Mando Corporation Business Report FY ended Dec. 2016

Financial Overview (Consolidated)

(in millions of won)

	FY ended Dec. 31, 2016	FY ended Dec. 31, 2015	Rate of change (%)	Remarks
Sales	5,866,371	5,299,190	10.7	-
Operating income	305,005	265,644	14.8	-
Net income	210,079	129,573	62.1	-

Recent Development Outside Korea

-Mando (Beijing) Automotive Chassis System Co., Ltd., a China unit of Mando Corporation, announced that its annual production volume of suspension products has reached 15 million units. In November 2016, the subsidiary broke its single-month production record by producing 1.68 million units of these products. (From a press release on December 23, 2016)

Contracts

-Mando (Beijing) Automotive Chassis System Co., Ltd., a Chinese unit of Korea-based Mando Corporation, received the Excellent Supplier Award 2016 from Volkswagen FAW Platform Co., Ltd. Chengdu Branch. Mando (Beijing) Automotive Chassis System has been supplying front brake calipers for the Jetta since July 2015. (From a press release on November 21, 2016)

R&D Structure

-Sungnam, Gyeonggi-do (Mando Global R&D Center)

-U.S. (Detroit, Michigan)
-China (Beijing)
-India (Haryana)
-Germany (Frankfurt)

-U.S. (Sault Ste. Marie, Michigan)
-China (Heihe, Heilongjiang province)
-Sweden (Arjeplog)
-New Zealand (Wanaka)

-The Company announced that it will establish a R&D center in Silicon Valley, California, U.S. The new facility is expected to open in the first half of 2017. The company commented that it is aiming to boost its competitiveness in the future automotive technology market through partnership with various global companies. (From a press release on December 28, 2016)

-The Company commenced a new research and development center in Chennai. This dedicated R&D center will include broader adoption of quality management principles across customers and an increasing importance placed on sustainability. Mando India, located near Chennai, was set up in 1997 as a joint venture between Mando Corporation, Korea and ANAND, India to manufacture brake systems adhering Mando specifications. (Anand Group update from July 20,2016)

R&D Expenditure

(in millions of won)

	FY ended Dec. 31, 2016	FY ended Dec. 31, 2015	FY ended Dec. 31, 2014*
Amount	283,229	259,555	77,870
% of sales	4.83	4.90	4.52

*Due to the company split on September 1, 2014, FY ended Dec. 31, 2014 covers a 4-month period from September 1, 2014 through December 31, 2014 in the Group's financial statements.

Capital Expenditure (FY ended Dec. 31, 2016)

(in millions of won)

Product Division	Details	Amount
Brake	Additional equipment for AHB Gen3	1,923
	Remodeling production lines for MGH80/85, calipers for new vehicle models, and other products	12,323
	In addition, replacing aging equipment, automating, and investing in IT, quality, logistics, dies	9,795
	Brake meters	24,042
Steering	IMS production lines and additional product lines	7,483
	Remodeling production lines for C-EPS for new vehicle models, and other products	4,860
	In addition, replacing aging equipment and investing in IT, quality, logistics, dies	10,681
	Steering meters	23,023
Suspension	Remodeling production lines for S/Strut for new vehicle models, and other products	753
	In addition, replacing aging equipment and investing in IT, quality, logistics, dies	4,263
	Suspension meters	5,016
Other		36,818
Total		88,898