change of capitalization ofR&D investment
□√Applicable□Not Applicable
See the note 14 (b) to major change of capitalization ofR&D investment.
V. Cash Flow Analysis
RMB’000
|||||
|-|-|-|-|
|Item|2016|2015|Y-O-Y Change|
|Net cash generated from|4,593,000|1,924,474||
||||138.66%|
|operating activities||||
|Net cash used in|-875,148|-1,197,152||
||||26.90%|
|investing activities||||
|Net cash used in|-899,670|-842,750||
||||-6.75%|
|financing activities||||
|Net (decrease)/increase|2,818,182|-115,428||
|cash and cash|||2,541.50%|
|equivalents||||

Explanation on the major factors regarding major change of related data
□√Applicable□Not Applicable
Net cash generated from operating activities increased by RMB 2,669 million, up138.66% vs. 2015, mainly reflecting the increase of cash generated from selling goods due to higher sales volume.
Explanation on significant difference between net cash generated from operating activities and net profit during the reporting period
□Applicable□√Not Applicable
3. Non- core business analysis
□Applicable□√Not Applicable
4. Analysis of Assets and Liabilities
I. Major changes
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|Asset item|December 31, 2016||December 31, 2015||YOY|Major ChangesExplanation|
||||||Proportionchange||
||Amount|Proportion|Amount|Proportion|(Points)||
|Property, plant andequipment|6,688,530|27.31%|6,323,546|30.04%|-2.73||
|Inventories|1,934,092|7.90%|1,730,930|8.22%|-0.32||
|Trade, other receivablesand prepayments|2,625,808|10.72%|2,793,770|13.27%|-2.55||
|Cash and cash equivalents|11,666,222|47.63%|8,848,040|42.03%|5.60|Due to the increase ofcash generated fromoperating activities|
|Trade and other payables|11,605,178|47.38%|8,708,829|41.37%|6.01|Due to the increase ofmaterial purchasingaccording to theincrease of Q4 salesvolume|

 II. The fair value of the assets and liabilities (not applicable).
III. Restriction on Assets Rights as of the End of the Reporting Period
There was no major restriction on assets rights as of the end of the reporting period. 5. Investment
I. Summary
□Applicable□√Not Applicable
II. Obtained Major Equity Investment during the Reporting Period
□Applicable□√Not Applicable
III. Ongoing Major Non-Equity Investment during the Reporting Period
□√Applicable□Not Applicable
||||||||
|-|-|-|-|-|-|-|
|ProjectName|InvestmentMethod/source|FixedAssets(Y/N)|Spendingin 2016(RMBMils)|InvestmentCommitted(RMB Mils)|Progress|Index|
|J08Program|Self-funded|Y|50|856|Launched|Announcement of thisproject (No:2013-035)was published in thewebsiteHttp://www.cninfo.com.cn|
|J09Program|Self-funded|Y|303|1,908|Launched|Announcement of thisproject (No:2014-013)was published in thewebsiteHttp://www.cninfo.com.cn|

Announcement of this Capacity
project (No:2010-017) Investment Self-
Y 54 1,919 90% was published in the in Xiaolan funded
website
Site
Http://www.cninfo.com.cn
||||||||
|-|-|-|-|-|-|-|
|N330Program|Self-funded|Y|332|991|Launched|Announcement of thisproject (No:2015-005)was published in thewebsiteHttp://www.cninfo.com.cn|

 IV. Financial Assets Investment
(a) Stock Investment
□Applicable□√Not Applicable
(b) Derivative Investment
□Applicable□√Not Applicable
V. Usage of Raised Fund
□Applicable□√Not Applicable
6. Sales of Major Assets and Equity
I. Sale of Major Assets
□Applicable□√Not Applicable
II. Sales of Major Equity
□Applicable□√Not Applicable
7. Operating Results of Main Subsidiaries and Joint-Stock Companies whose impact onJMC’s net profit more than10%
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofCompanies|Type ofCompanies|Main Business|RegisteredCapital|Assets|Net Assets|Turnover|OperatingProfit|Net Profit|
|JianglingMotors SalesCorporation,Ltd|Subsidiary|Sales vehicle,service parts|50,000,000|2,667,369,265|231,233,192|23,177,566,943|14,407,672|10,551,204|
|JMC HeavyDuty VehicleCo., Ltd|Subsidiary|Product heavycommercialvehicle , engine,component, andrelated service|281,793,174|1,301,652,005.|-107,534,370|104,774,811|-173,413,993|-54,663,175|

Acquisition and disposal of the subsidiary
□Applicable□√Not Applicable
8. Structured Entities Controlled by JMC
□Applicable□√Not Applicable
9. Outlook
I. Industry Competition and Development Trend
At present China is still in the stage of accelerated industrial and urbanization development. With the One Belt One Road strategy and urbanization progress,China’s infrastructure construction and logistics industry will also continue the development as well as opportunity for the development ofChina’s commercial vehicle market. Meanwhile, China's Car Parc per capita is still lower thanworld’s average level indicating a strong auto market potential in the future. Currently, urban traffic congestion, environment pollution and purchase tax incentive reduction affect automobile industry development. However, as the economic progressing steadily, the consumption level and purchasing power improved, domestic automobile sales volume is expected to achieve higher level. In 2017, sales volume is expected to continue to grow slightly.
II. Corporation Strategy
Company’s mission 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 continue to improve SUV sales performance and penetrate into heavy truck segment.
III. 2017 Business Plan
The Company is targeting 2017 sales volume level at 365 thousand units and revenue level at RMB 35.2 billion, increases of30% and32% vs. 2016 respectively. To enhance profitability, the company is committed to the following plans in 2017: (1) Achieve volume and market share targets by enhancing the sales network and sales/marketing activities, especially pushing the third– fifth class city dealer network construction;
(2) Well prepared the new products launch plan for Tourneo AT, JMC own brand light bus, JMC heavy truck;
(3) Continue to improve product quality, pursue cost reduction opportunities, improve manufacturing and operating efficiency to achieve profit and cost targets;
(4) Continue to promote the new fuel economy and emission compliance program to satisfy regulatory requirements;.
(5) Work with technical partners to execute future product development andR&D ability improvement; and
(6) Expand finished vehicle exports and OEM components sales business.
IV. Potential Challenges and Solutions
In 2017, the Company will continue to face fiercer competition, more stringent regulatory requirements, intensifying cost pressures and a slowdown inChina’s economic growth. To achieve steady growth, the Company will continue to focus on the following aspects in 2017:
(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; and
(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 continues to promote new products development andR&D ability improvement, 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 truck, and devote to strengthening dealer network, expanding overseas market and parts business.
10. External research and media interview to the Company
I. Table of external research, communication and media interviews with the
Company in the reporting period
|||||
|-|-|-|-|
|Date|CommunicationMethod|Type ofObject|Information Discussed andMaterials offered|
|January 14,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|January 26,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|March 3,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|March 10,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|June 15,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|August 12,2016|On-the-spotresearch|Institution|JMC Operating highlights|
|September8, 2016|On-the-spotresearch|Institution|JMC Operating highlights|
|November11, 2016|On-the-spotresearch|Institution|JMC Operating highlights|
|Reception times|||8|
|Visiting institution number|||29|
|Visiting person number|||0|
|Other objects|||0|
|Whether to disclose, reveal or divulge theundisclosed material information|||No|

Chapter V Major Events
1. Profit distribution and capital reserve conversion regarding common stock
Establishment, implementation or adjustment of profit distribution policy, esp. cash dividend distribution policy, regarding common stock during the reporting period□√Applicable□Not Applicable
TheCompany’s standards and proportion on profit distribution is clear and on the process, Independent Directors fulfilled their duties. The reasonable appeals from the middle and small shareholders were thought over and their legal rights and interests were protected when the plan was drafted and executed.
JMC had distributed cash dividends to all the shareholders in the consecutive fourteen years since 2003. Accumulated cash dividends for the fourteen years totalled RMB 6,421 million. During the reporting period, the Proposal on Profit Distribution for Year 2015 was reviewed and approved by the Board of Directors, and was approved by 2015 AnnualShareholders’ Meeting. On July 2016, the Company completed the profit distribution for Year 2015. 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.
|||
|-|-|
|Special Explanation on Cash Dividend Policy||
|Whether to comply with the requirements of the||
|Articles of Association of JMC or resolution of the|Y|
|Shareholders’ Meeting (Y/N)||
|Whether the standards and proportion of dividends||
||Y|
|on profit distribution are clear (Y/N)||
|Whether the procedures are valid and legal (Y/N)|Y|
|Whether the Independent Director fulfil their duties||
||Y|
|(Y/N)||
|Whether middle and small shareholders have||
|opportunities to claim their appeals and their legal|Y|
|rights and interests are completely protected (Y/N)||
|Whether the condition and procedure are||
|reasonable and transparent when the cash|Y|
|dividend policy is being changed (Y/N)||

Profit Distribution Plan or Proposal from 2014 to 2016
(1) Proposal on 2016 Year Profit Distribution Plan
Details on the profit available for appropriation of the Company in 2016 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, 2015|9,851,590|9,848,381|
|2016 net profit|1,318,016|1,318,016|
|Allocation of dividend for 2015|-889,110|-889,110|
|Retained earnings at Dec. 31, 2016|10,280,496|10,277,287|

 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, 2016 were RMB 10,277,287 thousand.
The Board approved to submit to the 2016 AnnualShareholders’ Meeting the following proposal on year 2016 profit distribution:
(1). to appropriate for the dividend distribution from the profit available for distribution, which shall be equal to RMB 0.61 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 6.1 (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, 2016, the total cash dividend distribution amounts shall be RMB 526,560,540.
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) 2015 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 10.3 (including tax) was distributed for every 10 shares held. Based on the total share capital of 863,214,000 shares as of December 31, 2015, the total cash dividend distribution amounts were RMB 889,110,420.
B share dividend was paid in Hong Kong Dollars and converted based on the HKD-to- RMB standard exchange rate published by 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) 2014 Year Profit Distribution Plan
Profit distribution proposal: a cash dividend of RMB 9.7 (including tax) was 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 were RMB 837,317,580.
B share dividend was 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 recent three years
Unit:RMB’000
|||||
|-|-|-|-|
||Cash dividend(Including tax)|Profit attributable tothe equity holders ofthe Company in thatyear|Cash dividend as % ofprofit attributable to theequity holders of theCompany|
|2016*|526,561|1,318,016|39.95%|
|2015|889,110|2,222,061|40.01%|
|2014|837,318|2,107,852|39.72%|

*The proposal on 2016 year profit distribution is subject to approval of the
Shareholders’ Meeting of the Company.
2. Proposal on 2016 Year Profit Distribution Plan or Capital Reserve Conversion□√Applicable□Not Applicable
Please refer to Article 1, Chapter V of this Report.
3. Commitments
3.1 Commitments of the Company, the shareholder, the actual controlling party, the acquirer, the Director, the Supervisor, the senior executive or other related party of the Company
□√Applicable□Not Applicable
|||||||
|-|-|-|-|-|-|
|Item|Promisor|Content ofCommitments|Time|Term ofCommitments|Implementation ofcommitments|
|Share reform||None|None|None|N/A|
|Acquisition report orStatement of changes inequity||None|None|None|N/A|
|Asset restructuring||None|None|None|N/A|
|Initial Public Offering orre-funding||None|None|None|N/A|
|Other commitments|JMH|*|July 11,2015|within 6 monthssince July 9,2015|JMH exercised itscommitments sincerely anddid not breach the promise asof January 9, 2016.|
|Implementation in timeor not|Yes|||||

* i. JMH will not reduce JMC shares by secondary market within six months since July 9, 2015; ii. JMH will exercise its duties as a major shareholder, concentrate on the quality of the listed company, push to establish a sound invest-return long-term mechanism and continue to improve the return level.
3.2 Earnings forecast of the assets or project and the explanations
□Applicable□√Not Applicable
4. Non-operating funding in the Company occupied by controlling shareholder and its affiliates
□Applicable□√Not Applicable
There was no non-operating funding in the Company occupied by controlling
shareholder and its affiliates.
5. Explanation of the Board of Directors, Supervisory Committee and Independent Directors to abnormal opinions from accounting firm
□Applicable□√Not Applicable
6. Explanation on the changes of accounting policy, accounting estimates, estimation method compared with that of last year
□Applicable□√Not Applicable
There was no change of accounting policy, accounting estimates, estimation method during the reporting period.
7. Explanation on major accounting errors that shall be restated during the reporting period
□Applicable□√Not Applicable
There was no major accounting error that shall be restated during the reporting period. 8. Explanation on consolidated scope change compared with that of last year
□Applicable□√Not Applicable
There was no change on consolidated scope in the reporting period.
9. Appointment or Dismissal of Accounting Firm
Current accounting firm
|||
|-|-|
|Name|PricewaterhouseCoopers Zhong Tian CPAs LLP|
|Compensation (RMB’000)|1,900|
|Consecutive years offering audit||
||15|
|services||
|Names of signed accountants|Ye Jun, Xiong Huanwei|

Dismissal of accounting firm
□Applicable□√Not Applicable
Appointment of C-SOX auditor, financial consultant or sponsor
Upon the approval of 2014 AnnualShareholders’ Meeting, JMC agreed to appoint PwC Zhong Tian asJMC’s 2016 to 2018 C-SOX auditor. In 2016, JMC paid RMB 550 thousand to PwC Zhong Tian for the C-SOX audit.
10. Suspension and Termination of Listing after Annual Report Disclosed
□Applicable□√Not Applicable
11. Related Matters regarding Bankruptcy
□Applicable□√Not Applicable
There was no matter involving bankruptcy during the reporting period.
12. Major Litigation or Arbitration
□Applicable□√Not Applicable
There was no major litigation or arbitration during the reporting period.
13. Punishment
□Applicable□√Not Applicable
Neither JMC nor its Directors or senior management were punished by regulatory authorities in 2016.
14. Honesty and credit of JMC and its controlling shareholder or actual controlling party
□Applicable□√Not Applicable
15. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan and Other Employee Incentive Method
□Applicable□√Not Applicable
There was neither equity incentive plan or ESOP, nor other employee incentive method in 2016.
16. Major Related Transactions
i. Routine related party transactions
□√Applicable□Not Applicable
||||||||
|-|-|-|-|-|-|-|
|Transaction Parties|Content|Relationship|PricingPrinciple|SettlementMethod|Amount(RMB’000)|As % ofTotalPurchases/Revenue|
|Jiangxi JianglingChassis Company|Parts andcomponentspurchase|Subsidiary ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|805,640|4.26|
|Jiangxi JianglingSpecial-PurposeVehicle Co, Ltd.|Parts andcomponentspurchase|Wholly-ownedsubsidiary ofJMCG|Contractedprice|30 days afterdelivery andinvoicing|700,310|3.70|
|Nanchang Bao-jiangSteel Processing &Distribution Co., Ltd.|Rawmaterialspurchase|Associate ofJMCG|Contractedprice|Prepayment|690,100|3.65|
|GETRAG (Jiangxi)TransmissionCompany|Parts andcomponentspurchase|Associate ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|656,600|3.47|
|Jiangling-LearInterior Trim Factory|Parts andcomponentspurchase|Joint venture ofJMCG|Contractedprice|60 days afterdelivery andinvoicing|569,820|3.01|
|Ford|Parts andcomponentspurchase|Controllingshareholder ofJMC|Contractedprice|D/P & T/T|523,860|2.77|
|JMCG Import andExport Co., Ltd.|Sales|Associate ofJMCG|Contractedprice|40% ofprepaymentand theremains paidduring 30 daysafter delivery|1,184,310|4.45|

ii. Major related party transaction concerning transfer of assets or equity
□Applicable□√Not Applicable
There was no major related party transaction concerning transfer of assets or equity
in 2016.
iii. Related party transaction concerning outside co-investment
□Applicable□√Not Applicable
There was no outside co-investment in 2016.
iv. Related credit and debt
□√Applicable□Not Applicable
Is there non-operating related credit and debt?
□Yes□√No
The Company had no non-operating related credit and debt in the reporting period. v. Other major related party transactions
□√Applicable□Not Applicable
The balance amount of bank deposit of the Company in JMCG Finance Company as of the end of the year 2016 was RMB 874,990 thousand. The Board of Directors reviewed and approved JMCG Finance Company Continious Risk Assessment Report. Please refer to the website www.cninfo.com.cn for the original of the report which was published on March 25, 2017.
17. Major Contracts and Execution
i. Entrustment, contract or lease
a. Entrustment
□Applicable□√Not Applicable
There was no entrustment in 2016.
b. Contract
□Applicable□√Not Applicable
There was no contract in 2016.
c. Lease
□√Applicable□Not Applicable
See the note 31 (b) to financial statements for lease of related parties.
Project with more than10% of net profit
□Applicable□√Not Applicable
There was no lease project with more than10% of net profit in the reporting period. ii Major guarantee
□Applicable□√Not Applicable
The Company had no outside guarantee in 2016.
iii. Entrustment on cash asset management
a. Trust investment
□Applicable□√Not Applicable
There was no trust investment in 2016.
b. Entrusted loan
□Applicable□√Not Applicable
There was no entrusted loan in 2016.
iv. Other major contract
□Applicable□√Not Applicable
18. Corporation Social Responsibilities
i. Targeted measures in poverty alleviation
□√Applicable□Not Applicable
a. Summary of targeted measures in poverty alleviation in 2016
The Company joined the one-to-one poverty alleviation, depending on JMCG, in Qianmo Village, Dai Jiapu Township, Suichuang County, Jiangxi Province and Xianting Village, Songhu Town, Xinjian District, Nanchang City in accordance with the working arrangement of Jiangxi Provincial Party Committee and Provincial Government.
In 2016, the Company made 29 families or 86 persons in Qianmo Village who were recorded into poverty alleviation files get rid of poverty; and made 11 persons get rid of poverty in Xianting Village.
b. Status of Year 2016 targeted measures in poverty alleviation for the listed company
||||
|-|-|-|
|Item|Unit|Amount/Progress|
|I. Brief Introduction|——|——|
|including：1. Funding|RMB (‘000)|100|
|2. Sum converted from the materials|RMB (‘000)|47.7|
|3. Persons get rid of poverty|Persons|97|
|II. Investments|——|——|
|1. Anti-poverty depending on industry development|——|——|
|including：1.1 Type|——||
|1.2 Projects|Number||
|1.3 Investment amount|RMB (‘000)||
|1.4 Persons get rid of poverty|Persons||
|2. Anti-poverty depending on employment transfer|——|——|
|including：2.1 Investments on vocational skills|RMB (‘000)||
|2.2 Training persons regarding vocational skills|Persons||
|2.3 Employment Persons|Persons||
|3. Anti-poverty depending on relocation|——|——|
|including：3.1 Employment persons among relocated|||
||Persons||
|persons|||
|4. Anti-poverty depending on education|——|——|
|including：4.1 Grants in aid to poor students|RMB (‘000)|11.1|
|4.2 Poor students in aid|Persons|43|
|4.3 Investments on the improvement of|||
||RMB (‘000)|80|
|educational source in poverty-stricken area|||
|5. Health Anti-poverty|——|——|
|Including: 5.1 Investments on medical and health services|||
||RMB (‘000)||
|in poverty-stricken area|||
|6. Ecological protection anti-poverty|——|——|
|including：6.1 Project type|——||
|6.2 Investment amount|RMB (‘000)||
|7. Miscellaneous provisions|——|——|
|including：7.1 Investments on stay-at-home children,|RMB (‘000)||

||||
|-|-|-|
|women and elderly|||
|7.2 Number of stay-at-home children, women|||
||Persons||
|and elderly in aid|||
|7.3 Investments on poor & disable people|RMB (‘000)||
|7.4 Number of poor & disable people in aid|Persons||
|8. Social anti-poverty|——|——|
|including：8.1 Investments on cooperation between West|||
||RMB (‘000)||
|China and East China|||
|8.2 Investments on one-to-one anti-poverty|RMB (‘000)|100|
|8.3 Investments from anti-poverty charity fund|RMB (‘000)||
|9. Other|——|——|
|including：9.1.Project|Number||
|9.2.Investment amount|RMB (‘000)||
|9.3. Persons getting rid of poverty|Persons||
|III. Awards|——|——|

 c. On-going plan regarding targeted measures in poverty alleviation
In 2017, depending on JMCG, the Company will make 23 families or 48 persons in Qianmo Village get rid of poverty and make the Village remove poverty village hat. And, the Company will make the other 2 persons in Xianting Village get rid of poverty. ii. Other information regarding corporation social responsibilities
√Applicable□Not Applicable
JMC 2016 Corporation Social Responsibilities Report can be downloaded from JMC official website: www.jmc.com.cn or the website: www.cninfo.com.cn.
19. Other Major Events
JMC received government incentives of approximate RMB 510 million appropriated by Nanchang City, Nanchang County Xiaolan Economy Development Zone, Nanchang City Qingyupu District, and Taiyuan Economic& Technological Development Zone in 2016, which is to supportJMC’s development.
20. Major event of JMC subsidiary
□Applicable□√Not Applicable
Chapter VI Share Capital Changes& Shareholders
1. Changes of shareholding structure
I. Table of the changes of shareholding structure
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Change (+, -)|||||After the change||
||Shares|Proportionof totalshares (%)|Newshares|BonusShares|Reserve-converted shares|Others|Subtotal|Shares|Proportionof totalshares (%)|
|I. Limited tradableA shares|1,725,900|0.20%|-|-|-|-|-|1,725,900|0.20%|
|3. Other domesticshares|1,725,900|0.20%|-|-|-|-|-|1,725,900|0.20%|
|Including:||||||||||
|Domestic legalperson shares|1,713,000|0.20%|-|-|-|-877,860|-877,860|835,140|0.10%|
|Domestic naturalperson shares|12,900|-|-|-|-|877,860|877,860|890,760|0.10%|
|II. Unlimitedtradable shares|861,488,100|99.80%|-|-|-|-|-|861,488,100|99.80%|
|1. A shares|517,488,100|59.95%|-|-|-|-|-|517,488,100|59.95%|
|2. B shares|344,000,000|39.85%|-|-|-|-|-|344,000,000|39.85%|
|III. Total|863,214,000|100.00%|-|-|-|-|-|863,214,000|100.00%|

 Causes of shareholding changes
□√Applicable□Not Applicable
JMC did not issue shares or derivative securities during the past three years as of December 31, 2016.JMC’s total shares remained the same in 2016, and the change in shareholding structure was caused by
a. limited A shares of 757,860 shares, formerly held by Shenzhen Airport Terminal Building Co., Ltd., were transferred to 197 nature person shareholders;
b. limited A shares of 120,000 shares, formerly held by Luoyang Machinery& Electric Company, were transferred to one nature person shareholder by the way of judicial decision.
Approval of changes of shareholding structure
□Applicable□√Not Applicable
Shares Transfer
□Applicable□√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS,shareholders’ equity attributable to the equity holders of the Company, generated from shares transfer□Applicable□√Not Applicable
Others to be disclosed necessarily or per the requirements of securities regulator□Applicable□√Not Applicable
II. Changes of limited A shares
□Applicable□√Not Applicable
2. Securities Issuance and Listing
I. Securities issuance (not including preferred shares) in 2016
□Applicable□√Not Applicable
II. Explanation on changes of shares, shareholding structure, assets and liabilities structure
□Applicable□√Not Applicable
III. Current staff shares
□Applicable□√Not Applicable
3. Shareholders and actual controlling parties
I. Total shareholders, top ten shareholders, and top ten shareholders holding unlimited tradable shares
||||||||
|-|-|-|-|-|-|-|
|Total shareholders(as of December 31,2016)|JMC had 19,407 shareholders, including 14,409 A-share holders, and 4,998 B-share holders,as of December 31, 2016.||||||
|Total shareholders(as of February 28,2017)|JMC had 20,535 shareholders, including 15,445 A-share holders, and 5,090 B-shareholders, as of February 28, 2017.||||||
|Top ten shareholders|||||||
|Shareholder Name|ShareholderType|ShareholdingPercentage(%)|Shares atthe End ofYear|Change(+,-)|Shares withTradingRestriction|Shares duetomortgageor frozen|
|Jiangling MotorHolding Co., Ltd.|State-ownedlegal person|41.03|354,176,000|0|0|0|
|Ford Motor Company|Foreign legalperson|32|276,228,394|0|0|0|
|China SecuritiesCorporation Limited|Other|2.64|22,745,784|0|0|0|
|Shanghai AutomotiveCo., Ltd.|State-ownedLegal person|1.51|13,019,610|0|0|0|
|Central HuijinInvestment Ltd.|State-ownedlegal person|0.83|7,186,600|0|0|0|
|British ColumbiaInvest Company|Foreign legalperson|0.75|6,438,041|1,137,969|0|0|
|BILL & MELINDAGATESFOUNDATIONTRUST|Foreign legalperson|0.73|6,338,080|92,500|0|0|
|JPMBLSA RE FTIFTEMPLETON CHINAFUND GTI 5497|Foreign legalperson|0.68|5,872,450|0|0|0|
|GAOLINGFUND,L.P.|Foreign legalperson|0.63|5,439,086|0|0|0|
|Norges Bank|Foreign legalperson|0.59|5,082,713|1,337,195|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||
|China Securities Corporation Limited||22,745,784|||A share||
|Shanghai Automotive Co., Ltd.||13,019,610|||A share||
|Central Huijin Investment Ltd.||7,186,600|||A share||
|British Columbia Invest Company||6,438,041|||A share||

||||
|-|-|-|
|BILL & MELINDA GATES FOUNDATIONTRUST|6,338,080|A share|
|JPMBLSA RE FTIF TEMPLETONCHINA FUND GTI 5497|5,872,450|B share|
|GAOLING FUND,L.P.|5,439,086|B share|
|Norges Bank|5,082,713|A share|
|Notes on association among above-mentioned shareholders|None.||

Stock buy-back by top ten shareholders or top ten shareholders holding unlimited tradable shares in the reporting period
□Applicable□√Not Applicable
II. Controlling Shareholders
Nature of controlling shareholders: Central/Local government holdings, foreign holdings
Type: Legal person
||||||
|-|-|-|-|-|
||Legal|||Main scope of|
|Name||Established Date|Organization code||
||representative|||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|
|Jiangling Motor Holding|||9136010076703230|for merchandise and|
||Mr. Zhang Baolin|November 1. 2004|||
|Co., Ltd.|||79|technology export &|
|||||import; property|
|||||management; sales of|
|||||household articles,|
|||||mechanical &|
|||||electronic equipment,|
|||||artistic handicrafts,|
|||||agricultural by-|
|||||products and steel;|
|||||consulting business in|
|||||enterprise|
|||||management.|
|||||Design,|
|||||manufacturing,|
|||||assembly and sales of|
|||||cars, trucks, parts and|
||William Clay||||
|Ford Motor Company||1903||components,|
||Ford||||
|||||financing, leasing of|
|||||vehicles and|
|||||equipment, and|
|||||insurance business.|

 Change of controlling shareholders
□Applicable□√Not Applicable
There was no change of controlling shareholders in the reporting period.
III. Actual Controlling Parties
Nature of controlling shareholders: Central/Local State-owned Assets Supervision and Administration
Type: Legal person
||||||
|-|-|-|-|-|
||Legal||||
|Name||Established Date|Organization code|Main scope of business|
||representative||||
|||||manufacturing of|
|||||automobiles, engines,|
|||||chassis, specialty vehicle,|
|||||transmission, other products,|
|||||automotive quality testing,|
|||||sales of self-produced|
|||||products and raw materials,|
|||||equipment, electronic|
|JMCG|Qiu Tiangao|July 27, 1991|91360000158263759R|products, parts and others,|
|||||as well as related after-sales|
|||||services and maintenance|
|||||services; development of|
|||||products derived from JMC|
|||||brand light vehicle; oversea|
|||||auto project-contracting,|
|||||export equipment, material|
|||||and related labor services.|
|||||development, manufacturing,|
|||||sales, import & export|
|Chongqing||||business of auto (including|
|Changan||December 31,||sedan), engine, automotive|
||Xu Liuping||9150000020286320X6||
|Automobile||1996||components, die, tools,|
|Co., Ltd.||||installation of machinery,|
|||||technological consultant|
|||||services.|
|Equity of listed company in domestic and aboard market held by the entity|||||
|||||None|
|controlled by the actual controlling party during the reporting period|||||

Change of actual controlling parties
□Applicable□√Not Applicable
There was no change of actual controlling parties in the reporting period.
Ownership and control relations between the Company and the actual controlling parties are shown as follows:
SASAC
Nanchang State-owned Assets
Supervision and Administration
Committee
41.82% 100%
C hongqing Changan Automobile Co., JMCG
Ltd.
50% 50%
JMH Ford
41.03% 32%
JMC
Actual controlling parties control the Company by the way of trust or other assets management
□Applicable□√Not Applicable
IV. Other legal person shareholder holding more than10% of total equity of the Company
□Applicable□√Not Applicable
V. Shareholding reducing restriction to controlling shareholders, actual controlling parties, restructuring parties and other commitment-making entities
□√Applicable□Not Applicable
JMH commits not to reduce JMC shares by secondary market within six months since July 9, 2015.
Chapter VII Preferred Shares
□Applicable□√Not Applicable
JMC had no preferred shares in the reporting period.
Chapter VIII Directors, Supervisors, Senior Management and Employees
1. Changes of Shares held by Directors, Supervisors and Senior Management
||||||||||
|-|-|-|-|-|-|-|-|-|
|Position|Name|Gender|Age|Term of Office|Shares|Shares|Share|Cause|

||||||||||
|-|-|-|-|-|-|-|-|-|
||||||as ofDec. 31,2015|as ofDec. 31,2016|Change inYear 2016|ofShareChange|
|Directors：|||||||||
|Chairman|Qiu Tiangao|Male|51|2014.6.27-2017.6.27|0|0|0||
|Vice Chairman|David Schoch|Male|66|2016.8.12-2017.6.27|0|0|0||
|Director|Mark Kosman|Male|52|2016.4.28-2017.6.27|0|0|0||
|Director & President|Thomas Fann|Male|55|2016.4.28-2017.6.27|0|0|0||
|Director & EVP|Xiong Chunying|Female|53|2016.4.28-2017.6.27|1,200|1,200|0||
|Director|Yuan Mingxue|Male|50|2015.12.9-2017.6.27|0|0|0||
|Independent Director|Lu Song|Male|60|2014.6.27-2017.6.27|0|0|0||
|Independent Director|Wang Kun|Female|41|2014.6.27-2017.6.27|0|0|0||
|Independent Director|Li Xianjun|Male|49|2015.12.9-2017.6.27|0|0|0||
|Ex-Chairman|Wang Xigao|Male|67|2014.6.27-2016.4.28|0|0|0||
|Ex-Vice Chairman|John Lawler|Male|51|2014.6.27-2016.8.12|0|0|0||
|Ex-Director|Manto Wong|Male|55|2014.6.27-2016.4.28|0|0|0||
|Ex- Director &President|Yuan-Ching Chen|Male|65|2014.6.27-2016.4.28|0|0|0||
|Supervisors：|||||||||
|Chief supervisor|Zhu Yi|Male|47|2014.6.27-2017.6.27|0|0|0||
|Supervisor|Alvin Qing Liu|Male|60|2014.6.27-2017.6.27|0|0|0||
|Supervisor|Zhang Jian|Male|48|2014.6.27-2017.6.27|40|40|0||
|Supervisor|Liu Niansheng|Male|50|2014.6.27-2017.6.27|0|0|0||
|Supervisor|Xu Lanfeng|Female|48|2014.6.27-2017.6.27|0|0|0||
|SeniorManagement:|||||||||
|EVP|Jin Wenhui|Male|50|2015.1.1-2017.6.27|0|0|0||
|CFO|Gong Yuanyuan|Female|44|2016.4.7-2017.6.27|0|0|0||
|VP & Board Secretary|Wan Hong|Male|56|2014.6.27-2017.6.27|0|0|0||
|VP|Li Qing|Male|52|2014.6.27-2017.6.27|0|0|0||
|VP|Tim Slatter|Male|43|2015.4.1-2017.6.27|0|0|0||
|VP|Zhu Shuixing|Male|52|2014.6.27-2017.6.27|100|100|0||
|VP|Liu Shuying|Female|54|2014.6.27-2017.6.27|0|0|0||

|||||||||
|-|-|-|-|-|-|-|-|
|VP|Arturo Mendoza|Male|62|2015.7.1-2017.6.27|0|0|0|
|VP|Li Xiaojun|Male|41|2015.7.1-2017.6.27|0|0|0|
|VP|Christian Chen|Male|44|2015.9.1-2017.6.27|0|0|0|
|Ex-CFO|Dennis Leu|Male|53|2014.6.27-2016.4.7|0|0|0|
|Ex-VP|Liao Zanping|Male|54|2014.6.27-2017.2.1|0|0|0|
|VP|Wu Xiaojun|Male|43|2017.2.1-2017.6.27|0|0|0|

2. Changes of Directors, Supervisors and Senior Management
||||||
|-|-|-|-|-|
|Name|Position|Status|Date|Reason|
|Wang Xigao|Chairman|Leave|April 28, 2016|Retirement|
|John Lawler|Vice Chairman|Leave|August 12, 2016|Work rotation|
|Manto Wong|Director|Leave|April 28, 2016|Work rotation|
|Yuan-Ching|||||
||Director|Leave|April 28, 2016|Work rotation|
|Chen|||||
|Yuan-Ching|||||
||President|Dismissal|April 7, 2016|Work rotation|
|Chen|||||
|Dennis Leu|CFO|Dismissal|April 7, 2016|Work rotation|
|Liao Zanping|VP|Dismissal|February 1, 2017|Work rotation|

3. Particulars about working experience of directors, supervisors and senior
management in the past five years
Directors:
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 Chairman of JMCG Jingma Motors Co., Ltd., Chairman of Jiangxi Isuzu Motors Co., Ltd., Vice Chairman of JMH, Director, General Manager,Chairman of JMCG, Mr. Qiu Tiangao was appointed as Chairman of JMC in April 2016.
Mr. David Schoch, born in 1951, holds aBachelor’s Degree in Business Administration from Lycoming College, U.S.A. and his MBA in Finance from Temple University. In the past five years, Mr. David Schoch held various positions including Ford Motor Company Group Vice President and President, Asia Pacific, Chairman and CEO of Ford China. Mr. David Schoch was appointed as Vice Chairman of JMC in August 2016.
Mr. Mark Kosman, born in 1965, holds a Bachelor Degree in Accounting from Bowling Green State University, U.S.A. and a MBA from Wayne State University, U.S.A. In the past five years, Mr. Mark Kosman held various positions including Global Product
Development Controller of Ford, Ford Asia Pacific& Africa CFO. Mr. Mark Kosman
was appointed as Director of JMC in April 2016.
Mr. Thomas Fann, born in 1962, holds a Bachelor Degree in Mechanical Engineering from National Cheng Kung University, China Taiwai, a Master Degree in Mechanical Engineering from National Tsing Hua University, China Taiwan, and a Doctor Degree in Mechanical Engineering from University of Michigan, U.S.A. In the past five years, Mr. Thomas Fann held various positions including Finance Director, President of Ford Lio Ho, President of JMC. Mr. Thomas Fann was appointed as Director of JMC in April 2016.
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, Director of JMCG. Ms. Xiong Chunying was appointed as Director of JMC in April 2016.
Mr. Yuan Mingxue, born in 1968, senior engineer, holds aBachelor’s Degree in Auto Engineering from Beijing Institute of Technology and an EMBA from China Europe International Business School. In the past five years, Mr. Yuan Mingxue held various positions including Assistant to Assistant to the President, Chief of Strategy Planning Department and Director of Capital Management Division of Chongqing Changan Automobile Company Limited (“Changan Automobile”), Assistant to the President and General Manager of Overseas Business Development Department of Changan Automobile, Vice President of Changan Automobile, and Director of JMH. Mr. Yuan Mingxue was appointed as Director of JMC in October 2015.
Mr. Lu Song, born in 1957, 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 teaching and administrative staff of CFAU, Vice President of the Chinese Society of Private International Law, Executive Member of the Council of the Chinese Society of International Law, Executive Member of the Council the Chinese Arbitration Law, and the arbitrator of international arbitral institutions. 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 Centre. Ms. Wang Kun was appointed as Independent Director of JMC in June 2014.
Mr. Li Xianjun, born in 1967, holds aBachelor’s Degree in Industrial Management from Jilin University of Technology and an MBA, aDoctor’s Degree in Political Economy from Jilin University. In the past five years, Mr. Li Xianjun held various positions including Head and Academic Director of School of Automotive Engineering of Tsinghua University, Independent Director of Tianjin FAW Xiali Automobile Co., Ltd. Ms. Li Xianjun was appointed as Independent Director of JMC in December 2015. Supervisors:
Mr. Zhu Yi, born in 1970, is a senior accountant, and holds aBachelor’s Degree in Business Administration from Jiangxi Institute of Economic Administrators and a MBA from New York Institute of Technology. In the past five years, Mr. Zhu Yi used to be Vice General Manager, Director of JMCG, and Director of JMH. Mr. Zhu Yi has been a Chief Supervisor of JMC since June 2011.
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 Chairman of Changan Ford Mazda Engine Co., Ltd., Director of Changan Ford Automobile Co., Ltd., Vice President and General Counsel of Ford Asia Pacific, Director& Vice Chairman of Ford Motor (China) Ltd. 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 Chief of JMCG Publicity Department and Chairman of JMCG Labor Union. 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 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 Chief of Manufacturing Department and Assistant to the President of JMC. Ms. Xu Lanfeng has been a Supervisor of JMC in June 2008. Senior management:
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, and an EMBA Degree in China Europe International Business School. In the past five years, Mr. Jin Wenhui held various positions including 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., Executive Vice President of JMC.
Ms. Gong Yuanyuan, born in 1973, holds a Bachelor Degree in Finance from Shanghai Jiaotong University and a MBA from City University, United Kingdom. In the past five yeats, Ms. Gong Yuanyuan has held various positions including Controller of MFG andMP&L of Ford China, and PD Controller of Lincoln and Mustang of Ford U.S., CFO of JMC.
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, Independent Director of Jiangxi Hongdu Aviation Industry Co., Ltd. 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 President of JMC, Director of JMCG and Executive Director of Jiangling Motors Sales Co., Ltd.
Mr. Tim Slatter, born in 1974, holds aBachelor’s Degree in Automotive Engineering and Design from Coventry University, U.K. In the past five years, Mr. Tim Slatter held various positions including Global Exhaust Engineering Manager of Ford Europe, Powertrain Programs and Integration Chief Engineer of Ford AP.
Mr. Zhu Shuixing, born in 1965, is a senior engineer and 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 position of 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 the position of Vice President of JMC.
Mr. Arturo Mendoza, born in 1955, holds an EngineeringBachelor’s Degree in Mechanical Engineering from Instituto Tecnologico de Chihuahua, Mexico. In the past five years, Mr. Arturo Mendoza held various positions including LMEA Manager of Changan Ford Mazda Engine Corporation and Vice President of JMC.
Mr. Li Xiaojun, born in 1975, is a senior engineer and holds aBachelor’s Degree in Mechanical Design& Manufacturing from Jiangxi University of Science and Technology and aMaster’s Degree in Industrial Engineering from Huazhong University of Science and Technology. In the past five years, Mr. Li Xiaojun held various positions including Plant Manager of Assembly Plant, Assistant to the President for JMC and Vice President of JMC.
Mr. Christian Chen, born in 1972, is a semi-senior engineer and holds aBachelor’s Degree in Automotive Engineering from Wuhan University of Technology and a MBA from Wuhan University. In the past five years, Mr. Christian Chen held various positions including Purchasing Manager and Senior Purchasing Manager of Ford Motor Company, and Vice President of JMC.
Mr. Wu Xiaojun, born in 1974, holds aBachelor’s Degree from Wuhan University of Technology and a MBA from Jiangxi University of Finance and Economics. In the past five years, Mr. Wu Xiaojun held various positions including Chief of Quality Department, Assistant to the President for JMC, Executive Deputy General Manager, General Manager of JMC Heavy Duty Vehicle Co., Ltd. Mr. Wu Xiaojun was appointed as VP of JMC in February 2017.
Positions at the shareholder entities
□√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Name|ShareholderEntity|Title|Term ofOffice|CompensationPaid byShareholderEntity (Y/N)|
|Qiu Tiangao|JMH|Vice Chairman|2016.3—|N|
|David Schoch|Ford|Group Vice Presidentand President, AsiaPacific|2012.12—|Y|
|Yuan Mingxue|JMH|Director|2015.7—|N|
|Zhu Yi|JMH|Director|2004.11—|N|
|Alvin Qing Liu|Ford|Asia Pacific VicePresident andGeneral Counsel|2009.1—|Y|

Particulars about positions and concurrent positions in other entities other than shareholder entities
□√Applicable□Not Applicable
||||
|-|-|-|
|Name|Entity|Title|
|Qiu Tiangao|JMC Heavy DutyVehicle Co., Ltd.|Executive Director|
||JMCG|Chairman|
||JMCG Jingma MotorsCo., Ltd.|Chairman|
||Jiangxi-Isuzu MotorsCo., Ltd.|Chairman|

||||
|-|-|-|
|David Schoch|Ford Motor (China)Ltd.|Chairman and CEO|
||Ford Motor Research& Engineering(Nanjing) Co., Ltd.|Chairman and CEO|
||Changan FordAutomobile Co., Ltd.|Vice Chairman|
|Mark Kosman|Ford Motor (China)Ltd.|Director|
||Changan FordAutomobile Co., Ltd.|Director|
|Yuan Mingxue|Chongqing ChanganAutomobile Co., Ltd.|Vice President|
|Lu Song|CAFU|Professor|
|Wang Kun|Tsinghua University|Assistant to Dean ofTsinghua UniversitySchool of Economicsand Managementand Deputy Directorof TsinghuaUniversity CorporateGovernance Center|
|Li Xianjun|Tsinghua University|Head and AcademicDirector of School ofAutomotiveEngineering|
|Zhu Yi|JMCG|Director & ViceGeneral Manager|
|Alvin Qing Liu|Changan Ford MazdaEngine Co., Ltd.|Vice Chairman|
||Ford Motor (China)Ltd.|Director & ViceChairman|
||Changan FordAutomobile Co., Ltd.|Director|
|Xiong Chunying|JMCG|Director|
|Jin Wenhui|JMCG|Director|
|Gong Yuanyuan|JMC Heavy DutyVehicle Co., Ltd.|Supervisor|
||Jiangling MotorsSales Co., Ltd.|Supervisor|
|Wan Hong|Jiangxi HongduAviation Industry Co.,Ltd.|Independent Director|
|Li Qing|JMCG|Director|
||Jiangling MotorsSales Co., Ltd.|Executive Director|
|Wu Xiaojun|JMC Heavy DutyVehicle Co., Ltd.|General Manager|

Penalties from securities regulator to the present and resigned Directors, Supervisors
and senior executives in the recently three years
□Applicable□√Not Applicable
4. Annual Compensation
Decision-making procedure, basis, and payment regarding the annual compensation of the Directors, the Supervisors and senior executives
Directors and Supervisors who did not concurrently hold other management positions in JMC were not paid by JMC. Director Qiu Tiangao, Supervisors Zhu Yi and Zhang Jian were paid by JMCG. Directors David Schoch, Mark Kosman and Supervisor Alvin Qing Liu were paid by Ford. Director Yuan Mingxue 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 years. In 2016, the Company paid annual compensation before tax of approximately RMB 1,660 thousand to EVP Xiong Chunying, paid approximately RMB 1,330 thousand EVP Jin Wenhui, paid approximately RMB 1,200 thousand per person to VP& Board Secretary Wan Hong, VP Li Qing, VP Zhu Shuixing VP Liu Shuying, paid VP Liao Zanping approximately RMB 1,300 thousand, and paid VP Li Xiaojun approximately RMB 1,070 thousand. Two employee-representative supervisors, Mr. Liu Niansheng and Ms Xu Lanfeng, were paid annual compensation before tax of about RMB 840 thousand and RMB 460 thousand respectively. The total compensation before tax paid by JMC for the aforesaid persons was about RMB 11.49 million in the reporting period, including the long-term incentive of RMB 1.19 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 2016, JMC should payUS$ 281,250 per person to Ford for Director& President Thomas Fann, payUS$ 375 thousand per person to VP Arturo Mendoza and VP Tim Slatter, pay RMB 562.5 thousand to CFO Gong Yuanyuan, pay RMB 750 thousand to VP Christian Chen, payUS$ 93,750 per person to ex- Director& President Yuan-Ching Chen and ex-CFO Dennis Leu. 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.
Table on Annual Compensation
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|||||||Compensation|
||||||Compensation||
|||||||Paid by|
|Name|Position|Gender|Age|Present (Y/N)|Before Tax||
|||||||Related Party|
||||||Paid by JMC||
|||||||(Y/N)|
|Qiu Tiangao|Chairman|Male|51|Y|0|Y|
|David Schoch|Vice Chairman|Male|66|Y|0|Y|
|Mark Kosman|Director|Male|52|Y|0|Y|
||Director &|||Y||N|
|Thomas Fann||Male|55||*||
||President||||||
|Xiong Chunying|Director & EVP|Female|53|Y|1,660|N|
|Yuan Mingxue|Director|Male|50|Y|0|Y|
||Independent|||Y|||
|Lu Song||Male|60||100|N|
||Director||||||
||Independent|||Y|||
|Wang Kun||Female|41||100|N|
||Director||||||
||Independent|||Y|||
|Li Xianjun||Male|49||100|N|
||Director||||||
|Wang Xigao|Ex-Chairman|Male|67|N|0|Y|
||Ex-Vice|||N|||
|John Lawler||Male|51||0|Y|
||Chairman||||||
|Manto Wong|Ex-Director|Male|55|N|0|Y|
|Yuan-Ching|Ex- Director &||||||
|||Male|65|N|*|N|
|Chen|President||||||
|Zhu Yi|Chief supervisor|Male|47|Y|0|Y|
|Alvin Qing Liu|Supervisor|Male|60|Y|0|Y|
|Zhang Jian|Supervisor|Male|48|Y|0|Y|
|Liu Niansheng|Supervisor|Male|50|Y|840|N|
|Xu Lanfeng|Supervisor|Female|48|Y|460|N|
|Jin Wenhui|EVP|Male|50|Y|1,330|N|
|Gong Yuanyuan|CFO|Female|44|Y|*|N|
||VP & Board|||Y|||
|Wan Hong||Male|56||1,200|N|
||Secretary||||||
|Li Qing|VP|Male|52|Y|1,200|N|
|Tim Slatter|VP|Male|43|Y|*|N|
|Zhu Shuixing|VP|Male|52|Y|1,200|N|
|Liu Shuying|VP|Female|54|Y|1,200|N|
|Arturo Mendoza|VP|Male|62|Y|*|N|
|Li Xiaojun|VP|Male|41|Y|1,070|N|
|Christian Chen|VP|Male|44|Y|*|N|
|Dennis Leu|Ex-CFO|Male|53|N|*|N|
|Liao Zanping|Ex-VP|Male|54|N|1,300|N|

* Please refer to the Article 4 (2) of the Chapter.
Granted equity incentive to the Directors, Supervisors and senior executives in 2016□Applicable□√Not Applicable
5. Employees
i. Employees, Professional Structure and Educational Level
|||
|-|-|
|Employees in parent company (persons)|15,473|
|Employees in subsidiaries (persons)|1,392|
|Total employees (persons)|16,865|
|Total employees paid compensation (persons)|17,776|
|Retired employees bore retirement benefits in parent|847|

|||
|-|-|
|company and its subsidiaries||
|Professional Structure||
|Type|Employees (Persons)|
|Production Worker|11,465|
|Sales Personnel|679|
|Technical Personnel|3,592|
|Finance Personnel|167|
|Administrative Staff|962|
|Total|16,865|
|Educational Level||
|Type|Employees (Persons)|
|Master degree and higher|925|
|Bachelor degree|3,814|
|Polytechnic school degree|2,290|
|Below polytechnic school degree|9,836|
|Total|16,865|

 ii. Compensation Policy
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,.
iii. Training
In 2016,JMC’s training expense was RMB 22,195 thousand, and training person-time were 95,851 with training stratification of96.70%. Please refer to the Chapter IV of 2016 JMC Corporation Social Responsibility Report for more details on 2016 training plan implementation.
iv. Labour outsourcing
□Applicable□√Not Applicable
Chapter IX Corporate Governance Structure
1. Status of the Corporate Governance in JMC
Difference between actual situation of corporate governance in JMC and that of requirements of listed company corporate governance promulgated by CSRC
□Applicable□√Not Applicable
There was no major difference between actual situation of corporate governance in JMC and that of requirements of listed company corporate governance promulgated by CSRC. 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. JMC fulfilled its social responsibilities positively and made a report on 2016 Corporate Social Responsibilities. 2. Separation between JMC and the Controlling Shareholders in respect of Personnel, Assets and Finance, and Independence concerning Organization and Business: (1) With respect to personnel matters, the positions of chairman and president are held by different individuals;JMC’s senior management do not hold positions other
than director positions with its controlling shareholders; JMC senior management
personnel are paid by JMC; labor, personnel matters and compensation management
of JMC are completely independent.
(2) With respect to assets, JMC assets are complete. The assets utilized by JMC, including production system, supporting production system and peripheral facilities, and non-patent technology, are owned and/or controlled by JMC.
(3) With respect to finance, JMC has an independent finance department and independent accounting system, and has a uniform and independent accounting system and financial control system for its branches and subsidiaries. JMC has its own bank accounts, and there are no bank accounts jointly owned by JMC and its controlling shareholders. JMC pays taxes independently in accordance with relevant laws.
(4) With respect to organization,JMC’s organization is independent, complete and scientifically established with a sound and efficient operating mechanism. The establishment and the operation 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.
3. Horizontal Competition
□Applicable□√Not Applicable
4. Introduction to theShareholders’ Meeting
I. Index to theShareholders’ Meeting in 2015
||||||
|-|-|-|-|-|
|Meeting|Meeting Type|Convening Date|Disclosure Date|Index|
|||||Announcement of this|
|2016 First Special|Special|||Special Shareholders’|
|Shareholders’|Shareholders’|April 28, 2016|April 29, 2016|Meeting (No: 2016-017) was|
|Meeting|Meeting|||published in the website|
|||||Http://www.cninfo.com.cn.|
|||||Announcement of this Annual|
|2015 Annual|Annual|||Shareholders’ Meeting (No:|
|Shareholders’|Shareholders’|June 30, 2016|July 1, 2016|2016-026) was published in|
|Meeting|Meeting|||the website|
|||||Http://www.cninfo.com.cn.|
|||||Announcement of this|
|2016 Second Special|Special|||Special Shareholders’|
|Shareholders’|Shareholders’|August 12, 2016|August 13, 2016|Meeting (No: 2016-037) was|
|Meeting|Meeting|||published in the website|
|||||Http://www.cninfo.com.cn.|

 II. SpecialShareholders’ Meeting convened by preferred shareholders whose voting rights were restored
□Applicable□√Not Applicable
5. IndependentDirectors’ Performance of Duty
I. Particulars about thedirectors’ attendance to the Board meeting and theShareholders’ Meeting
|||||||||
|-|-|-|-|-|-|-|-|
|Name|RequiredBoardAttendance|Presencein Person|Presencein Form ofPaperMeeting|Presenceby Proxy|Absence|Not to presentin person intwoconsecutivemeetings (Y/N)|Presence attheShareholders’Meeting|
|Lu Song|16|3|12|1|0|N|1|
|Wang Kun|16|4|12|0|0|N|1|
|Li Xianjun|16|3|12|1|0|N|0|

 II. Dissent from Independent Directors
□Yes□√No
The Independent Directors of the Company had no dissent to the relevant proposal of the Company in the reporting period.
III. Other introduction to IndependentDirectors’ Performance of Duty
□√Yes□No
JMC has appointed three Independent Directors so far. The Independent Directors exercised their fiduciary duties on routine work and major decision-making of the Board of Directors. They studied every proposal reviewed by the Board of Directors thoroughly and raised their opinions, inquired about major events which required opinions from the Independent Directors and issued their written opinions, and actively engaged in the affairs of the Compensation Committee and the Audit Committee in the reporting period, to protect the interests of the Company and all the shareholders. 6. 2016 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 the Credit Risk Control Proposal and Credit Risk Control Status Report;
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 2016 Independent Auditor Summary
Report to Board for review; and
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, 2017 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 16, 2017 as follows:
i. Financial statements have been prepared according to China New GAAP and thecompany’s financial policies; and
ii. The financial status reported for December 31, 2016 including Balance Sheet, Income Statement and Cash Flow is accurate and truthful.
The Audit Committee made resolutions on the audited 2016 financial statements on March 2, 2017 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, 2016 including Balance Sheet, Income Statement and Cash Flow is accurate and truthful. The Audit Committee supports submitting to the Board approval.
C. 2016 External Auditor Work Summary Report
The Audit Committee has reviewed the 2016 Audit Work Plan submitted by the independent auditing firm PwC via communications with the PwC leading auditor. Agreement was achieved regarding timing and content and both parties believe that the plan ensures a comprehensive completion of the 2016 audit tasks.
The independent auditor thoroughly communicated with the management and the Audit Committee Members regarding: accounting policies implementation, revenue recognition, significant accounting estimates related to accrued expenses, accounting treatment for 8 Provisions, impairment of long-term assets and 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, 2016, and the financial performance
and cash flows for the year then ended. The audit conclusion fairly reflects theCompany’s actual status.
II. 2016 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 2015 Year-end Bonus for Senior Executives;
ii. reviewed and approved 2014 Diligence Report of the Compensation Committee; and
iii. proposed and reviewed JMC Executive Compensation Scheme, and submit it to the Board of Directors for approval.
The CompensationCommittee’s opinions on the annual compensation of the directors, supervisors and senior management disclosed in this Report are as follows: The 2016 annual compensation for the Chinese-side senior management was paid upon the principles promulgated in the JMC Executive Compensation Scheme. The 2016 annual compensation for Ford-seconded senior management personnel was paid in accordance with revised Personnel Secondment Agreement signed between JMC and Ford and Ford Affiliates. The annual compensation for the director and supervisor that the Company paid abided by JMC salary management system. In the reporting period, the annual compensation of the directors, supervisors and senior executives disclosed in this Report was complied with JMC salary management system, and there was neither breach nor inconsistency of this system. 7. Works of Supervisory Board
Risks found by the Supervisory Board in 2016
□Yes□√No
The Supervisory Board had no dissent on inspection items in the reporting period. 8. Compensation& Incentive Mechanism for Senior Management in the Reporting Period
In accordance with the JMC Executive Compensation Scheme approved by the Board of Directors in September 2016, the compensation for senior management consists of base salary and floating bonus. The base salary level is determined according the grade of the senior executives, and the floating bones shall be paid according to the operating performance.70% of the bonus will be distributed in this year, and the rest30% will be distributed in the next three years. The annual total income target of the senior executives will be adjusted through using the historical market salary increase. The Compensation Committee approved the 2016 year-end bonus of senior executives on March 2, 2017 based on the performance of the KPIs for the senior executives, and approved to adjust the Year 2017 total income target of the senior executives. These plans are applicable only to the Chinese-side senior management.
9. Internal Control
I. Major defect of internal control in the reporting period
□Yes□√No
II. Internal Control Self-assessment Report
|||
|-|-|
|Issuance date|March 25, 2017|
|Index|www.cninfo.com.cn|
|Total value of assets of the entities||
|in scope counts as % of that||
||100.00%|
|disclosed in the consolidated||
|financial statements||

||||
|-|-|-|
|Total value of operating revenue of|||
|the entities in scope counts as % of|||
||100.00%||
|that disclosed in the consolidated|||
|financial statements|||
|Deficiency Determination Criteria|||
|Type|Financial Report|Non-financial Report|
||Material Weakness: An error that||
||changes the trend of results,||
|||Material Weakness: Unscientific|
||changes profit to loss or loss to||
|||decision making process such|
||profit Ineffective anti-fraud||
|||as incorrect decisions that|
||process or any fraud involving||
|||result in unsuccessful mergers|
||senior management Ineffective||
|||and acquisitions; Major|
||control over accounting policies||
|||regulatory compliance issues;|
||Ineffective oversight by the Audit||
|||Frequent media reports harmful|
||Committee Significant Deficiency;||
|||to the Company’s reputation; A|
||Errors in management reporting||
|||lack of control within key|
||systems or Corporate accounting||
|||business processes or|
||records that could lead to||
|||systematic breakdown of|
||incorrect management decisions;||
|||control policies|
||Actions inconsistent with||
|||Material weakness identified in|
|Qualitative Criteria|Company values, policies and||
|||the self-assessment without any|
||other Corporate guidelines that||
|||action plan implemented|
||are likely to significantly impact||
|||Significant Deficiency; control|
||cost, quality, customer||
|||deficiency, or combination of|
||satisfaction, reputation, or||
|||control deficiencies, that does|
||competitive advantage; Control||
|||not meet the criteria for material|
||issues in IT infrastructure or||
|||weakness but deserves the|
||applications that may lead to||
|||concerns of the Audit|
||impairment of Company||
|||Committee and the Board of|
||operations. Any actions indicating||
|||Directors. Minor Deficiency Any|
||fraud or theft that is significant in||
|||control deficiencies that do not|
||value Minor Deficiency; Any||
|||meet the criteria for material or|
||control deficiencies that do not||
|||significant.|
||meet the criteria for material or||
||significant.||
||Material Weakness Misstatement in||
||the Income Statement is more than||
||5% of the annual profit before||
||taxation; Misclassification in the||
||Income Statement is more than||
||0.4% of the annual sales revenue|Please refer to internal control|
|||deficiency over financial reporting|
|Quantitative Criteria|Adjustment of net assets in the||
|||for the criteria for non-financial|
||Balance Sheet is more than 1% of||
|||reporting internal control.|
||the shareholders' equity Adjustment||
||of asset or liability in the Balance||
||Sheet is more than 0.6% of the total||
||assets; Adjustment in the Cash Flow||
||Statement is more than 3% of the||

|||
|-|-|
||total net cash flow in the operating|
||activities. Significant Deficiency|
||Misstatement in the Income|
||Statement is more than 2.5% of the|
||annual profit before taxation;|
||Misclassification in the Income|
||Statement is more than 0.2% of the|
||annual sales revenue; Adjustment of|
||net assets in the Balance Sheet is|
||more than 0.5% of the|
||Shareholders’ equity; Adjustment|
||of asset or liability in the Balance|
||Sheet is more than 0.3% of the Total|
||assets; Adjustment in the Cash Flow|
||Statement is more than 1.5% of the|
||total net cash flow from the|
||operating activities. Minor Deficiency|
||All the deficiencies that do not meet|
||the quantitative criteria for|
||significant.|
|Number of Material Weakness in||
||0|
|financial report||
|Number of Material Weakness in||
||0|
|non-financial report||
|Number of Significant Deficiency in||
||0|
|financial report||
|Number of Significant Deficiency in||
||0|
|non-financial report||

10. Internal Control Audit Report
□√Applicable□Not Applicable
|||
|-|-|
|Opinions in the Internal Control Audit Report||
|The opinions in the Internal Control Audit Report issued by Pwc Zhong Tian are as follows:||
|As of December 31, 2016, JMC maintained adequate control over financial statements in all the material||
|aspects according to the Basic Standard for Enterprise Internal Control and other relevant rules.||
|Internal Control Audit Report||
||Disclosed|
|Disclosed or not||
|Issuance date|March 25, 2017|
|Index|Http://www.cninfo.com.cn|
|Type of Opinion|Standard and unqualified opinions|
|Major Defect regarding non-||
||No|
|financial report or no||

Abnormal opinion issued by the accounting firm
□Yes□√No
Opinion issued by the accounting firm keeps the same with that of self-assessment report made by the Board
□√Yes□No
Chapter X Corporate Bond
Whether the Company owns the corporate bond that it lists in the securities exchange and is undue or is not paid in full althoughit’s due
No.
Chapter XI Financial Statements
Type of Audit Report Standard and Unqualified Opinion
Signature date March 23, 2017
Name of Auditor PricewaterhouseCoopers Zhong Tian CPAs LLP
Document No. of Audit Report 2017/SH-082
IndependentAuditor’s Report
2017/SH-082 (Page 1 of 5) To the Shareholders of Jiangling Motors Corporation, Ltd.
Opinion
What we have audited
The consolidated financial statements of Jiangling Motors Corporation, Ltd. (the “Company”) and its subsidiaries (the “Group”) set out on pages 50 to 107, which comprise:
 the consolidated statement of financial position as at 31 December 2016;
 the consolidated statement of comprehensive income for the year then ended;
 the consolidated statement of changes in equity for the year then ended;
 the consolidated statement of cash flows for the year then ended; and
 notes to the consolidated financial statements, which include a summary of significant accounting policies.
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2016, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in theAuditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
 Research and development expenditures
 Impairment of long term assets
2017/SH-082 (Page 2 of 5)
|||
|-|-|
|Key Audit Matter|How our audit addressed the|
||Key Audit Matter|

Research and development We obtained a breakdown, by value, of all individual
expenditures research and development projects and reconciled this
to the amounts of research and development expenses
Refer to note 14 to the and capitalised research and development projects,
consolidated financial which were recorded in the general ledger, identifying
statements. no reconciling differences.
We focussed on this area due to We tested the projects where research and
the incurred amount of research development expenses were in excess of
and development expenditures RMB20,000,000, together with a sample of randomly
(RMB1,937,313,000 in 2016), the selected immaterial projects from the remaining
amount of the development costs population, as follows:
capitalised (RMB124,587,000 in• We obtained the lists of expenses by nature on
2016), and the fact that there is selected projects and inspected contracts and
management’s judgement
underlying invoices which were directly related to
involved in assessing whether the
those projects. We also checked the reasonableness
of the indirect expenses attributable to relevant
criteria set out in the accounting
projects, including employment costs and
policies (note 2.8(2)) required for
depreciation expenses, by understanding the
capitalisation of such
allocating method and inspecting the supporting
development costs had been met,
for the assembling and allocating process of those
particularly:
indirect expenses.
• The technical feasibility of the
• We also checked the recorded research and
project.
development costs of those projects with budgeted
• The likelihood of the project
amounts and discuss with project manager
generating sufficient future
regarding to the status of selected projects.
economic benefits.
We found no material issues arising from the above
We had particular regard to the
procedures.
fact that the Group has continued
to invest in the technical
We obtained the lists of capitalised projects and tested
improvements for its automobile
those projects with the capitalised amounts over
products, and therefore we
RMB25,000,000. We obtained explanations from
focussed on the accuracy and
management of why those projects were considered to
completeness of recorded
be capital in nature, in terms of how the specific
research and development
requirements of the relevant accounting standards,
expenditures and whether the
most notably of IAS 38 were met. We also conducted
economic benefits of the projects
interviews with individual project managers
under development supported
responsible for those projects selected to corroborate
the amounts capitalised.
these explanations, which enabled us to independently
assess whether the projects met all the criteria for
As part of our work we also
capitalisation set out in accounting standards. In
focused on management’s
addition, we reviewed the selectedprojects’ inspection
judgements regarding whether
reports at different phases including the reports which
capitalised costs were of a
indicated that the subject projects entered into
development stage rather than
developmental stage and related management and
research stage (which would result
board meeting minutes. We found the information we
in the costs being expensed rather
gathered from those documents to be consistent with
than capitalised), and whether
explanations obtained from individual project
costs, including employment
managers and to be in line withmanagement’s
(payroll) costs, were directly
assessment that the costs met the relevant
attributable to relevant projects.
capitalisation criteria. We consideredmanagement’s
judgments on whether those selected projects should
be capitalised were appropriate.
2017/SH-082 (Page 3 of 5)
|||
|-|-|
|Key Audit Matter|How our audit addressed the|
||Key Audit Matter|

Impairment of long term We evaluatedmanagement’s impairment calculations
assets assessing the future cash flow forecasts used in the
models, and the process by which they were drawn up,
Refer to note 12 to the including comparing them to the latest Board
consolidated financial approved budgets, and testing the underlying
statements. calculations. We found that management had followed
their clearly documented process for drawing up future
We focused on this area because cash flow forecasts, which was subject to timely
JMC Heavy Duty Vehicle Co., oversight and challenge by the directors and which was
Ltd. (“JMCH”), the subsidiary consistent with theBoard’s approved budgets.
of the Group has incurred
accumulated losses of We challenged:
RMB622,424,000 as at 31 • the key assumptions for long-term growth rates in
December 2016, which the forecasts by comparing them to historical
indicates there may be results, and economic and industry forecasts;
impairment on its long term • the discount rate by assessing the cost of capital for
assets, mainly including the CGU and comparable organisations.
property, plant and equipment
with the amount of We discussed the action plans in place and evaluated
RMB861,591,000 The the reasonableness of those plans, by comparing those
determination of whether or not action plans withJMC’s performance in prior years,
an impairment charge for long automobile industry developing trends and existing
term assets for JMCH is marketplayer’s performance. We considered those
necessary to involve significant action plans were reasonably set in place.
judgements of management
about the future results of the We also tested whether the required CGU profitability
business and assessment of improvement had ever been attained by the relevant
future plans of theJMCH’s CGU historically. We compared the current year actual
operations. results with the figures included in the prior year
forecast to consider whether any forecasts included
Management considers JMCH assumptions that, with hindsight, had been optimistic.
to be a cash generating unit We found the actual results and forecasted figures
(“CGU”) and has calculated the were consistent.
recoverable amount of this CGU
as the higher of anasset’s or We challenged management on the adequacy of their
cash-generatingunit’s fair value sensitivity calculations over the CGU. We determined
less costs of disposal and its that the calculations were most sensitive to
value in use. The value in use is assumptions for revenue growth rates and discount
based on discounted future cash rates. We calculated the degree to which these
flow forecasts over which the assumptions would need to move before an
management make judgements impairment conclusion was triggered. We discussed
on certain key inputs including, the likelihood of such a movement with management
for example, discount rates and and agreed with their conclusion that it was unlikely.
long term growth rates.
2017/SH-082 (Page 4 of 5) Other Information
Management is responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and ourauditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Audit Committee is responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2017/SH-082 (Page 5 of 5) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
 Conclude on the appropriateness ofmanagement’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theGroup’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independentauditor’s report is Ye Jun. PricewaterhouseCoopers Zhong Tian LLP
Shanghai, thePeople’s Republic of China
23 March 2017
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in thousands of RMB unless otherwise stated)
Year ended 31 December Note 2016 2015 Revenue 5 26,633,949 24,527,893 Sales tax (823,494) (788,236) Cost of sales 6 (20,612,723) (18,131,135) Gross profit 5,197,732 5,608,522 Distribution expenses 6 (1,961,535) (1,591,235) Administrative expenses 6 (2,498,485) (2,470,489) Impairment charge of non-current assets (2,795) (3,016) Other income 8 514,415 683,136 Operating profit 1,249,332 2,226,918 Finance income 9 223,517 270,985 Finance expenses 9 (3,882) (2,344) Finance income-net 9 219,635 268,641 Share of profit of investments accounted for using the
equity method 15b 12,624 14,045 Profit before income tax 1,481,591 2,509,604 Income tax expense 10 (163,575) (287,543) Profit for the year 1,318,016 2,222,061 Other comprehensive income:
Item that will not be reclassified subsequently to profit or
loss
- Remeasurements of retirement benefits obligations (1,083) (2,707) - Income tax relating to remeasurements of retirement
benefit obligations 271 677 Other comprehensive income for the year, net of tax (812) (2,030) Total comprehensive income for the year 1,317,204 2,220,031 Profit attributable to:
Shareholders of the Company 1,318,016 2,222,061 Total comprehensive income attributable to:
Shareholders of the Company 1,317,204 2,220,031 Earnings per share for profit attributable to the
shareholders of the Company for the year
(expressed in RMB per share)
- Basic and diluted 11 1.53 2.57 The notes on pages 55 to 107 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
(All amounts in thousands of RMB unless otherwise stated)
As at 31 December Note 2016 2015 Assets
Non-current assets
Property, plant and equipment 12 6,688,530 6,323,546 Lease prepayment 13 632,408 645,608 Intangible assets 14 158,160 41,705 Investments accounted for using the equity method 15b 39,893 40,993 Other non-current assets 97,549 64,487 Deferred income tax assets 16 554,488 473,933 8,171,028 7,590,272 Current assets
Financial assets at fair value through profit or loss 8,539 77 Inventories 17 1,934,092 1,730,930 Trade and other receivables and prepayments 18 2,625,808 2,793,770 Cash and cash equivalents 19 11,666,222 8,848,040 Restricted cash 463 - Assets classified as held for sale 20 87,637 87,637 16,322,761 13,460,454 Total assets 24,493,789 21,050,726
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 31 DECEMBER 2016
(All amounts in thousands of RMB unless otherwise stated)
As at 31 December
Note 2016 2015 Equity and liabilities
Equity attributable to shareholders of the
Company
Share capital 21 863,214 863,214 Share premium 816,609 816,609 Other reserves 22 452,126 452,938 Retained earnings 10,277,287 9,848,381 Total equity 12,409,236 11,981,142 Liabilities
Non-current liabilities
Borrowings 23 4,543 4,678 Deferred income tax liabilities 16 27,383 28,392 Retirement benefit obligations 24 53,627 52,273 Provisions for warranty and other liabilities 25 130,987 104,557 Other non-current liabilities 320 400 216,860 190,300 Current liabilities
Trade and other payables 26 11,605,178 8,708,829 Current income tax liabilities 98,860 50,305 Borrowings 23 454 425 Retirement benefit obligations 24 4,561 4,560 Provisions for warranty and other liabilities 25 153,640 110,165 Other current liabilities 5,000 5,000 11,867,693 8,879,284 Total liabilities 12,084,553 9,069,584 Total equity and liabilities 24,493,789 21,050,726 The notes on pages 55 to 107 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 2016
(All amounts in thousands of RMB unless otherwise stated)
Attributable to shareholders of the Company
Share Share Other Retained Total Note capital premium reserves earnings equity Balance at 1 January 2015 863,214 816,609 454,968 8,463,638 10,598,429 Profit for the year - - - 2,222,061 2,222,061 Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of tax - - (2,030) - (2,030) Dividends relating to 2014 - - - (837,318) (837,318) Balance at 31 December 2015 863,214 816,609 452,938 9,848,381 11,981,142 Balance at 1 January 2016 863,214 816,609 452,938 9,848,381 11,981,142 Profit for the year - - - 1,318,016 1,318,016 Other comprehensive income
- Remeasurements of retirement
benefit obligations, net of tax - - (812) - (812) Dividends relating to 2015 27 - - - (889,110) (889,110) Balance at 31 December 2016 863,214 816,609 452,126 10,277,287 12,409,236 The notes on pages 55 to 107 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in thousands of RMB unless otherwise stated)
Year ended 31 December Note 2016 2015 Cash flows from operating activities
Cash generated from operations 28 4,789,706 2,349,083 Interest paid (393) (340) Income tax paid (196,313) (424,269) Net cash generated from operating activities 4,593,000 1,924,474 Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (1,144,340) (1,542,900) Other cash paid relating to investing activities (1,138) (6,561) Proceeds from disposal of PPE 28 2,765 43,669 Interest received 248,605 291,744 Dividends received 13,724 15,657 Other cash received from investing activities 5,236 1,239 Net cash used in investing activities (875,148) (1,197,152) Cash flows from financing activities
Repayments of borrowings (433) (411) Dividends paid to shareholders of the Company (897,770) (840,961) Other cash paid relating to financing activities (1,467) (1,378) Net cash used in financing activities (899,670) (842,750) Net increase/(decrease) in cash and cash equivalents 2,818,182 (115,428) Cash and cash equivalents at beginning of year 8,848,040 8,963,468 Effects of exchange rate changes - - Cash and cash equivalents at end of year 19 11,666,222 8,848,040 The notes on pages 55 to 107 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in thePeople’s Republic of China (the “PRC”) under the Company Law of the PRC and according to the approval of Hongban (1992) No. 005 of Nangchang Revolution and Authorisation Group ofCompany’s Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was owned by Jiangling Motors Corporation Group (“JMCG”). The legalrepresentative’s operating license of the Company is No. 913600006124469438.
The address of theCompany’s registered office is No.509, Northern Yingbin Avenue, Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”). In addition, the Company issued 25,214,000 A shares as bonus shares to the existing shareholders in 1994. The bonus shares were issued by utilisation of theCompany’s retained earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and the Company issued 170,000,000 additional B shares in 1998.
As at 31 December 2016, 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 23 March 2017.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying theGroup’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimations are significant to the consolidated financial statements are disclosed in Note 4.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
|||
|-|-|
|2|Summary of significant accounting policies (continued)|
|2.1|Basis of preparation (continued)|

2.1.1 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the group
Standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2016 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 2016, 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|

||
|-|
|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.|

JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
2.1.1 Changes in accounting policy and disclosures (continued)
(b) New standards and interpretations not yet adopted (continued)
||
|-|
|IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and|
|establishes principles for reporting useful information to users of financial statements|
|about the nature, amount, timing and uncertainty of revenue and cash flows arising from|
|an entity’s contracts with customers. Revenue is recognised when a customer obtains|
|control of a good or service and thus has the ability to direct the use and obtain the|
|benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11|
|'Construction contracts' and related interpretations. The standard is effective for annual|
|periods beginning on or after 1 January 2018 and earlier application is permitted. The|
|Group is assessing the impact of IFRS 15.|

||
|-|
|IFRS 16, 'Leases' will result in almost all leases being recognised on the balance sheet,|
|as the distinction between operating and finance leases is removed. Under the new|
|standard, an asset (the right to use the leased item) and a financial liability to pay rentals|
|are recognised. The only exceptions are short-term and low-value leases. The|
|accounting for lessors will not significantly change.|

||
|-|
|The new standard is mandatory for financial years commencing on or after 1 January|
|2019. At this stage, the Group does not intend to adopt the standard before its effective|
|date.|

There are no other 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.
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of theinvestee’s net assets including goodwill.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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.
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 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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‘other income/(expense)-net’.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale, are included in other comprehensive income.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the items.
Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings 35-40 years Plant and machinery 10-15 years Motor vehicles 6-10 years Moulds 5 years Electronic and other equipment 5-7 years Theassets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Anasset’s carrying amount is written down immediately to its recoverable amount if theasset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within‘other income/(expense) -net’ in profit or loss.
Assets under construction represent buildings under construction and plant and equipment pending installation, and are stated at cost. Costs include construction and acquisition costs. No provision for depreciation is made on assets under construction until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is expensed in profit or loss on a straight-line basis over the period of the lease or when there is impairment, the impairment is expensed in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets
(1) Goodwill
Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(2) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(e) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably measured.
The development cost of an internally generated intangible asset is the sum of the expenditure incurred from the date the asset meets the recognition criteria above to the date when it is available for use. The development costs capitalized in connection with the intangible asset include costs of materials and services used or consumed and employee costs incurred in the creation of the asset.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 5 years.
(4) Non-patent technology
Non-patent technology is capitalised from the development cost. These costs are amortised over their estimated useful lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.10 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The non-current assets (except for certain assets as explained below), are stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets and financial assets (other than investments in subsidiaries and associates), which are classified as held for sale, would continue to be measured in accordance with the policies set out elsewhere in Note 2.
2.11 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(1) Classification (continued)
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date-the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the‘financial assets at fair value through profit orloss’ category are presented in profit or loss within‘other income/(expense)-net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for- sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as‘gains and losses from investmentsecurities’.
Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends on available-for-sale equity instruments are recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Financial liabilities at fair value through profit or loss and offsetting financial instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this category if incurred principally for the purpose of selling in the short term. A financial liability initially recognised at fair value, and transaction costs are expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in this category are classified as current liabilities if expected to be settled within 12 months; otherwise, they are classified as non-current. A financial liability is derecognised when it is extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.13 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a‘lossevent’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financialasset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of aninstrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in thedebtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.13 Impairment of financial assets (continued)
(2) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.
For debt securities, if any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is reclassified from equity and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.
For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss– measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is reclassified from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average 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 expenses.
2.15 Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. See Note 2.11(2) for further information about theGroup’s accounting for trade receivables and Note 2.13 for a description of theGroup’s impairment policies.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases theCompany’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to theCompany’s shareholders.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.20 Borrowing costs (continued)
Borrowing costs include interest expense, finance charges in respect of finance lease and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. The exchange gains and losses that are an adjustment to interest costs include the interest rate differential between borrowing costs that would be incurred if the entity had borrowed funds in its functional currency, and the borrowing costs actually incurred on foreign currency borrowings. Such amounts are estimated based on interest rates on similar borrowings in theentity’s functional currency.
When the construction of the qualifying assets takes more than one accounting period, the amount of foreign exchange differences eligible for capitalisation is determined for each annual period and are limited to the difference between the hypothetical interest amount for the functional currency borrowings and the actual interest incurred for foreign currency borrowings. Foreign exchange differences that did not meet the criteria for capitalisation in previous years should not be capitalised in subsequent years.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax
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 and associate only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.21 Current and deferred income tax (continued)
(3) Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.22 Employee benefits
(1) Pension obligations
The Group contributes on a monthly basis to a defined contribution retirement scheme managed by the PRC government. The contribution to the scheme is charged to profit or loss as and when incurred. TheGroup’s obligations are determined at a certain percentage of the salaries of the employees.
In addition, the Group provides supplementary pension subsidies to certain qualified employees. Such supplementary pension subsidies are considered as under defined benefit plans. The liability recognised in the statement of financial position in respect of these defined benefit plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for recognised actuarial gains or losses and past service cost. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows according to the terms of the related pension liability.
The current service cost of the defined benefit plan, recognised in profit or loss in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit obligation results from employee service in the current year, benefit changes, curtailments and settlements.
Past-service costs are recognised immediately in profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
(2) Housing fund and other benefits
TheGroup’s full-time employees are entitled to participate in a state-sponsored housing fund. The fund can be used by the employees for the purchase of apartment accommodation, or may be withdrawn upon their retirement. The Group is required to make annual contributions to the state-sponsored housing fund equivalent to a certain percentage of theemployees’ salaries.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.22 Employee benefits (continued)
(3) Bonus entitlement
The expected cost of bonus payments is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made. Liabilities for bonus are expected to be settled within twelve months and are measured at the amounts expected to be paid when they are settled.
2.23 Provisions
Provisions, mainly warranty costs, are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
2.24 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of 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.
(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.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.25 Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables are recognised using the original effective interest rate.
2.26 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
2.27 Dividend distribution
Dividend distribution to theCompany’s shareholders is recognised as a liability in theGroup’s financial statements in the period in which the dividends are approved by theCompany’s shareholders, where appropriate.
2.28 Government grants
Government grants refer to the monetary or non-monetary assets obtained by the Group from the government, including tax return, financial subsidy and etc.
Government grants are recognised when the grants can be received and the Group can comply with all attached conditions. If a government grant is a monetary asset, it will be measured at the amount received or receivable. If a government grant is a non-monetary asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be measured at its nominal amount.
Government grants related to assets refer to government grants which are obtained by the Group for the purposes of purchase, construction or acquisition of the long-term assets. Government grants related to income refer to the government grants other than those related to assets.
Government grants related to assets will be recorded as deferred income and recognised evenly in profit or loss over the useful lives of the related assets. However, the government grants measured at their nominal amounts will be directly recorded in profit and loss for the current period.
Government grants related to income will be recorded as deferred income and recognised in profit or loss in the period in which the related expenses are recognised if the grants are intended to compensate for future expenses or losses, and otherwise recognised in profit or loss for the current period if the grants are used to compensate for expenses or losses that have been incurred.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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”) and Euro.
Management has set up a policy to require the Group to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not theCompany’s functional currency.
As at 31 December 2016, 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 RMB35,091,000 (2015: RMB23,276,000) higher/lower.
As at 31 December 2016, if RMB had strengthened/weakened by10% against Euro with all other variable held constant, theGroup’s net profit for the year then ended would have been approximately RMB5,269,000 (2015: RMB1,412,000) 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 2016, a large portion of its bank deposits and all of its borrowings were at fixed rate. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.
As at 31 December 2016, 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 RMB17,570,000 (2015: RMB20,259,000).
(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 2016, the Group had cash of approximately RMB874,990,000 (2015: RMB372,320,000) deposited in Jiangling Motor Group Finance Company (“JMCF”), which is a non-bank financial institution and a subsidiary of JMCG (Note 19). TheGroup’s other bank deposits are mainly deposited in state-owned banks or other listed banks. Management
believes all these financial institutions have high credit quality without significant credit risk.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(2) Credit risk (continued)
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 23) at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
The table below analyses theGroup’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 Between 1 Between 2 Over 5 year and 2 years and 5 years years At 31 December 2016
Bank borrowings
- Principals 454 454 1,363 2,726 - Interests 73 66 158 133 Trade and other payables 11,053,248 - - - 11,053,775 520 1,521 2,859 At 31 December 2015
Bank borrowings
- Principals 425 425 1,276 2,977 - Interests 75 69 167 167 Trade and other payables 8,206,159 - - - 8,206,659 494 1,443 3,144
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
3 Financial risk management (continued)
3.2 Capital risk management
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 2016 and 2015 were as follows:
31 December 2016 31 December 2015 Total borrowings 4,997 5,103 Total equity 12,409,236 11,981,142 Total capital 12,414,233 11,986,245 Gearing ratio 0.04% 0.04% 3.3 Fair value estimation
The inputs to valuation techniques used to measure fair value are categorised into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Financial assets at fair value through profit or loss are forward exchange contracts which are not traded in an active market. The fair value is determined by using valuation techniques which maximised the use of observable market data where it is available and rely as little as possible on entity specific estimates. Since all significant inputs required to value forward exchange contracts are observable, the forward exchange contracts are classified as level 2. The carrying amounts of theGroup’s financial assets including cash and cash equivalents, trade and other receivables and financial liabilities including trade and other payables, borrowing, approximate their fair values due to their short maturities. The book values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
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) Impairment of long term assets
The Group assesses whether there are indicators that the long term assets except for financial assets are impaired at each balance sheet date. When there are indicators that the carrying amounts of those long term assets are unrecoverable, an impairment test will be performed. When the carrying amount of the long term assets except for financial assets or the cash generating unit (“CGU”) is higher than its recoverable amount, which is the higher of anasset’s orCGU’s fair value less costs of disposal and its value in use, the impairment occurred.
To determine the fair value less costs of disposal, the Group take reference to the prices in sales agreements in relevant asset transactions or the observable market prices, and the incremental cost which could directly attributable to the assets disposal.
Key judgements are made on the outputs, sales prices, relevant operation costs and discount rates when estimate the discounted future cash flow forecasts. The Group uses relevant accessible information, including the assets outputs, sales prices, relevant operation costs which are based on the reasonable and supportable assumptions, to estimate the recoverable amount of those long term assets.
(2) Taxation
The Group is subject to various taxes in the PRC, including corporate income tax, value added tax and consumption tax. Significant judgment is required in determining the provision for these taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from amounts that were initial recorded, such differences will impact the tax provisions in the period 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 2016, the Group recorded the deferred tax assets of approximately RMB554,488,000. To the extent that it is probable that taxable profit will be available against which the deductible temporary differences will be utilised, deferred tax assets are recognised mainly for temporary differences arising from accrued expenses and retirement benefit obligations.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
4 Critical accounting estimates and judgements(continued)
(3) Provisions
The Group provides warranties on automobile and undertakes to repair or replace items that fail to perform satisfactorily based on certain pre-determined conditions. Management estimates the related warranty claims based on historical warranty claim information including level of repairs and returns as well as recent trends that might suggest that past cost information may differ from future claims.
Factors that could impact the estimated claim information include the success of theGroup’s productivity and quality controls, as well as parts and labour costs. Any increase or decrease in the provision would affect profit or loss in future years.
(4) Impairment of inventory
Inventories shall be measured at the lower of cost and the net realisable value. The net realisable value is estimated sales price less estimated cost to finish goods, estimated distribution expenses and related taxes in the daily operation.
If management revises estimated sales price, estimated cost to finish goods, distribution expenses and related taxes, and revised sales price is lower than current sales price, or revised cost to finish goods, distribution expenses and related taxes are higher than those current estimation, the Group need to consider increasing the impairment provision to the inventories.
If the actual sales price, the cost to finish goods, distribution expenses and related taxes are higher or lower than the estimation of management, the Group will recognise the relevant influence in profit or loss relevant accounting period.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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
2016 2015 Changes in inventories of finished goods and
work in progress (73,156) 169,844 Raw materials and consumables used 18,390,006 16,116,227 Employee benefit expense (Note 7) 1,874,861 1,678,080 Depreciation of PPE (Note 12, 28) 684,383 554,197 Repairs and maintenance expenditure on PPE 153,193 147,528 Research and development expenditure 1,812,726 1,830,993 Amortisation of lease prepayment (Note 13, 28) 15,594 15,733 Amortisation of intangible assets (Note 14, 28) 10,057 7,301 Provision of warranty 261,430 168,141 Others 1,907,004 1,478,741 Total cost of sales, distribution expenses and
administrative expenses 25,036,098 22,166,785 For the year ended 31 December 2016, depreciation of PPE of approximately RMB45,344,000 (2015: RMB36,374,000) and amortisation of intangible assets of approximately RMB10,465,000 (2015: RMB2,586,000) were included in research and development expenditure.
Impairment charge for trade and other receivables of approximately RMB8,952,000 (2015: RMB3,882,000) and impairment charge for inventories of approximately RMB27,693,000 (2015: RMB22,192,000), which were included in administrative expenses, were not included in expenses by nature.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
2016 2015 Wages and salaries 1,330,140 1,182,279 Social security costs 175,862 167,711 Pension costs defined contribution plans 220,736 209,339 Pension costs defined benefit plans (Note 24) 5,026 3,616 Others 143,097 115,135 1,874,861 1,678,080 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
2016 2015 Government grants (a) 517,797 709,071 Others (3,382) (25,935) 514,415 683,136 (a) In 2016, the Group received grants of approximately RMB517,797,000, 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 and Technological Development District Administrative Commission of Taiyuan. These government grants were income related to support theGroup’s operation and were charged to profit or loss directly up received.
9 Finance income and expenses
2016 2015 (a) Finance income
Interest income on bank deposits 209,023 239,965 Interest income on credit sales 14,494 31,020 223,517 270,985 (b) Finance expenses
Interest expense on bank loans (175) (417) Bank charges and others (3,707) (1,927) (3,882) (2,344) Net finance income 219,635 268,641
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of 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 2015, the Company is entitled to a preferential CIT rate of15% from 2015 to 2017 (2015:15%). The CIT rates of JMC Heavy Duty Vehicle Co., Ltd. (“JMCH”) and Jiangling Motor Sales Co, Ltd. (“JMCS”), the subsidiaries of the Company, are25%.
The amounts of income tax expense charged to profit or loss represented:
2016 2015 Current tax 244,868 321,135 Deferred tax (Note 16) (81,293) (33,592) 163,575 287,543 The tax on theGroup’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
2016 2015 Profit before tax 1,481,591 2,509,604 Tax calculated at tax rates applicable to profits in
the respective companies 220,400 376,423 Tax concessions (105) (160) Expenses not deductible for tax purposes 665 728 Income not subject to tax (85,519) (112,651) Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 11,242 9 9 9 Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised (14,614) - Temporary differences for which no deferred
income tax asset was recognised - 3,960 Tax losses for which no deferred income tax
asset was recognised 31,506 18,244 Tax charge 163,575 287,543
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(a) Corporate income tax (continued)
The tax credit relating to other comprehensive income is as follows:
2016 2015
Before Tax After Before Tax After tax credit tax tax credit tax Actuarial loss on retirement
benefit obligations (1,083) 271 (812) (2 ,707) 677 (2,030) Other comprehensive income (1,083) 271 (812) (2 ,707) 677 (2,030) Current tax - -
Deferred tax (Note 16) 271 677
271 677
(b) Value-added tax (“VAT”)
Output VAT is levied at a general rate of17% on the selling price of goods. Pursuant to the “Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax” (Cai Shui[2016] 36) jointly issued by the Ministry of Finance and the State Administration of Taxation, the rental income and interest income are subject to VAT from 1 May 2016, and the applicable tax rates are11% and6% respectively, while the business taxes were5% before then.
(c) Consumption Tax (“CT”)
TheGroup’s automobile sale is subject to CT at3%,5% or9% on the selling price of goods. 11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
2016 2015 Profit attributable to shareholders of the
Company 1,318,016 2,222,061 Weighted average number of ordinary shares in
issue(‘000) 863,214 863,214 Basic earnings per share (RMB) 1.53 2.57 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 2016.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment
Plant and Motor Electronic and Assets under
Buildings Machinery Vehicles Moulds other equipment constructions Total At 1 January 2015
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 Year ended 31 December 2015
Opening net book amount 1,489,506 1,543,671 105,160 277,151 1,038,758 1,282,162 5,736,408 Additions - - - - - 1,457,199 1,457,199 Transfers 114,352 261,449 34,729 193,583 399,568 (1,003,681) - Disposals (4,255) (1,612) (1,216) - (2,150) - (9,233) Classified as held for sale (78,870) - - - - - (78,870) Other deductions - (86,845) - - (2,628) (98,898) (188,371) Impairment charge (Note 28) - (1,719) (316) - (981) - (3,016) Depreciation charge (Note 6, 28) (46,204) (179,076) (25,116) (106,987) (233,188) - (590,571) Closing net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546 At 31 December 2015
Cost 1,802,523 3,193,284 219,587 1,591,116 2,384,260 1,637,474 10,828,244 Accumulated depreciation and impairment (327,994) (1,657,416) (106,346) (1,227,369) (1,184,881) (692) (4,504,698) Net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546 Year ended 31 December 2016
Opening net book amount 1,474,529 1,535,868 113,241 363,747 1,199,379 1,636,782 6,323,546 Additions - - - - - 1,138,940 1,138,940 Tra nsfers 63,567 422,097 55,408 621,285 498,413 (1,660,770) - Disposals (100) (774) (3,182) (736) (178) - (4,970) Other deductions - (18,969) - - (2,712) (14,784) (36,465) Impairment charge (Note 28) - (1,717) (50)
-
(1,027) - (2,794) Depreciation charge (Note 6, 28) (45,595) (198,266) (26,648) (177,019) (282,199) - (729,727) Closing net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530 At 31 December 2016
Cost 1,865,850 3,526,187 262,667 2,206,895 2,862,436 1,100,860 11,824,895 Accumulated depreciation and impairment (373,449) (1,787,948) (123,898) (1,399,618) (1,450,760) (692) (5,136,365) Net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the year ended 31 December 2016, depreciation expense of approximately RMB620,518,000 (2015: RMB506,108,000) was charged in cost of sales, RMB2,865,000 (2015: RMB2,284,000) in distribution expenses and RMB106,344,000 (2015: RMB82,179,000) in administrative expenses.
Lease rental expenses amounting to approximately RMB8,892,000 (2015: RMB8,809,000) 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 2016 31 December 2015 Opening net book amount 645,608 590,629 Additions 2,394 79,479 Classified as held for sale - (8,767) Amortisation charge (Note 6, 28) (15,594) (15,733) Closing net book amount 632,408 645,608 Cost 751,626 749,232 Accumulated amortisation (119,218) (103,624) Net book amount 632,408 645,608 Amortisation expense was charged in administrative expenses.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets
Non-patent After-sale
technology Software Goodwill management model Other Total Year ended 31 December 2015
Opening net book amount - 28,682 3,462 - 29 32,173 Addi tion - 19,419 - - - 19,419 Amortisation charge (Note 6, 28) - (9,876) - - (11) (9,887) Closing net book amount - 38,225 3,462 - 18 41,705 At 31 December 2015
Cost - 85,627 89,028 36,978 1,649 213,282 Accumulated amortisation and impairment - (47,402) (85,566) (36,978) (1,631) (171,577) Net book amount - 38,225 3,462 - 18 41,705 Year ended 31 December 2016
Opening net book amount - 38,225 3,462 - 18 41,705 Addition 124,587 12,390 - - - 136,977 Amortisation charge (Note 6, 28) (8,694) (11,818) - - (10) (20,522) Closing net book amount 115,893 38,797 3,462 - 8 158,160 At 31 December 2016
Cost 124,587 98,017 89,028 36,978 1,649 350,259 Accumulated amortisation and impairment (8,694) (59,220) (85,566) (36,978) (1,641) (192,099) Net book amount 115,893 38,797 3,462 - 8 158,160
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(a) For the year ended 31 December 2016, amortisation expense of approximately RMB20,027,000 (2015: RMB9,685,000) was charged in administrative expenses, approximately RMB297,000 (2015: RMB194,000) in cost of sales and approximately RMB198,000 (2015: RMB8,000) in distribution expenses.
(b) Development costs of approximately RMB124,587,000 were capitalised as non-patent technology by the Group in 2016 (2015: Nil).
(c) Impairment test for goodwill
Goodwill arises on the acquisition of a subsidiary, and is monitored by the management at the cash generating unit level. The goodwill is allocated to the following CGU:
31 December 2015 Addition Impairment 31 December 2016 JMCH 3,462 - - 3,462 The recoverable amount of the CGU is determined based on value in use calculations. These calculations use after-tax cash flow projections based on financial budgets approved by management covering a nine-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the heavy duty vehicle business in which the CGU operates.
The key assumptions used for value in use calculations in 2016 were as follows:
Item JMCH Compound annual volume growth rate 283% Long term growth rate 3% Discount rate 19.40% The key assumptions used for value in use calculations in 2015 were as follows:
Item JMCH Compound annual volume growth rate 404% Long term growth rate 3% Discount rate 19.40% The long term growth rates used are consistent with the forecasts included in industry reports. The discount rates used are after-tax and reflect specific risks relating to the relevant operating subsidiary.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
15a Subsidiaries
As at the date of this report, the Group has the following subsidiaries:
Place and date Percentage of
Entity of incorporation equity interest held Principal activities JMCH Taiyuan, PRC / 100% Manufacture and sale of 8 January 2013 automobiles and spare parts JMCS Nanchang, PRC / 100% Sale of automobiles and 11 October 2013 spare parts 15b Investments accounted for using the equity method
(a) Summarised financial information for immaterial associate
The amount recognised in the consolidated statement of financial position was as follow: 31 December 2016 31 December 2015 Associate 39,893 40,993 The amount recognised in the consolidated statement of comprehensive income was as follow: 2016 2015 Share of profit 12,624 14,045 The Company holds19.15% interest of Hanon Systems (Nanchang) Co., Ltd. (Hanon Systems) and the investment is accounted for using the equity method of accounting.
(b) Reconciliation of summarised financial information for immaterial associates
2016 2015 At beginning of the year 214,061 140,719 Profit for the year 65,920 73,342 Dividends distributed (71,664) - At end of the year 208,317 214,061 Interest in associate 19.15% 19.15% Carrying value 39,893 40,993
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax
31 December 2016 31 December 2015 Deferred tax assets 590,899 480,109 Deferred tax liabilities-can be offset (36,411) (6,176) Deferred tax liabilities-cannot be offset (27,383) (28,392) Deferred tax assets-net 554,488 473,933 Deferred tax liabilities-net (27,383) (28,392) The gross movement on the deferred income tax account is as follows:
31 December 2016 31 December 2015 At beginning of the year 445,541 411,272 Credited to profit or loss (Note 10(a)) 81,293 33,592 Credited to other comprehensive income
(Note 10(a)) 271 677 At end of the year 527,105 445,541 The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Amortization
Provision for Retirement of
impairment of benefits Accrued nonpatented
Deferred tax assets assets obligation expenses technology Others Total At 1 January 2015 5,329 12,442 381,437 - 43,200 442,408 Credited/(charged) to
profit or loss 878 220 78,607 - (42,681) 37,024 Credited to other
comprehensive income - 677 - - - 677 At 31 December 2015 6,207 13,339 460,044 - 519 480,109 Credited to profit or loss 1,379 484 107,442 1,087 127 110,519 Credited to other
comprehensive income - 271 - - - 271 At 31 December 2016 7,586 14,094 567,486 1,087 646 590,899 Amortisation Forward
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total At 1 January 2015 (1,678) - (29,458) - (31,136) (Charged)/credited to profit or
loss (1,082) (3,404) 1,066 (12) (3,432) At 31 December 2015 (2,760) (3,404) (28,392) (12) (34,568) (Charged)/credited to profit or
loss (1,936) (27,030) 1,009 (1,269) (29,226) At 31 December 2016 (4,696) (30,434) (27,383) (1,281) (63,794)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax (continued)
||||
|-|-|-|
|The analysis of deferred tax assets and deferred tax liabilities is as follows:|||
||31 December 2016|31 December 2015|
|Deferred tax assets:|||
|–Deferred tax asset to be recovered after|||
|more than 12 months|14,493|12,653|
|–Deferred tax asset to be recovered|||
|within 12 months|576,406|467,456|
||590,899|480,109|

 31 December 2016 31 December 2015 Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (60,365) (32,787)–Deferred tax liabilities to be recovered
within 12 months (3,429) (1,781) (63,794) (34,568) Deductible temporary differences and tax losses which no deferred income tax assets were recognised were as follows:
31 December 2016 31 December 2015 Deductible temporary differences 40,182 98,638 Tax losses
369,032 243,515 409,214 342,153 The expiry years of the tax losses are as follows:
31 December 2016 31 December 2015 2017 89,447 89,447 2018 44,319 44,319 2019 36,772 36,773 2020 72,470 72,976 2021 126,024 - 369,032 243,515
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Inventories
31 December 2016 31 December 2015 Raw materials 1,300,443 1,170,043 Work in progress 193,152 144,654 Finished goods 440,497 416,233 1,934,092 1,730,930 For the year ended 31 December 2016, the cost of inventories recognised as expenses and included in cost of sales amounted to approximately RMB18,316,850,000 (2015: RMB16,286,071,000).
A provision of approximately RMB26,491,000 (2015: RMB47,637,000) was made as at 31 December 2016. The Group reversed approximately RMB5,369,000 of a previous inventory write-down in 2016. In 2016, the Group wrote-off inventories with provision of approximately RMB48,839,000 made in prior years. The provision and reversal of the inventory write-down have been included in administrative expenses in profit or loss.
As at 31 December 2016, no inventory was pledged as security for liabilities.
18 Trade and other receivables and prepayments
31 December 2016 31 December 2015 Trade receivables 1,188,088 1,463,736 Less: Provision for impairment of trade
receivables (15,940) (7,319) Trade receivables– net 1,172,148 1,456,417 Notes receivables 498,875 709,630 Other receivables 86,581 58,427 Less: Provision for impairment of other
receivables (433) (292) Other receivables– net 86,148 58,135 Prepayments 796,833 476,952 Interest receivables 71,804 92,636 2,625,808 2,793,770 Refer to Note 31 for details of receivables from related parties. The carrying amounts of theGroup’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables and prepayments approximate their fair values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
31 December 2016 31 December 2015 At beginning of the year (7,611) (7,638) Provision for receivables impairment
(Note 28) (8,952) (3,882) Receivables written off during the year as
uncollectible 190 3,909 At end of the year (16,373) (7,611) The creation of provision for impaired receivables was included in‘administrativeexpense’ in profit or loss.
As at 31 December 2016, trade receivables of approximately RMB71,342,000 (2015: RMB59,095,000) 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 2016 31 December 2015 Up to 3 months 2,976 34,327 3 months to 6 months 25,787 7,404 Over 6 months 42,579 17,364 71,342 59,095 The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Cash and cash equivalents
31 December 2016 31 December 2015 Cash at bank and in hand 790,373 606,040 Short-term bank deposits (a) 10,875,849 8,242,000 11,666,222 8,848,040 As at 31 December 2016, the Group had cash of approximately RMB874,990,000 (2015: RMB372,320,000) deposited in JMCF (Note 31 (j)). The interest rates range from1.495%-2.25% per annum (2015:0.455% to3%). JMCF, a non-bank financial institution, is a subsidiary of JMCG.
(a) Short-term bank deposits can be withdrawn at the discretion of the Group without any restriction.
20 Assets classified as held for sale
31 December 2016 31 December 2015 Lease prepayment and buildings of
Transit plant 87,637 87,637 As at 26 March 2015, under the authorisation from the Board of Directors, the Company signed an agreement of “state-owned land reserves” with Nanchang Land Reserve Centre (the “agreement”). According to the agreement, the Company will sell its land use right and buildings of Transit plant, with a consideration of RMB135,000,000 to Nanchang Land Reserve Centre. The transaction is expected to be completed within the year of 2017.
As those aforementioned assets met the criteria of assets classified as held for sale, they were reclassified as current assets and presented separately in the consolidated statement of financial position.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
21 Share capital
Number of
Tradable shares Total shares “A” shares “B” shares
(thousands) Restricted Non-restricted
Year ended 31 December 2015
Balance at 1 January 2015 863,214 1,822 517,392 344,000 863,214 Transfer - (96) 96 - - Balance at 31 December 2015 863,214 1,726 517,488 344,000 863,214 Year ended 31 December 2016
Balance at 1 January 2016 863,214 1,726 517,488 344,000 863,214 Transfer - - - - - Balance at 31 December 2016 863,214 1,726 517,488 344,000 863,214 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, 1,726,000 shares were still restricted as at 31 December 2016.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
22 Other reserves
Statutory
surplus reserve
fund (a) Reserve fund Others Total At 1 January 2015 431,607 18,627 4,734 454,968 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (2,030) (2,030) At 31 December 2015 431,607 18,627 2,704 452,938 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - (812) (812) At 31 December 2016 431,607 18,627 1,892 452,126 (a) In accordance with the relevant laws and regulations in the PRC and Articles of Association of the Company, it is required to appropriate10% of its annual net profit, after offsetting any prioryears’ losses as determined under the Accounting Standards for Business Enterprises in the PRC, to the statutory surplus reserve fund before distributing the net profit. When the balance of the statutory surplus reserve fund reaches50% of theCompany’s share capital, any further appropriation is at the discretion of shareholders. The statutory surplus reserve fund can be used to offset prioryears’ losses, if any, and may be converted into share capital by issuing new shares to shareholders in proportion to their existing shareholding or by increasing the par value of the shares currently held by them. The fund is non-distributable except for liquidation. As the balance of the statutory surplus reserve fund has reached50% of theCompany’s share capital, no further appropriations to the statutory surplus reserve fund were provided for the years ended 31 December 2015 and 2016.
23 Borrowings
31 December 2016 31 December 2015 Current
Bank borrowings - guaranteed (a) 454 425 Non-current
Bank borrowings - guaranteed (a) 4,543 4,678 Total borrowings 4,997 5,103 (a) Bank borrowings of USD720,000 (equivalent to approximately RMB4,997,000) (2015: USD786,000 equivalent to approximately RMB5,103,000) were guaranteed by JMCF (Note 31 (c)).
The interest rate of bank borrowings is1.50% per annum (2015:1.50%).
The fair value of borrowings approximates their carrying values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
31 December 2016 31 December 2015 Between 1 and 2 years 454 425 Between 2 and 5 years 1,363 1,276 Over 5 years 2,726 2,977 4,543 4,678 The Group has the following undrawn borrowing facilities:
31 December 2016 31 December 2015 Fixed rate
- Expiring within one year 1,390,868 2,214,032 24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement of financial position is as follows:
31 December 2016 31 December 2015 Present value of defined benefits obligations 58,188 56,833 The movement of early retirement and supplemental benefit obligations for the year ended 31 December 2016 is as follows:
31 December2016 31 December2015 At beginning of the year 56,833 55,726 For the year
-Current service cost 1,325 1,625 -Interest cost 1,633 1,991 -Payment (4,754) (5,216) -Past service cost from the change of plan 1,486 - -Actuarial loss 1,665 2,707 At end of the year 58,188 56,833 Current 4,561 4,560 Non-current 53,627 52,273 58,188 56,833 The material actuarial assumptions used in valuing these obligations are as follows:
(1) Discount rate adopted:3.50% (2015:3.00%)
(2) The salary and supplemental benefits inflation rate of retiree, early-retiree and employee at post:0% to6% (2015:0% to5% )
(3) Mortality: average life expectancy of residents in the PRC
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
Based on the assessment and IAS 19, the Group estimated that, at 31 December 2016, a provision of approximately RMB58,188,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of approximately RMB58,188,000 is the present value of the unfunded obligations, of which the current portion amounting to approximately RMB4,561,000 (2015: RMB4,560,000) 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 by5.2%/5.8% Inflation rate Increase/decrease by0.5% Increase/decrease by2.0%/1.7% Rate of mortality Increase/decrease by 1 year Decrease/increase by0.1%/0.4% For the year ended 31 December 2016, approximately RMB5,026,000 (2015: RMB3,616,000) were charged in‘administrativeexpenses’ and approximately RMB1,083,000 (2015: RMB2,707,000) were charged in other comprehensive income.
25 Provisions for warranty and other liabilities
The movement on the warranty provisions and other liabilities is as follows:
31 December 2016 31 December 2015 At beginning of the year 214,722 226,503 Charged for the year (Note 6) 261,430 168,141 Utilised during the year (191,525) (179,922) At end of the year 284,627 214,722 Analysis of total provisions:
31 December 2016 31 December 2015 Non-current 130,987 104,557 Current 153,640 110,165 284,627 214,722 The above represents the warranty costs for repairs and maintenance, which are estimated based on present after-sale service policies and prioryears’ experience on the occurrence of such cost.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
31 December 2016 31 December 2015 Trade payables 7,731,169 5,600,317 Payroll and welfare payable 289,283 278,396 Dividend payables 5,840 11,646 Other payables 3,578,886 2,818,470 11,605,178 8,708,829 For details of amount due to related parties, please refer to Note 31.
27 Dividends
A final dividend for 2015 of RMB889,110,000 (RMB1.03 per share) was paid in 2016.
A final dividend for 2016 of RMB 0.61 per share, amounting to a total dividend of approximately RMB526,560,000 was proposed at the Board ofDirectors’ Meeting on 23 March 2017, 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
2016 2015 Profit before tax 1,481,591 2,509,604 Depreciation of PPE (Note 6, 12) 729,727 590,571 Amortisation of lease prepayment (Note 6, 13) 15,594 15,733 Amortisation of intangible assets (Note 6, 14) 20,522 9,887 Impairment charges of PPE (Note 12) 2,794 3,016 Provision for receivables impairment (Note 18) 8,952 3,882 Provision of inventories (Note 17) 27,693 22,192 Loss on disposals of PPE 2,550 6,268 Finance expenses (Note 9) 3,325 1,795 Finance income (Note 9) (223,517) (270,985) Net foreign exchange transaction loss 24,707 21,326 Share of profit from investment accounted for using
equity method (Note 15b) (12,624) (14,045) Investment (gain)/loss of forward exchange contracts (4,098) 5,322 Changes on fair value of forward exchange contracts (8,462) (2,088) Changes in working capital:
- Decrease in restricted cash - 6,810 - Increase in inventories (260,023) (133,843) - Decrease/(increase) in trade and other receivables 90,460 (855,314) - Increase/(decrease) in provisions for warranty 69,905 (11,781) - Increase in trade and other payables 2,820,338 442,333 - Increase/(decrease) in pensions and other
retirement benefits 272 (1,600) Cash generated from operations 4,789,706 2,349,083
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Year ended 31 December 2016 2015 Net book amount 4,970 9,233 Loss on disposal of PPE (2,550) (6,268) Offset with trade and other payables 345 40,704 Proceeds from disposal of PPE 2,765 43,669 29 Contingencies
At 31 December 2016, 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 2016 31 December 2015 Contracted but not provided for:
Purchases of buildings, plant and machinery 572,773 1,033,458 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 2016. The shareholders of JMH are Chongqing Changan Automobile Corporation Ltd. and JMCG, and both of them hold50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its associates, JMCG and its subsidiaries, JMH and its subsidiaries and joint venture, Ford and its subsidiaries and joint venture in the ordinary course of business during the year ended 31 December 2016.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the year ended 31 December 2016, related parties, other than the subsidiary, and their relationship with the Group are as follows:
Name of related party Relationship JMCG Shareholder of JMH Nanchang JMCG Skyman Auto Component Co.,Ltd. Subsidiary of JMH 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 Otomotiv Sanayi A.S. Subsidiary of Ford Auto Alliance (Thailand) Co.,Ltd. Subsidiary of Ford Ford Vietnam 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 Nanchang Gear Co.,Ltd. Subsidiary of JMCG Jiangxi Jiangling Material Utilization Co.,Ltd. Subsidiary of JMCG Jiangling Material Co. Subsidiary of JMCG Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. Subsidiary of JMCG JMCF Subsidiary of JMCG Jiangxi ISUZU Engine Co.,Ltd. Subsidiary of JMCG Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. Subsidiary of JMCG Jiangxi Jiangling Chassis Co.,Ltd. Subsidiary of JMCG Nanchang JMCG Liancheng Auto Component Co.,Ltd. Subsidiary of JMCG JMCG Jingma Motors Co., Ltd. Subsidiary of JMCG Jiangxi Jiangling Lear Interior System Co.,Ltd. Joint venture 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 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 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 Hengou Industry Co., Ltd. Associate of JMCG Nanchang JMCG Car Frame Co., Ltd. Subsidiary of JMCG Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. Subsidiary of JMCG Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd Subsidiary of JMCG Jiangxi Jiangling Real Estate Co., Ltd. Subsidiary of JMCG Jiangxi ISUZU Co., Ltd. Subsidiary of JMCG Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Associate of JMCG Nanchang Yinlun Heat-exchanger Co.,Ltd. Associate of JMCG JMCG Hequn Costume Co.,Ltd. Associate of JMCG Jiangling Aowei Aotomobile Spare Part Co.,Ltd. Associate of JMCG Nanchang JMCG Printing Plant Co.,Ltd. Associate of JMCG GETRAG (Jiangxi) Transmission Company Associate of JMCG
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
Name of related party Relationship Nanchang Baojiang Steel Processing Distribution Co.,Ltd. Associate of JMCG Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. Associate of JMCG Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Associate of JMCG Jiangxi Specialty Vehicles Jiangling Motors Group Co.,Ltd. Associate of JMCG Ford Motor Company of Australia Limited Subsidiary of Ford Changan Ford Automobile Co.,Ltd. Joint venture of Ford
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Purchase of goods 2016 2015 Jiangxi Jiangling Chassis Co.,Ltd. 805,642 753,418 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 700,309 478,819 Nanchang Baojiang Steel Processing Distribution Co.,Ltd. 690,097 601,711 GETRAG (Jiangxi) Transmission Company 656,595 643,244 Jiangxi Jiangling Lear Interior System Co.,Ltd. 569,823 470,855 Ford 523,858 728,225 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 390,959 282,451 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 329,198 298,493 Hanon Systems 233,974 248,735 Nanchang Unistar Electric& Electronics Co.,Ltd. 216,295 213,572 Changan Ford Automobile Co.,Ltd. 208,819 9,795 Jiangxi Specialty Vehicles Jiangling Motors Group Co.,Ltd. 186,315 232,562 Faurecia Emissions Control Technologies (Nanchang)
Co.,Ltd. 95,192 19,060 JMCG 87,317 127,389 Auto Alliance (Thailand) Co., Ltd. 86,082 - Nanchang Lianda Machinery Co.,Ltd. 69,312 76,417 Nanchang JMCG Skyman Auto Component Co.,Ltd. 69,143 71,495 Nanchang Yinlun Heat-exchanger Co.,Ltd. 52,415 50,170 Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 45,933 37,086 Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 33,051 34,912 Nanchang JMCG Xinchen Auto Component Co.,Ltd. 30,756 26,273 Jiangling Material Co. 25,503 25,493 Nanchang Gear Co.,Ltd. 19,394 19,024 Ford Otomotiv Sanayi A.S. 15,676 5,047 Jiangxi Biaohong Engine Tappet Co.,Ltd. 8,847 10,989 Nanchang JMCG Printing Plant Co.,Ltd. 8,548 6,879 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 6,994 8,532 JMCG Hequn Costume Co.,Ltd. 6,016 4,894 Jiangxi Jiangling Material Utilization Co.,Ltd. 1,769 4,142 Jiangxi JMCG Industry Co.,Ltd. 1,612 7,610 Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd. 1,160 - Jiangxi ISUZU Engine Co.,Ltd. 1,039 11,347 JMCG Interior Trim Factory - 190,609 Nanchang Jiangling Huasheng Cleaner Co.,Ltd. - 9,220 6,177,643 5,708,468 The Group purchased goods from related parties classified as two types: import parts and home- made parts.
 Purchase import parts from Ford orFord’s suppliers, based on agreed price;
 Purchase home-made parts from other related parts, based on quotation, cost accounting and negotiation.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction 2016 2015 Ford Engineering service and design 287,301 318,484 Ford Otomotiv Sanayi A.S. Engineering service and design 252,248 231,703 Nanchang JMCG Shishun Logistics Co., Ltd. Transportation 179,326 166,329 Ford Global Technologies, LLC Royalty fee 143,109 87,387 Nanchang Hengou Industry Co., Ltd. Packing/truckage 61,692 43,433 Ford Secondments costs 37,716 56,339 Ford Otomotiv Sanayi A.S. Secondments costs 31,996 22,261 Jiangxi JMCG Industry Co.,Ltd. Working meal 30,568 31,826 JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 21,636 27,476 Ford Otomotiv Sanayi A.S. Royalty fee 16,347 49,818 Jiangxi Jiangling Lear Interior System Co.,Ltd. Evaluation and design 12,665 6,332 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Agent business of importation 4,842 5,323 Ford Motor (China) Co., Ltd. Regional personnel costs 4,321 6,087 Ford Motor Research& Engineering (Nanjing) Co.,
Ltd. Regional personnel costs 2,908 2,461 Hanon Systems Experimental manufacturing costs 2,479 - JMCG Property Management Co. Property management 2,384 2,302 Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. Experimental manufacturing costs 2,158 597 Jiangxi Specialty Vehicles Jiangling Motors Group
Co.,Ltd. Promotion 2,022 7,882 Changan Ford Automobile Co.,Ltd. Design fee 1,650 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Purchase of services Natures of transaction 2016 2015 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. Promotion/Repairment 1,619 - Nanchang JMCG Liancheng Auto Component
Co.,Ltd. Experimental manufacturing costs 1,309 729 JMH Secondments costs 1,282 1,465 JMCG Public relations costs 1,119 1,134 Ford Motor Research& Engineering (Nanjing) Co.,
Ltd. Software fee - 2,953 GETRAG (Jiangxi) Transmission Company Design fee - 2,831 Ford Royalty fee - 2,416 Ford Motor (China) Co., Ltd. Software fee - 1,229 Others 1,075 - 1,103,772 1,078,797 The Group purchased the service from related parties based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued) Sales of goods 2016 2015 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 1,184,310 1,066,146 Jiangxi Specialty Vehicles Jiangling Motors Group Co.,Ltd. 152,519 189,793 JMCG Jingma Motors Co., Ltd. 80,192 60,741 Jiangxi Jiangling Chassis Co.,Ltd. 79,391 55,627 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 53,764 48,032 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 48,545 36,271 Jiangxi Jiangling Material Utilization Co.,Ltd. 30,047 47,818 Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 18,868 529 Jiangxi Jiangling Lear Interior System Co.,Ltd. 13,567 16,526 Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd. 8,757 - Jiangxi JMCG Industry Co.,Ltd. 8,557 9,606 Jiangxi Sinodef International Trade Co.,Ltd.(i) 7,873 16,949 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 7,453 6,939 JMCG Property Management Co. 7,228 7,043 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 6,942 95 Nanchang Hengou Industry Co., Ltd.(i) 4,272 - JMH 3,428 972 Jiangxi ISUZU Co., Ltd. 1,885 1,952 JMCG Interior Trim Factory - 16,989 Jiangxi ISUZU Engine Co.,Ltd. - 3,928 Nanchang JMCG Car Frame Co., Ltd. - 3,669 Others 2,173 1,775 1,719,771 1,591,400 The Group sold goods to related parties, based on agreement price.
(i) In November 2016, Nanchang Hengou Industry Co.,Ltd. absorbed Jiangxi Sinodef International Trade Co.,Ltd.
Provision of services 2016 2015 Ford Motor Company of Australia Limited 6,706 - The Group provided the services to related parties, based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental
Rental cost
Lessor Category Rental cost of 2016 Rental cost of 2015 Jiangxi Jiangling Motors Imp.&
Exp. Co., Ltd. Building 4,400 4,471 JMCG Building 4,069 4,074 JMCG Property Management Co. Building 423 259 Jiangxi Jiangling Real Estate Co.,
Ltd. Building - 5 8,892 8,809 Rental income
Lessee Category Rental income of Rental income of 2016 2015 Jiangling Material Co., Ltd. Building 132 132 JMH Building 107 35 GETRAG (Jiangxi) Transmission
Company Building 70 - Jiangxi ISUZU Co., Ltd. Building - 21 309 188 (c) Guarantee
As at 31 December 2016, bank loans of USD720,000 (equivalent to approximately RMB4,997,000) (2015:USD786,000 equivalent to approximately RMB5,103,000) were guaranteed by JMCF (Note 23).
(d) Sales of PPE
2016 2015 Jiangxi JMCG Industrial Co., Ltd. 15 10 (e) Purchase of PPE
2016 2015 Nanchang Jiangling HuaXiang Auto Components
Co.,Ltd. 8,262 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(f) Provide technique sharing
2016 2015 JMCG 92,453 - Ford Vietnam Limited 1,149 - 93,602 - (g) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive Committee, the Company Secretary and members of the Supervisory Board. During the year ended 31 December 2016, the total remuneration of the key management was approximately RMB11,786,000 (2015: RMB11,262,000).
(h) Interest received from cash deposit in related parties
31 December 2016 31 December 2015 JMCF 10,037 7,828 In 2016, the interest rates range from1.495% to2.25% per annum (2015:0.455% to3%). (i) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 31 December 2016 31 December 2015 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 230,848 230,762 JMCG Jingma Motors Co., Ltd. 10,530 8,337 Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. 3,304 - Jiangxi JMCG Industry Co.,Ltd. 2,036 3,384 Nanchang Hengou Industry Co., Ltd. 1,694 - JMH 1,664 - Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 1,360 9 Ford Vietnam Limited 1,149 - Jiangxi Specialty Vehicles Jiangling Motors
Group Co.,Ltd. - 24,097 Nanchang JMCG Car Frame Co., Ltd. - 2,453 Others 135 229 252,720 269,271 Other receivables from related parties 31 December 2016 31 December 2015 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 30,338 6,941 Ford Otomotiv Sanayi A.S. 1,225 1,225 Others 922 - 32,485 8,166
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(j) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 31 December 2016 31 December 2015 Nanchang Baojiang Steel Processing Distribution
Co.,Ltd. 410,220 211,530 Notes receivables from related parties 31 December 2016 31 December 2015 JMCG Jingma Motors Co., Ltd. 44,827 27,080 Jiangxi Jiangling Chassis Co., Ltd. - 4,217 44,827 31,297 Prepayments for construction in progress 31 December 2016 31 December 2015 JMCG Jiangxi Engineering Construction Co., Ltd. 8,106 1,755 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 273 20,166 8,379 21,921 Prepayments for mould lease 31 December 2016 31 December 2015 Changan Ford Automobile Co., Ltd. 32,528 18,517 Cash deposit in related parties 31 December 2016 31 December 2015 JMCF (Note 19) 874,990 372,320
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(j) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 31 December 2016 31 December 2015 Jiangxi Jiangling Lear Interior System Co.,Ltd. 381,357 195,310 Jiangxi Specialty Vehicles Jiangling Motors Group
Co.,Ltd. 286,710 330,939 Jiangxi Jiangling Chassis Co.,Ltd. 267,405 210,110 Jiangxi Jiangling Special Purpose Vehicle
Co.,Ltd. 255,916 199,259 Nanchang Jiangling Hua Xiang Auto
Components Co.,Ltd. 210,407 112,597 GETRAG (Jiangxi) Transmission Company 180,956 181,415 Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 144,608 105,596 Ford 117,540 127,701 Changan Ford Automobile Co.,Ltd. 113,485 5,829 Hanon Systems 87,404 96,058 JMCG 73,518 136,953 Nanchang Unistar Electric& Electronics Co.,Ltd. 50,575 71,433 Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. 43,618 17,574 Nanchang Lianda Machinery Co.,Ltd. 23,570 22,373 Nanchang JMCG Skyman Auto Component
Co.,Ltd. 23,538 22,024 Nanchang Yinlun Heat-exchanger Co.,Ltd. 20,612 15,247 Jiangxi Lingge Non-ferrous Metal Die-casting
Co.,Ltd. 17,778 10,737 Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 13,475 13,860 Auto Alliance (Thailand) Co.,Ltd. 12,004 - Nanchang JMCG Xinchen Auto Component
Co.,Ltd. 10,194 7,049 Nanchang Gear Co.,Ltd. 5,777 6,680 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 3,654 - Ford Otomotiv Sanayi A.S. 2,687 - Nanchang JMCG Printing Plant Co.,Ltd. 2,507 1,474 Jiangxi Biaohong Engine Tappet Co.,Ltd. 2,362 3,156 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 2,137 3,872 Jiangling Material Co. 933 1,501 Jiangxi Jiangling Material Utilization Co.,Ltd. 612 1,192 Nanchang Jiangling Huasheng Cleaner Co.,Ltd. - 5,274 Others 538 1,202 2,355,877 1,906,415
JIANGLING MOTORS CORPORATION, LTD.
FOR THE YEAR ENDED 31 DECEMBER 2016
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(j) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 31 December 2016 31 December 2015 Ford Otomotiv Sanayi A.S. 232,672 122,899 Ford 176,871 110,278 Ford Global Technologies, LLC 58,517 48,500 Jiangxi Jiangling Lear Interior System Co.,Ltd. 16,154 5,178 JMCG Jiangxi Engineering Construction Co., Ltd. 12,511 8,333 Nanchang Hengou Industry Co., Ltd. 11,378 11,815 Nanchang Jiangling Hua Xiang Auto
Components Co.,Ltd. 6,157 5,590 Nanchang JMCG Shishun Logistics Co., Ltd. 3,944 2,773 Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 3,751 1,745 GETRAG (Jiangxi) Transmission Company 1,550 6,650 JMCG Hequn Costume Co.,Ltd. 1,410 1,189 JMH 1,303 386 Ford Motor (China) Co., Ltd. 1,199 4,340 Nanchang JMCG Printing Plant Co.,Ltd. 1,168 502 JMCG 1,041 928 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 616 3,668 Ford Motor Research& Engineering (Nanjing)
Co., Ltd. 466 1,126 Jiangxi Specialty Vehicles Jiangling Motors
Group Co.,Ltd. 167 13,554 Others 4,174 2,106 535,049 351,560 Advance from related parties 31 December 2016 31 December 2015 Jiangxi Specialty Vehicles Jiangling Motors
Group Co.,Ltd. 4,294 96 Jiangxi Sinodef International Trade Co.,Ltd. - 737 Others 342 380 4,636 1,213 (k) I Related parties commitments
Capital commitments 31 December 2016 31 December 2015 JMCG Jiangxi Engineering Construction Co.,
Ltd. 40,334 29,304
Chapter XII Catalog on Documents for Reference
1. Originals of 2016 financial statements signed by legal representative and Chief Financial Officer.
2. Originals of the 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 2016.
4. The Annual Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
March 23, 2017