Fengfan Co., Ltd. Business Report FY2006

Business Highlights

Performance for FY2006 (million yuan)

in million yuan	FY2006	FY2005	Factors
Sales	1,872.82	1,367.41	Sales and profit increased year-on-year, thanks to the following factors: - Greater demand for automotive batteries. - The Company won business from new customers with its high capability to develop cutting-edge products.
Net profits	66.85	53.23

New contracts
- In April 2006, the Company signed an agreement with Nanjing Automobile Group to develop a battery to be used for the TF sports car scheduled to be introduced in 2007 and the Rover 75 sedan.

- In November 2006, the Company and Shanghai Automotive Industry (Group) Corporation reached an exclusive supply agreement for the batteries used in the Roewe.

- In November 2006, the 6-QW-72BC maintenance free batteries developed by the Company passed a loading test on the Benz-DaimlerChrysler 300C passenger vehicles.

Investment Activities

Progress in capital investments (as of Dec.2006)

Capital investment projects	Planned investment amount ( in million yuan)	Actual investment amount (in million yuan)	Status report as of Dec. 2006
Construction project for new-type maintenance free battery production line	200.39	178.17	Completed
Expansion project for production facilities of high performance battery plates	80.00	83.65	Completed
Construction project for lithium-ion battery production facilities	200.00	84.78	Under construction
Total	480.39	346.60

New investment project
- In November 2006, the Company announced that it will build a new plant to manufacture lead-acid batteries in response to surging demand for such batteries in the global market. The company intends to boost its global market share by supplying these batteries to its customers such as Shanghai VW, FAW-FW, and Dongfeng-Peugeot-Citroen Automobile, which are joint-venture companies between Chinese and non-Chinese companies.

Project	Planned amount of investment (in million yuan)
Preparing a production facility to manufacture maintenance-free lead-acid sealed batteries. This facility will have an annual production capacity of 3 million units	270.00