Financial Overview

(in million yuan)

	FY ended Dec. 31,2012	FY ended Dec. 31,2011	Rate of increase (decrease)(%)	Factors
Sales	8,339.81	8,173.45	0.26
Operating profit	329.89	496.16	(36.34)	-Profit decreased as a result of slowdown in automobile industry growth, serious competition and increase of labor and R&D expense
Ordinary profit	435.01	582.53	(28.51)
Net profit	381.74	509.41	(28.20)

Acquisition

-The Company announced that it will acquire the 66.69 percent share in Jiangsu Sunway Precision Forging Co., Ltd. now held by the Wanxiang Group, its parent company, for approximately 188.30 million yuan.

-The Company agreed to acquire U.S.-based A123 Systems Inc., outbidding Johnson Controls, NEC, and Siemens in a U.S. bankruptcy auction. Excluded from the asset purchase agreement is A123’s government business, including allU.S. military contracts. Wanxiang is awaiting the decision of the United States Bankruptcy Court for the District of Delaware, which is expected to be made on December 18, 2012.

Joint Venture
-On February 17, 2012. The Company made an agreement with the U.S.-based Smith Electric Vehicles Corp. to establish a joint-venture company in China. Based on the agreement, Wanxiang Qianchao will invest 25 million US dollars in Smith and 75 million US dollars in the new joint-venture company to manufacture electric commercial vehicles such as school buses in China. The electric vehicles produced at the new company will combine Wanxiang’s expertise in EV components and Smith’s platform designing technique and drive systems. The EVs will be sold under the Smith brand. Smith’s electric power systems use battery units made by Valence and A123. (From news releases issued by multiple sources on February 27, 2012)

 

-On February 17, 2012, the Company made an agreement with the U.S.-based Smith Electric Vehicles Corp. to establish a joint-venture company in China. Based on the agreement, Wanxiang Qianchao will invest 25 million US dollars in Smith and 75 million US dollars in the new joint-venture company to manufacture electric commercial vehicles such as school buses in China. The electric vehicles produced at the new company will combine Wanxiang’s expertise in EV components and Smith’s platform designing technique and drive systems. The EVs will be sold under the Smith brand. Smith’s electric power systems use battery units made by Valence and A123. (From news releases issued by multiple sources on February 27, 2012)

New Companies 

-The Company announced on January 13, 2012 that it will make an additional investment of 80 million yuan in Wanxiang Qianchao Chongqing, its wholly owned subsidiary. This will raise the subsidiary’s capital to 120 million yuan from current 40 million yuan. The Chongqing facility is to cover 3 million units of the Group’s project to increase production of constant velocity driveshafts by 8.4 million units. Capital spending in this project, which is scheduled to be completed in 2013 is expected to reach 414.95 million yuan. As the initial phase of the plant, the company will add 1.2 million units to its yearly production capacity. (From new releases issued by multiple sources, January 16, 2012)

-The R&D expenditure in 2012 is 319.21 million yuan,3.83% of the Company's revenue.

R&D Facility

Name	Wanxiang Technical Center
Year established	1994
Overview	-The center conducts R&D activities for all the companies under the Wanxiang Group. -In Nov. 2003, its automotive product laboratory was authorized by the China Quality Certificate Center (CQC) as a contracted CQC testing facility. This enabled the Company to carry out testing of its products based on CCC (China Compulsory Certification) by itself. Qualified products for self-testing include six kinds of automotive components: brakes, drive shafts, CVJ shafts,; universal joints, shock absorbers, and wheel bearings.

Capital Investment Projects

(As of Dec. 2012)

Project	Planned amount of investment (in million yuan)	Investment made in 2011 (in million yuan)	Actual Spending by 2011 as a percent of planned amount of  investment (%)
Constructing facility to manufacture carburized bearings (annual production volume: 600,000 sets)	24.18	0.47	91.62
Constructing additional facility to manufacture ABSs at Wanxiang Jinggong	21.50	0.39	99.65
Constructing the second plant at Huainan	25.00	0.60	128.39
Constructing additional facility to manufacture constant velocity drive shaft assemblies	1,943.72	126.74	40.16
Constructing additional facility to manufacture wheel hub units used in passenger vehicles	1,807.76	142.81	17.39
Establishing additional facility to manufacture high-performance drive shafts (annual production volume: 600,000 sets)	166.00	26.44	99.12
Constructing transmission shafts at Shiyan Factory	10.00	0.03	65.76
Constructing additional facility to manufacture chassis modules at Hefei Wanxiang Qianchao Automotive Parts	25.39	1.97	58.94
Constructing the third plant to manufacture castings at Henan Province	20.00	12.67	101.07
Constructing additional facility to make universal joints (annual production volume: 20 million sets) and differential assemblies	118.00	9.60	49.74
Constructing a plant to manufacture ABSs and brake modules at Shanghai	94.74	23.04	47.16
Airbag project	40.00	3.52	8.8
Constructing the third plant at Jiangsu Sunway Co.,Ltd	20.43	13.95	96.6
Constructing the second parts stamping plant at Hubei Province	15.00	2.38	74.76
Constructing precision hub bearings used in passenger vehicles	39.00	24.91	107.50
Constructing the second bearing plant at Jiangsu Province	10.69	0.90	86.34
Constructing parts stamping plant at Guilin Province	4.38	0.71	113.95

 

Investment in China
-Wanxiang Qianchao Co., Ltd. announced that it will acquire the 66.69 percent share in Jiangsu Sunway Precision Forging Co., Ltd. now held by the Wanxiang Group, its parent company, for approximately 188.30 million yuan. Part of the fund required for this project will be covered by the capital raised for adding capacity to produce 8.4 million more constant velocity shafts at Wanxiang Qianchao. The company, which has already ensured the capacity to manufacture 5.4 million drive shafts, is expecting to minimize the cost needed for reaching the 8.4 million units level. It aims to do so by switching procurement of some production equipment from exports to domestic sourcing, while subcontracting part of the production processes to other manufacturers. This will contribute to more than a 15 percent saving in procurement cost, which can be used as the fund for stock purchase. (From an announcement by the company, December 13, 2012)

-Wanxiang Qianchao Co., Ltd. announced on January 13, 2012 that it will make an additional investment of 80 million yuan in Wanxiang Qianchao Chongqing, its wholly owned subsidiary. This will raise the subsidiary’s capital to 120 million yuan from current 40 million yuan. The Chongqing facility is to cover 3 million units of the Group’s project to increase production of constant velocity driveshafts by 8.4 million units. Capital spending in this project, which is scheduled to be completed in 2013 is expected to reach 414.95 million yuan. As the initial phase of the plant, the company will add 1.2 million units to its yearly production capacity. (From new releases issued by multiple sources, January 16, 2012)

-The Company announced on January 13, 2012 that it will make an additional investment of 80 million yuan in Wanxiang Qianchao Chongqing, its wholly owned subsidiary. This will raise the subsidiary’s capital to 120 million yuan from current 40 million yuan. The Chongqing facility is to cover 3 million units of the Group’s project to increase production of constant velocity driveshafts by 8.4 million units. Capital spending in this project, which is scheduled to be completed in 2013 is expected to reach 414.95 million yuan. As the initial phase of the plant, the company will add 1.2 million units to its yearly production capacity. (From new releases issued by multiple sources, January 16, 2012)