Financial Overview

(In million yuan)	FY2010	FY2009	Increases (%)	Factors
Sales	2,328.31	2,490.70	(6.52%)	-Sales of two subsidiaries increased and one reduced; Kunming Leimo Power System Co., Ltd., sold about 7,000 diesel engines for passenger vehicles, increased by 150% for FY2010; Chengdu Yunnei Power Co., Ltd. sold 63.5thousand diesel engines, increased by 26.22% for FY2010; Dazhou Co.,Ltd. sold 1,199 trucks, reduced by 59.73%
Operating profit	-31.78	47.25	(167.26%)	-The large difference seen between the operating profit and ordinary profit was due to government subsidies for reinstating the land use right of the old Chengdu Yunnei plant.
Ordinary profit	151.92	206.67	(26.49%)
Net profit	142.29	180.45	(21.15%)

  

Restructuring

-It has been decided that 100 percent of the shares in Yunnan Diesel Engine Plant, which is a parent company of the Company will be transferred to Changan Automobile free of cost, turning Yunnan Diesel Engine Plant into a wholly owned subsidiary of the automaker. The transfer will bring Kunming Yunnei Power under the umbrella of Changan Automobile. This project, which has already been approved by the State-owned Assets Supervision and Administration Commission of Kunming City, is subject to approval of both the State-owned Assets Supervision and Administration Commission of the State Council; and China Securities Regulator Commission, as well. (From an announcement by the company, January 7, 2011)

Production capacity of Kumming Leimo

 -On December 16, 2010, Kunming Leimo Power System Co., Ltd., which is a wholly owned subsidiary of the Company held a ceremony to celebrate the achievement of its planned production capacity. Kunming Leimo Power System was established in November 2009 with a registered capital of 50 million yuan. The company is a specialized manufacturer of diesel engines for passenger vehicles. Its yearly production capacity, which has reached 150,000 engines, can be further raised up to 200,000 engines in the future. The subsidiary is already supplying its products to Jianghuai Automotive, Liuzhou Motors, Beijing Automobile, Beiqi Foton, Zhengzhou Nissan, and other companies. Its production and sales are expected to reach 7,000 engines in 2010. The volumes are expected to go up to 15,000 to 20,000 in 2011, and 30,000 to 40,000 in 2012. (From news releases issued by multiple sources on December 16, 2010)

Business partnership

-Shanghai Automotive Industry Corporation (Group) and the Company are likely to bolster collaboration in the area of small diesel engine technology for passenger cars and other vehicles. The two companies are said to be discussing plans that include establishing a joint-venture company and conducting a stock swap. Since last year, they have been carrying out a joint project to develop 0.9- to 1.9-liter diesel engines. This latest development in strengthening their ties is seen as part of Shanghai Automotive's initiative to enhance its passenger vehicle business. It is believed that Shanghai Automotive is intending to install a new 1.9-liter diesel engine, which it is developing with the company, on in its own-brand Roewe 550 that will be launched possibly by next year. 

R&D Expenditure

Product Development 

Project (in million yuan)	The remaining sum  at the beginning of the year	Amount invested in 2010
D19TCI electronic controlled Common Rail System	6.50	-
D25TCI electronic controlled Common Rail System	0.16	4.95
Development of Diesel Engines conforming to China 3 Emissions Limits	3.98	3.36
Development of Diesel Engines conforming to Euro 4 Emissions Limits	0.96	-
Development of Diesel Engines conforming to Euro 5 Emissions Limits	3.48	11.51
Development of Mini Diesel Engines	2.73	2.34
Development of Hybrid Power Diesel Engines	0.12	0.21
Develpoment of others parts	1.40	0.97
Development of Diesel Engines conforming to China 4 Emissions Limits	-	1.17
Development of Euro 4 Platform	-	2.39
Total	19.33	26.74

The expenditure on  product development accounts for 57.10% of the Company's total Research and Development expenditure.

Source: annual report

 

Technological Partnership

R&D Structure

Facility	Overview
Internal Combustion Engine Institute	- Designing and developing diesel engines, and developing manufacturing facilities to produce them - This facility and Beijing Institute of Technology are jointly operating the Internal Combustion Engine Engineering Center - This facility and Kunming Science & Technology University are jointly operating the Diesel Engine Test & Research Center

Items (in million yuan)	Planned Budget	Amount invested in 2010	Accumulated investment until 2010	Notes
New plant to manufacture diesel engines for passenger vehicles	1,796.40	331.31	764.37	Started trial operations in Oct. 2010, the test center and logistic center are under construction.

The Company is constructing a new plant to manufacture diesel engines for passenger car. The total amount of investment in this project is budgeted at 1,796.40 million yuan. When the new production lines are completed, the Company will be able to produce 200,000 diesel engines a year.