Jiangling Motors Corporation, Ltd. Extracts From 2011 Annual Report

Transcription

1 Share s code: Share s Jiangling Name: Motors Jiangling B No.: Jiangling Motors Corporation, Ltd. Extracts From 2011 Annual Report 1 Important Note 1.1 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 undertake that the information disclosed herein does not contain false statements, misrepresentations or major omissions. These extracts are extracted from the original of annual report. Investors should carefully read the original for details. 1.2 None of the Directors states that he can not ensure the truthfulness, accuracy and completeness of the information disclosed in the report, or he had the dissentience to this report. 1.3 All the Directors were present at the meeting. 1.4 PricewaterhouseCoopers Zhong Tian CPAs Limited Company issued unqualified auditor s reports for JMC. 1.5 Chairman Wang Xigao, President Yuan-Ching Chen, CFO Michael Joseph Brielmaier and Chief of Finance Department, Ding Ni, confirm that the Financial Statements in this Annual Report are truthful and complete. 1.6 The Annual Report is prepared in Chinese and English. In the event of any discrepancy, the Chinese version will prevail. All financial data in this report are prepared under International Financial Reporting Standards ( IFRS ) unless otherwise specified. 2.1 Brief introduction 2 Brief Introduction Share s name Jiangling Motor Jiangling B Share s code Place of listing Shenzhen Stock Exchange 2.2 Contact persons and contact details Board Secretary Securities Affair Representative Name Wan Hong Quan Shi 1

2 Contact address No. 509, Northern Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.C Telephone Fax Operating Highlight 3.1 Main accounting data Unit: RMB Change (%) 2009 Revenue 17,456,999 15,767, ,433,205 Operating profit 1,947,783 1,926, ,181,403 Profit Before Income Tax 2,121,268 2,026, ,238,840 Profit Attributable to the Equity Holders of 1,866,431 1,706, ,052,529 the Company Net Cash Generated From Operating Activities 1,147,034 2,716, ,112,232 End of End of End of Change (%) Year 2011 Year 2010 Year 2009 Total Assets 11,819,855 11,237, ,294,346 Total liabilities 4,392,735 4,995, ,347,493 Shareholders Equity Attributable to the Equity Holders of the 7,311,768 6,127, ,843,947 Company Share Capital 863, , , Main financial indexes Change (%) 2009 Basic Earnings Per Share (RMB) Diluted Earnings Per Share (RMB) Weighted Average Return on Net Asset Ratio Net Cash Per Share Generated From Operating Activities % 30.91% Down 3.37 percentage points 23.66%

3 (RMB) End of Year 2011 End of Year 2010 Change (%) End of Year 2009 Net Assets Per Share Attributable to the Equity Holders of the Company (RMB) Liabilities/Assets (%) Down 7.29 percentage points Difference between net profits per China General Acceptable Accounting Principles ( China GAAP ) and per International Financial Reporting Standards ( IFRS ) Applicable Not Applicable Shareholders Equity Attributable to the Equity Holders of the Company as of December 31, 2011 Unit: RMB 000 Profit Attributable to the Equity Holders of the Company in 2011 As Prepared under the China GAAP* 7,311,768 1,870,918 Adjustment per IFRS: Staff Bonus and Welfare Fund appropriated from Net Profit of a Subsidiary - -4,487 As Restated in Conformity with IFRS 7,311,768 1,866,431 * Based on the financial statements audited by PwC Zhong Tian per the China GAAP. 3

4 4 Share Capital Changes & Shareholders 4.1 Total shareholders, top ten shareholders, and top ten shareholders holding unlimited tradable shares Total shareholders (as of December 31, 2011) Total shareholders (as of February 29, 2012) Top ten shareholders Shareholder Name Jiangling Motor Holding Co., Ltd. Ford Motor Company Huaan Tactical Select Securities Investment Fund Shanghai Automotive Co., Ltd. National Social Security Fund- Portfolio 102 Bosera Thematic Sector Equity Securities Investment Fund Dragon Billion China Master Fund Rongtong New Blue-chip Securities Investment Fund Jpmblsa Re Ftif Templeton China Fund Gti 5497 JMC had 24,174 shareholders, including 17,918 A-share holders and 6,256 B-share holders. JMC had 23,110 shareholders, including 16,929 A-share holders and 6,181 B-share holders. Shareholder Type State-owned Foreign legal person Domestic non-state-owned State-owned Legal person Domestic non-state-owned Domestic non-state-owned Foreign legal person Domestic non-state-owned Foreign legal person Shareholding Percentage (%) Shares at the End of Year Shares with Trading Restriction Shares due 4 to mortgage or frozen ,176, ,964, ,129, ,019, ,234, ,500, ,969, ,281, ,827, Foreign legal Invesco Funds Sicav ,701, person Top ten shareholders holding unlimited tradable shares Shareholder Name Shares without Trading Share Type Restriction Jiangling Motor Holding Co., Ltd. 354,176,000 A share Ford Motor Company 258,964,200 B share Huaan Tactical Select Securities Investment Fund 19,129,434 A share Shanghai Automotive Co., Ltd. 13,019,610 A share National Social Security Fund- Portfolio ,234,091 A share Bosera Thematic Sector Equity Securities 9,500,000 A share

5 Investment Fund Dragon Billion China Master Fund 8,969,196 B share Rongtong New Blue-chip Securities Investment Fund 7,281,998 A share Jpmblsa Re Ftif Templeton China Fund Gti ,827,483 B share Invesco Funds Sicav 4,701,709 B share Notes on association among above-mentioned shareholders Bosera Thematic Sector Equity Securities Investment Fund and National Social Security Fund- Portfolio 102 are in custody of Bosera Fund Management Co., Ltd. 4.2 Ownership and control relations between the Company and the actual controlling parties SASAC Nanchang State-owned Assets Supervision and Administration Committee 45.55% 100% Chongqing Changan Automobile Co., Ltd. JMCG 50% 50% JMH 41.03% Ford 30% JMC 5 Report of the Board of Directors 5.1 Discussions and analysis on operating results during the reporting period 1. Operating Results JMC s core business is production and sales of light commercial vehicles and related components. Its major products include JMC series light truck, pickup, SUV and Transit series commercial vehicles. The Company also produces engines, castings and other components. In 2011, JMC achieved record sales volume of 194,588 units including 67,916 JMC brand light trucks, 68,077 JMC brand pickups and SUVs, and 58,595 Ford Transit commercial vehicles. Total sales volume was up 9% from the same period last year. Total production volume was 189,166 units, including 64,763 JMC brand light trucks, 67,170 JMC brand pickups and SUVs, and 57,233 Transits. 5

6 The Company s sales increase is primarily explained by market share growth. Compared with same period last year, JMC brand light truck sales volume increased by 3%, JMC brand pickup and SUV sales volume increased by 13%, Transit sales volume increased by 12%. In 2011, the Company achieved a share of 1.1% of China s total vehicle industry, up 0.1 percentage point from a year ago (In 2011, the Company achieved a share of 3.3% of China s commercial vehicle industry, up 0.6 percentage point compared with 2010). JMC light trucks (including pickup) accounted for 7.2% of the light truck market, up 0.6 percentage points from a year ago. Transit, along with the JMC brand Yunba microbus, achieved about 20.9% of the light bus market, and increase of 0.3 percentage points from last year s level. (Data source for above analysis: China Association of Automobile Manufacturers and the Company sales records) 2. Operating Results of Subsidiaries Name of Business Main Registered Assets Turnover Operating Net Profit Subsidiaries Products Capital (RMB 000) (RMB 000) Profit (RMB 000) (RMB 000) Jiangling-Isuzu Motors Manufacturing N series Light Truck, T Company, Ltd. series Pickup, $ 30 million 2,338,401 9,091, , ,650 Microbus, SUV 3. Operational Challenges and Resolutions In 2011, the Company continued to face new competitive product entry, more stringent regulatory requirements, intensifying cost pressures and a slowdown in the commercial vehicle industry. During the reporting period, the Company focused on quality improvements, new product development and new plant construction, which sets the foundation for future growth. With regard to competition, the Company continued to experience market share pressure from low price competitors. In response, the Company lowered prices on selected models of Transit, light truck and diesel pickups. Additionally, proactive marketing plans were initiated to help generate sales. The Company also accelerated development of the dealer network in the second tier markets and enhanced its customer purchase satisfaction. To achieve steady growth, the company continues to focus on (1) quality improvement for all products, (2) tactically accelerating marketing spending and sales promotion that improve market share, (3) reducing component costs and improving manufacturing efficiency, (4) balancing management of controllable expenses, including operating, capacity-related, and new product development spending, while ensuring that the company s long term 6

7 development remains consistent with company objectives, and (5) strengthening corporate governance and application of appropriate risk assessment and control mechanisms. The company anticipates continued cost pressures and severe competition in the future, including raw material prices and labor cost increases, competitive vehicle price reduction, more new vehicle entries in selected market segments, government policy revisions, more stringent regulatory requirements and erratic vehicle industry growth. The Company will continue to leverage previously established processes and work groups to reduce existing production costs and eliminate operating waste throughout the enterprise. Additionally, we are maximizing design optimization and cost reduction for new products. With the support of our technology partners, we will continue to execute major projects approved by the Board. These programs include the N350 PK project, the N330 project (the next generation SUV which is a self developed product), the N800 project (the next generation light truck which is a self developed product), the N351 SUV AT Program. These actions will introduce competitive and profitable products into the light commercial vehicle market according to project time plan and will effectively upgrade manufacturing capabilities. Finally, the company is continuing its efforts to strengthen its dealer network development and pursue export and OEM sales growth. 4. Financial Results Total revenue in 2011 was RMB 17,457 million, up 11% from the same period last year. Net profit was RMB 1,866 million, up 9% from the same period last year (under International Financial Reporting Standards). Gross margin was 24.7%, down 1.1 points vs. 2010, primarily reflecting negative pricing on selected models and raw material cost increase. Sales tax was increased by RMB 227 million, or 79%, from the same period last year, primarily reflecting higher consumption tax generated from volume growth and levy of construction and education taxes. Other income was increased by RMB 96 million, or 1192%, from the same period last year, primarily reflecting increased government financial subsidies. Cash flow from operations was positive RMB 1,147 million, reflecting favorable profit and operating-related working capital changes. Cash flow from investing activities was negative RMB 840 million, reflecting capital expenditure for facilities, equipment and tooling. Financing cash flow was negative RMB 735 million, primarily explained by the annual dividend payment. At the end of 2011, Company cash and cash equivalents totaled RMB 5,385 million, a decrease of RMB 428 million from the end of The balance of bank borrowing was RMB 6.6 million, down RMB million from 2010 year end. Trade and other receivables at the end of the reporting period increased by 7

8 RMB 636 million, or 77%, from 2010 year end, primarily reflecting sales increase and more dealers opting to settle payment with bank acceptance notes. Total assets were RMB 11,820 million, up 5% from RMB 11,238 million at year-end The increase primarily reflects an increase in construction in progress. Total liabilities were RMB 4,393 million, down 12% from RMB 4,995 million at year-end 2010, primarily reflecting a decrease in accounts payable vs. the end of Shareholder equity was RMB 7,427 million at December 31, 2011, up RMB 1,185 million from year-end This increase is primarily explained by net profit earned in the reporting period partially offset by the dividend payments Year Plan The Company is projecting revenue at RMB 20 billion for 2012, up about 14% from Intensified competition resulting from new competitor and new product entries will require increased levels of marketing expense. Additionally, R&D and capital expenditures are projected to be higher as we progress with new product programs and capacity expansion actions. In 2012, the Company will continue to focus on generating cash and profits, enhance formulation of new product development strategies, and execute plans for future growth. Specific actions include: i. Accelerate efforts to strengthen our brands through enhancing the Company's distribution network, including brand-specific shop expansion and development of JMC Cares service strategy to achieve volume and market share targets. ii. Improve product quality and customer satisfaction. iii. Increase product cost reduction efforts and improve operating efficiencies to achieve profit and cost targets. iv. Work with technology partners to execute the N330, N350, N800, JX4D24, E802 and Xiaolan new Assembly Plant, Test Track, New R&D Center, etc. v. Enhance and execute product and engine cycle plans. vi. Expand finished vehicle exports and OEM component sales business. vii. Deliver recruiting, retention and training objectives that help to strengthen employees' overall competence to support future growth. 5.2 Table below breaks down Revenue & Cost of Goods Sold from Core Business. Unit: RMB 000 Product Turnover Cost in core business Gross Margin Y-O-Y turnover change (%) Y-O-Y Change in costs of core business (%) Y-O-Y gross margin change (points) I. Vehicle 15,965,167 12,107, % II. Components 1,298, , %

9 Total 17,263,210 13,045, % Causes and explanations of major changes on profit structure, core business and its structure profitability (margin) of core business compared with previous reporting period Applicable Not Applicable 6 Financial Statements 6.1 Explanation on the changes of accounting policy, accounting estimates, estimation method compared with that of last year Applicable Not Applicable In order to reflect JMC s actual warranty trend more rightly and keep proper warranty reserve more reasonably, starting in June 2011, JMC adopted a new methodology to adjust its warranty reserve and cost per unit accrual. The traditional way is to fix the warranty reserve on the basis of historical warranty spending trend as well as the total sales volume while the new methodology is to develop an adequate reserve-to-spending ratio for reserve review guidelines (Keep the reserve as a certain multiple of the average actual spending cost of past four quarters) and review/adjust the cost per unit accrual based on the reserve-to-spending ratio. Under IFRS, JMC increased RMB million on the profit after tax of 2011 in conjunction of this adjustment. 6.2 Cause and impacts of major accounting errors, and correction result Applicable Not Applicable 6.3 Explanation on consolidated scope change compared with that of last year Applicable Not Applicable 6.4 Explanation of the Board of Directors and Supervisory Committee to abnormal opinions from accounting firm Applicable Not Applicable Board of Directors Jiangling Motors Corporation, Ltd. March 16,