Annual Report 2007 - Hmdatalink.com hm datalink

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Management Discussion and AnalysisOverall PerformanceDespite a difficult start at the beginning of theyear, featured by intensified competition in China’ssedan market and a slow down in the demand foreconomy sedans, 2007 remains a fruitful year for theGroup in terms of progress in structural changes andprofitability. Despite the short-term negative impacton their sales volume at the beginning of the year,when the implementation of the Group’s strategictransformation caused dramatic fall in the salesvolume of lower-end models and thus a 3% declinein their total sales volume in the first half of 2007, theGroup’s operating associates still managed to makeup the shortfall in the second half and recorded a10% growth in total sales volume in the full year of2007, mainly helped by the success of the two higherendmodels – the “2008 Free Cruiser” and “Vision” –launched in the second half of the year.As a result, 2007 was again a record year forthe Group in terms of both sales revenues andprofitability. The Group’s operating associates– Zhejiang Geely, Shanghai Maple, ZhejiangKingkong, Hunan Geely and Zhejiang Ruhoo – solda record number of 181,517 units of vehicles in2007, up 10% from previous year, and achieved netprofit of HK$755 million, up 45% from previous year,despite the initial costs of the associates’ strategictransformation and their substantial investments incapacity expansion, technological upgrading, andresearch and development of core technologies andnew products during the period. The remarkablefinancial performance of the operating associateshad enabled the Group to report another recordprofitability with net profit after minority interestsincreasing by 51% to HK$315 million in 2007. Thegood results were despite inclusion of non-cashcharges including the accrued interest expenses ofaround HK$35 million incurred by the Company’soutstanding 5-year zero coupon Convertible Bondsdue 2011.The Group’s turnover, which principally came fromits auto parts subsidiary Zhejiang Fulin GuorunAutomobile Parts and Components Co. Ltd.(“Zhejiang Fulin”), was up 8% to HK$137 million in2007, mainly driven by increased sales of auto partsand components by Zhejiang Fulin to the Group’soperating associates. Net profit at Zhejiang Fulin,GEELY AUTOMOBILE HOLDINGS LIMITED11ANNUAL REPORT 2 0 0 7
Management Discussion and Analysishowever, was only maintained at previous year’s levelat around HK$12 million as higher sales during theyear were offset by higher raw material prices duringthe period.51%-owned Shanghai LTI was officially set up in June2007 and its net loss during 2007 was well controlled atbelow HK$5 million level. The Group started to equityaccount for 23%-owned MBH’s financial results in itsfinancial statements from 1 July 2007. Performance byMBH, where its revenues and profit in 2007 mainly camefrom manufactures and sales of TX4 taxi vehicles in theUK market, was in line with expectations during thesecond half of 2007.Reorganization and AcquisitionsDuring the year, the Group continued its on-goingrestructuring to further rationalize its corporatestructure, aiming at improving the Group’s overalltransparency and its operating efficiency. In additionto taking additional stakes in its existing businesses,the Group also set up new businesses and jointventures to expand its revenue and earnings basesin order to achieve better economies of scale andbusiness synergy, through the sharing of operationalknowledge, technologies, marketing and distributionchannels with its new partners.GEELY AUTOMOBILE HOLDINGS LIMITED12ANNUAL 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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Geely Automobile Holdings LimitedRo
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