Financial Overview

(in million yuan)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Difference (%)	Factors
Sales	1,243.20	1,522.46	(18.34%)	Due to declining sales of customers like Hafei and Changhe Automobile, the company's engine production and sales declined.
Operating profit	(73.77)	31.38	-	-Profit decreased due to the sales decreased.
Ordinary profit	(65.41)	33.83	-
Net profit	(65.41)	33.83	-

-During January-June 2012, the company sold 10,490 engines, already achieving 52.45 percent of its sales target for the full year. In terms of monetary amounts, sales reached 985.82 million yuan, which is equivalent to 50.22 percent of its target figure for 2012, with exports totaling 44.19 million yuan, climbing 60.95 percent from the same term last year. (From a press release, July 23, 2012)

-In 2012, the Company sold 182,800 units powertrains, 26.4% decrease of the previous year and achieved sales of 1.243 billion. (From the Company's 2012 annual report)

-The Company planned to sell 150,000 powertrain assemblies in 2013 and achieve sales of 0.97 billion.(From the Company's 2012 annual report)

Contracts

- In terms of market development, the Company officially entered the Changan Group supplying system. The Company supplied DAM13R and DA465QA engines for Changan Light Rail Vehicle Department and DAM15R engines for Changan Kuayue Automobile.The Company's DAM10R engines started equipped for FAW Jilin, and has entered into car assembly stage. The sales of JAC engines increased dramatically.(From the Company's 2012 annual report)

- The Company signed a supply agreement with Baoding Changan Bus Manufacturing Co., Ltd., which is also a member of the Changan Automobile Group, in August 2012. Based on the three-year agreement, Harbin Dongan is supplying power assemblies worth 25 million yuan during 2012. (From an announcement by the company, August 25, 2012)

-The Company, which has been working on prototype production of engines for the Changan Automobile R101, completed manufacturing 57 prototypes for the model on June 13. This is the second time for Harbin Dongan to work on the automaker’s project since it joined the Changan Group. The company is building up its production framework to keep up with forecasted demand for July and August. (From a press release, June 29, 2012)

Produced the prototype

-On November 8, 2012, the Company produced the prototype of the new F5M43 manual transmission. The company is working on revamping and adjusting the necessary production equipment and processes, while training its employees for the new operation. Commercial operation is scheduled to start on a small-lot production line in December 2012. (From a press release, November 26, 2012)

-The Company, which has been working on prototype production of engines for the Changan Automobile R101, completed manufacturing 57 prototypes for the model on June 13. This is the second time for Harbin Dongan to work on the automaker’s project since it joined the Changan Group. The company is building up its production framework to keep up with forecasted demand for July and August. (From a press release, June 29, 2012)

Two millionth engine off the production line

-The Company held a ceremony to celebrate its two millionth engine off the production line on February 28, 2012. The ceremony was attended by the company’s officials who reaffirmed their commitment to take a new step forward for achieving further growth. Although the Chinese automotive market is beginning to stabilize after showing an explosive growth, the company is continuing to increase business, having added high performance new products. During the month of January 2012, the company manufactured 12,319 engines and sold 26,857 engines. (From a press release, February 29, 2012)

-In 2012, the Company's R & D center has been identified as Heilongjiang Provincial Enterprise Technology Center.

-In 2012, the Company's R & D expenses is 25.92 million yuan, 2.09% of the Company's operating income.

-Up to now, the Company has 144 patents in total, 3 of which are invention patents in 2012.

Engines

-Developed M Series engines such as 1.0L, 1.3L and 1.5L MPI engines, successfully equipped with vehicles;

-Developed M Series intake engines such as 1.0L  intake VVT engines, 1.3L intake  VVT + EGR engines and 1.5L intake VVT + EGR engines, to be put into production;

-Developed M Series 1.0L precursor engines, to be equipped with Lobo in 2013;

-Improved DAT10R, DAT13R drive transmissions and DAT11F precursor transmission, which is ready for the mass production;

-In 2012, the Company completed Phase Two construction of M-series engine production line and is ready for mass production now.
-The prototype of M series 1.5-liter DVVT engines has been completed.

New Products

- Developed 1.5 liter DVVT engine to ensure it will go to the market at the end of 2013 and developed rear-wheel-drive engines and four-cylinder precursor engines. (From the Company's 2012 annual report)

Recent Capital Investment Projects (as at the end of Dec.2012)

(in million yuan)

Items	Planed amount of investment	Amount invested in 2012	Percentage already invested out of the total planned investment	Notes
Additional production lines to manufacture crankshafts	160.00	0.22	83.38%	-trial production in big quantities
Establishing a production line to produce dual VVT small displacement engines	531.16	150.85	28.32%	Under construction
Setting up a production line for electronic-control, small displacement gasoline engines	155.63	86.65	50.68%	Under construction
Constructing a production line to make 6-speed transmissions for small passenger vehicles	197.26	8.46	3.93%	Under construction