Financial overview

(million yuan)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of Change(%)	Factors
Sales	69,329.47	57,889.22	19.76%	-Sales of major products increased.
Operating profit	7,073.68	6,121.31	15.56%	The profit increased as the sales increased.
Ordinary profit	7,188.09	6,222.18	15.52%
Net profit	6,345.73	5,546.10	14.42%

 

New Company
-Shanghai Xingfu Motorcycle Co., Ltd., a subsidiary of the Company, and Germany-based Pierburg Pump Technology GmbH, have established a 50-50 joint venture in Shanghai. The new company, Huayu Pierburg Pump Technology Co., Ltd., will be capitalized at 80 million yuan, and investment in this project is expected to reach 200 million yuan. Receiving technical support from Pierburg Pump Technology, the new company will develop and produce oil pumps, including variable oil pumps for engines and electric oil pumps for transmissions, for Chinese customers. Production will be conducted at its new plant on 4,000 square meters of land in northern Shanghai. Opening of its own R&D center is also scheduled in the future. (From news releases issued by multiple sources on May 24, 2013)

-In May 2013, the Company and the Chia Tai Group of Thailand signed an agreement to establish Huayu Chia Tai Co., Ltd. The new joint-venture company will be capitalized at 40 million yuan, of which 51 percent will be invested by Huayu and 49 percent by Chia Tai. By locating an assembly facility in Thailand, the company aims to respond to the needs of automakers operating in the ASEAN market, while accelerating its global expansion plans. (From news releases issued by multiple sources on May 21, 2013)

Supply Agreement

-Shanghai Sekely Die Technology Co., Ltd., which is a subsidiary of the Company, announced that it started to mass-produce door assemblies for the Shanghai GM Cadillac XTS. The door systems were developed in-house at Shanghai Sekely Die Technology, which will provide the products to Shanghai GM at low prices. (From news releases issued by multiple sources on December 30, 2013)

Acquisition

-Shanghai Sekely Die Technology Co., Ltd., a subsidiary of the Company, announced that it would acquire 100 percent of Nanjing Automobile Tooling Co., Ltd. for CNY 251.4 million. Nanjing Automobile Tooling, capitalized at CNY 153.34 million, is currently owned 70 percent by the SAIC Group and 30 percent by Donghua Automotive Industrial Co., Ltd. The company designs, develops and produces dies and inspection equipment, and also manufactures large stamping parts and other automotive components for SAIC Passenger Vehicle, Iveco and other customers. (From an announcement by the company on March 22, 2014)

-Visteon Corporation announced that it has entered into an agreement with Huayu Automotive Systems Co., Ltd. (HASCO) to sell its 50 percent stake in Chinese joint venture Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), as well as its direct interests in other related interiors joint ventures, to HASCO. Additionally, Visteon and HASCO agreed to modify their existing electronics ventures in China such that Visteon will obtain control of the majority of Yanfeng Visteon Automotive Electronics Co., Ltd. (YFVE). The transactions are expected to be completed by June 2015. Visteon will receive cash payments of approximately USD 1.25 billion for the sale of its interests in YFV and other related interiors joint ventures, and will pay approximately USD 70 million to gain control of the majority of YFVE. The Company announced that it acquired a remaining 50 percent share in Yanfeng Visteon Automotive Trim Systems Co., Ltd. at the end of December 2013. As a result, HUAYU Automotive Systems has turned the joint venture with Visteon into its wholly owned subsidiary, and changed the subsidiary’s name to Yanfeng Automotive Trim Systems Co., Ltd. (From a press release on January 7, 2014)

-Visteon Corporation announced that it has entered into an agreement with Huayu Automotive Systems Co., Ltd. (HASCO) to sell its 50 percent stake in Chinese joint venture Yanfeng Visteon Automotive Trim Systems Co., Ltd. (YFV), as well as its direct interests in other related interiors joint ventures, to HASCO. Additionally, Visteon and HASCO agreed to modify their existing electronics ventures in China such that Visteon will obtain control of the majority of Yanfeng Visteon Automotive Electronics Co., Ltd. (YFVE). The transactions are expected to be completed by June 2015. Visteon will receive cash payments of approximately USD 1.25 billion for the sale of its interests in YFV and other related interiors joint ventures, and will pay approximately USD 70 million to gain control of the majority of YFVE. The Company announced that it acquired a remaining 50 percent share in Yanfeng Visteon Automotive Trim Systems Co., Ltd. at the end of December 2013. As a result, HUAYU Automotive Systems has turned the joint venture with Visteon into its wholly owned subsidiary, and changed the subsidiary’s name to Yanfeng Automotive Trim Systems Co., Ltd. (From a press release on January 7, 2014)

-It is likely that the Company and Johnson Controls have agreed on a nondisclosure agreement, under which HUAYU wouldl acquire the automotive electronics division of Johnson Controls. April 4, 2013 is the first offer deadline and HUAYU could offer more than 1 billion dollars for the deal. Although HUAYU Automotive System is one of the leaders in the Chinese auto parts market, its presence in the car electronic market is limited. The acquisition will allow the company to improve its competitiveness in this field. Johnson Controls, on the other hand, has been suffering from declining profitability, decreasing vehicle production in Europe, and intensifying competitions with Chinese companies. The purchasing plan is expected to cater to the needs of respective parties. (From news releases issued by multiple sources on April 9, 2013)

Pass the Test

<YAPP Automotive Parts Co., Ltd.>
-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, announced that its R&D Center passed a testing by Jiangling Motors. In January, the center received a certificate to perform testing for the automaker. (From a press release on January 26, 2014)

-In September 2013, the Shanghai Plant of YAPP Automotive Parts Co., Ltd. received an A-rating from Shanghai VW after undergoing a production process screening and product testing by the automaker. (From a press release, October 12, 2013)

<Shanghai Sandmann Foundry Co., Ltd.>

-Shanghai Sandmann Foundry Co., Ltd., which is a wholly owned subsidiary of the Company, announced that its plant retooling and energy saving projects have passed a screening by the city of Shanghai. These projects were carried out in accordance with Shanghai City’s technology improvement project 2011. (From a press release, September 17, 2013)

<Shanghai GKN Drive System Co., Ltd.>

-In August 2013Shanghai GKN Drive System Co., Ltd., the Company's subsidiary, announced that the company is working on a project to launch production of constant velocity universal joints in China, and passed a screening conducted by the Shanghai Municipal Commission of Economy and Informatization. (From news releases issued by multiple sources on September 2, 2013)

Off the Production Line

-In December 2013, Shanghai GKN Drive System Co., Ltd., the Company's subsidiary, produced over 15 million constant velocity joints. Its annual sales volume is expected increase by 16 percent from the 2012 level. (From news releases issued by multiple sources on December 23, 2013)

Come into Prouction

-In October 2013, Yanfeng Visteon Automotive Trim Systems, the Company's subsidiairy, announced that its new plant in Ningbo started operating. The new facility locates in Hangzhouwan New area, Ningbo city, Zhejiang province. There are three subsidiaries of Yanfeng Visteon, namely, Yanfeng Visteon Automotive Trim Systems (Ningbo) Co., Ltd., Yanfeng Plastic Omnium Automotive Exterior Systems Co., Ltd. Ningbo Branch and Ningbo Yanfeng Johnson Controls Seating Co., Ltd.They will supply to Shanghai VW. (From news releases issued by multiple sources on November 4, 2013)

Awards

<Shanghai GKN Drive System Co., Ltd.>
-GKN Sinter Metals Danyang Ltd., a subsidiary of Shanghai GKN Drive Shaft, announced that it has received the following awards during 2013:
- The Excellent Quality Award from Volkswagen Automatic Transmission (Dalian) Co., Ltd.
- 2013 GETRAG CEO Special Award and Zero PPM Award from GETRAG (Jiangxi) Transmission Co., Ltd.
- The Excellent Quality Award from Tianjin Tanhas Technology Co., Ltd.
(From a press release on January 28, 2014)

-GKN Zhongyuan Cylinder Liner Co. Ltd., which is a subsidiary of Shanghai GKN Drive Shaft, annoucned that it received U.S. Caterpillar’s Supplier Quality Excellence Process (SQEP) Gold Award. GKN Zhongyuan Cylinder has been supplying generator cylinder liners to Caterpillar since 2007. (From a press release, September 3, 2013)

<YAPP Automotive Parts Co., Ltd.>
-YAPP Automotive Parts Co., Ltd., a subsidiary of HUAYU Automotive Systems Company Limited, announced that it has received the following awards:

• The Outstanding Contribution Award Sliver Prize (Special Award commemorating Shanghai VW’ 30th anniversary), and the Excellent Supplier Award from Shanghai VW;
• The Excellent Quality Award from FAW Car;
• The Top 10 Supplier Award 2013 from FAW VW;
• The Silver Sail Award from Shanghai GM Dong Yue (This award was given to the Yantai Plant);
• The Excellent Supplier Award 2013 from the Nanjing Automobile Group;
• The Technology Development Award, and the Lifecycle Management Award (the company won this award also in 2006-2012) from Shanghai GM.

 (From a press release on January 23, 2014)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, announced that it has received Jiangling Motors’ A-class Supplier Award 2013. (From a press release on January 17, 2014)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, announced that it has received the following awards for 2013 from SAIC Motor Corporation: the Top Ten Supplier Award from SAIC Motor; and the Top Ten Supplier Award for excellent delivery performance from the automaker’s Nanjin Plant. (From a press release on January 15, 2014)

-In May 2013, YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, received Ford’s Global Excellent Performance Award for FY2012.This is the first time for YAPP to win the award from the U.S. company. (From a press release, July 17, 2013)

-YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, has been awarded the Volkswagen Group Award for 2013. No other HUAYU Automotive Group company has ever received this award. (From a press release, July 12, 2013)

-In April 2013, the Shanghai Plant of YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, received General Motors’ supplier award for 2012. (From a press release, May 21, 2013)

-In January 2013, YAPP Automotive Parts Co., Ltd., which is a subsidiary of the Company, announced that it received the following awards at the FAW Group’s Suppliers Meeting held in Changchun: the Excellent Quality Award from FAW-VW; the Cost Improvement Award from the FAW Group; and the Excellent Supplier Award from FAW Car. In addition, the company’ Wuhan Branch won the Best Supplier Award for 2012 from Dongfeng Peugeot-Citroën Automobile and the Excellent Supplier Award for 2012 from Dongfeng Passenger Vehicle. (From a press release, January 24, 2013)

-In December 2012, YAPP Automotive Parts Co., Ltd., a subsidiary of the Company, was awarded the 2012 Excellent Supplier Award from Changan Mazda. The company has also been chosen as the 2012 A-class Supplier by Jiangling Motor. (From a press release, January 10, 2013)

<Shanghai SAIC-METZELER Sealing Systems Co., Ltd.>

-Shanghai SAIC-METZELER Sealing Systems Co., Ltd., a subsidiary of HUAYU Automotive Systems Company Limited, has been awarded the Quality Improvement Award for 2013 from Changan Mazda. The company had also earned the Quality Improvement Award from Changan Ford in September 2013. (From news releases issued by multiple sources on December 23, 2013)

Business Plan for Next Year

-In 2014, the Company plans to reach CNY 70 billion sales. (From the Company's 2013 annual report)

R&D Expenditure

(in million yuan)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
R&D Expenditure	1,324	1,059	2,426

R&D Facility

-At the end of 2013, the Company's 24 subsidiaries acquired the title of Shanghai Technology Center.

-In January 2014, the technical center of YAPP Automotive Parts, a subsidiary of the Company, has been designated as a China national-class technical facility by the Chinese government. YAPP Automotive Parts has obtained a foreign patent for its original oil-tank technology for the next generation. Its oil tanks have been selected by Volkswagen, General Motors and other companies. (From news releases issued by multiple sources on January 13, 2014)

-In December 2013, Huayu Automotive System’s Technical Center has passed the Carnegie Mellon University’s Software Engineering Institute (SEI) Capability Maturity Model Integration (CMMI) -DEV Level2 in the area of development process for electronic components. (From news releases issued by multiple sources on December 23, 2013)

-In July 2013, Shanghai GKN Drive Shaft Co., Ltd., the Company's subsidiary, announced that its laboratory passed a testing conducted by the China National Accreditation Service for Conformity Assessment (CNAS) and received a national accreditation certificate. (From news releases issued by multiple sources on August 13, 2013)

Capital Investment Projects

(as of Dec. 2013 )

Project	Planned amount of investment (in million yuan)	Investment made in 2012 (in million yuan)	Percentage of total input
Retooling spring production facility at China Spring Corporation Limited	72.46	36.07	59%
PXE series technology transformation at Shanghai Sanden Behr Automotive Air Conditioning Co., Ltd.	2.75	1.41	63%
Expanding production capacity of compressors at Shanghai Sanden Behr Automotive Air Conditioning Co., Ltd.	70.30	33.34	47%
Stamping project in Yantai subsidiary of Shanghai Superior Die Technology Co., Ltd.	700.00	305.96	43%
Stamping transformation projects at Shanghai Tractor & Internal Combustion Engine Co., Ltd.	201.68	55.14	64%
Stamping transformation projects in Wuhan Jiezhong Auto Parts Co., Ltd., subsidiairy of Shanghai Tractor & Internal Combustion Engine Co., Ltd.	402.16	141.38	70%
Project of engines at Shanghai Union Automobile & Tractor Industry Trade Co., Ltd.	13.19	-	100%
Front brake caliper device tooling projects at Shanghai Automotive Brake Systems Co., Ltd.	3.86	-	84%
Vacuum boosters assembly line at Shanghai Automotive Brake Systems Co., Ltd.	18.78	-	79%
Interior parts production line renovation project at Yanfeng Visteon	920.00	438.68	76%
Electronic parts production line reconstruction project at Yanfeng Visteon	184.98	72.83	58%
Seat parts production line reconstruction project at Yanfeng Visteon	1,816.32	528.00	45%

Domestic Investment

- In December 2013, Yanfeng Visteon Jinqiao Automotive Trim Systems Co., Ltd., a subsidiary of the Company, held a topping-out ceremony for its new Wuhan facility. The building is expected to be completed by March 2014, with the first phase of the construction project scheduled to be finished by June 2014. The Wuhan Branch will produce interior trims mainly for Shanghai GM’s Wuhan Plant, starting in January 2015. Its annual production capacity is expected to reach 300,000 sets. (From news releases issued by multiple sources on January 13, 2014)

-In October 2013, Shanghai GKN Drive Shaft broke ground at the site of its fourth global technical center. The construction project will mark the beginning of a new chapter for the company, which has just celebrated its 25th anniversary. The technical center will be set up on 14,647 square meters of land. The total investment in this project is expected to reach CNY 94.20 million. The company has already acquired the government’s approval for the facility’s new testing laboratory. (From news releases issued by multiple sources on October 27, 2013)

-In August 2013, Yanfeng Visteon Jinqiao Automotive Trim Systems, which is a subsidiary of Yanfeng Visteon Automotive Trim Systems Co., Ltd., will establish Yanfeng Visteon Wuhan Automotive Trim Systems Co., Ltd. The new facility will be constructed on a 66,600-square-meter-site adjacent to the Wuhan Plant of Shanghai GM. The construction project will be carried out in two phases, and an interior trim plant would be completed in the first phase. It will be finished in June 2014 and expected to begin operations in January 2015. The plant will have the capacity to produce 300,000 sets of instrument panels, door panels, and CNSLs per year. (From press releases issued by multiple sources on September 24, 2013)

-In September 2013, Shanghai Sandmann Foundry Co., Ltd., which is a wholly owned subsidiary of the Company, announced that its plant retooling and energy saving projects have passed a screening by the city of Shanghai. These projects were carried out in accordance with Shanghai City’s technology improvement project 2011. (From a press release, September 17, 2013)

-Yantai Sekely Die Technology Co., Ltd., a subsidiary of the Company, held a groundbreaking ceremony at its plant site. The subsidiary, established in March 2013, will be investing RMB 750 million in the construction project on 106,500 square meters of land. The new facility will supply automotive doors, hoods, hot stamping components and technologies mainly to Shanghai GM’s Dong Yue Plant in Yantai and Norsom Plant in Shenyang. (From a press release, June 17, 2013)

-In May 2013, YAPP Automotive Parts Co., Ltd., the Company’s subsidiary, announced that it established the Changchun second plant in National Changchun Automotive Economic-Technological Development Area in China.  The new plant covers approx. 40,000 square meters and is expected to produce 1 million plastic fuel tanks per year, which will be mainly supplied to FAW VW and FAW Car. The plant will start its full operation at the end of 2013. (from the press release on May 13, 2013)

-Shanghai GKN Drive Shaft Co., Ltd. started constructing a new plant building in the premises of the Shanghai Shenjiang Plant, covering the additional 21,067 square meters. The groundbreaking ceremony was held in April, 2013. The expansion is conducted as a part of the company’s five-year development plan, and the total investment is expected to amount to 100 million yuan. The construction of structure would be completed in November 2013. (From a press release, April 23, 2013)