0175 Geely Automobile Holdings Limited Annual Report 2011

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Annual Report 2011Geely Automobile Holdings Limitedconstruction, expansion and upgrading of productionfacilities, the Group’s strategy is to fund these longer-termcapital commitments by a combination of its operationalcash flow, bank borrowings and fund raising exercises inthe international capital market.Total capital expenditures for the Group amounted toabout RMB2 billion in 2011, which was in line with thebudgeted amount at the beginning of the year. Workingcapital (inventories + trade and other receivables – tradeand other payables) increased by about RMB1,066 millionduring 2011 to reach RMB1,458 million at the end of 2011as a combined result of higher revenues during the yearand thus higher notes receivable, at the end of 2011,and the higher inventories to secure supply of vehiclesahead of the peak season in January 2012. As a result,the Group’s total cash level (cash and bank balances +pledged bank deposits) decreased by 27% to RMB3,384million, while its total borrowings increased by 27% toRMB3,375 million. These, combined with total convertiblebonds outstanding at RMB1,527 million, resulted in a netdebt position at RMB1,517 million at the end of 2011 versusa net cash of RMB494 million a year ago. Despite this, theGroup’s net debt to equity ratio stood at a healthy level of16% at the end of 2011.Cash and Bank BalancesRMB BillionAt 31 DecemberTotal BorrowingsRMB BillionAt 31 December654321065432105.394.6409 102.83 2.6609 103.38113.3711Budgeted capital expenditures of the Group amount toabout RMB1 billion in 2012, including the funding for theresearch and development of new vehicle models, newengines and gearboxes, the expansion and upgrading ofproduction facilities at the Cixi plant, the Jinan plant, theXiangtan plant, the Chengdu plant, the Lanzhou plant andthe Ningbo plant, and the financing of the constructionof new production facilities for automatic transmissionsat Chongqing and Jining of Shandong province. TheGroup plans to fund its capital expenditures from itsoperational cash flow, its cash reserve, additional bankborrowings, and fund raising exercises in the internationalcapital market. As at the date of this report, the Companyhas no definite plan or schedule on raising funds in theinternational capital market.Vehicle manufacturingThe Group sold a total of 421,611 units of vehicles in 2011,slightly above the level achieved in 2010. Strong demandfor mid and larger-size sedan models like Emgrand “EC7”and “EC8” and a rapid increase in exports more than offsetthe drop in the sales of older models like “Free Cruiser”and “Vision”. The Group’s domestic sales volume in 2011was down 3% from the previous year to 382,011 units,compared with the 6.6% increase in the sales volumeof China’s overall sedan market during the same period.Exports sales volume recovered strongly and was up 93%to 39,600 units and accounted for close to 10% of theGroup’s total sales volume in 2011.The Group conducts its business in China under threeindependent brand divisions: “GLEagle”, “Emgrand” and“Englon”, all of which equipped with their own managementteams, production facilities and distribution network. At theend of December 2011, the Group’s three independent salesnetworks in China comprised a total of 976 shops, including570 exclusive franchisee stores and 406 4S stores. In theexports markets, the Group still markets its products under“Geely” brand and sells its products through 63 sales agentsand 351 second tier shops in 52 countries.Amongst the Group’s three brand divisions in China:“GLEalge”, “Emgrand” and “Englon”, “GLEagle” brandedvehicles remains the most important in terms of salesvolume and accounted for 42% of the Group’s total salesvolume in 2011. “Emgrand” branded vehicles, however,achieved the fastest growth in sales volume in 2011.
Annual Report 2011Geely Automobile Holdings LimitedManagement ReportPerformance & GovernanceDemand for Emgrand “EC7” continued to be very strong,making the model the Group’s best selling model in 2011,accounting for 22% of the Group’s total sales volume duringthe period. This was despite the major demand constraintscaused by the lack of AT (automatic transmissions) versionsduring the period and the shortage of supply caused bythe capacity constraints at Ningbo plant II, where EC7 isproduced. Sales volume of “Free Cruiser” and “Vision”, bothgrouped under “GLEagle” brand, however, declined by 13%and 19% respectively, ahead of the planned launches oftheir upgraded models.Despite of the Group’s first entry into the large size sedanmarket, Emgrand “EC8” continued to receive good marketresponse, achieving an average monthly sales volume ofclose to 1,300 units in 2011. Demand for “EC8” started topick up at the beginning of 2012 with a monthly sales volumeof over 2,200 units in the first two months of 2012. As aresult of the continued positive shift in product mix during theperiod, driven by the strong sales volume growth of “EC7”,the Group’s ex-factory average sales price improved furtherto RMB46,153 per unit in 2011, up 3% from last year.In 2011, Emgrand “EC8” achieved a 5-star rating with highscores (49.6 points) in C-NCAP crash test, making it one ofthe best scoring models amongst the 150 models ever testedby C-NCAP. This is after Geely “Panda” achieved a 5-starrating (45.3 points) in the C-NCAP crash test in 2009 andafter the Group’s Emgrand “EC-7” achieved a 5-star rating(46.8 points) in the C-NCAP crash test in 2010. The Group’sachievements in upgrading the safety standards of its vehicleswere further endorsed by Euro NCAP in November 2011,when the Group’s Emgrand “EC7” received a 4-star rating incrash-tests organized by Euro NCAP, making it the highestrated vehicles from China rated by the organisation.Annual Sales VolumeYear1999200020012002200320042,0008,00021,00047,80076,27496,6932005200620072008200920102011133,041164,495181,517204,205326,710415,843421,611Unit10
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0175 Geely Automobile Holdings Limited Annual Report 2011

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