(Incorporate in Bermuda with limited liability) HKEx Stock Code : 305 2015 ANNUAL REPORT Unit 2403, 24/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong www.wuling.com.hk ANNUAL REPORT 2015 REPORT ANNUAL CORPORATE PROFILE Wuling Motors Holdings Limited (“Wuling Motors Holdings” or the “Company”) and its subsidiaries (collectively referred to as the “Wuling Group” or the “Group”) are principally engaged in the businesses of trading and manufacturing of automotive components, engines and specialized vehicles in China. Our Group’s corporate goal is to grasp the tremendous business opportunities arising from the rapidly growing automobile industry in China. We supply engines and automotive components to commercial-type mini-vehicles and passenger vehicles. We are also a qualified enterprise for manufacturing electrical mini-truck in China. The Group’s main production facilities are located in Liuzhou, Qingdao and Chongqing. Since 2011, it has been ranked as one of the Fortune China 500 Enterprises. GROUP STRUCTURE WULING MOTORS DRAGON HILL GUANGXI 15.5% HOLDINGS 56.5% AUTOMOBILE HKEx:305 54.9% 45.1% WULING INDUSTRIAL AUTOMOTIVE SPECIALIZED ENGINES AND COMPONENTS VEHICLES AND RELATED PARTS OTHER INDUSTRIAL (INCLUDING NEW SERVICES ENERGY VEHICLES) CONTENTS Corporate Profile Group Structure 2 Chairman’s Statement 7 Report of the CEO 10 Operation Review Main Business Segments Engines and Related Parts Automotive Components and Other Industrial Services Specialized Vehicles (including New Energy Vehicles) 21 Financial Review 25 Environmental, Social and Governance Review 34 Directors’ and Senior Management’s Biographies 42 Corporate Governance Report 52 Report of the Directors 64 Independent Auditor’s Report 66 Consolidated Statement of Profit or Loss and Other Comprehensive Income 67 Consolidated Statement of Financial Position 69 Consolidated Statement of Changes in Equity 70 Consolidated Statement of Cash Flows 72 Notes to the Consolidated Financial Statements Corporate Information 02 CHAIRMAN’S STATEMENT PURSUING Growth Amid Stability OPTIMIZING Business Structure PROMOTING Sustainable Development WEI Hongwen Chairman PREFACE structure and promoted business transformation, successfully identifying new goals for strategic development without 2015 was a year full of opportunities and challenges for compromising the long-standing scale of operation and automobile industry in China. As China’s economy entered healthy growth. In 2015, the Group recorded a turnover of the new normal, the automobile industry experienced stages RMB13,451,243,000, representing an increase of 10.8% over of moderate growth. Adhering to its operating policies of the previous year; net profit of RMB170,052,000, representing “Pursuing Growth Amid Stability, Optimizing Business a growth of 56.8% over the previous year; and profits Structure, Promoting Sustainable Development”, Wuling attributable to the owners of the Company of RMB82,212,000, Motors Holdings Limited (hereinafter referred to as the representing an increase of 66.3% over the previous year, “Group” or “Wuling Motors Holdings”) managed to enhance effectively a testament to the enhancement of its corporate quality and efficiency, continued to adjust its enterprise competitiveness amid this challenging year. WULING MOTORS HOLDINGS LIMITED / ANNUAL REPORT 2015 03 REVIEW OF MAJOR ACHIEVEMENTS IN 2015 1. Pursuing growth amid stability through shifting focus to medium-to-high ended products In 2015, the Group continued to optimize its business structure and actively pursued cost control and efficiency (i) Adjusting product structure to cater the enhancement, achieving better operation quality as a result. market by achieving enhancement in both In addition, adjustments were made to product structure to productivity and quality of component cater the customers’ needs by transforming and upgrading to business high value-added passenger vehicles products. Meanwhile, the Group’s keenness on project establishment and its solid For component business, in 2015, the Group foundation of ancilliary facilities provided strong momentum closely followed the development of its for its corporate development. The Group also reinforced customers where the models adopted by the operation management and took further precautionary customers shifted from mini-vehicles to high- measures against various operating and marketing risks to ended MPV and SUV passenger vehicles. The steadily push through a strategic transformation process, Group continued to widen the business scope of culminating business growth amid stability. For the year supplying components to the passenger vehicle under review, the Group recorded the following major market through upgraded technology and achievements: innovative products, in turn promoting the WULING MOTORS HOLDINGS LIMITED / ANNUAL REPORT 2015 04 CHAIRMAN’S STATEMENT (Continued transformation and upgrade of its products from launched and well received by the market. commercial-type vehicles to medium-to-high Wuling Rongguang low-temperature refrigerator ended passenger vehicles. The Group successfully vehicles (五菱榮光低溫冷藏車) were accredited developed the self-owned brand of passenger as the “Excellent Application of Cold Chain vehicles product series of its major customer Products in PRC” (中國冷鏈優秀產品應用案例), SGMW, including key components such as rear which is the first national award of professional structure of vehicle body for Baojun 730 model, standard for the cold chain industry received by cockpit modules for Baojun 730 model and front the Group. skin for Baojun 560 model, and recorded a mass order volume. In particular, seat and cockpit In order to strengthen the Group’s modules for Baojun 730 model were the high competitiveness for passenger buses, the Group valued-added products resulted from focused on the optimization of quality and cost enhancement of technology and strengthen our reduction of passenger buses. Modifications were core competitive edge, marking a breakthrough made to metal plate, interior and external achieved in the competition with the joint decoration and chassis in response to the market ventures of the global top 500 enterprises. The feedback, contributing to a cost reduction of achievement further strengthened the approximately RMB2,000 per unit. The production lines for passenger vehicles products competitiveness of the Group’s products was of the Group, demonstrating our caliber in largely strengthened by our effort to enhance managing the production of medium-to-high quality and lower cost. In 2015, the Group’s three ended passenger vehicles products as well as major vehicle models, namely redecorated further improvement of our technology and vehicles, passenger buses and non-road vehicles, quality of component products. In addition, recorded a sales volume of approximately 43,000 leveraging on its stable quality and supply, the units in aggregate, of which Wuling school buses Group’s self-developed 1.8L engine products recorded a sales volume of nearly 3,100 units, were exclusively installed in Baojun 560 SUV representing a year-on-year increase of model, marking the Group’s ability to manage approximately 26%, providing a formidable the production of components for passenger support to the strategic development of the vehicles and further enhancement in technology Group’s car assembly business. The Group’s first and quality of its component products. In 2015, strategic model S100, a medium-to-high ended the Group’s component business for passenger passenger vehicle model, will soon be launched vehicles accounted for over 50% of the total to the market, which is expected to make income generated from the division for the year positive contribution to and lay a solid 2015. foundation for the future development of the Group’s business. (ii) Continuously launching energy-saving environmental models to achieve growths in 2. Reinforcing the industry base to realize inter- car assembly business provincial linkage of multi industries The Group adopted a market segmentation In order to keep pace with the development of strategy to cater for market needs. Focus was put customers and shift its focus to high value-added on developing new products of energy-saving products, we realized the strategic transformation of environmental models such as rear-drive our products during “the 12th Five Year Plan” period by electrical sight-seeing vehicles, Wuling consolidating the demands for project investment, Rongguang mobile service vehicles (五菱榮光流 achieving a steady progress in the Group’s major 動服務車), Wuling Rongguang vending vehicles project establishment and more investment has been (五菱榮光售貨車), refrigerator vehicles and made in expanding infrastructure construction. In refreshment vehicles. The new products were 2015, with the completion and commencement of WULING MOTORS HOLDINGS LIMITED / ANNUAL REPORT 2015 05 production of the Chongqing base, the Group formed specific risk assessment and advice on remedial its strategic production layout at Liuzhou, Chongqing actions on a regular basis at the Group’s and Qingdao, Shandong. Currently, the Group has meetings of operations and financial analysis. In initially transformed the single production point at 2015, we further expanded the scope of work Liuzhou to the inter-provincial production group at into the management of intangible assets and Guangxi, Shandong and Chongqing, accomplishing a fixed assets, continuously strengthening our synchronized expansion and improvement in terms of capability in cost control and in