Annual Report 2014
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ANNUAL REPORT 2014 Unit 2403, 24/F, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong www.wuling.com.hk ANNUAL REPORT 2014 ANNUAL This report is printed on environmentally friendly paper 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. The Group is the leading commercial-type mini- vehicle’s engines and automotive components manufacturer as well as a qualified enterprise for manufacturing electrical mini-truck in China. The Group’s main production facilities are located in Liuzhou and Qingdao. Since 2011, it has been ranked as one of the Fortune China 500 Enterprises. GROUP STRUCTURE WULING MOTORS DRAGON HILL LIUZHOU 19% HOLDINGS 51% WULING HKEx:305 51% 49% WULING INDUSTRIAL AUTOMOTIVE SPECIALIZED ENGINES AND COMPONENTS VEHICLES RELATED PARTS AND (INCLUDING NEW OTHER INDUSTRIAL ENERGY VEHICLES) SERVICES CONTENTS Corporate Profile Group Structure 2 Chairman’s Statement 6 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) 20 Financial Review 24 Environmental, Social and Governance Review 33 Directors’ and Senior Management’s Biographies 41 Corporate Governance Report 52 Report of the Directors 62 Independent Auditor’s Report 64 Consolidated Statement of Profit or Loss and Other Comprehensive Income 65 Consolidated Statement of Financial Position 67 Consolidated Statement of Changes in Equity 68 Consolidated Statement of Cash Flows 70 Notes to the Consolidated Financial Statements Corporate Information CHAIRMAN’S STATEMENT Pursuing Growth Amid Stability Optimizing Business Structure Promoting Sustainable Development Preface to adjust its enterprise structure and promoted business transformation, successfully identifying new 2014 was a year full of opportunities and challenges for goals for strategic development without compromising automobile industry in China. As China’s economy the long-standing scale of operation and healthy entered the new normal, competitions in the industry growth. In 2014, the Group recorded a turnover of continued to intensify. Adhering to its operating RMB12,138,662,000, net profit of RMB108,417,000 and policies of “Pursuing Growth Amid Stability, profits attributable to the owners of the Group of Optimizing Business Structure, Promoting Sustainable RMB49,443,000, effectively a testament to the Development”, Wuling Motors Holdings Limited enhancement of its corporate competitiveness. managed to enhance quality and efficiency, continued 2 WULING MOTORS HOLDINGS LIMITED Review of Major Achievements in 2014 customer’s first Baojun 730 MPV in the second half 2014, demonstrating our foothold in the passenger In 2014, the Group continued to optimize its business vehicles sector. On the other hand, in the second half structure and actively pursued cost control and of 2014, the Group ,in the capacity of an exclusive efficiency enhancement, achieving better operation supplier, recorded for the first time a wholesale volume quality as a result . In addition, new products were of 70 units of LJ465QR1NE2 engines, the foundation of unremittingly developed to cater the market. Wuling Liuji’s range extenders, to be installed in GAC Meanwhile, the Group’s keenness on project Trumpchi GA5 hybrid power automobiles. V6 engine, a establishment and its solid foundation of ancilliary high capacity and high power engine to be installed in facilities provided strong momentum for its corporate medium-sized passenger vehicles, MPV and SUV, is at development. The Group also reinforced operation testing stage, marking a substantial progress of the management and took further precautionary measures project. to steadily push through a strategic transformation process, culminating business growth amid stability. For component business, Wuling Motors took the For the year under review, the Group recorded the initiative to adjust the product structure of its following major achievements: component business in response to the modification of product structure by the major customers and widened For engine business, Wuling Liuji has been developing the business scope of supplying components to the new products and introduced corresponding measures passenger vehicle market. In 2014, automotive to capitalize on new development opportunities. NP components and other industrial services division 18, currently the Group’s first engine with self-created recorded a turnover of RMB7,418,056,000, representing intelligence property for commercial passenger a year-on-year growth of 11.4%. vehicles , was successfully installed into our major ANNUAL REPORT 2014 3 CHAIRMAN’S STATEMENT (Continued) For component business for the commercial-type Going forward, the Group will keep on enriching the vehicles, the Group continued to maintain its refrigerator vehicle series according to the specific competitive edge through acting as the exclusive needs of the customers so as to enhance the supplier of various products of Wuling Hongguang, competitiveness of its refrigerator vehicles. including model S rear structure of vehicle body, instrument panels and front axles. Meanwhile, Sales team of the car assembly division actively applied installation ratio of front and back mufflers also innovation to its marketing model for school buses, increased to 50%. Moreover, the Group achieved bulk with establishment of sales channels being the main provision of basic model seats for Wuling Hongguang’s theme while direct sales being the auxiliary objective, vehicle models, rear axles for Beiqi Yinxiang SUV and effectively expanding sales volume of school buses. other component products for Baojun 730 series. Currently, the Group has 31 distributors for school Through the establishment of production lines for buses in various provinces, including Henan, electrophoresis, recognised as one of the most Shandong, Shaanxi and Hunan. After the sophisticated processes for producing automotive comprehensive optimization and upgrading of our components in Guangxi, and the in-house passenger vehicle products, sales volume achieved manufacturing capabilities of foam cores for seats, the breakthrough in August 2014. The monthly sales Group had effectively enhanced its core volume of passenger vehicles (below 6 metres) hit new competitiveness in the seat products segment. highs for two consecutive months, selling over 600 units each month. In September 2014, the Group In developing components for passenger vehicles, the received order for 52 LNG dual-fuel buses, the largest Group’s effort in innovating technology standards and single order ever undertaken. As at November 2014, reforming technical standards enabled the introduction the Group’s non-road vehicle business recorded for of highly competitive core products for the passenger the first time a sales volume exceeding 2,000 units, vehicle market, such as the torsion beam rear thereby laying a strong foundation for car assembly suspension (後扭梁). Successful application of our business to accomplish our annual target. In addition, components in the production of our major customer’s the fleet of 30 fourth generation police vehicles Baojun 730 MPV signified a new era of Wuling Motors launched by Wuling Motors made its gallant in developing the component business for the appearance in two international events, namely the passenger vehicle market. This sensational 11th China-ASEAN Exposition and the 45th World breakthrough is of great significance to Wuling Motors Artistic Gymnastics Championships. Meanwhile, in further expanding its component products for the development of garbage trucks with detachable passenger vehicles in the future. dumpsters and sprinkler trucks in response to the “Cleaning Rural Areas for Beauty of Guangxi (美麗廣 For car assembly business, the Group adopted a 西•清潔鄉村)” campaign has completed and the market segmentation strategy to cater for market vehicles have been officially launched in the market. needs. Focus was put on developing pioneer products such as school buses and other buses running on new For upgrading and further expansion on the Group energy which are in compliance with the new basis, with a view to keeping pace with the regulations. Meanwhile, the Group also explored the development of customers and shifting its focus to production of special-purpose redecorated vehicles (特 high value-added products, the Group is proceeding 種改裝車) of high-added values and expedited the with various projects in terms of equity, capital and research and development of various self-developed R&D of new products in a proactive and orderly models of passenger vehicles, electric vehicles, fashion. The Group will make aggressive investment in refrigerator vehicles and sanitation vehicles. The expanding infrastructure construction to diversify its Rongguang 1.5L single-row low-temperature operations, procure sustainable development and refrigerator vehicles (1.5L 榮光單排低溫冷藏車) boost momentum for its long term development. launched in the second half of 2013 won favour from Significant investment projects commenced in recent the customers. In 2014, this model alone recorded