Jiangling Motors Corporation, Ltd.
2017 Half-year Report
2017-036
Chapter I Important Notes, Contents and Abbreviations
Important Note
The Board of Directors and its members, the Supervisory Board and its members, and the senior executives are jointly and severally liable for the truthfulness, accuracy and completeness of the information disclosed in the report and confirm that the information disclosed herein does not contain false statements, misrepresentations or major omissions.
All Directors were present at the Board meeting to review this Half-year Report.
Neither cash dividend nor stock dividend was distributed. The Board decided not to convert capital reserve to share capital this time.
Chairman Qiu Tiangao, CFO Gong Yuanyuan and Chief of Finance Department, Wu Jiehong, confirm that the Financial Statements in this Half- year Report are truthful, accurate and complete.
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 Half-year Report is prepared in Chinese and English. In case of discrepancy, the Chinese version will prevail.
Contents
Chapter I Important Notes, Contents and Abbreviations ................................. 2 Chapter II Brief Introduction ............................................................................. 4 Chapter III Business Profile............................................................................... 6 Chapter IV Business Operation Discussion and Analysis ................................. 7 Chapter V Major Events ................................................................................. 11 Chapter VI Share Capital Changes& Shareholders ........................................ 18 Chapter VII Preferred Shares .......................................................................... 21 Chapter VIII Directors, Supervisors and Senior Management .......................... 22 Chapter IX Company Bond ............................................................................. 23 Chapter X Financial Statements ..................................................................... 24 Chapter XI Catalogue on Documents for Reference ....................................... 82 Abbreviations:
JMC, or the Company Jiangling Motors Corporation, Ltd.
JMH Jiangling Motor Holding Co., Ltd.
Ford Ford Motor Company
Jiangling-Isuzu Jiangling-Isuzu Motors Company, Ltd.
CSRC China Securities Regulatory Commission
JMCG Jiangling Motors Company (Group)
JMCH JMC Heavy Duty Vehicle Co., Ltd.
EVP Executive Vice President
CFO Chief Financial Officer
VP Vice President
Chapter II Brief Introduction
1.Company’s information
|||||
|-|-|-|-|
|Share’s name|Jiangling Motors, Jiangling B|Share’s Code|000550, 200550|
|Place of listing|Shenzhen Stock Exchange|||
|Company’s Chinese|江铃汽车股份有限公司|||
|name||||
|English name|Jiangling Motors Corporation, Ltd.|||
|Abbreviation|JMC|||
|Company legal|Qiu Tiangao|||
|representative||||

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

 3. Other
I. Contact methods
Changes of registered address, headquarter address, postal code, website
and e-mail
□Applicable√Not Applicable
There is no change of registered address, headquarter address, postal code,
website and e-mail. Please refer to 2016 Annual Report for details.
II. Newspapers for information disclosure, website for publication ofJMC’s
half-year report and place for achieving half-year report
□Applicable√Not Applicable
There is no change of newspapers for information disclosure, website designated by CSRC for publication ofJMC’s Half-year Report and place for achieving Half-year Report. Please refer to 2016 Annual Report for details.
4. Main accounting data and financial ratios
Unit: RMB‘000
|||||
|-|-|-|-|
||Reporting period(2017 first half)|Same periodlast year|Change (%)|
|Revenue|15,666,476|10,810,736|44.92|
|Profit Attributable to theEquity Holders of theCompany|552,903|704,517|-21.52|
|Net Cash GeneratedFrom Operating Activities|-899,401|987,554|-191.07|
|Basic Earnings Per Share(RMB)|0.64|0.82|-21.52|
|Diluted Earnings PerShare (RMB)|0.64|0.82|-21.52|
|Weighted Average Returnon Equity Ratio|4.36%|5.71%|Down 1.35percentage points|
||At the end ofreporting period|At the end of theprevious year|Change (%)|
|Total Assets|24,199,974|24,493,789|-1.20|
|Shareholders’ EquityAttributable to the EquityHolders of the Company|12,435,579|12,409,236|0.21|

5. Accounting data difference between domestic and foreign accounting
standards
I. Differences in net profit and net assets disclosed respectively per IFRS and
PRC GAAP.
□Applicable√Not Applicable
There is no difference between IFRS and PRC GAAP in net profit and net
assets.
II. Differences in net profit and net assets disclosed respectively per GAAP
and PRC GAAP.
□Applicable√Not Applicable
There is no difference between GAAP and PRC GAAP in net profit and net
assets.
Chapter III Business Profile
1.Company’s core business during the reporting period
JMC’s core business is production and sales of commercial vehicles, SUV and related components.JMC’s major products include JMC series light truck, heavy duty trucks, pickup, Yusheng SUV, Ford-brand SUV, Ford brand MPV Tourneo, and Transit series commercial vehicles. 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 c0enter, 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 and new generation Yusheng SUV S350 launched further enhancedJMC’s capability ofR&D, manufacturing and market competitiveness in SUV field. 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 products production and quality improvement. Xiaolan nationalR&DCentre’s research and development capability will also be further improved.
Chapter IV Business Operation Discussion and Analysis
1. Summary
In the first half of 2017, China's automotive market continues to keep growth.
Total sales volume was 13.35 million units, increased3.81% than 2016 first
half. SUV sales volume was 4.52 million units, increased16.83% compared
with the first half of 2016. Commercial vehicle sales volume was 2.10 million
units, increased17.39% compared with the same period last year.
During the reporting period, to cope with more severe competition, more
stringent regulatory requirement and intensifying cost pressures, the
Company focused on quality improvement, new product development,
operating cost control and production efficiency enhancement. Simultaneously, the Company introduced series of sales policy to respond the market risk. In
the first half of 2017, JMC achieved sales volume of 153,756 units, increased
27.06% compared with the same period last year, achieved revenue of RMB
15.67 billion, increased44.92% compared with the same period last year,
achieved net profit of RMB 0.55 billion, decreased21.52% compared with the same period last year. It mainly reflected the company product structure
adjustment and the sales andR&D expenses increase.
2. Core business analysis
Year-over-Year Changes of Main Financial Data
Unit:RMB’000
||||||
|-|-|-|-|-|
||2017 1H|2016 1H|YOYchange(%)|Reason|
|Revenue|15,666,476|10,810,736|44.92|Due to the sales volumeincrease and productstructure change|
|Cost of sales|12,371,957|8,356,083|48.06|Due to the Sales volumeincrease and productstructure change|
|Distribution costs|1,270,477|757,567|67.70|Marketing and salespromotion expenseincrease|
|Administrative expenses|1,193,666|937,398|27.34||
|Finance Income-net|125,900|109,652|14.82||
|Incometax expense|62,435|66,103|-5.55||
|Research andDevelopment Expenditure|860,424|710,342|21.13|Due to researches onChina VI EmissionStandard in 2017|
|Net cash generated fromoperating activities|-899,401|987,554|-191.07|Receivables and paymentincrease due to salesvolume increase|
|Net cash used in investingactivities|-282,756|-357,893|20.99||
|Net cash used infinancing activities|-6,118|-7,783|21.39||
|Net increase/(decrease)in cash and cashequivalents|-1,188,275|621,878|-291.08|Cash generated fromoperating activitiesdecrease|

Significant change in the profit structure or profit source of the Company
during the reporting period.
□
Applicable√ Not Applicable
There is no significant change in the profit structure or profit source of the
Company during the reporting period.
Main Business Structure:
||||||||
|-|-|-|-|-|-|-|
||||Gross|Y-O-Y||Y-O-Y gross|
||Turnover|Cost|||Y-O-Y cost||
||||Margin|turnover||margin|
||(RMB ‘000)|(RMB ‘000)|||change||
||||(RMB ‘000)|change||change|
|By Industry|||||||
|Automobile Industry|15,492,267|12,206,138|21.21%|44.86%|48.01%|-1.68%|
|By Products|||||||
|Vehicle|14,194,541|11,288,484|20.47%|49.30%|52.92%|-1.89%|
|By Region|||||||
|China|15,492,267|12,206,138|21.21%|44.86%|48.01%|-1.68%|

 3. Non-core business analysis
□
Applicable√ Not Applicable
4. Analysis of assets and liabilities
Unit:RMB’000
||||||||
|-|-|-|-|-|-|-|
|Asset item|June 30, 2017||June 30, 2016||YOY|Major ChangesExplanation|
||||||Proportionchange(%)||
||Amount|Proportion(%)|Amount|Proportion(%)|||
|Property, plant andequipment|6,587,077|27.22|6,390,229|29.99|-2.77||
|Inventories|1,960,649|8.10|1,729,280|8.12|-0.02||
|Trade, other receivablesand prepayments|3,589,508|14.83|2,253,658|10.58|4.25|Due to the salesvolume increase|
|Cash and cashequivalents|10,477,947|43.30|9,469,918|44.44|-1.14||

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
IV. Financial assets investment
a. Stock investment
□
Applicable√ Not Applicable
b. Derivative investment
□
Applicable√ Not Applicable
6. Sale of major assets and equity
I. Sale of major assets
□
Applicable√ Not Applicable
II. Sale of major equity
□
Applicable√ Not Applicable
7. Operating results of main subsidiaries and joint-stock companies whose
impact onJMC’s net profit more than10%
□
√Applicable Not Applicable
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofCompanies|Type ofCompanies|Main Products|RegisteredCapital|Assets|Net Assets|Turnover|OperatingProfit|Net Profit|
|JianglingMotors SalesCorporation,Ltd|Subsidiary|Sales vehicle,service parts|50,000,000|3,683,544,099|112,515,152|13,996,005,780|-158,145,985|-118,718,041|
|JMC HeavyDuty VehicleCo., Ltd|Subsidiary|Product heavycommercialvehicle , engine,component, andrelated service|281,793,174|1,472,764,115|-176,920,868|32,387,142|-90,458,534|-69,386,498|

8．Structured entities controlled by JMC
□
Applicable√ Not Applicable
9. Forecast of business performance in the first nine months of 2017.
□
Applicable√ Not Applicable
10. 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.
I. Macroeconomic risk, raw materials such as coal, precious metals and steel prices increase, which have direct impact on automobile parts purchasing cost, so as to affects the company's profitability.
II. Policies and regulations risk, under the pressure of environmental protection, city vehicle purchase restriction / traffic control become "normal", which have negative effect on the automobile sales and use, and Emissions/safety regulations continuously upgrade both in domestic and abroad at the same time, will force companies to upgrade technology quickly, which will further intensify the company's investment and operating pressure. III. Industry environment risk, China's auto market has entered a stage of
perfect competition, the auto market of domestic and foreign gradually
become mature, consumer tastes have improved, which put forward higher
requirements of the independent brand and quality of car companies. In
addition, with the growing of technical barriers in overseas markets, trade protectionist tendencies increase, emerging economies growth slowdown, decline of cars demand risks increase, and harder expansion for international market.
IV. Business model risks, with the rapid development of intelligent interconnection, big data technology, Internet companies enter the automobile industry, which change the traditional business model.
The company will take the following measures to deal with above risks:
I. Optimizingcompany’s production system to improve efficiency and product quality;
II. Optimizing dealer network and marketing spending to improve market share ;
III. Improvesuppliers’ capability and parts quality; complete the logistic optimization plan for components and vehicle delivery; continue to reduce parts purchasing cost;
IV. Strengthening corporate governance and application of appropriate risk assessment and control mechanisms;
V. Sustaining the expense management to further enhance company competitiveness to win in the very challenging market; and
VI. Optimize and execute thecompany’s growth strategies, as well as strengthen the traditional advantage, gradually increase investment in new energy company, and new intelligent interconnection, so as to pursue sustainable long-term growth.
Chapter V Major Events
1. Annual and specialshareholders’ meeting
I.Shareholders’ meeting during the reporting period
|||||||
|-|-|-|-|-|-|
|||Investors||||
|||||Announcement||
|Number|Name|Attending|Meeting Date||Announcement Index|
|||||Date||
|||Percentage (%)||||
||||||Number 2017-018,|
||2017 First Special||||published on the|
|1||77.93|May 18, 2017|May 19, 2017||
||Shareholders’ Meeting||||website|
||||||www.cninfo.com.cn.|
||||||Number 2017-025,|
||2016 Annual|||||
||||||published on the|
|2|Shareholders’ Meeting|77.67|June 29, 2017|June 30, 2017||
||||||website|
||||||www.cninfo.com.cn.|

 II. Share holders who hold vote right restored preferred shares apply to hold a specialshareholders’ meeting
□Applicable√Not Applicable
2. Proposal on profit distribution and converting capital reserve to share
capital for the reporting period
□Applicable√Not Applicable
3. Commitments of actual controlling parties, shareholders, related parties, acquirers and the Company finished in the reporting period or overdue unfinished by the end of the reporting period
□Applicable√Not Applicable
There is no commitments of actual controlling parties, shareholders, related parties, acquirers and the Company finished in the reporting period or overdue unfinished by the end of the reporting period.
4. Appointment or dismissal of accounting firm
Whether the 2017 half-year report is audited?
□Yes√No
JMC 2017 half-year report is not audited.
5. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm for the reporting period
□Applicable√Not Applicable
6. Explanation of the board of directors, the supervisory board to abnormal
opinions from accounting firm in 2016
□Applicable√Not Applicable
7. Related matters regarding bankruptcy
□Applicable√Not Applicable
The Company did not go bankrupt during the reporting period.
8. Litigation or arbitration
Significant litigation or arbitration
□Applicable√Not Applicable
There is no significant litigation or arbitration in the reporting period.
Other litigation
□Applicable√Not Applicable
9. Punishment
□Applicable√Not Applicable
The Company have not been punished by regulatory authorities.
10. Honesty and credit of JMC and its controlling shareholder or actual
controlling party
□Applicable√Not Applicable
11. Implementation of equity incentive plan, employee stock ownership plan
and other employee incentive method
□Applicable√Not Applicable
12. Major related transactions
I. Routine operation related party transactions
√Applicable□Not Applicable
||||||||
|-|-|-|-|-|-|-|
|Transaction Parties|Content|Relationship|PricingPrinciple|Settlement Method|Amount(RMB’000)|As % ofTotalPurchases/Revenue|
|Nanchang Bao-jiangSteel Processing &Distribution Co., Ltd.|Raw materialspurchase|Associate ofJMCG|Contractedprice|Prepayment|457,760|4.00|
|Ford|Parts and componentspurchase|Controllingshareholderof JMC|Contractedprice|D/P & T/T|452,439|3.96|
|Jiangxi JianglingChassis Company|Parts and componentspurchase|Subsidiary ofJMCG|Contractedprice|60 days after deliveryand invoicing|421,636|3.69|
|GETRAG (Jiangxi)Transmission Company|Parts and componentspurchase|Associate ofJMCG|Contractedprice|60 days after deliveryand invoicing|391,606|3.42|
|Jiangxi JianglingSpecial-PurposeVehicle Co, Ltd.|Parts and componentspurchase|Wholly-ownedsubsidiary ofJMCG|Contractedprice|30 days after deliveryand invoicing|326,851|2.86|
|Jiangling-Lear InteriorTrim Factory|Parts and componentspurchase|Joint ventureof JMCG|Contractedprice|60 days after deliveryand invoicing|282,853|2.47|
|JMCG Import andExport Co., Ltd.|Sales|Associate ofJMCG|Contractedprice|40% of prepayment andthe remains paid during30 days after delivery|452,175|2.89|

The Announcement of Related Party Transactions (No.: 2014-052) was disclosed on Dec.16, 2014 on the website www.cninfo.com.cn.
II. Major related party transaction concerning transfer of assets or equity
□Applicable√Not Applicable
There was no major related party transaction concerning transfer of assets or
equity during the reporting period.
III. Related party transaction concerning outside co-investment
□Applicable√Not Applicable
There was no outside co-investment during the reporting period.
IV. Related credit and debt
√Applicable□Not Applicable
Is there non-operating related credit and debt?
□Applicable√Not Applicable
The Company had no non-operating related credit and debt during 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 June 30, 2017 was RMB 963,588 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 August 31, 2017.
13. Non-operating funding in the Company occupied by controlling
shareholder and its affiliates
□Applicable√Not Applicable
There was no non-operating funding in the Company occupied by controlling shareholder and its affiliates during the reporting period.
14. Major contracts and execution
I. Entrustment, contract or lease
a. Entrustment
□Applicable√Not Applicable
There was no entrustment during the reporting period.
b. Contract
□Applicable√Not Applicable
There was no contract during the reporting period.
c. Lease
√Applicable□Not Applicable
See the note 31(b) to financial statements for lease of related parties.
Project earns more than10% of net profit.
□Applicable√Not Applicable
II Major guarantee
□Applicable√Not Applicable
The Company had no outside guarantee during the reporting period.
III. Other important contracts
□Applicable√Not Applicable
There was no other important contract during the reporting period.
15. Corporation social responsibilities
I. One-to-one poverty alleviation
a. Summary of one-to-one poverty alleviation
According to arrangement of JMCG, the Company joined the one-to-one
poverty alleviation in Qianmo Village, Daijiapu Township, Suichuan County,
Jiangxi Province and XIanting Village, Songhu Town, Xinjian District,
Nanchang City.
b. Status of targeted measures in poverty alleviation for the listed company
||||
|-|-|-|
|Item|Unit|Amount/Progress|
|I. Brief Introduction|——|——|
|including：1. Funding|RMB (‘000)|43|
|2. Sum converted from the materials|RMB (‘000)|13.3|
|3. Persons get rid of poverty|Persons|20|
|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)||
|4.2 Poor students in aid|Persons||
|4.3 Investments on the improvement of|||
||RMB (‘000)||
|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)|56.3|
|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|——|——|

II. Environmental protection
Whether the Company and affiliates is the key pollution discharge unit
published by environmental protection administration?
√Yes□No
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Emission|||||Emission|Meet|
|Main|Emission||Emission Outlet|Emission||Emission|||
|||Outlet|||Emission Standard||Standard|Standard|
|Pollutants|Ways||Distribution|Concentration||Amount|||
|||Number|||||Amount|or Not|
||||3 in Mainsite, 1||||||
||||||“Wastewater||||
||||in Xiaolan Site,|||COD:91.11|COD≤844.92||
|Wastewater|continuous|||"COD:183mg/L|Discharge|||Meet|
|||6|1 in Cast Plant|||t, NH-|t, NH-||
|(COD,NH-N)|discharge|||NH-N:12mg/L"|Standard”(GB 8978-|||Standard|
||||and 1 in Axle|||N :4.897t|N≤21.878t||
||||||1996)||||
||||Plant||||||
|||||SO2:36mg/m3,|||||
|Exhaust gas|||||"The Emission||||
||||53 in Mainsite,|NOx :89mg/m3,|||||
|(SO2,NOx,s|||||Standard of Air||||
||||34 in Xiaolan|smoke:83.9mg/m3,||SO2:0.23t,|||
|moke,toluol,|continuous||||Pollutants”,” Emission||SO2≤93.01t,|Meet|
|||125|Site, 33 in Cast|toluol :0.016mg/m3,||NOx :13.71|||
|dimethylben|discharge||||Standard of Air||NOx≤60.91t|Standard|
||||Plant and 5 in|dimethylbenzene:0.09||t|||
|zene,|||||Pollutants for Boiler”||||
||||Axle Plant|0mg/m3 , NMHC:|||||
|NMHC）|||||（GB 13271-2014）||||
|||||22.6mg/m3"|||||

III. Information regarding environment protection
The construction and operation of pollutant preventive and control facilities
Since 2006, JMC has invested more than RMB 30 million to construct seven wastewater treatment stations (including the wastewater treatment station in the east plant area and Xiaolan wastewater treatment station), with the treatment capacity as high as 9,000t/d. The treated wastewater reached the national discharge standard.
For up-to-standard emission of waste gases, JMC has taken new control measures over the years. In 2012, the Company invested RMB 10 million to reconstruct the cupola furnace in the casting plant. In 2013, Xiaolan Branch invested RMB 14 million to install a TNV waste gas incinerator. In 2014, JMC invested RMB 14.6 million to construct the boiler coal-gas-switch project in the south district. In 2017, the casting plant reconstructed the ventilation& dust removal system for the smelting furnace in the large-size and middle& small- sized parts workshop, and installed efficient environmental-friendly dust removal equipment, effectively reducing the environmental pollution by dust.
For noise reduction, JMC took different measures to reduce the environmental impact, such as increase of protective sound-proof doors& windows, establishment of noise enclosure for air blower, installation of muffler and transformation of sound-proof doors& windows. All these measures can make sure up-to-standard discharge of noise at the plant boundary.
In the process of waste management, JMC managed from the source, and divided the generation of wastes. JMC established a temporary storage yard
for solid wastes. Warning graphic symbols have been posted at the temporary
storage site of hazardous wastes. Besides, signboards have been provided as
well, so as to remind the passerby of probable hazards in the storage process of hazardous wastes.
EIA on construction project and other administrative permits for environmental protection
The company strictly implements the construction project environmental impact assessment system. With respect to new construction, expansion and reconstruction, JMC comprehensively planned environmental protection and evaluated the “Three Simultaneities”. From the source of design, JMC carried out the philosophy of energy saving and low carbon all the time. The Company carries on the environmental monitoring every year according to the requirements, ensures the pollutant discharge meeting the requirements of discharge permit, formulates the stricter internal control target, and strives to reduce the impact of environmental pollution to the minimum.
Emergency plan on emergency environmental incidents
In order to dilute or prevent environmental risks, JMC established an emergency preparation and response procedure and specific environmental emergency plans (such as emergency plan on environmental pollution accidents, emergency plan on hazardous gases and emergency plan on paint thinner), so as to formulate corresponding control methods for potential accidents and emergences occurred or that may probably occur. JMC organized emergency drills every year to ensure the efficiency of emergency plan.
Environmental self-monitoring scheme
In 2017,JMC’s Qingyunpu Main Plant Area (the “Plant Area”) was listed as a key pollutant discharging organization of wastewater/hazardous wastes. The Plant Area monitored by itself in strict accordance with the Method for Self- monitoring and Information Disclosure of State Key Monitoring Enterprises (Trial). Its self-monitoring schemes, monitoring results and annual monitoring reports on pollution sources were disclosed on the “pollution source self- monitoring reporting platform of Jiangxi Province”. Xiaolan plant area and other plant areas finished self-monitoring according to the EIA requirements.
Other information related to environmental protection
JMC paid high attention to environmental protection and pollution source control, taking resource saving and cost reduction as the primary task. Moreover, the Company also took full advantage of 6sigma, and controlled from the source, so as to achieve the effect of environmental improvement. In the new expansion and reconstruction projects, JMC laid emphasis on improving the environmental performance, strictly implemented the system of “Three Simultaneities”, transacted the EIA procedure according to national standards, stipulated the preventive and control measures for environmental pollution, and reported to competent administrative departments on environmental protection for approval.
16. Other major events
√Applicable□Not Applicable
JMC received government incentives about RMB 200 million appropriated by Nanchang City, Nanchang County XiaolanEconomic& Technological Development Zone, Nanchang City Qingyunpu District and Taiyuan Technological Development Zone during the reporting period, which is to supportJMC’s development.
17. Major event of JMC subsidiary
□Applicable√Not Applicable
Chapter VI Share Capital Changes& Shareholders
1. Changes of Shareholding Structure
I. Changes of shareholding structure
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||Before the change||Change (+, -)|||||After the change||
|||Shares|Proportionof totalshares (%)|Newshares|BonusShares|Reserve-converted shares|Others|Subtotal|Shares|Proportionof totalshares (%)|
|I. Limited tradableA shares||1,725,900|0.20%|-|-|-|-|-|1,725,900|0.20%|
|1. State shares||-|-|-|-|-|-|-|-|-|
|2.|State-own legal|-|-|-|-|-|-|-|-|-|
||person share||||||||||
|3. Other domesticshares||1,725,900|0.20%|-|-|-|-|-|1,725,900|0.20%|
|Including:|||||||||||
|Domestic legalperson shares||835,140|0.10%|-|-|-|-44,400|-44,400|790,740|0.09%|
|Domestic naturalperson shares||890,760|0.10%|-|-|-|44,400|44,400|935,160|0.11%|
|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
44,400 limited tradable A shares hold by a domestic legal person shareholder were transferred to natural person shareholders in the first half of 2017.
Approval of changes of shareholding structure
□Applicable√Not Applicable
Shares transfer
□Applicable√Not Applicable
Impact on accounting data, such as the latest EPS, diluted EPS,shareholders’ equity attributable to the equity holders of the Company, generated from
shares changes
□Applicable√Not Applicable
Others to be disclosed necessarily or per the requirements of securities
regulator
□Applicable√Not Applicable
II. Changes of limited tradable shares
□Applicable√Not Applicable
2. Securities issuance and listing
□Applicable√Not Applicable
3. Shareholders and shareholding status
||||||||
|-|-|-|-|-|-|-|
|Total shareholders(as of June 30, 2017)|JMC had 29,297 shareholders, including 23,921 A-share holders, and 5,376 B-share holders.||||||
|Top ten shareholders|||||||
|Shareholder Name|ShareholderType|ShareholdingPercentage (%)|Shares atthe End ofYear|Change(+,-)|Shares withTradingRestriction|Sharesdue tomortgageor 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|22,743,584|-2,200|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|
|JPMBLSA RE FTIFTEMPLETON CHINAFUND GTI 5497|Foreign legalperson|0.75|5,848,450|-24,000|0|0|
|Xingye SecuritiesCorporation JinqilinNo.5 AggregateAssets ManagementPlan|Other|0.67|5,782,597|5,782,597|0|0|
|GAOLINGFUND,L.P.|Foreign legalperson|0.63|5,439,086|0|0|0|
|TEMPLETONDRAGONFUND,INC.|Foreign legalperson|0.57|4,916,708|0|0|0|
|INVESCOFUNDS SICAV|Foreign legalperson|0.52|4,483,356|110,726|0|0|
|Notes on association among above-mentionedshareholders|||None.||||
|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||22,743,584|||A share||
|Shanghai Automotive Co., Ltd.||13,019,610|||A share||
|Central Huijin Investment Ltd.||7,186,600|||A share||
|JPMBLSA RE FTIF TEMPLETONCHINA FUND GTI 5497||5,848,450|||B share||
|Xingye Securities Corporation JinqilinNo.5 Aggregate Assets ManagementPlan||5,782,597|||A share||
|GAOLING FUND,L.P.||5,439,086|||B share||
|TEMPLETON DRAGON FUND,INC.||4,916,708|||B share||
|INVESCO FUNDS SICAV||4,483,356|||B share||
|Notes on association among above-mentioned shareholders||None.|||||

Stock buy-back by top ten shareholders or top ten shareholders holding
unlimited tradable shares in the reporting period
□Yes√No
There is no stock buy-back by top ten shareholders or top ten shareholders holding unlimited tradable shares in the reporting period.
4. Change of controlling shareholders or actual controlling parties
Change of controlling shareholders
□Applicable√Not Applicable
There was no change of controlling shareholders during the reporting period.
Change of actual controlling parties
□Applicable√Not Applicable
There was no change of actual controlling parties during the reporting period.
Chapter VII Preferred Shares
□Applicable√Not Applicable
JMC have no preferred shares during the reporting period.
Chapter VIII Directors, Supervisors and Senior Management 1. Changes of shares held by directors, supervisors and senior management□Applicable√Not Applicable
There was no change of shares held by Directors, Supervisors and senior
management in the reporting period. Please refer to 2016 annual report for
details.
2. Changes of directors, supervisors and senior management
||||||
|-|-|-|-|-|
|Name|Position|Status|Date|Reason|
|Peter Fleet|Vice Chairman|Elected|June 29, 2017|Re-election of Board of Directors|
|David|||||
||Director|Elected|June 29, 2017|Re-election of Board of Directors|
|Johnston|||||
|||Expiration of|||
|David Schoch|Vice Chairman|the Term of|June 29, 2017|Re-election of Board of Directors|
|||Office|||
|||Expiration of|||
|Mark Kosman|Director|the Term of|June 29, 2017|Re-election of Board of Directors|
|||Office|||
|||Expiration of|||
|Arturo|||||
||Vice President|the Term of|June 29, 2017||
|Mendoza|||||
|||Office|||
|Mike Chang|Vice President|Appointed|June 29, 2017||
|||Expiration of|||
|Liu Niansheng|Supervisor|the Term of|June 27, 2017|Re-election of Supervisory Board|
|||Office|||
|||Expiration of|||
|Xu Lanfeng|Supervisor|the Term of|June 27, 2017|Re-election of Supervisory Board|
|||Office|||
|Ding Zhaoyang|Supervisor|Elected|June 27, 2017|Re-election of Supervisory Board|
|Chen Guang|Supervisor|Elected|June 27, 2017|Re-election of Supervisory Board|
|Liao Zanping|Vice President|Leave|Feb. 1, 2017|Work rotation|
|Wu Xiaojun|Vice President|Appointed|Feb. 1, 2017||

Chapter IX Company Bond
Whether the Company owns the corporate bond that is lists in the securities
exchange and undue or is not paid in full althoughit’s due.
□Yes√No
Chapter X Financial Statements
JIANGLING MOTORS CORPORATION, LTD.
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30
JUNE 2017
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June Note 2017# 2016# Revenue 5 15,666,476 10,810,736 Sales tax (544,622) (328,255) Cost of sales 6 (12,371,957) (8,356,083) Gross profit 2,749,897 2,126,398 Distribution expenses 6 (1,270,477) (757,567) Administrative expenses 6 (1,193,666) (937,398) Impairment charge of non-current assets (3,347) (1,347) Other income 8 203,584 225,856 Operating profit 485,991 655,942 Finance income 9 127,903 110,419 Finance expenses 9 (2,003) (767) Finance income-net 9 125,900 109,652 Share of profit of investments accounted for using the
equity method 15b 3,447 5,026 Profit before income tax 615,338 770,620 Income tax expense 10 (62,435) (66,103) Profit for the period 552,903 704,517 Total comprehensive income for the period 552,903 704,517 Profit attributable to:
Shareholders of the Company 552,903 704,517 Total comprehensive income attributable to:
Shareholders of the Company 552,903 704,517 Earnings per share for profit attributable to the
shareholders of the Company for the period
(expressed in RMB per share)
- Basic and diluted 11 0.64 0.82#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
As at
31 December Note
30 June2017# 2016 Assets
Non-current assets
Property, plant and equipment 12 6,587,077 6,688,530 Lease prepayment 13 624,621 632,408 Intangible assets 14 148,093 158,160 Investments accounted for using the equity method 15b 43,340 39,893 Other non-current assets 99,127 97,549 Deferred income tax assets 16 576,026 554,488 8,078,284 8,171,028 Current assets
Financial assets at fair value through profit or loss 5,949 8,539 Inventories 17 1,960,649 1,934,092 Trade and other receivables and prepayments 18 3,589,508 2,625,808 Cash and cash equivalents 19 10,477,947 11,666,222 Restricted cash - 463 Assets classified as held for sale 20 87,637 87,637 16,121,690 16,322,761 Total assets 24,199,974 24,493,789
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
AS AT 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
As at
Note 31 December 30 June2017# 2016 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 22 452,126 452,126 Retained earnings 10,303,630 10,277,287 Total equity 12,435,579 12,409,236 Liabilities
Non-current liabilities
Borrowings 23 4,214 4,543 Deferred income tax liabilities 16 26,980 27,383 Retirement benefit obligations 24 50,913 53,627 Provisions for warranty and other liabilities 25 149,128 130,987 Other non-current liabilities 280 320 231,515 216,860 Current liabilities
Trade and other payables 26 11,329,443 11,605,178 Current income tax liabilities 31,121 98,860 Borrowings 23 444 454 Retirement benefit obligations 24 4,561 4,561 Provisions for warranty and other liabilities 25 167,311 153,640 Other current liabilities - 5,000 11,532,880 11,867,693 Total liabilities 11,764,395 12,084,553 Total equity and liabilities 24,199,974 24,493,789#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(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 2016 863,214 816,609 452,938 9,848,381 11,981,142 Profit for the six months 704,517 704,517 Dividends relating to 2015 (889,110) (889,110) Balance at 30 June 2016 863,214 816,609 452,938 9,663,788 11,796,549 Balance at 1 January 2017 863,214 816,609 452,126 10,277,287 12,409,236 Profit for the six months - - - 552,903 552,903 Dividends relating to 2016 27 - - - (526,560) (526,560) Balance at 30 June 2017 863,214 816,609 452,126 10,303,630 12,435,579#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2017
(All amounts in thousands of RMB unless otherwise stated)
Six months ended 30 June Note 2017# 2016# Cash flows from operating activities
Cash generated from operations 28 (733,272) 1,103,907 Interest paid (158) (320) Income tax paid (165,971) (116,033) Net cash generated from operating activities (899,401) 987,554 Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (407,102) (512,444) Other cash paid relating to investing activities (3,886) (101) Proceeds from disposal of PPE 28 2,097 2,611 Interest received 120,666 145,919 Dividends received - 5,745 Other cash received from investing activities 5,469 377 Net cash used in investing activities (282,756) (357,893) Cash flows from financing activities
Repayments of borrowings (5,226) (212) Dividends paid to shareholders of the Company (892) (7,571) Net cash used in financing activities (6,118) (7,783) Net (decrease)/increase in cash and cash equivalents (1,188,275) 621,878 Cash and cash equivalents at beginning of year 11,666,222 8,848,040 Effects of exchange rate changes - - Cash and cash equivalents at end of period 19 10,477,947 9,469,918#Unaudited financial indexes
The notes on pages 28 to 79 are an integral part of these consolidated financial statements.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
1 General information
Jiangling Motors Corporation, Ltd. (the “Company”) was established in thePeople’s Republic of China (the “PRC”) under the Company Law of the PRC and according to the approval of Hongban (1992) No. 005 of Nangchang Revolution and Authorisation Group ofCompany’s Joint Stock as a joint stock limited company to hold certain operational assets and liabilities of the automotive manufacturing business of Jiangxi Motors Manufacturing Factory, which was owned by Jiangling Motors Corporation Group (“JMCG”). The legalrepresentative’s operating license of the Company is No. 913600006124469438.
The address of theCompany’s registered office is No.509, Northern Yingbin Avenue, Nanchang, Jiangxi Province, the PRC.
In December 1993, the Company issued 494,000,000 domestic ordinary shares (“A share”). In addition, the Company issued 25,214,000 A shares as bonus shares to the existing shareholders in 1994. The bonus shares were issued by utilisation of theCompany’s retained earnings.
In 1995, the Company issued 174,000,000 domestically listed foreign shares (“B share”) and the Company issued 170,000,000 additional B shares in 1998.
As at 30 June 2017, 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 29 August 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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the items.
Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings 35-40 years Plant and machinery 10-15 years Motor vehicles 6-10 years Moulds 5 years Electronic and other equipment 5-7 years Theassets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Anasset’s carrying amount is written down immediately to its recoverable amount if theasset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within‘other income/(expense) -net’ in profit or loss.
Assets under construction represent buildings under construction and plant and equipment pending installation, and are stated at cost. Costs include construction and acquisition costs. No provision for depreciation is made on assets under construction until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.
2.7 Lease prepayment
Lease prepayment represents upfront prepayment made for the land use rights, and is expensed in profit or loss on a straight-line basis over the period of the lease or when there is impairment, the impairment is expensed in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.8 Intangible assets (continued)
(3) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 5 years.
(4) Non-patent technology
Non-patent technology is capitalised from the development cost. These costs are amortised over their estimated useful lives of 5 years.
2.9 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.10 Non-current assets held-for-sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The non-current assets (except for certain assets as explained below), are stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets and financial assets (other than investments in subsidiaries and associates), which are classified as held for sale, would continue to be measured in accordance with the policies set out elsewhere in Note 2.
2.11 Financial assets
(1) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(1) Classification (continued)
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
(2) Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade-date-the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the‘financial assets at fair value through profit orloss’ category are presented in profit or loss within‘other income/(expense)-net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for- sale are recognised in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as‘gains and losses from investmentsecurities’.
Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends on available-for-sale equity instruments are recognised in profit or loss as part of other income when theGroup’s right to receive payments is established.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.12 Financial liabilities at fair value through profit or loss and offsetting financial instruments
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this category if incurred principally for the purpose of selling in the short term. A financial liability initially recognised at fair value, and transaction costs are expensed in profit or loss. Subsequent measurements are measured at fair value. Liabilities in this category are classified as current liabilities if expected to be settled within 12 months; otherwise, they are classified as non-current. A financial liability is derecognised when it is extinguished.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.13 Impairment of financial assets
(1) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a‘lossevent’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financialasset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of aninstrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in thedebtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
2 Summary of significant accounting policies (continued)
2.17 Share capital
Share capital consists of “A” and “B” shares.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases theCompany’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to theCompany’s shareholders.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.19 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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 30 June 2017, if RMB had strengthened/weakened by10% against USD with all other variable held constant, theGroup’s net profit for the six months ended 30 June 2017 then ended would have been approximately RMB20,534,000 (2016: RMB35,091,000) higher/lower. As at 30 June 2017, if RMB had strengthened/weakened by10% against Euro with all other variable held constant, theGroup’s net profit for the six months ended 30 June 2017 then ended would have been approximately RMB2,731,000 (2016: RMB5,269,000) higher/lower. (b) Interest rate risk
TheGroup’s income and operating cash flows are substantially independent of changes in market interest rates. As at 30 June 2017, a large portion of its bank deposits and all of its borrowings were at fixed rate. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.
As at 30 June 2017, 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 six months ended 30 June 2017 then ended would have been increased/decreased by approximately RMB10,184,000.
(2) Credit risk
TheGroup’s maximum exposure to credit risk in relation to financial assets is the carrying amounts of cash and cash equivalents and trade and other receivables.
As at 30 June 2017, the Group had cash of approximately RMB963,588,000 (2016: RMB874,990,000) 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 SIX MONTHS ENDED 30 JUNE 2017
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 30 June 2017
Bank borrowings
- Principals 444 444 1,330 2,440 - Interests 68 62 145 110 Trade and other payables 10,394,267 - - - 10,394,779 506 1,475 2,550 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
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 30 June 2017 and 31 December 2016 were as follows:
30 June 2017 31 December 2016 Total borrowings 4,658 4,997 Total equity 12,435,579 12,409,236 Total capital 12,440,237 12,414,233 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 SIX MONTHS ENDED 30 JUNE 2017
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 30 June 2017, the Group recorded the deferred tax assets of approximately RMB576,026,000. To the extent that it is probable that taxable profit will be available against which the deductible temporary differences will be utilised, deferred tax assets are recognised mainly for temporary differences arising from accrued expenses and retirement benefit obligations.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 SIX MONTHS ENDED 30 JUNE 2017
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
Six months ended 30 June 2017 2016 Changes in inventories of finished goods and
work in progress 162,825 74,118 Raw materials and consumables used 11,127,866 7,390,290 Employee benefit expense (Note 7) 1,042,529 872,355 Depreciation of PPE (Note 12, 28) 397,762 323,276 Repairs and maintenance expenditure on PPE 43,305 37,727 Research and development expenditure 852,674 650,289 Amortisation of lease prepayment (Note 13, 28) 7,787 7,904 Amortisation of intangible assets (Note 14, 28) 5,527 4,743 Provision of warranty 150,360 108,763 Others 1,023,595 562,749 Total cost of sales, distribution expenses and
administrative expenses 14,814,230 10,032,214 For the six months ended 30 June 2017, depreciation of PPE of approximately RMB24,788,000 (the six months ended 30 June 2016: RMB 21,797,000) and amortisation of intangible assets of approximately RMB12,642,000 (the six months ended 30 June 2016: RMB 888,000) were included in research and development expenditure.
Impairment charge for trade and other receivables of approximately RMB2,207,000 (the six months ended 30 June 2016:RMB8,710,000) and impairment charge for inventories of approximately RMB19,663,000 (the six months ended 30 June 2016: RMB 10,124,000), which were included in administrative expenses, were not included in expenses by nature.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
7 Employee benefit expense
Six months ended 30 June
2017 2016 Wages and salaries 748,104 619,534 Social security costs 98,055 84,831 Pension costs defined contribution plans 129,990 114,803 Others 66,380 53,187 1,042,529 872,355 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
Six months ended 30 June
2017 2016 Government grants (a) 205,468 227,480 Others (1,884) (1,624) 203,584 225,856 (a) For the six months ended 30 June 2017, the Group received grants of approximately RMB205,468,000 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
Six months ended 30 June
2017 2016 (a) Finance income
Interest income on bank deposits 121,328 103,318 Interest income on credit sales 6,575 7,101 127,903 110,419 (b) Finance expenses
Interest expense on bank loans (114) (59) Bank charges and others (1,889) (708) (2,003) (767) Net finance income 125,900 109,652
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 (2016:15%). 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:
Six months ended 30 June
2017 2016 Current tax 84,376 96,325 Deferred tax (Note 16) (21,941) (30,222) 62,435 66,103 The tax on theGroup’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
Six months ended 30 June
2017 2016 Profit before tax 615,338 770,620 Tax calculated at tax rates applicable to profits in
the respective companies 70,822 100,020 Tax concessions (28) (105) Expenses not deductible for tax purposes 361 283 Income not subject to tax (40,650) (36,587) Effect of different tax rates applied for the periods
in which the temporary differences are
expected to reverse 10,849 4,322 Utilisation of previously temporary differences for
which no deferred income tax asset was
recognised (2,391) (11,161) Tax losses for which no deferred income tax
asset was recognised 23,472 9,331 Tax charge 62,435 66,103
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
10 Taxation (continued)
(a) 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.
(b) Consumption Tax (“CT”)
TheGroup’s automobile sale is subject to CT at3%,5% or9% on the selling price of goods. 11 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
Six months ended 30 June
2017 2016 Profit attributable to shareholders of the
Company 552,903 704,517 Weighted average number of ordinary shares in
issue(‘000) 863,214 863,214 Basic earnings per share (RMB) 0.64 0.82 Diluted earnings per share equals to basic earnings per share as there were no dilutive potential ordinary shares outstanding during the six months ended 30 June 2017.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 2016
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 Transfers 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 - (1,717) (50)
-
(1,027) - (2,794) Depreciation charge (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 Six months ended 30 June 2017
Opening net book amount 1,492,401 1,738,239 138,769 807,277 1,411,676 1,100,168 6,688,530 Additions - - - - - 326,956 326,956 Tra nsfers 71,525 111,568 3,067 64,038 111,288 (361,486) - Disposals - (68) (1,817) - (276) - (2,161) Other deductions - - - - - (351) (351) Impairment charge (Note 28) - (615) (128)
-
(2,188) (416) (3,347) Depreciation charge (Note 6, 28) (24,511) (110,408) (15,166) (114,781) (157,684) - (422,550) Closing net book amount 1,539,415 1,738,716 124,725 756,534 1,362,816 1,064,871 6,587,077 At 30 June 2017
Cost 1,937,375 3,632,890 260,707 2,257,218 2,962,674 1,065,979 12,116,843 Accumulated depreciation and impairment (397,960) (1,894,174) (135,982) (1,500,684) (1,599,858) (1,108) (5,529,766) Net book amount 1,539,415 1,738,716 124,725 756,534 1,362,816 1,064,871 6,587,077
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
12 Property, plant and equipment (continued)
For the six months ended 30 June 2017, depreciation expense of approximately RMB367,960,000 (the six months ended 30 June 2016: RMB289,897,000) was charged in cost of sales, RMB1,349,000 (the six months ended 30 June 2016: RMB1,427,000) in distribution expenses and RMB53,241,000 (the six months ended 30 June 2016: RMB53,749,000) in administrative expenses.
Lease rental expenses amounting to approximately RMB4,419,000 (the six months ended 30 June 2016: RMB3,087,000) relating to the lease of property are included in profit or loss. 13 Lease prepayment
Lease prepayment represents theGroup’s interests in land which are held on leases of 50 years. The movement is as follows:
30 June 2017 31 December 2016 Opening net book amount 632,408 645,608 Additions - 2,394 Amortisation charge (Note 6, 28) (7,787) (15,594) Closing net book amount 624,621 632,408 Cost 751,626 751,626 Accumulated amortisation (127,005) (119,218) Net book amount 624,621 632,408 Amortisation expense was charged in administrative expenses.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 2016
Opening net book amount - 38,225 3,462 - 18 41,705 Addi tion 124,587 12,390 - - - 136,977 Amortisation charge (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 Six months ended 30 June 2017
Opening net book amount 115,893 38,797 3,462 - 8 158,160 Addition 7,751 351 - - - 8,102 Amortisation charge (Note 6, 28) (11,745) (6,420) - - (4) (18,169) Closing net book amount 111,899 32,728 3,462 - 4 148,093 At 30 June 2017
Cost 132,338 98,368 89,028 36,978 1,649 358,361 Accumulated amortisation and impairment (20,439) (65,640) (85,566) (36,978) (1,645) (210,268) Net book amount 111,899 32,728 3,462 - 4 148,093
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
14 Intangible assets (continued)
(a) For six months ended 30 June 2017, amortisation expense of approximately RMB17,690,000 (the six months ended 30 June 2016: RMB5,506,000) was charged in administrative expenses, approximately RMB309,000 (the six months ended 30 June 2016: RMB97,000) in cost of sales and approximately RMB170,000 (the six months ended 30 June 2016: RMB28,000) in distribution expenses.
(b) Development costs of approximately RMB7,751,000 were capitalised as non-patent technology by the Group during the six months ended 30 June 2017 (the six months ended 30 June 2016: RMB60,053,000).
(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 2016 Addition Impairment 30 June 2017 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 long term growth rates used are consistent with the forecasts included in industry reports. The discount rates used are after-tax and reflect specific risks relating to the relevant operating subsidiary.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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: 30 June 2017 31 December 2016 Associate 43,340 39,893 The amount recognised in the consolidated statement of comprehensive income was as follow: Six months ended 30 June 2017 2016 Share of profit 3,447 5,026 The Company holds19.15% interest of Hanon Systems (Nanchang) Co., Ltd. (Hanon Systems) and the investment is accounted for using the equity method of accounting.
(b) Reconciliation of summarised financial information for immaterial associates
Six months ended 30 June 2017 2016 At beginning of the year 208,317 214,061 Profit for the period 18,000 26,245 Dividends distributed - (30,000) At end of the period 226,317 210,306 Interest in associate 19.15% 19.15% Carrying value 43,340 40,274
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax
30 June 2017 31 December 2016 Deferred tax assets 640,190 590,899 Deferred tax liabilities-can be offset (64,164) (36,411) Deferred tax liabilities-cannot be offset (26,980) (27,383) Deferred tax assets-net 576,026 554,488 Deferred tax liabilities-net (26,980) (27,383) The gross movement on the deferred income tax account is as follows:
30 June 2017 31 December 2016 At beginning of the year 527,105 445,541 Credited to profit or loss (Note 10(a)) 21,941 81,293 Credited to other comprehensive income
(Note 10(a)) - 271 At end of the period 549,046 527,105 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 2016 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 Credited /(charged) to
profit or loss 3,331 (407) 44,665 1,468 234 49,291 Credited to other
comprehensive income - - - - - - At 30 June 2017 10,917 13,687 612,151 2,555 880 640,190 Amortisation Forward
of intangible PPE Fair value exchange
Deferred tax liabilities assets depreciation gains contracts Total At 1 January 2016 (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) (Charged)/credited to profit or
loss (586) (27,556) 403 389 (27,350) At 30 June 2017 (5,282) (57,990) (26,980) (892) (91,144)
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
16 Deferred income tax (continued)
||||
|-|-|-|
|The analysis of deferred tax assets and deferred tax liabilities is as follows:|||
||30 June 2017|31 December 2016|
|Deferred tax assets:|||
|–Deferred tax asset to be recovered after|||
|more than 12 months|15,554|14,493|
|–Deferred tax asset to be recovered|||
|within 12 months|624,636|576,406|
||640,190|590,899|

 30 June 2017 31 December 2016 Deferred tax liabilities:
–Deferred tax liabilities to be recovered
after more than 12 months (86,576) (60,365)–Deferred tax liabilities to be recovered
within 12 months (4,568) (3,429) (91,144) (63,794) Deductible temporary differences and tax losses which no deferred income tax assets were recognised were as follows:
30 June 2017 31 December 2016 Deductible temporary differences 30,618 40,182 Tax losses
452,714 369,032 483,332 409,214 The expiry years of the tax losses are as follows:
30 June 2017 31 December 2016 2017 89,447 89,447 2018 44,319 44,319 2019 36,772 36,772 2020 72,470 72,470 2021 115,819 126,024 2022 93,887 - 452,714 369,032
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
17 Inventories
30 June 2017 31 December 2016 Raw materials 1,489,895 1,300,443 Work in progress 202,854 193,152 Finished goods 267,900 440,497 1,960,649 1,934,092 For the six months ended 30 June 2017, the cost of inventories recognised as expenses and included in cost of sales amounted to approximately RMB11,290,691,000 ( the six months ended 30 June 2016: RMB7,464,408,000).
A provision of approximately RMB39,366,000(2016: RMB26,491,000) was made as at 30 June 2017. The Group reversed approximately RMB1,062,000 of a previous inventory write- down during the six months ended 30 June 2017. During the six months ended 30 June 2017, the Group wrote-off inventories with provision of approximately RMB6,788,000 made in prior years. The provision and reversal of the inventory write-down have been included in administrative expenses in profit or loss.
As at 30 June 2017, no inventory was pledged as security for liabilities.
18 Trade and other receivables and prepayments
30 June 2017 31 December 2016 Trade receivables 1,651,383 1,188,088 Less: Provision for impairment of trade
receivables (18,056) (15,940) Trade receivables– net 1,633,327 1,172,148 Notes receivables 651,501 498,875 Other receivables 104,667 86,581 Less: Provision for impairment of other
receivables (524) (433) Other receivables– net 104,143 86,148 Prepayments 1,120,071 796,833 Interest receivables 80,466 71,804 3,589,508 2,625,808 Refer to Note 31 for details of receivables from related parties. The carrying amounts of theGroup’s trade and other receivables are all denominated in RMB.
The carrying amounts of trade and other receivables and prepayments approximate their fair values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
18 Trade and other receivables and prepayments (continued)
Movement on the provision for impairment of trade and other receivables is as follows:
30 June 2017 31 December 2016 At beginning of the year (16,373) (7,611) Provision for receivables impairment
(Note 28) (2,207) (8,952) Receivables written off during the year as
uncollectible - 190 At end of the period (18,580) (16,373) The creation of provision for impaired receivables was included in‘administrativeexpense’ in profit or loss.
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 SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
19 Cash and cash equivalents
30 June 2017 31 December 2016 Cash at bank and in hand 642,947 790,373 Short-term bank deposits (a) 9,835,000 10,875,849 10,477,947 11,666,222 As at 30 June 2017, the Group had cash of approximately RMB963,588,000 (2016: RMB874,990,000) deposited in JMCF (Note 31 (j)). The interest rates range from1.495%-2.25% per annum (2016:1.495% to2.25%). JMCF, a non-bank financial institution, is a subsidiary of JMCG.
(a) Short-term bank deposits can be withdrawn at the discretion of the Group without any restriction.
20 Assets classified as held for sale
30 June 2017 31 December 2016 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 SIX MONTHS ENDED 30 JUNE 2017
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 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 Six months ended 30 June
2017
Balance at 1 January 2017 863,214 1,726 517,488 344,000 863,214 Transfer - - - - - Balance at 30 June 2017 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 30 June 2017.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
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 2016 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 Other comprehensive income
-Remeasurements of retirement
benefit obligation, net of tax - - - - At 30 June 2017 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 six months ended 30 June 2017.
23 Borrowings
30 June 2017 31 December 2016 Current
Bank borrowings - guaranteed (a) 444 454 Non-current
Bank borrowings - guaranteed (a) 4,214 4,543 Total borrowings 4,658 4,997 (a) Bank borrowings of USD 688,000 (equivalent to approximately RMB4,658,000) (2016: USD720,000 equivalent to approximately RMB4,997,000) were guaranteed by JMCF (Note 31 (c)).
The interest rate of bank borrowings is1.50% per annum (2016:1.50%).
The fair value of borrowings approximates their carrying values.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
23 Borrowings (continued)
The maturity of non-current borrowings is as follows:
30 June 2017 31 December 2016 Between 1 and 2 years 444 454 Between 2 and 5 years 1,330 1,363 Over 5 years 2,440 2,726 4,214 4,543 The Group has the following undrawn borrowing facilities:
30 June 2017 31 December 2016 Fixed rate
- Expiring within one year 1,392,537 1,390,868 24 Retirement benefits obligations
The amount of early retirement and supplemental benefit obligations recognised in the statement of financial position is as follows:
30 June 2017 31 December 2016 Present value of defined benefits obligations 55,474 58,188 The movement of early retirement and supplemental benefit obligations for the six months ended 30 June 2017 is as follows:
30 June 2017 31 D ecember 2016 At beginning of the year 58,188 56,833 For the year
-Current service cost - 1,325 -Interest cost - 1,633 -Payment (2,714) (4,754) -Past service cost from the change of plan - 1,486 -Actuarial loss - 1,665 At end of the period 55,474 58,188 Current 4,561 4,561 Non-current 50,913 53,627 55,474 58,188 The material actuarial assumptions used in valuing these obligations are as follows:
30 June 2017 31 December 2016 Discount rate adopted —— 3.5% The salary and supplemental benefits inflation
rate of retiree, early-retiree and employee at post —— 0% to6%
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
24 Retirement benefits obligations (continued)
As at 30 June 2017, the Group did not estimate the present value of defined benefit obligation. Based on the assessment and IAS 19, the Group estimated that, at 30 June 2017, a provision of RMB55,474,000 is sufficient to cover all future retirement-related obligations.
Obligation in respect of retirement benefits of RMB55,474,000 is the present value of the unfunded obligations, of which the current portion amounting to RMB4,561,000 (2016: RMB4,561,000) has been included under current liabilities.
25 Provisions for warranty and other liabilities
The movement on the warranty provisions and other liabilities is as follows:
30 June 2017 31 December 2016 At beginning of the year 284,627 214,722 Charged for the year (Note 6) 150,360 261,430 Utilised during the year (118,548) (191,525) At end of the period 316,439 284,627 Analysis of total provisions:
30 June 2017 31 December 2016 Non-current 149,128 130,987 Current 167,311 153,640 316,439 284,627 The above represents the warranty costs for repairs and maintenance, which are estimated based on present after-sale service policies and prioryears’ experience on the occurrence of such cost.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
26 Trade and other payables
30 June 2017 31 December 2016 Trade payables 7,173,967 7,731,169 Payroll and welfare payable 237,814 289,283 Dividend payables 531,512 5,840 Other payables 3,386,150 3,578,886 11,329,443 11,605,178 For details of amount due to related parties, please refer to Note 31.
27 Dividends
A final dividend for 2016 of RMB 0.61 per share, amounting to a total dividend of RMB526,560,000 is proposed at theShareholders’ Meeting on 29 June 2017.
28 Cash generated from operations
Six months ended 30 June 2017 2016 Profit before tax 615,338 770,620 Depreciation of PPE (Note 6, 12) 422,550 345,073 Amortisation of lease prepayment (Note 6, 13) 7,787 7,904 Amortisation of intangible assets (Note 6, 14) 18,169 5,631 Impairment charges of PPE (Note 12) 3,347 1,347 Provision for receivables impairment (Note 18) 2,207 8,710 Provision of inventories 19,663 10,124 Loss on disposals of PPE 246 895 Finance expenses 1,646 483 Finance income (Note 9) (127,903) (110,419) Net foreign exchange transaction loss 5,383 6,863 Share of profit from investment accounted for using
equity method (Note 15b) (3,447) (5,026) Investment gain of forward exchange contracts (1,583) (276) Changes on fair value of forward exchange contracts 2,590 (1,921) Changes in working capital:
- Increase in inventories (52,548) (32,459) - (Increase) /decrease in trade and other receivables (948,781) 460,103 - Increase in provisions for warranty 31,812 15,767 - decrease in trade and other payables (727,034) (376,818) -decrease in pensions and other retirement benefits (2,714) (2,694) Cash generated from operations (733,272) 1,103,907
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
28 Cash generated from operations (continued)
In the cash flow statement, proceeds from disposal of PPE comprise:
Six months ended 30 June 2017 2016 Net book amount 2,161 3,289 Loss on disposal of PPE (246) (895) Offset with trade and other payables 182 217 Proceeds from disposal of PPE 2,097 2,611 29 Contingencies
At 30 June 2017 the Group did not have any significant contingent liabilities.
30 Commitments
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:
30 June 2017 31 December 2016 Contracted but not provided for:
Purchases of buildings, plant and machinery 631,540 572,773 31 Related party transactions
Related parties are those parties that have the ability to control the other party or exercise significant influence in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.
Jiangling Motor Holdings Co. Ltd. (“JMH”), which owns41.03% of theCompany’s shares, and Ford Motor Company (“Ford”), which owns32% of theCompany’s shares, are major shareholders of the Company as at 30 June 2017. The shareholders of JMH are Chongqing Changan Automobile Corporation Ltd. and JMCG, and both of them hold50% equity interest of JMH, respectively.
The following is a summary of the significant transactions carried out between the Group, its associates, JMCG and its subsidiaries, JMH and its subsidiaries and joint venture, Ford and its subsidiaries and joint venture in the ordinary course of business during the six months ended 30 June 2017.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
For the six months ended 30 June 2017, 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 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 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 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 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. Subsidiary of JMCG Jiangxi Jiangling Non-ferrous Metal Die-casting 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 GETRAG (Jiangxi) Transmission Company Associate of JMCG 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 JMCG Specialty Vehicles Corporation, 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 SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services
Six months ended 30 June Purchase of goods 2017 2016 Nanchang Baojiang Steel Processing Distribution Co.,Ltd. 457,760 254,213 Ford 452,439 184,544 Jiangxi Jiangling Chassis Co.,Ltd. 421,636 384,153 GETRAG (Jiangxi) Transmission Company 391,606 311,994 Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 326,851 298,479 Jiangxi Jiangling Lear Interior System Co.,Ltd. 282,853 227,342 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 278,927 135,181 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 234,711 138,623 Nanchang Unistar Electric& Electronics Co.,Ltd. 122,995 100,047 Hanon Systems 120,879 103,226 Changan Ford Automobile Co.,Ltd. 115,331 10,719 Faurecia Emissions Control Technologies (Nanchang) Co.,Ltd. 99,189 28,368 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 73,564 90,130 Auto Alliance (Thailand) Co.,Ltd. 72,011 - JMCG 50,538 53,480 Nanchang JMCG Skyman Auto Component Co.,Ltd. 31,861 32,714 Nanchang Lianda Machinery Co.,Ltd. 30,357 35,657 Jiangxi Lingge Non-ferrous Metal Die-casting Co.,Ltd. 29,077 18,710 Nanchang Yinlun Heat-exchanger Co.,Ltd. 28,259 23,343 Ford Otomotiv Sanayi A.S. 16,047 5,865 Jiangling Material Co. 14,658 11,117 Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 13,956 15,318 Nanchang Gear Co.,Ltd. 12,040 8,976 Nanchang JMCG Xinchen Auto Component Co.,Ltd. 11,909 14,164 Jiangxi Biaohong Engine Tappet Co.,Ltd. 4,042 4,814 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 3,062 3,709 JMCG Hequn Costume Co.,Ltd. 2,543 1,504 Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd 1,961 - Jiangxi JMCG Industry Co.,Ltd. 1,355 831 Jiangxi Jiangling Material Utilization Co.,Ltd. - 1,327 Others 3 4,952 3,702,420 2,503,500 The Group purchased goods from related parties classified as two types: import parts and home- made parts.
 Purchase import parts from Ford orFord’s suppliers, based on agreed price;
 Purchase home-made parts from other related parts, based on quotation, cost accounting and negotiation.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2017 2016 Ford Engineering service and design 148,586 46,590 Ford Global Technologies, LLC Royalty fee 134,653 37,885 Nanchang JMCG Shishun Logistics Co., Ltd. Transportation 128,924 85,587 Ford Otomotiv Sanayi A.S. Engineering service and design 32,749 151,648 Nanchang Hengou Industry Co., Ltd. Packing/truckage 29,705 30,836 JMCG Jiangxi Engineering Construction Co., Ltd. Engineering construction and maintenance 20,430 789 Ford Otomotiv Sanayi A.S. Secondments costs 16,652 15,334 Ford Secondments costs 16,631 19,584 Jiangxi JMCG Industry Co.,Ltd. Working meal 15,434 13,053 JMH Royalty fee 10,000 - Ford Otomotiv Sanayi A.S. Royalty fee 9,582 6,736 Ford Motor (China) Co., Ltd. Software and consulting fees 3,327 - Ford Motor (China) Co., Ltd. Regional personnel costs 2,847 2,702 Hanon Systems Experimental manufacturing costs 2,263 2,479 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. Agent business of importation 1,972 2,705 Nanchang JMCG Liancheng Auto Component
Co.,Ltd. Experimental manufacturing costs 1,145 - JMH Secondments costs 957 641 Ford Motor Research& Engineering (Nanjing) Co.,
Ltd. Regional personnel costs 937 1,871 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. Promotion 396 2,774
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued)
Six months ended 30 June
Purchase of services Natures of transaction 2017 2016 Changan Ford Automobile Co.,Ltd. Design fee - 1,650 Others Design fee 3,750 236 580,940 423,100 The Group purchased the service from related parties based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(a) Purchases and sales of goods, provision and purchases of services (continued) Six months ended 30 June Sales of goods 2017 2016 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 452,175 550,617 Jiangxi Jiangling Chassis Co.,Ltd. 47,632 26,293 Nanchang Hengou Industry Co., Ltd. 44,199 - Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 42,953 84,586 JMCG Jingma Motors Co., Ltd. 39,224 38,436 Nanchang JMCG Liancheng Auto Component Co.,Ltd. 30,036 22,918 Jiangxi Jiangling Non-ferrous Metal Die-casting Co.,Ltd 29,891 - Jiangxi Jiangling Special Purpose Vehicle Co.,Ltd. 18,326 24,979 Jiangxi JMCG Yichehang Second-hand Motors Sales Co., Ltd. 14,511 11,215 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 12,823 3,145 Nanchang Jiangling Hua Xiang Auto Components Co.,Ltd. 9,155 1,908 Jiangxi Jiangling Lear Interior System Co.,Ltd. 3,355 6,702 JMCG Property Management Co. 3,343 3,353 Jiangxi JMCG Industry Co.,Ltd. 3,060 5,214 JMH 2,853 1,729 Jiangxi ISUZU Co., Ltd. 1,009 440 Jiangxi Jiangling Material Utilization Co.,Ltd. - 15,849 Jiangxi Sinodef International Trade Co.,Ltd. - 4,831 Others 766 1,135 755,311 803,350 The Group sold goods to related parties, based on agreement price.
Six months ended 30 June Provision of services 2017 2016 Ford Motor Company of Australia Limited - 6,698 The Group provided the services to related parties, based on agreement price.
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(b) Rental
Rental cost
Lessor Category Rental cost of six Rental cost of six months ended 30 months ended 30 June 2017 June 2016 Jiangxi Jiangling Motors Imp.&
Exp. Co., Ltd. Building 2,138 2,981 JMCG Building 2,070 - JMCG Property Management Co. Building 211 106 4,419 3,087 Rental income
Lessee Category Rental income of six Rental income of six months ended 30 months ended 30 June 2017 June 2016 JMH Building 4 22 GETRAG (Jiangxi) Transmission
Company Building 3 - 7 22 (c) Guarantee
As at 30 June 2017, bank loans of USD688,000 (equivalent to approximately RMB4,658,000) (2016:USD720,000 equivalent to approximately RMB4,997,000) were guaranteed by JMCF (Note 23).
(d) Sales of PPE
Six months ended 30 June 2017 2016 Jiangxi JMCG Industrial Co., Ltd. 2 5 (e) Purchase of PPE
Six months ended 30 June 2017 2016 Jiangxi JMCG Specialty Vehicles Corporation, Ltd. 150 -
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(f) Key management remuneration
Key management includes directors (executive and non-executive), members of the Executive Committee, the Company Secretary and members of the Supervisory Board. During the six months ended 30 June 2017, the total remuneration of the key management was approximately RMB 9,256,000 (the six months ended 30 June 2016: RMB 8,077,000).
(g) Interest received from cash deposit in related parties
Six months ended 30 June 2017 2016 JMCF 10,098 5,879 During the six months ended 30 June 2017, the interest rates range from1.495% to2.25% per annum.
(h) Balances arising from sales/purchases of goods/services
Trade receivables from related parties 30 June 2017 31 December 2016 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 131,831 230,848 Nanchang Hengou Industry Co., Ltd. 40,987 1,694 JMCG Jingma Motors Co., Ltd. 19,593 10,530 Jiangxi Jiangling Chassis Co.,Ltd. 7,149 - JMH 3,370 1,664 Jiangxi JMCG Industry Co.,Ltd. 1,633 2,036 Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. - 3,304 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. - 1,360 Ford Vietnam Limited - 1,149 Others 293 135 204,856 252,720 Other receivables from related parties 30 June 2017 31 December 2016 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 43,710 30,338 Ford Otomotiv Sanayi A.S. 1,225 1,225 Others 930 922 45,865 32,485
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Prepayments for purchasing of goods 30 June 2017 31 December 2016 Nanchang Baojiang Steel Processing Distribution
Co.,Ltd. 586,520 410,220 Ford Otomotiv Sanayi A.S. 1,930 - Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 986 - 589,436 410,220 Notes receivables from related parties 30 June 2017 31 December 2016 JMCG Jingma Motors Co., Ltd. 36,395 44,827 Prepayments for construction in progress 30 June 2017 31 December 2016 JMCG Jiangxi Engineering Construction Co., Ltd. 13,516 8,106 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 12,245 273 Others 150 - 25,911 8,379 Prepayments for mould lease 30 June 2017 31 December 2016 Changan Ford Automobile Co., Ltd. 22,259 32,528 Cash deposit in related parties 30 June 2017 31 December 2016 JMCF (Note 19) 963,588 874,990
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) Balances arising from sales/purchases of goods/services (continued)
Trade payables to related parties 30 June 2017 31 December 2016 Jiangxi Jiangling Chassis Co.,Ltd. 301,854 267,405 Jiangxi Jiangling Lear Interior System Co.,Ltd. 270,491 381,357 Jiangxi JMCG Specialty Vehicles Corporation,
Ltd. 258,189 286,710 Nanchang Jiangling Hua Xiang Auto
Components Co.,Ltd. 194,953 210,407 GETRAG (Jiangxi) Transmission Company 185,437 180,956 Jiangxi Jiangling Special Purpose Vehicle
Co.,Ltd. 167,843 255,916 Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 116,678 144,608 Hanon Systems 83,797 87,404 Ford 81,868 117,540 Nanchang Unistar Electric& Electronics Co.,Ltd. 68,648 50,575 Faurecia Emissions Control Technologies
(Nanchang) Co.,Ltd. 54,110 43,618 JMCG 51,201 73,518 Nanchang JMCG Skyman Auto Component
Co.,Ltd. 34,032 23,538 Jiangxi Lingge Non-ferrous Metal Die-casting
Co.,Ltd. 18,622 17,778 Nanchang Yinlun Heat-exchanger Co.,Ltd. 18,311 20,612 Nanchang Lianda Machinery Co.,Ltd. 17,716 23,570 Nanchang JMCG Xinchen Auto Component
Co.,Ltd. 9,691 10,194 Jiangling Aowei Aotomobile Spare Part Co.,Ltd. 8,983 13,475 Auto Alliance (Thailand) Co.,Ltd. 6,888 12,004 Jiangxi Jiangling Motors Imp.& Exp. Co., Ltd. 6,454 3,654 Nanchang Gear Co.,Ltd. 5,836 5,777 Jiangxi JMCG Shangrao Industrial Co.,Ltd. 2,521 2,137 Jiangxi Biaohong Engine Tappet Co.,Ltd. 2,133 2,362 Changan Ford Automobile Co.,Ltd. 2,036 113,485 Ford Otomotiv Sanayi A.S. 2,015 2,687 Jiangxi Jiangling Non-ferrous Metal Die-casting
Co.,Ltd 1,492 612 Jiangxi JMCG Industry Co.,Ltd. 1,481 188 Others 1,190 3,790 1,974,470 2,355,877
JIANGLING MOTORS CORPORATION, LTD.
FOR THE SIX MONTHS ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of RMB unless otherwise stated)
31 Related party transactions (continued)
(h) I Balances arising from sales/purchases of goods/services (continued)
Other payables to related parties 30 June 2017 31 December 2016 Ford 109,828 176,871 Ford Otomotiv Sanayi A.S. 95,045 232,672 Ford Global Technologies, LLC 59,147 58,517 JMCG Jiangxi Engineering Construction Co., Ltd. 18,145 12,511 JMH 10,696 1,303 Jiangxi Jiangling Lear Interior System Co.,Ltd. 10,556 16,154 Nanchang Hengou Industry Co., Ltd. 9,423 11,378 Nanchang JMCG Shishun Logistics Co., Ltd. 6,580 3,944 Nanchang Jiangling Hua Xiang Auto Components
Co.,Ltd. 5,979 6,157 Nanchang JMCG Liancheng Auto Component
Co.,Ltd. 3,879 3,751 Ford Motor (China) Co., Ltd. 3,689 1,199 Hanon Systems 2,520 257 Jiangxi Jiangling Group Special Vehicle Co.,Ltd. 1,090 951 GETRAG (Jiangxi) Transmission Company 665 1,550 JMCG Hequn Costume Co.,Ltd. 861 1,410 JMCG 53 1,041 Others 2,864 5,383 341,020 535,049 Advance from related parties 30 June 2017 31 December 2016 Jiangxi JMCG Specialty Vehicles Corporation,
Ltd. 176 4,294 Others 774 342 950 4,636 (i) I Related parties commitments
Capital commitments 30 June 2017 31 December 2016 JMCG Jiangxi Engineering Construction Co.,
Ltd. 49,019 40,334
Chapter XI Catalogue on Documents for Reference
1. Originals of 2017 Half-year financial statements signed by legal representative and Chief Financial Officer.
2. Originals of all the documents and public announcements disclosed in
newspapers designated by CSRC in the first half of 2017.
4. The Half-year Report in the China GAAP.
Board of Directors
Jiangling Motors Corporation, Ltd.
August 30, 2017