Annual Report 2007 - Hmdatalink.com hm datalink

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Chairman’s Statementoperating associates has resulted in slowerdemand for Zhejiang Fulin’s products.This, coupled with rising raw material costsand disruption to production due to therelocation of manufacturing facilities to newlocation in 2007, resulted in lower marginachieved by Zhejiang Fulin in 2007. Netprofit at Zhejiang Fulin was therefore onlyflat at around HK$12 million in 2007. Despitecontinued pressure from higher raw material costs,I however believe Zhejiang Fulin’s earnings growthcould improve towards the later part of 2008, helpedby the commencement of large scale productionof new generation of EPS and braking system forthe operating associates’ new higher end productslike “Free Cruiser”, “Geely Kingkong” and “Vision”models.A key milestone for the Group in 2007 was theGroup’s investment in a 51% stake in ShanghaiLTI Automobile Components Company Limited(“Shanghai LTI”), a newly created specialtymanufacturer of taxies, limousine vehicles and luxurysaloon cars in Shanghai, and a related investmentin a 22.83% stake in UK-listed Manganese BronzeHoldings plc (“MBH”), the other major shareholderof Shanghai LTI and the manufacturer of the iconic“London Taxi” vehicles. The transaction marked animportant step by the Group to further broadenits product line to higher value-added productsand to expand internationally, utilizing existingexpertise, products, technologies and brand andother resources, which are amply available in theglobal auto industry. The cooperation also representsan interesting and competitive combination of along established and well-known Englishbrand with the associates’ proven advantagesin power-train technology and cost effectivemanufacturing.Shanghai LTI started operation in June 2007and is on track to start trial production of TX4model of London taxies in Shanghai in thesecond half of 2008. Shanghai LTI recorded anet loss of HK$5 million in 2007 due to start up costsof the joint-venture and exchange losses. As part ofthe deal related to the establishment of ShanghaiLTI, the Group also invested in 22.83% stake in UKlistedManganese Bronze Holdings plc in mid-2007.MBH’s performance during the final five monthsof 2007 was in line with expectations. MBH sold atotal of 4,199 vehicles during the 17-month periodto 31 December 2007, mainly in the UK market andrecorded revenue of GBP144.5 million and pretaxprofit of GBP4.9 million during the 17-monthperiod. With the scheduled commencement of theproduction of localized version of the TX4 models ofLondon taxi at Shanghai LTI in the later part of 2008,I believe the performance of MBH should improvefurther in the near future.Prospects2007 was a challenging, eventful and strategicallyimportant year in the Group’s history. During theyear, the Group embarked on a major strategictransformation, through expansion into higherendvehicles and major investments to enhancethe Group’s technology competence and productbranding, aiming at transforming Geely brand’sGEELY AUTOMOBILE HOLDINGS LIMITED9ANNUAL REPORT 2 0 0 7
Chairman’s Statementcompetitive advantages from price competitiveto technology and performance competent. Thestrategic transformation has so far yielded verypositive results, as evidenced by the tremendoussuccess of the higher-end products launched in2007 and the significant improvement in brandrecognition and customer satisfaction for Geely’sproducts as indicated by the recent results of majorindustry surveys in China’s sedan market. We believethat the strategic transformation, if successful,could significantly enhance the Group’s competitiveadvantages within a short period of time, thereby toenhance the returns to the Company’s shareholders.With the successful launches of “Vision” sedansat the end of 2007, the improvement in customersatisfaction achieved in most major customer surveys,and the significant efforts spent in the exploration ofexport markets over the past few years, we believethe Group is well positioned to expand its marketshares in both China and oversea markets in 2008.We are therefore forecasting a total sales volume of230,000 units for the Group’s operating associates in2008, representing a YoY growth of 27%.The Group and its operating associates will continueto focus on the operation and expansion of itsautomobile business, to actively seek for ways andopportunities to further broaden its product lineto include higher value-added products, and togradually expand its operations into the globalmarket, with an aim to become a leading supplierfor the safest, the most environmental friendly andthe most energy efficient vehicles in the globalmarket. To achieve this, the Group and its operatingassociates will continue to invest heavily in theresearch and development of new platforms, newtechnologies and new models in a bid to narrowthe Group’s technology gap compared with majorinternational automobile companies. Major changeshave also been implemented in the areas of qualitycontrol, technology development and innovation,parts and component procurement, marketing anddistribution and management mentality to furtherstrengthen the Group’s overall competitiveness.Li Shu FuChairman16 April 2008GEELY AUTOMOBILE HOLDINGS LIMITED10ANNUAL REPORT 2 0 0 7
Page 3 and 4: Supplying the SAFEST, the MOST ENER
Page 5 and 6: Financial Summary and HighlightsFin
Page 8 and 9: Chairman’s StatementLi Shu Fu,Cha
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Consolidated balance sheetas at 31
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Geely Automobile Holdings LimitedRo
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